GAO Reports Most Employers in Compliance With Mental Health Parity Act but Plans Impose Restrictions on Mental Health Benefits; DOL Enforcement Efforts Increase

According to a recently released report by the General Accounting Office (GAO), 86 percent of employer-sponsored health plans are in compliance with the Mental Health Parity Act of 1996 (MHPA), but most impose restrictions on mental health benefits that do not exist for medical/surgical benefits. MHPA requires parity by prohibiting health plans and insurers from imposing annual and lifetime dollar limits on mental health coverage that are more restrictive than limits imposed on medical and surgical coverage. The law is scheduled to sunset on September 30, 2001. The GAO report was released to a Senate Committee that is also considering whether to renew MHPA and whether to extend its reach to require full parity for all mental health benefits.

Compliance with MHPA

GAO found that most employers offered health plans that are compliant with MHPA. However, it determined that most of these employers have plan design features that restrict the number of hospital days or outpatient visits covered for mental health benefits more than for other medical and surgical benefits. Typically, these plan design features include:

• Limits on the number of covered hospital days and outpatient office visits,
• Higher cost sharing such as copayments and coinsurance, and
• Increased caps on employees’ out-of-pocket costs.

Complying with MHPA generally resulted in cost increases of less than 1 percent, according to the GAO. Moreover, cost increases due to compliance with more comprehensive state mental health parity laws (such as those that require full parity) range from 2 to 4 percent.

DOL Steps Up Enforcement Efforts

The GAO confirmed what Compliance Alert reported several months ago: the Department of Labor (DOL) plans to regularly conduct more investigations to monitor health plan compliance with federal health laws, including MHPA. The GAO reports that the DOL has begun to rely on proactive investigations more than complaints in order to systematically determine health plan compliance with federal health benefits laws. The DOL has not disclosed the criteria it is using to decide which plans to investigate.

Employers that are the subject of DOL investigations have been asked to modify their health plans if the DOL determines the plan is in violation of MHPA. Moreover, DOL has recently taken the position that a limit on visits that is combined with a dollar limit to create a definite monetary cap on mental health benefits violates MHPA. (For example, DOL has recently found that a 20-visit per year limit on outpatient mental health coverage combined with a $50 per visit cap on coverage creates a $1,000 per year annual maximum. If there were no such maximum on medical/surgical coverage, the annual maximum would violate MHPA.)

Implications for Plan Sponsors

In light of the GAO report and the increase in DOL investigations, plan sponsors may wish to revisit their plans to assure that they remain in compliance with MHPA and other federal health legislation.

The GAO report, Mental Health Parity Act: Employers’ Mental Health Benefits Remain Limited Despite New Federal Standards GAO/HEHS-00-95 (May 10, 2000), and testimony before the Senate Health, Education, Labor and Pensions (HELP) Committee, GAO/T-HEHS-00-113 (May 18, 2000), are available in PDF format on the GAO’s Web site at www.gao.gov.