Last fall, the Pennsylvania Department of Insurance (DOI) documented that the UnitedHealthcare Insurance Company had committed several violations of the Mental Health Parity and Addiction Equity Act (MHPAEA). The Department found UnitedHealthcare (UHC) inaccurately calculated out-of-pocket costs and improperly denied claims. The Department imposed $1 million in civil penalties. UHC also agreed to fund an $800,000 public outreach campaign to educate consumers about their mental health and substance use disorder benefits and to pay restitution to consumers for denied claims and high out-of-pocket costs.
The Pennsylvania DOI is conducting similar comprehensive exams of all major insurers with an emphasis on MHPAEA. In January 2019, the department levied a $190,000 fine against Aetna over their treatment of substance use benefits.
The Pennsylvania DOI’s actions are part of increased state efforts to conduct oversight and enforcement of MHPAEA, a little more than ten years after the federal law’s enactment.
What is MHPAEA?
MHPAEA requires health plans that cover mental health and substance use disorder (MH/SUD) services to do so at parity with other medical services. That means financial requirements (including co-pays, out-of-pocket limits and deductibles) and treatment limitations (both quantitative and non-quantitative) that apply to MH/SUD can be no more restrictive than those that apply to other medical services. The premise of MHPAEA is straightforward, but ensuring that insurers are complying with parity requirements can be complex. While certain financial requirements and quantitative limits are relatively simple to compare, non-quantitative limits like medical management and formulary design are difficult to measure, yet critical to consumers’ access to services and financial protection.
Which Plans Must Comply with MHPAEA?
MHPAEA does not require plans to offer mental health and substance use benefits. Rather, the law applies to group health plans and individual and group health insurers, including large-group and self-funded plans, that offer these benefits alongside medical and surgical benefits. Since mental health and substance use services are considered an essential health benefit (EHB) under the Affordable Care Act, plans sold in the individual and small-group insurance markets must include this benefit and are subject to MHPAEA compliance; large and self-funded employer plans are not. Alternative coverage products offered in the individual market, such as short-term or association plans, are also not required to comply with EHB requirements and are not obligated to offer mental health or substance use coverage.
State Role in MHPAEA Enforcement
While MHPAEA is a federal law, primary enforcement authority for individual and fully insured group plans lies at the state level. As with other federal insurance regulation, MHPAEA sets a floor of consumer protection and states can pass their own laws that either codify the federal standard or add additional protections. State agencies (generally the DOI, though this may vary by state) are then responsible for reviewing insurer practices and ensuring compliance with both federal and state standards MHPAEA compliance can be reviewed both up front, with form review before plans can be marketed, and on the back end, by reviewing the policies and procedures of plans already in the market (often referred to as a “market conduct exam”). Some states have received HHS market stabilization grants to enhance mental health parity enforcement, including Virginia, Washington, and West Virginia.
Federal Role in MHPAEA Enforcement
The federal government maintains oversight of MHPAEA compliance for the 2.3 million employer-based group health plans regulated under ERISA, and provides guidance to help insurers and regulators implement MHPAEA. MHPAEA enforcement of ERISA plans is overseen by the Department of Labor’s Employee Benefits Security Administration (DOL EBSA). The DOL has created a self-compliance tool to help health plans and state regulators assess parity compliance and identify “red flags,” particularly with regard to non-quantitative treatment limits, which may require further analysis to confirm compliance standards are met.
The DOL also conducts targeted reviews in response to consumer complaints or other inquiries. In 2018, EBSA performed MHPAEA compliance reviews as part of 115 investigations, and found 21 violations. However, the U.S. Government Accountability Office has suggested that consumer complaints may not be reliable indicator of the scope of insurer compliance with MHPAEA, and has recommended that federal regulators evaluate their approach and potentially develop a plan to more effectively enforce the parity requirements.
More Work to Be Done
Just over ten years after MHPAEA’s passage, current regulation and enforcement practices have not led to parity in practice. A recent report by Milliman actuaries found that significant disparities still exist in both out-of-network utilization rates and provider reimbursement rates, with higher out-of-network rates and lower reimbursement levels for mental health/substance use treatment providers, as compared to medical providers. In a 2016 study from the National Alliance on Mental Illness, 28 percent of survey respondents stated that they used an out-of-network mental health provider, compared to 3 percent who used an out-of-network primary care provider. Patients have also brought insurers to court over denials of mental health treatment; in March 2019, a judge in Northern California ruled that UHC’s internal policies discriminated against patients with mental health and substance abuse disorder.
CHIR experts are looking at one state’s MHPAEA enforcement efforts. With funding from the California Health Care Foundation, we’re assessing MHPAEA enforcement in California, documenting what regulators have done to ensure parity and talking to multiple stakeholders to hear their views on parity. We’ll report back here on what we find.