Make sure mental health coverage is "in parity" with other benefits


As a result of a class action lawsuit brought against a major insurance carrier, 67,000 denied claims must be reprocessed related to mental health and substance disorder treatments. The carrier is also ordered to adhere to independent guidelines developed by mental health and substance use treatment organizations instead of by its own internal guidelines and train their employees in appropriate medical criteria and new standards.


This case highlights the need for self-insured plans to ensure they are compliant with ERISA and mental health parity requirements. Here is a quick review.


At a high level, mental health parity says that if a group health plan covers medical/surgical benefits also covers either mental health or substance use disorder benefits, the plan may be subject to the requirements under the Mental Health Parity Act (MHPA) and the Mental Health Parity and Addiction Equity Act (MHPAEA). In other words, these rules don’t mandate that mental health or substance use treatments be covered, but instead says that if they are covered then they must be covered in the same manner as medical and surgical benefits.


Plans that are subject to these requirements will be subject to three different mandates:


  • Annual or Lifetime Limits. Group health plans that apply annual or lifetime dollar limits for medical/surgical benefits must generally apply those same (or higher) dollar limits for mental health benefits and substance use disorder benefits.

  • Parity as to Financial Requirements and Quantitative Treatment Limitations. Plans must also provide uniformity between medical/surgical benefits, and mental health or substance use disorder benefits as to financial requirements (e.g., deductibles, copays, coinsurance, and out-of-pocket maximums) and quantitative treatment limitations (e.g., number of treatments, visits, or days of coverage).

  • Parity as to Non-quantitative Treatment Limitations. Plans also must comply with other requirements for non-quantitative treatment limitations (e.g., medical management standards, excluding benefits based on medical necessity or medical appropriateness, non-uniform preauthorization requirements).


Note that the 21st Century Cures Act specifically said that coverage for “eating disorder benefits, including residential treatment,” is subject to the requirements of the MHPAEA. This means that plans must provide parity between medical/surgical benefits and eating disorder benefits as to annual or lifetime limits, financial requirements, quantitative treatment limitations, and non-quantitative treatment limitations.


Therefore, self-insured plan sponsors should heed this decision by the court as a warning and reminder to ensure compliance with federal and state mental health parity requirements, and fiduciary duty under ERISA.

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