Mental Health Parity Bill Headed for Passage at Last Bazelon Center Mental Health Policy Reporter
Volume VI, No. 1, February 22, 2007
Mental Health Parity Bill Headed for Passage at Last
The new Congress seems poised to finally address the disparity between surgical/medical and mental health/substance abuse coverage by private insurers. After many years of effort by the mental health community, a Senate committee has approved a bill for mental health parity in the private health insurance market. The Senate Health, Education, Labor and Pensions Committee approved, by an 18-3 vote, the “Mental Health Parity Act of 2007” (S. 558).
The bill, sponsored by Senators Edward Kennedy (D-MA) and Pete Domenici (R-NM), reflects a number of compromises made with groups representing employers and insurers that have in the past strongly opposed mental health parity.
S. 558 builds on the Mental Health Parity Act of 1996, which required parity in lifetime limits, to require parity between medical/surgical benefits and mental health/substance abuse benefits with respect to day and visit limits, co-payments, deductibles and other financial and treatment limitations. The bill applies to businesses with 50 or more employees, but would not require any employers to offer mental health or substance abuse coverage. However, if a plan does include a mental health/substance abuse benefit, then that benefit must be at parity.
When a plan includes a mental health/substance abuse out-of-network benefit, that benefit must also be at parity (however, the health plan may limit coverage to in-network services and need not include any out-of-network benefits). The mental health benefit may also be subject to separate reimbursement or provider-payment rates and service delivery systems and can be managed in order to ensure the medical necessity of the service.
The bill includes language allowing an exemption for plans that experience significant increases in costs due to implementation of this parity benefit. In such a case, if a plan’s total costs increase by 2 percent or more, the parity requirements would not apply to the plan for one plan year. Following that initial year, if the parity rules increases total costs by 1 percent in any later year, the plan would again be exempt for one plan year.
In addition to creating this uniform parity requirement across all plans, S. 558 would override some aspects of state parity laws. Pre-empted would be aspects of state parity laws that address day and visit limits, payment rates, medical necessity/managed care issues and cost-exemption provisions.
However, the bill would not pre-empt other aspects of state law, particularly laws that mandate mental health coverage. Plans that are required by state law to have a mental health benefit would not only have to continue to meet that requirement but would also have to meet the requirements of S. 558 with respect to day/visit limits, co-payments, deductibles, and other financial and treatment limitations. The rules in S558 regarding payment rates, service delivery systems and managed care would also apply to those benefits in those states.
S. 558 does not address a politically difficult issue, the definition of mental health and substance abuse benefits. Instead, it allows these terms to be defined in each plan. Where these terms are defined in state law, this bill does not pre-empt them.
In the House, Representatives Patrick Kennedy (D-RI) and Jim Ramstad (R-MN) continue to champion mental health parity and are expected to re-introduce their parallel legislation, The Paul Wellstone Mental Health Parity Act.
Contributor: Don Phillips
