Mental Health Parity Act, Insurance and Rehab

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It is a sad reality that mental health disorders are sometimes not taken as seriously as physical ailments. There has long been a stigma against recognizing mental health concerns as a legitimate form of distress, with Psychology Today explaining that people who are afflicted by such disorders often experience prejudice and discrimination from those who do not understand the ramifications of such diagnoses.[1] Fortunately, legislation like the Mental Health Parity Act have turned the clock forward on how insurers treat workers who suffer from mental health issues.

Mental Health Parity

The Mental Health Parity Act (as of 2008, known as the Mental Health Parity and Addiction Equity Act, or MHPAEA) is a federal law that prohibits group health plans and health insurers from imposing unfair and unfavorable limitations on mental health or substance abuse disorder benefits, when compared to the medical and surgical benefits they offer.[2] Specifically, the MHPEA mandates that dollar limitations on mental health benefits (either annually or for a lifetime) should not be lower than any pre-existing dollar limitations for other medical benefits.
Effectively, the Act puts the “parity” in “mental health parity,” ensuring that mental health issues are taken as seriously as other medical issues.

Why is this crucial? Before this legislation, insurers were not required to cover mental health care as part of their group plans. This is because, as the New England Journal of Medicine explains, there has historically been a separation of mental health and addiction treatment from the rest of medicine.[3] This dissonance may have been a contributing factor to the stigma that mental health patients have traditionally received, as mentioned above. As a result of this void, access to much-needed treatment was restricted, meaning patients and their families had to pay out-of-pocket in order to secure treatment.

Loopholes and Lack of Coverage

According to the National Alliance on Mental Illness, the original legislation (signed into law by President Bill Clinton in 1996) offered no provision for covering substance abuse or chemical dependency issues.[4] In 2008, President George W. Bush signed the Act as we know it today, whereby substance abuse disorders receive equal limitations as medical/surgical benefits.

Why did the original Mental Health Parity Act have to be expanded? Not only did it not offer any coverage for substance abuse issues, it also had a number of loopholes that employers and insurers used to get out of standardizing plans. For example, plans could be limited to merely 10 therapy visits for a case of major depression (even though it can be a lifelong illness for many people, according to the Journal of Clinical Depression[5]), and insurers could demand a higher copayment in the case of an outpatient appointment for mental health care than for an outpatient visit for treatment of a physical issue, without violating the law as it was written.

The expansion of the Mental Health Parity Act into the Mental Health Parity and Addiction Equity Act closes the loophole.[6]

Do People Know They Can Get Insurance for Mental Health and Substance Abuse?

Such exploitation was (and remains, to a lesser degree) possible because not many Americans are aware that their mental health rights are protected by law. As recently as 2014, a survey conducted by the American Psychological Association found that only four percent of Americans even know that the Mental Health Parity and Addiction Equity Act exists, even though 27 percent of the population have received mental health care treatment at least once in their lives. Mental health issues are the causes of disability in North America, with more than 41 million people in the US alone believed to be suffering from some form of mental illness.

Quoting figures from the Substance Abuse and Mental Health Services Administration, the American Psychological Association noted than nearly 11 million Americans have mental health care needs that are not currently being met, underscoring the necessity of legislation like the Mental Health Parity and Addiction Equity Act.[7]

Coverage and Exclusions

Encouragingly, the MHPAEA covers all the mental health and substance abuse disorders covered by a health plan; however, in the interests of fairness to insurers, health plans are allowed to specifically exclude certain diagnoses from their coverage (either from the medical/surgical spectrum or the mental/substance abuse spectrum).[8] Exclusions have to be made clear in the documentation provided by the insurance company.

