By: Chad Alan Staul, Esq.
On October 3, 2008, Congress passed the Paul Wellstone and Pete Domenici Mental Health Parity and Addition Equity Act ("MHPAEA"). Although it has been a year since its passage, the law's January 1, 2010, effective date is now approaching. Under the MHPAEA, approximately 113 million people across the country will have a right to non-discriminatory mental health and substance abuse coverage, including 82 million people enrolled in self-funded plans regulated under ERISA. This translates to potential new claims of discriminatory conduct against health providers as well as attempts to impute liability to the employers who use them.
The MHPAEA amended the Mental Health Parity Act of 1996 by requiring that group health plans of 50 or more employees (whether self-funded and regulated under ERISA or fully-insured and regulated by state law) that choose to provide mental health/substance abuse benefits in addition to traditional medical/surgical benefits, employ equivalent requirements regarding financial obligations and treatment limitations. This means that covered group plans must provide equal coverage for deductibles, copayments, out-of-pocket expenses, frequency of treatment, number of visits, days of coverage, annual and lifetime dollar limits and other similar limits regardless of whether the condition's nature is medical/surgical or mental health/substance abuse. Prior to this act, health plans placed limitations on treatment and required patients to pay higher costs for mental health/substance abuse benefits compared to physical benefits. MHPAEA now makes this practice illegal if a group health plan falls within the law's scope.
Employers need to be aware that MHPAEA provides some exemptions. First, MHPAEA does not apply to employers with fewer than 50 employees. Second, the law establishes an important cost exemption. A group health plan (or coverage) can apply for a cost exemption from the law for one plan year if it experiences an increase in actual total benefits costs of 1% (2% in the first applicable plan year). The Department of Labor or the Department of Health and Human Services, whichever is applicable, and all appropriate agencies, participants and beneficiaries must be contacted if this exemption is elected. Further, the plan costs are subject to an actuary report and a potential compliance audit from any appropriate agency. In addition, MHPAEA, as a federal law, does not automatically override state laws. The MHPAEA only preempts state laws that "prevent the application" of the Act. This means that more restrictive and stronger state parity and other consumer protection laws need to be complied with as well.
Employers offering group health plans that fall within the purview of the MHPAEA need to ensure that the health provider is in compliance or will be in compliance by January 1, 2010. Insurers are not required to provide coverage for mental health/substance abuse; however, if such coverage is provided, it must be at parity in accordance with the MHPAEA for any legitimately diagnosed mental health condition and/or substance abuse disorder as defined under the terms of the health plan in accordance with applicable federal and state law. As always, we encourage employers to seek appropriate legal counsel regarding any questions or concerns implementing this new federal law.
Questions? Please contact WS Attorney Chad A. Staul in our Minneapolis, MN office at (952) 746-1700, or chstaul@wesselssherman.com.
