NOTICES
INSURANCE DEPARTMENT
Guidance Regarding Parity in Mental Health and Substance Use Disorder Coverage; Notice 2016-15
[46 Pa.B. 6942]
[Saturday, October 29, 2016]Concerns have been expressed to the Insurance Department about the implementation and enforcement of parity between mental health and substance use disorder (MH/SUD) insurance coverage, on the one hand, and medical/surgical insurance coverage, on the other hand. This guidance is issued to inform and remind insurance companies and the public of how parity in these coverages is to be applied. This guidance also addresses how other laws, such as the State mandates relating to MH/SUD coverage and the Affordable Care Act (ACA), interact with the parity requirement. Finally, this guidance applies only to commercial insurance issued in this Commonwealth; it does not apply to health care coverage through a government program (such as Medicare, Medicaid or CHIP), employer-based self-funded coverage or insurance issued in another state.
MHPAEA
Health care treatment for MH/SUDs is an important element of insurance coverage. In 2008, Congress enacted the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) (Pub.L. No. 110-343). MHPAEA aims to address many treatment issues for individuals with MH/SUD by requiring that any benefits for mental health or substance use disorder conditions, or both, be comparable to coverage of medical/surgical services. This law was adopted into Commonwealth law by the act of March 22, 2010 (P.L. 147, No. 14) (Act 14) (40 P.S. §§ 908-11—908-16). When enacted, MHPAEA applied only to large groups of more than 50 employees that offered MH/SUD coverage. The ACA extended the application of MHPAEA to all nongrandfathered and nontransitional individual and small group policies effective January 1, 2014: (1) it revised the language of MHPAEA to include individual policies within its scope; (2) it added a separate provision (ACA § 1311(j)) to require both individual and small group qualified health plans on the Exchange to comply with MHPAEA; and (3) it requires all individual and small group policies to provide essential health benefits (EHB), which include MH/SUD coverage, without annual and lifetime dollar limits. Accordingly, MHPAEA applies, with respect to commercial insurance, to individual and small group health plans (other than grandfathered or transitional plans, as described in ACA guidance) offered, issued or renewed in the commercial market beginning on or after January 1, 2014, and to large group plans providing MH/SUD coverage.
The Commonwealth has not to date promulgated regulations under the State parity law, as it may do under the authority of section 2 of Act 14 (40 P.S. § 908-16). Until regulations are promulgated thereunder, the Department intends to use as guidance for the Department and the Commonwealth's insurance industry the Federal rules and guidance implementing MHPAEA, both currently in use and as may be promulgated in the future.
MHPAEA requires that MH/SUD benefits be no more restrictive than medical/surgical benefits, in three areas:
• Financial requirements. Examples include co-pays, co-insurance, deductibles and out-of-pocket maximums.
• Quantitative treatment limitations. Examples include limitations on services utilization, such as limits on the number of inpatient or outpatient visits that are covered, as well as parity with respect to aggregate lifetime and annual dollar limits.
• Nonquantitative treatment limitations (NQTL). Examples include the use of management tools such as medical necessity definitions, formulary designs, network tier design, network participation standards and reimbursement rates, methods for determining usual, customary and reasonable charges, step therapy or fail-first protocols, course of treatment requirements and other restrictions based on other criteria.
The current Federal regulation concerning MHPAEA benefits, codified at 45 CFR 146.136 (relating to parity in mental health and substance use disorder benefits), augmented by its preamble at 78 FR 68240 (November 13, 2013), provides significant detail regarding how parity is to be determined. Additional information, in the form of both Frequently Asked Questions and implementation tools, is also available from the Federal government.1 The guidance in this notice highlights particular aspects of parity implementation, but should be read in conjunction with, and not as a substitute for, the complete guidance available from the Federal government.
First, for purposes of determining parity, MHPAEA categorizes benefits into six classifications. The classifications are: inpatient, in-network; inpatient, out-of-network; outpatient, in-network; outpatient, out-of-network; emergency care; and prescription drugs. The outpatient classifications may be subclassified as office visits and all other outpatient items and services. If a health insurance plan provides MH/SUD benefits in any classification of benefits, MH/SUD benefits must be provided in every classification in which medical/surgical benefits are provided. Note that in determining the classification in which a particular benefit belongs, a plan must apply the same standards to medical/surgical benefits and to MH/SUD benefits.
Second, a health plan that provides both medical/surgical benefits and MH/SUD benefits may not apply any financial requirement or treatment limitation to MH/SUD benefits in any classification that is more restrictive than the ''predominant'' financial requirement or treatment limitation of that type applied to ''substantially all'' medical/surgical benefits in the same classification.
To assure that this ''predominant/substantially all'' requirement is being met with regard to financial requirements or quantitative treatment limitations, a health plan should use the calculations of what is ''predominant'' and what is ''substantially all'' outlined at 45 CFR 146.136(c)(3), where ''substantially all'' means a limitation that applies to at least 2/3 of all medical/surgical benefits in that classification, and ''predominant'' means the limitation applies to more than 1/2 of medical/surgical benefits in that classification. For purposes of these calculations, one must use the dollar amount of all plan payments for medical/surgical benefits in the classification expected to be paid under the plan for the plan year. Examples of these determinations are provided in the Federal regulation.
