Updated: Sep 8
More than 25 years after the first federal mental health parity protections were put in place, adequate coverage for behavioral health (BH) care – including both mental health and substance use conditions –remains elusive for many consumers with health insurance.1 Federal BH parity rules require health plans that offer BH coverage to ensure that financial requirements (such as deductibles, copayments, coinsurance, and out-of-pocket limits) and treatment limits (such as day and visit limits as well as nonquantitative limits on benefits such as prior authorization) on these benefits are no more restrictive than those on medical and surgical benefits.
Mental Health Parity at a Crossroads
The COVID-19 pandemic has heightened awareness and exacerbated existing challenges in BH. Strengthening BH parity protections is just one part of a larger policy discussion that includes addressing the BH workforce shortage, rising BH treatment needs among children and youth, an inadequate health care infrastructure to address those in crisis, and the need for improved coordination and integration of primary care and BH care in the health care delivery system.
All of these issues contribute to the access and coverage challenges in health insurance that BH parity was supposed to address. The stakes are high for coverage protection, as nearly 90% of nonelderly individuals with a BH condition have some form of health coverage. Despite having coverage, many insured adults (36%) with moderate to severe symptoms of anxiety and depression did not receive care in 2019. There have been consistent calls for more federal guidance on the specific protections in the federal BH parity law, as well as for increased enforcement. As Congress2 debates reforms to address these concerns in BH care, and as federal agencies plan to update parity regulations, this brief explains the federal BH parity requirements – including who they apply to and how they’re enforced — and sets out key policy issues.
Federal BH Parity Protections
Federal protections for BH coverage sought to correct historical differences in how health insurance covered this care when compared to medical/surgical benefits. The focal point of these protections has evolved over the years from the narrow initial federal law, the Mental Health Parity Act of 1996 (MHPA), to the broader protections in the current law, the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) (Appendix Figure 1).
With MHPAEA, an initial focus on ensuring that consumers were not subject to higher cost sharing and more restrictive day and visit limits for BH shifted to looking at disparities in treatments limits in coverage that are not expressed numerically. These so-called “nonquantitative treatment limits” or NQTLs include plan features that limit the scope or duration of care such as prior authorization requirements and medical necessity reviews, standards for provider admission to a network, and provider reimbursement rates.
Federal regulations implementing parity for commercial plans and for Medicaid and the Children’s Health Insurance Program (CHIP) have set out substantially similar protections (See Appendix Table 1 for major differences between commercial parity and Medicaid). These are detailed and complex standards making it a challenge for consumers with coverage to know what practices violate the law. Federal agencies have issued FAQs and other guidance for both commercial and Medicaid/CHIP to explain how these standards work. The basic protections are described below.
Who does the law apply to?
Federal BH parity rules apply to most health coverage, public and private, but do not apply to Medicare. Table 1 summarizes the basic rules and exceptions. Parity applies to all health coverage in the individual, small and large group insurance markets, as well as to all private employer-sponsored plans (insured and self-insured) with the exception of self-insured employer plans covering groups of no more than 50 employees, “retiree only” plans, short-term limited duration coverage and coverage considered “excepted benefits.”3 It also applies to self-insured state and local governmental plans (called nonfederal governmental plans), though these plans have the ability to opt out of MHPAEA protections, as hundreds of plans across 31 states currently do.
Source: Kaiser Family Foundation