Paul Wellstone and Peter Domenici Mental Health Parity and Addiction Equality Act of 2008

Paul Wellstone and Peter Domenici

Mental Health Parity and Addiction Equality Act of 2008

I. Executive Summary

Mental health and addiction disorders are serious matters that affect a significant portion of the U.S. population. Under the Mental Health Parity and Addiction Equality Act (MHPAEA), disorders such as alcoholism, drug addiction, autism, bi-polar disorders, ADHD, depression, anxiety, and other commonly diagnosed mental disorders are treated the same as all other medical conditions covered under health plans. This Act builds upon the Mental Health Parity Act of 1996, (MPHA), which requires all applicable plans to provide comparable annual or lifetime dollar limits for mental health and physical health services and amends the MPHA to include substance use disorders. The new law will result in mental health and addiction services parity for about 113 million Americans. According to Kevin Burke, director of the AAFP Division of Government Relations in a recent article posted by AAFP, this newly enacted legislation is a "long needed incremental improvement in health insurance coverage" (Arvantes, 2008) one that will allow physicians to more appropriately bill for mental health and addiction services. Under this legislation, health plans will be required to cover mental health and substance use disorders in the same manner as they would any other medical conditions.

This legislation though offering equality to those suffering from mental health and substance use disorders; may prove to have a significant impact on rising costs of heath care.

II. Issues and Purposes addressed by Legislation

Reports have shown that 87 percent of employer group plans had limits on their mental health coverage. The mental health benefits were significantly lower than benefits for other medical conditions. The costs shared for addiction was almost 50 percent higher then those associated with medical conditions or surgical procedures, and there were seldom caps placed on the amount of out of pocket costs associated with mental health and substance use. According to the National Institute of Mental Health, an estimated 26.2 percent of Americans ages 18 and older, or about one in four adults, suffer from a diagnosable mental disorder in a given year, and this imbalance in benefits was having a significant impact. (Luongo, 2008)

The purpose of the Mental Health Parity and Addition Equality Act is to correct the imbalance between the benefits available for mental health and substance use disorders and those provided for other medical conditions and surgical procedures under group health plans.

A. Equality for Mental Health an Substance Use Coverage

This legislation ensures the financial requirements for mental health or substance use disorders, such as deductibles, copayments, coinsurance, and out-of-pocket expenses, are no more restrictive than the financial requirements applied to all other medical and surgical benefits offered by a group plan. Any limitations on the frequency of treatment, number of visits, days of coverage, must also parity those offered for other medical conditions and surgical procedures. (M. Lee Smith Publishers, 2010)

In addition, group health plan offering out-of-network coverage for medical and surgical benefits must provide the same out-of-network benefits for mental health and substance use disorders. (Luongo, 2008)

B. Preservation of State Law

The current HIPAA preemption standard applies. This standard is extremely protective of State law. Therefore, although this legislation creates a federal parity requirement, it does not serve to displace state laws containing stronger parity protections. Thus, plans must comply with their state's parity and protection measures if they provide greater protection. (National Council for Community Behavioral Health, 2010)

C. Small Employer Exemptions

The small employer exemption, as defined under the Mental Health Parity Act of 1996, will remain unchanged; therefore, this legislation will not apply to any group health plan of a small employer, defined as an employer with 2 to 50 employees. State parity laws will continue to apply to these employers, as well as to individual plans. (National Council for Community Behavioral Health, 2010)

D. Cost Exemptions

If the costs to comply with this legislation increases a group health plans total costs, inclusive of medical, surgical, mental health and substance use disorders by more than 2 percent during the first plan year the plan, the plan can be exempted from the law, for one year. Legislation requires determination on increases in actual costs under a plan must adhere to specific procedures in order to obtain an exempt status. A qualified actuary shall determine and prepare a written report regarding a plan's cost increase after a plan has complied with the Act for the first six months of the plan year involved. The plan must promptly notify the appropriate Federal and State agencies, and participants and beneficiaries when it elects an exemption. In addition, the Secretary of Labor, Secretary of Health and Human Services and State agencies may audit a plan to determine compliance with the Act when the plan has elected an exemption. (National Council for Community Behavioral Health, 2010)

E. Exclusions

This legislation is not without exclusions. This law does not apply to Medicare since parity is already included in the Medicare Improvements for Patients and Providers Act (MIPPA).

This law does not mandate mental health and substance use coverage; however, if a plan chooses to offer such coverage, the costs and limitations must parity those of other medical health benefits. In addition, it does not mandate that all mental health and substance use disorders be covered, it only requires coverage for conditions as defined under the terms of each plan. (National Council for Community Behavioral Health, 2010)

III. History of Legislation

A. Brief overview of the Mental Health Parity Act of 1996

The Mental Health Parity Act of 1996 (MHPA) went into effect on January 1, 1998. The MHPA is a very simple parity law, which prohibits health plans from having different annual or lifetime limits on mental health benefits than those placed on medical and surgical benefits. The