Recently, new Frequently Asked Questions (“FAQs”) were issued by the Departments of Labor, Treasury, and Health and Human Services (the “Agencies”) addressing the implementation of the Mental Health Parity and Addiction Equity Act (the “MHP Act”). As summarized in a previous SGR Client Alert, the MHP Act specifies that the financial requirements and treatment limitations imposed on mental health and substance use disorder benefits cannot be more restrictive than the predominant financial requirements and treatment limitations that apply to substantially all medical and surgical benefits. The FAQs clarified some of the more difficult issues that arise with regards to the MHP Act.
Beware of Prior Authorization Issues Under the MHP Act
The FAQs clarify that, under the MHP Act, when prior authorization is not required for medical or surgical benefits, it is impermissible for a group health plan to require prior authorization from the plan’s utilization reviewer with regard to the medical necessity of mental health or substance use disorder benefits. This is considered an impermissible nonquantitative treatment limitation under the MHP Act.
Similarly, group health plan sponsors must be careful that their plans do not impose stricter nonquantitative treatment limitations in practice with regard to mental health or substance use disorder benefits. For instance, if inpatient benefits for medical or surgical conditions are routinely approved for seven days, but inpatient benefits for mental health or substance use disorder benefits are routinely only approved for one day, this may be viewed as an impermissible nonquantitative treatment limitation under the MHP Act.
Beware of Insurance Policies Requiring Prior Authorization for All Mental Health or Substance Use Disorder Benefits
For employers considering various health insurance policy options for their employees, the FAQs warn that policies requiring prior authorization for all outpatient mental health benefits, but only a few types of outpatient medical or surgical benefits, may violate the MHP Act. The FAQs note that while some differences in plan requirements for prior authorization may be permissible, it is unlikely that the standards considered by the plan in determining which medical or surgical benefits require prior authorization would result in all mental health or substance use disorder benefits needing prior authorization.
Copayments Must be Carefully Reviewed if the Rates for Mental Health or Substance Use Disorder Benefits are Higher Than Medical or Surgical Copayments
As stated in the FAQs, the standard for determining the maximum copayment that can be applied to mental health or substance use disorder benefits is determined by the predominant copayment that applies to substantially all medical or surgical benefits within a classification (e.g., inpatient in-network, inpatient out-of-network, outpatient in-network, outpatient out-of-network, emergency care, and prescription drugs). If the copayment that meets this standard is the one charged for a medial or surgical specialist, that copayment can be charged for all mental health or substance use disorder benefits within that classification. On the other hand, if the copayment that meets this standard is the one charged for a medical or surgical generalist, then that is the copayment that can be charged to all mental health or substance use disorder benefits within that classification.
Group health plan sponsors should carefully review their plans’ copayments for all benefits to ensure that mental health or substance use disorder copayments are not in violation of these new FAQs under the MHP Act.
For more information, or for assistance in determining whether your group health plan complies with these requirements, please contact your SGR Executive Compensation and Employee Benefits counsel.