Old game new rules: how will payers react to new limits imposed by parity regulations?
Article Type: Cover story
Subject: Managed care plans (Medical care) (Laws, regulations and rules)
Mental health (Laws, regulations and rules)
Authors: Gauthier, Patrick
Ray, Charles G.
Alexandrei, Kathryn
Pub Date: 03/01/2010
Publication: Name: Behavioral Healthcare Publisher: Vendome Group LLC Audience: Academic; Trade Format: Magazine/Journal Subject: Health; Health care industry; Psychology and mental health Copyright: COPYRIGHT 2010 Vendome Group LLC ISSN: 1931-7093
Issue: Date: March, 2010 Source Volume: 30 Source Issue: 3
Topic: Event Code: 930 Government regulation; 940 Government regulation (cont); 980 Legal issues & crime Advertising Code: 94 Legal/Government Regulation Computer Subject: Government regulation
Accession Number: 223731734
Full Text: As a fundamental health insurance reform, The Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008 has far-reaching effects and implications for as many as one in three Americans. A hard-won product of vision, advocacy, cooperation, and compromise, the Act's enabling regulations, also known as the Interim Final Rule (IFR), were released Jan. 29 with an immediate impact on health insurance companies, managed care and managed behavioral health organizations, self-insured employers, and a variety of administrative service providers. Additional regulations that apply to Medicaid managed care plans are expected in the coming months.

Although the MHPAEA may appear complex, it was designed to preserve consumer rights and interests. But in many respects, the MHPAEA was crafted with health plans and payers in mind--a perspective far removed from the primary concerns of government programs, community mental health and substance abuse treatment providers, and consumers.

The unexpected

Despite nearly 14 years of debate and negotiation in the legislative process, many details of the IFR developed by the U.S. Departments of H HS, Labor, and Treasury were unexpected. Among those most surprised were health plans, payers, and insurers, who thought that the details of the IFR differed from the law that Congress had developed and President Bush signed in October 2008.

Throughout the long legislative process, these plans and payer groups were slow to accept the parity proposition, but ultimately concluded that their key concerns and needs had been addressed in the bill. Many thought that the language of the bill made it likely that the MHPAEA and its IFR would allow them to:

* Maintain access and cost controls specific to mental health and substance use treatment benefits, including separate deductibles;

* Continue to select and cover the conditions and diagnoses they deem appropriate, in light of applicable state law; and,

* Continue to manage mental health and sub stance use treatment benefits with only minor changes necessary to eliminate any real or perceived discriminatory practices.

Clearly, many plans were expecting that parity could be implemented with essentially the same underwriting variables as before--and without any "meaningful" additional costs. Several prominent and reliable claims experience studies conducted by independent consultants and the Congressional Budget Office modeled a future for parity that projected cost increases of less than two percent using traditional managed care approaches. Many plans banked on the belief that that IFR would preserve the behavioral health-specific benefit management practices that have evolved in the past 25 years, practices that have been proven effective in managing costs.

The IFR released by the Departments of HHS, Labor, and Treasury in late January would put an end to speculation by laying out clear nationwide guidance for medical management criteria, scope of services, and covered conditions--at least, provider and consumer groups hoped it would. However, the IFR offered relatively little guidance in these three areas, instead deferring to health plan policies and state law. Its guidance was restricted to creating six Classifications of Benefits where parity would apply and to defining allowable quantitative and non-quantitative limitations on coverage.


Reaction to the IFR was primarily positive from advocates of mental health and substance abuse treatment. But recent questions and comments from advocacy groups demonstrate that they are concerned about the absence of detail regarding the scope of services. Conversely, plans and payers have found the IFR to be quite different from what they had expected, involving a new and unanticipated set of underwriting assumptions and, perhaps, much less latitude in determining the scope and standards of care.


These reactions shouldn't come as a surprise to anyone. Both sides clearly hoped for and expected widely divergent outcomes. Advocates sought greater specificity and conditions that would support greater access and consumption of services, while insurers and payers sought to retain flexibility and self-determination in managing costs as sociated with consumption. The tension is understandable.


Health plan and employer concerns

Traditional health insurance plans have based coverage decisions on along-standing medical model of people's needs, centered around maintaining physical health. Mental health advocates have argued that the medical model is limited, pointing to a model that views the individual as a broad constellation of strengths and issues, shaped by a complex web of factors including brain chemistry, family of origin, early childhood development, access to education, economic strata, and other environmental factors.

To overcome the limitations of medically-based models of care, behavioral health advocates argued that the "generally recognized independent standards of current medical practice" described in the IFR should be expanded in order to avoid processes and practices that impose limitations on care. They suggested that guidelines for medically accepted standards of care include conditions defined in the current Diagnostic and Statistical Manual of Mental Disorders (DSM) or the World Health Organization's International Statistical Classification of Diseases and Related Health Problems (ICD).

For those living in the growing number of states that have adopted a more holistic model of behavioral health and high standards for parity in benefits, such as Vermont, Minnesota, and Oregon, the scope of services is already relatively broad. However, in states like Idaho and Wyoming whose laws embody a more traditional and limited medical viewpoint, the mention of DSM criteria in the IFR could be reason for serious questions between plans and employers. Because the IFR contains no minimum federal "scope of services," differences in state laws ultimately will lead to differences in access and continuum of treatment resources available for mental health and substance use conditions.

