elaws - Health Benefits Advisor for Employers

Health Benefits Advisor for Employers

Does the plan comply with the mental health parity provisions for parity in financial requirements and quantitative treatment limitations?

A plan may not impose a financial requirement or quantitative treatment limitation applicable to mental health/substance use disorder benefits in any classification that is more restrictive than the predominant financial requirement or quantitative treatment limitation of that type applied to substantially all medical/surgical benefits in the same classification. See 29 CFR 2590.712(c)(2).

Types of financial requirements include deductibles, copayments, coinsurance, and out-of-pocket maximums. See 29 CFR 2590.712(c)(1)(ii).
Types of quantitative treatment limits include annual, episode, and lifetime day and visit limits, for example, number of treatments, visits, or days of coverage. See 29 CFR 2590.712(c)(1)(ii). The six classifications of benefits are:
1. inpatient, in-network;
2. inpatient, out-of-network;
3. outpatient, in-network;
4. outpatient, out-of-network;
5. emergency care; and
6. prescription drugs
  See 29 CFR 2590.712(c)(2)(ii).

Under the plan, any financial requirement or quantitative treatment limitation that applies to mental health benefits within a particular classification cannot be more restrictive than the predominant requirement or limitation that applies to substantially all medical/surgical benefits within the same classification. See 29 CFR 2590.712(c)(2).

(Note, see below discussion of enforcement safe harbor for determining parity with respect to outpatient benefits provided under two sub-classifications.)

To determine parity each type of financial requirement or treatment limitation within a coverage unit (coverage unit refers to the way in which a plan groups individuals for purposes of determining benefits, or premiums or contributions, for example, self-only, family, employee plus spouse. See 29 CFR 2590.712(c)(1)(iv).) must be analyzed separately within each classification. See 29 CFR 2590.712(c)(2)(i). If a plan applies different levels of a financial requirement or treatment limitation to different coverage units in a classification of medical/surgical benefits (for example, a $250 deductible for self-only and a $500 deductible for family coverage), the predominant level is determined separately for each coverage unit. See 29 CFR 2590.712(c)(3)(ii).
Generally, a financial requirement or treatment limitation is considered to apply to substantially all medical/surgical benefits if it applies to two-thirds or more of the medical/surgical benefits. See 29 CFR 2590.712(c)(3)(i)(A). This two-thirds calculation is based on the dollar amount of plan payments expected to be paid for the year. See 29 CFR 2590.712(c)(3)(i)(C). (Any reasonable method can be used for this calculation. See CFR 2590.712(c) (3)(i)(E).)
Generally, the predominant level will apply to more than one-half of the medical/surgical benefits in that classification subject to the requirement or limitation. See 29 CFR 2590.712(c)(3)(i)(B)(1). If there is no single level that applies to one-half of medical/surgical benefits in the classification, the plan can combine levels until the combination of levels applies to more than one-half of medical/surgical benefits subject to the requirement or limitation in the classification. The least restrictive level within the combination is considered the predominant level. See 29 CFR 2590.712(c)(3)(i)(B)(2).

Safe Harbor:

Until the issuance of final regulations, for purposes of determining parity for outpatient benefits (in-network and out-of network), the Departments have established an enforcement safe harbor under which no enforcement action will be taken against a plan or issuer that divides its benefits furnished on an outpatient basis into two sub-classifications, specifically 1) office visits and 2) all other outpatient items and services, for purposes of applying the financial requirement and treatment limitation rules under MHPAEA.

After the sub-classifications are established, the plan or issuer may not impose any financial requirement or treatment limitation on mental health or substance use disorder benefits in any sub-classification (i.e., office visits or non-office visits) that is more restrictive than the predominant financial requirement or treatment limitation that applies to substantially all medical/surgical benefits in the sub-classification using the methodology set forth in the interim final rules.
Other than as permitted under this enforcement policy, and except as permitted under the interim final rules for multi-tier prescription drug formularies, sub-classifications are not permitted when applying the financial requirement and treatment limitation rules under MHPAEA. Accordingly, and as stated in the preamble to the interim final rules, separate sub-classifications for generalists and specialists are not permitted.

Tips: Ensure that the plan does not impose cost-sharing requirements or quantitative treatment limitations that are applicable only to mental health/substance use disorder benefits.

For a simpler method of compliance when a type of financial requirement or treatment limitation applies to at least two-thirds of medical surgical benefits in the classification, but no single level is predominant, a plan can treat the least restrictive level of financial requirement or treatment limitation applied to medical/surgical benefits as predominant.