Jeri Davis International

Legislation Evolution – The History

Original Parity legislation from 1996 had limited impact predominately on large employers and excluded substance abuse. 

The Wellstone Act requires true benefit parity requirements (copayments, coinsurance, days of coverage, etc), and includes substance abuse.

Behavioral Health (BH) and Substance Abuse (SA) are included in the legislation as outlined below.  An EAP can still have visit limits, but insurance plans can no longer use them as a gatekeeper (require a certain number of EAP visits be exhausted before a person can get coverage for Behavioral Health benefits.)

There are six classifications:

1.           Inpatient in-network

2.           Inpatient out-of-network

3.           Outpatient in-network

4.           Outpatient out-of-network

5.           Emergency care

6.           Prescription drugs

Coverage in General  

If a plan provides any benefits for a mental health condition or substance abuse disorder, benefits must be provided at parity for that condition or disorder in each classification that medical/surgical is provided (based on “predominate” and “substantially all” criteria).

Financial Coverage

Financial requirements (including cumulative requirements) under the plan with regard to deductibles, co-payments, coinsurance and out-of-pocket expenses for mental health and substance abuse benefits covered under the plan, must be the same or better than the financial requirements for medical and surgical benefits under the plan.

Limits on Services

There are two types: “quantitative limits” (limits on dollar amounts or number of sessions), and “non-quantitative limits.”  The IFR expressly prohibits plans from making use of the following non-quantitative limits unless similar restrictions exist for medical/surgical benefits:

1.           Medical management (including medical necessity)

2.           Prescription formulary design

3.           “Fail-first” or step therapies

4.           Prior authorization

The IFR prohibits plans from instituting separate deductibles, copayments, and out-of-pocket limits for Mental Health/Substance Use and medical/surgical benefits for both in- and out-of- network coverage.  Any deductibles, copayments, and out-of-pocket limits required by the plan must be integrated and cumulative for all services.  Therefore, any carrier who offers BH/SA benefits ONLY must share data with the carriers who provide medical benefits for any individuals enrolled in both.

Key Effective Dates

Insurance plans can begin at the start of any month, so regulation effective dates take a full 12-month cycle to capture all employers.

Based on the original effective date of October 4, 2009, the majority of employers made changes to insurance coverage compliant with the Wellstone Act beginning with plans that began November 2009.

The IFR, which provided further clarification, stipulates compliance for plans starting July 1, 2010 or later.

·     Coverage, therefore, will be changing through the next several months, as plans with start dates prior to October 2009 comply and all plans with start dates from November 2009 to July 2010 modify plans to comply with clarifications outlined in the interim final regulations.

Exemptions

There are some exceptions for small employers, as well as employers who have union agreements which stipulate benefits; however, the most significant exclusion is the health plan exception.

The statute allows for health insurance plans to be granted a 1-year exemption from the parity requirements if they experience total increased costs of 2% in the first year after implementation and 1% in subsequent years. The criteria for this exemption are not included in this IFR but will be released in the future.

Impact on Insurance Coverage

In general, legislation will broaden coverage and reduce many of the current limitations.  (See the definitions chart for specifics, definitions and parity impact.)  However, coverage will vary based on what employers or individuals elect for coverage unless:

1.         Coverage is mandated by state law, and

2.         The employer must comply with that mandate (not self-insured ERISA).   

 There are three areas for application nuances:  

1.         What is included or excluded under the plan.   Employers can exclude coverage or limit what is covered; however, if covered, it must comply as stated above.  For example, they can exclude SA entirely or can limit it within SA (pay for alcohol but not cocaine). 

2.         Defining a “mental health condition” and “substance abuse disorder”: 

a.    Plan terms define unless insured plan (state law)

b.    Must be consistent with “generally recognized independent standards of current medical practice” -- not necessarily a national standard, but just that which is accepted in the “relevant” medical community. 

·         DSM 

·         State guideline  

·         Other applicable sources

3.         Practical application of “non-quantitative limits.”  Most plans include restrictions for medical/ surgical benefits, including medical management, prescription formulary design, “fail-first” or step therapies, and prior