Plans subject to the Employment Retirement Income Security Act of 1974 (ERISA)--which include those funded by large, private industry employers and not subject to state laws--may also struggle with defining the services they will cover. Providers and consumers hoped that the IFR would provide direction with respect to covered diagnoses, service levels, and provider types--all of which are prerequisites of an effective treatment plan. Instead, the IFR provided only the classifications of benefits. Without this additional definition, ERISA plan employers will have to make their own decisions about covered diagnoses, services, and providers.

However, in their efforts to create cost-efficient plans, employers must choose their coverage carefully. A refusal to cover substance abuse treatment, for example, or to provide master's level counseling or psychotherapy for major depression, could result in much greater medical cost offsets as consumers are driven to more primary medical care visits.

From the payer point of view, the IFR introduces other very practical concerns:

* A single deductible. While many plans and payers hoped the traditional separate deductible would prevail, the IFR specifically requires a single, unified deductible. With this change, many plans lose a significant financial buffer, since plan members who utilize mental health/substance abuse (MHY SA) services will likely satisfy their unified deductibles more quickly, making them eligible to tap into plan benefits sooner. To support the unified deductible, plans face the challenge of developing and maintaining new interoperable databases that can compile and deliver updated deductible information based on claims submitted by medical/surgical and MH/SA providers.

* Equal access and copays. Copays for mental health providers and services must be on par with comparable medical providers or services in six classifications, obligating plans to design an "equal" benefit, with equal copays in all of these classifications. The IFR stipulates that for each classification of benefit, there can be no more limiting non-quantitative restrictions, processes, or standards in place than there are for medical/surgical services.

* New record-keeping and documentation requirements. The IFR requires payers to disclose their medical necessity and level of care criteria and disclose the reasons for denied claims. While larger insurers may take this additional work in stride, smaller plans may struggle with this new requirement.

* Ban on Employee Assistance Plan (EAP) gate keepers. In a blow to some ERISA plans, the IFR specifically bans the use of EAPs as "gate keepers" to higher levels of service. In light of the IFR, plans that require pre-authorization for routine outpatient mental health treatment must have a similar requirement for access to outpatient medical services such as visits to a primary care physician. Gatekeeping functions for MH/SA services must now be performed by medical management professionals. For many plans and employers, these services are already provided by managed behavioral health organizations or consultants.

Overall, the release of the IFR sets up a dynamic in which plans and payers believe that they negotiated in good faith for a cost-efficient vision of parity. They expected to keep certain managed care tools, processes, and controls in place to manage parity's costs, but now face a reality that is quite different. Rather than reversing the "us vs. them" dynamic that has prevailed between consumers and payers for so long, this antagonism may be strengthened. Ironically, that is the dynamic the law was intended to overcome.

Consequences and opportunities

How this interaction plays itself out will vary. The majority of plans and insurers will comply with the regulations. However, some ERISA plans as well as self insured state, county, and local public employee health plans may conclude that the regulations are too demanding and costly and opt out of MHPAEA and parity coverage. Already, New Jersey and the city of LaCrosse, Wisconsin, have excluded their plans, demon strating that large public employers aren't afraid to opt out.

For care providers who are able to respond quickly to market changes, parity may bring new opportunities. Taking an active role, for example, in promoting the use of the American Society for Addiction Medicine Patient Placement Criteria (ASAM PPC-2R)as a generally-accepted medical standard could help substance use treatment providers shape a more favorable set of services in their states. The same can be said for partial hospitalization, case management, and other types of services that are considered best practices by some and relatively unknown to others.

Patrick Gauthier is a director at AHP Healthcare Solutions, while Charles G. Ray is a principal at Criterion Health. Kathryn Alexendrei is an associate director at AHP Healthcare Solutions.

More Online:

To learn more about parity's impact, or to receive a copy of AHP's in-depth parity analysis, visit www.behavioral.net/MHPAEA.

RELATED ARTICLE: Challenges, issues, and questions: A summary of parity

* The IFR does not define a scope of services. Covered conditions (diagnoses), types of service, and types of providers remain unclear. This is less challenging in states with mandated mental health or SUD parity or those with partial parity.

* Access to treatment will vary based on state law. States like Minnesota, Oregon, and Vermont require health plan benefits that are far more substantial than those of states such as Wyoming. For example, a residential level of care may be covered in states that have more progressive mental health benefit regulations, but may not be covered in other states or by self-insured employers. As a result, two individuals in different states who suffer from an identical constellation of illness and severity may well qualify for different coverage.

* ERISA groups are not subject to state laws, so they will have greater flexibility addressing scope of services issues and, like self-insured public employee plans, can opt out of MHPAEA.

* Small group and individual plans are unaffected by MHPAEA.

* The Classification of Benefits does not address services that have traditionally fallen outside of the six designated classes. This is troubling for partial hospitalization and residential programs, therapeutic group homes, case management, and intensive outpatient programs.

* The IFR uses the term "generally accepted medical standards" where medical necessity guidelines are concerned. This is troublesome for certain conditions like autism that may be deemed either a medical or mental health condition (depending on the state and plan policy) and calls into question the types of standards in use.

* Communication between plans, providers, and consumers will be especially challenging. Providers need to be vigilant when benefits and plan rules change in order to maintain continuity of care. California experienced considerable difficulty when the state enacted its parity law. Consumers were unclear how benefit processes and rules worked and didn't know who to call when benefits were carved out to managed care organizations. Poor communication can lead to denied billings for reasons having to do with medical management, or to discontinuity of care when provider networks change or when benefits change to preclude certain services or providers.
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