Few large U.S. employers are planning to drop their mental health and substance abuse benefits as a result of new federal mental health parity regulations. Most are choosing to modify their plans to comply with the rules, according to a survey by HR consultancy Hewitt Associates.
On Jan. 29, 2010, the U.S. Centers for Medicare and Medicaid Services, Department of Labor's Employee Benefits Security Administration and Internal Revenue Service issued interim final rules under the Mental Health Parity and Addiction Equity Act of 2008. The act prohibits group health plans that provide mental health or substance abuse benefits from setting higher co-payments and deductibles or imposing stricter limits for the treatment of mental illness or substance abuse.
The regulations, which take effect for plan years beginning on July 1, 2010, say that an employee assistance program (EAP) cannot be used as a gatekeeper—where members are required to use the EAP before accessing mental health/substance abuse benefits—unless a similar program is required for medical/surgical benefits.
“Many people assumed that once the Mental Health Parity Act passed, employers would drop mental health benefits to avoid managing the new regulations,” commented Kathleen Mahieu, Hewitt’s national leader for behavioral health care consulting services. “However, as companies increasingly focus on the overall health and productivity of their workforce, they realize that mental health and substance abuse coverage are a valuable part of ensuring that employees are at their best mentally and physically. We believe employers are willing to make the investment to keep these benefits for their workers.”
A February 2010 Hewitt survey of 70 Fortune 500 employers that offer mental health benefits confirms Mahieu’s assertion. None of the surveyed companies had eliminated mental health/substance abuse coverage since the law was enacted in 2008. Many took steps to comply with the initial legislation. For example:
• All surveyed companies eliminated annual and lifetime maximums, a key component of the new regulations.
• One in five (20 percent) modified mental health or substance abuse precertification requirements or adjusted the diagnoses and services covered under the plan, such as eliminating or adding coverage for specific services or adding out-of-network coverage.
• Almost all (98 percent) maintained their administrative arrangement with their mental health or substance abuse vendors.
While most companies stayed with a model where mental health or substance abuse benefits are administered by a specialty behavioral health vendor (i.e., carve-out plan), Mahieu believes that more companies will switch to a plan where benefits are administered by the medical benefits vendor (i.e., carve-in plan).
More employers are likely to switch to a plan where
mental health benefits are administered by
the medical benefits provider.
“Many employers, particularly those with ‘carve-out’ programs, have already established separate deductibles and out-of-pocket maximums for mental health/substance abuse benefits that were no more restrictive than the medical provisions,” says Mahieu. “These employers will need to re-evaluate their plan design to ensure compliance with the regulations and may even consider re-evaluating their ‘carve-out’ arrangement in order to ease the administrative burden of tracking co-pays, co-insurance and account money.”
Steps to Take
Mahieu recommends that employers review their mental health/substance abuse benefits programs—even those in which employers have already made changes to comply with the initial legislation. They should conduct an in-depth comparison of their mental health and substance abuse and medical and surgical benefits to ensure compliance with the new regulations. This evaluation should include:
• A thorough cost analysis to ensure that mental health and substance abuse and medical benefits comply with federal regulations and to assess the financial impact of any changes.
• A review of plan documentation, medical management standards, financial requirements and treatment limitations to determine compliance.
• A review of the conditions and treatment settings covered under the plan.
• A review of the organization’s overall behavioral health strategy, including:
✔ Ways to use an EAP to help offset some of the cost of design changes.
✔ Methods for monitoring program utilization and vendor effectiveness after implementing plan changes.
✔ Ensuring that mental health benefits vendors are doing all they can to provide appropriate treatment, while ensuring employees are getting the care they need.
✔ Assessing holistic strategies that focus on encouraging employees to take an active role in their health care, leading to improved physical and mental health.
As the regulations become effective for plan years beginning on or after July 1, 2010, employers will need to act quickly to determine compliance and make any necessary program changes.
Stephen Miller is an online editor/manager for SHRM.
Regs Establish Parity Standards for Mental Health Treatment, SHRM Online Benefits Discipline, February 2010
Agencies Issue Rules for Mental Health Parity Act, SHRM Online Benefits Discipline, February 2010
SHRM Online Benefits Discipline
Express Request: SHRM members can receive additional online resources on this topic. Visit SHRM's Express Request web site and select the key term Mental Health Parity Act Interim Final Rules (Benefits).