Notwithstanding the extensive scope of the MHPAEA, it does not actually require large group health plans or health insurance providers to cover such benefits; it only stipulates that if issuers do offer plans for mental health and substance abuse, their coverage cannot be inferior or more limited when compared to the plans that they offer for surgical or medical benefits.
In the interests of equity as laid down by the law, coverage for mental health or substance abuse disorders must not have greater financial requirements than those that applied to all medical or surgical benefits. Similarly, treatment limitations (number of hospital visits, days of coverage, etc.) cannot be any more or less than treatment limitations of medical/surgical coverage. If a company’s health insurance plan has out-of-network medical and surgical coverage, it must offer the same out-of-network coverage for mental health and substance abuse treatment.
The Mental Health Parity and Addiction Equity Act does not apply to group health plans of small private employers that have 50 or fewer employees. Non-federal governmental plans that have fewer than 100 employees also do not have to abide by the MHPAEA. There are other provisions for exemption, including group health plans and health insurance based on their increased cost, and large, self-funded non-federal governmental employers that opt out of the MHPAEA requirements.

‘Historic Proportions’

Together with the Affordable Care Act of 2010, the Mental Health Parity and Addiction Equity Act has helped 60 million Americans who needed behavioral health benefits, says the Substance Abuse and Mental Health Services Administration. It has also created programs whereby local entities – states and communities – can provide education about mental health care issues, in terms of how to prevent harmful mental health environments and how to promote positive ones.[9]

Writing about the reach of the ACA and the MHPAEA, the Journal of Behavioral Health Services & Research posited that coverage of mental and behavioral health care will be expanded by “historic proportions.”[10]

In 2013, the Departments of Health and Human Services, Labor and the Treasury issued a joint “final rule” on the MHPAEA, clarifying additional protections for consumers, such as:

  • Ensuring that the Act is in effect for intermediate levels of care in residential treatment or intensive outpatient settings
  • Ensuring that the Act applies across geographical standards, different types of facilities and different levels of health care networks
  • Ensuring that health plans have the required levels of transparency, as pertains to the rights of people participating in the plans
  • Closing a loophole, whereby insurance companies were able to make an exception for certain benefits that did not meet standards of clinically appropriate care; clinical experts advised that the exception was unnecessary, confusing, and allowed for patients to be taken advantage of, hence the closure as part of the final ruling[11]

With this, the US government hopes to complete their plan to make insurance coverage for people suffering from co-occurring mental health and substance abuse disorders as comprehensive as possible, while simultaneously closing the gap between the treatment and perception of mental illness and other forms of medical distress.

As laid out by Kathleen Sebelius, the Secretary of Health and Human Services, in her statement announcing the final ruling, the goal of the Mental Health Parity and Addiction Equity Act is to make mental health and substance abuse treatment services affordable and accessible to all Americans.

Citations

[1] “Mental Health & Stigma.” (August 2013). Psychology Today. Accessed April 16, 2015.

[2] “The Mental Health Parity and Equality Addiction Act.” (n.d.) Centers for Medicare and Medicaid Services. Accessed April 16, 2015.

[3] “Moving Beyond Parity.” (September 2011). New England Journal of Medicine. Accessed April 16, 2015.

[4] “The Mental Health Parity Act of 1996.” (n.d.) Centers for Medicare and Medicaid Services. Accessed April 16, 2015.

[5] “Preventing Recurrent Depression: Long-Term Treatment for Major Depressive Disorder.” (2007). Journal of Clinical Psychiatry. Accessed April 16, 2015.

[6] “Mental Health Parity” (April 2014). Health Affairs. Accessed April 16, 2015.

[7] “Few Americans Aware of their Rights for Mental Health Coverage.” (May 2014). American Psychological Association. Accessed April 16, 2015.

[8] “Does Your Insurance Cover Mental Health Services?” (n.d.) American Psychological Association. Accessed April 16, 2015.

[9] “Health Financing.” (n.d) Substance Abuse and Mental Health Services Administration. Accessed April 16, 2015.

[10] “How the Affordable Healthcare Act and the Mental Health Parity and Addiction Equity Act Greatly Expand Coverage of Behavioral Health Care.” (October 2014). Journal of Behavioral Health Services & Research. Accessed April 16, 2015.

[11] “Administration Issues Final Mental Health and Substance Abuse Disorder Parity Rule.” (November 2013). U.S. Department of Health and Human Services. Accessed April 16, 2015.

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