While parity is likewise required for treatment limitations that are not quantifiable, the nonquantitative nature of NQTLs supports the use of a different approach to analyzing parity with respect to NQTLs.2 Thus, as explained in 45 CFR 146.136(c)(4), a health plan that provides both medical/surgical benefits and MH/SUD benefits may not apply any NQTL to MH/SUD benefits in any classification unless the processes, strategies, evidentiary standards or other factors used in applying that limitation to MH/SUD benefits within that classification are ''comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards or other factors used in applying the limitation to medical/surgical benefits in the classification.'' See 45 CFR 146.136(c)(4)(i). Examples of these determinations are provided in the Federal regulation and in a ''Warning Signs'' document published jointly by the Federal Department of Health and Human Services and Department of Labor, available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/MHAPEAChecklistWarningSigns.pdf.
Other Relevant Laws
The Commonwealth has two laws in addition to Act 14 (the parity law) that deal specifically with MH/SUD benefits. First, the act of December 22, 1989 (P.L. 755, No. 106) (Act 106) (40 P.S. §§ 908-1—908-8), which provides for substance use and dependency coverage, establishes minimum standards for coverage of inpatient detoxification, nonhospital residential and outpatient services. Act 106 applies to all group policies, regardless of size. Second, the act of December 21, 1998 (P.L. 1108, No. 150) (Act 150) (40 P.S. § 764g), which applies to policies issued to large groups (50 or more employees), requires coverage of 9 specified mental health conditions, establishing minimum standards for inpatient and outpatient services.
Layered over these Commonwealth laws and MHPAEA are additional Federal requirements, including: the ACA's EHB requirement for individual and small group policies to provide MH/SUD benefits (42 U.S.C.A. §§ 300gg-6(a) and 18022(b)); the ACA's requirement that there be no lifetime or annual dollar limits on EHBs (42 U.S.C.A. § 300gg-11); the ACA regulatory requirement that for EHBs, both the benefits and the limitations on coverage such as benefit amount, duration, and scope must be ''substantially equal'' to the EHB benchmark plan (45 CFR 156.115(a)(1) (relating to provision of EHB))3 ; and the MHPAEA regulatory provision specifying that if MH/SUD benefits are provided in any classification of benefits, they must be provided in every classification for which medical/surgical benefits are provided. See 45 CFR 146.136(c)(2)(ii).
The practical effect of this layering for individual, small group and large group policies results in the extensive application of parity within each market.4 Thus:
• Individual Market
◦ Act 106 does not apply.
▪ However, the benefits required by Act 106 are contained in the Commonwealth's EHB benchmark plans, and therefore the ACA requires that they be provided without annual or lifetime dollar limits and for plan years beginning on or after January 1, 2017, without any quantitative limits.
▪ Because Act 106 does not apply, medical management techniques may be used with respect to the Act 106 benefits provided as EHBs. Any medical management techniques used must comply with the NQTL requirements of MHPAEA.
◦ Act 150 does not apply.
▪ However, the benefits required by Act 150 are contained in the Commonwealth's EHB benchmark plans, and therefore the ACA requires that they be provided without annual or lifetime dollar limits and for plan years beginning on or after January 1, 2017, without any quantitative limits.
▪ Because the ACA EHB provision requires coverage of a least some MH/SUD benefits in the benefit classifications outlined in the MHPAEA regulation, an individual plan must provide MH/SUD benefits in every classification for which medical/surgical benefits are provided. See 45 CFR 146.136(c)(2)(ii)(A).
• Small Group Market
◦ Act 106 applies.
▪ The benefits required by Act 106 are contained in the EHB benchmark plan, and therefore must be provided without annual or lifetime dollar limits and for plan years beginning on or after January 1, 2017, without any quantitative limits.
▪ Because Act 106 applies, a small group plan is subject to the statutory limitations on prerequisites with respect to the minimum coverage requirements of Act 106; medical management techniques may only be used with respect to those benefits once the Act 106 minimum coverage requirements have been met.5 Any medical management techniques used must comply with the NQTL requirements of MHPAEA.
▪ The Act 106 benefits are minimum levels of coverage, and are not to be construed as functioning as a cap or ceiling on any benefits required to be provided as a result of the implementation of MHPAEA and the ACA.
◦ Act 150 does not apply.
▪ However, the benefits required by Act 150 are contained in the Commonwealth's EHB benchmark plans, and therefore must be provided without annual or lifetime dollar limits and for plan years beginning on or after January 1, 2017, without any quantitative limits.
▪ Because Act 106 and the ACA EHB provision require coverage of a least some MH/SUD benefits in the benefit classifications outlined in the MHPAEA regulation, a small group plan must provide MH/SUD benefits in every classification for which medical/surgical benefits are provided. See 45 CFR 146.136(c)(2)(ii)(A).
• Large Group Market
◦ Act 106 applies.
▪ Because Act 106 applies, a large group plan must comply with the minimum coverage requirements of Act 106. That means the plan must cover SUD services; as a result of MHPAEA, those SUD services must be provided in parity with medical/surgical health services.
▪ In addition, because Act 106 applies, the SUD coverage is subject to the statutory limitations on prerequisites with respect to the minimum coverage requirements of Act 106; medical management techniques may only be used with respect to those benefits once the Act 106 minimum coverage requirements have been met.6 Any medical management techniques used must comply with the NQTL requirements of MHPAEA.
◦ Act 150 applies.
◦ Because Act 106 and Act 150 require coverage of a least some MH/SUD benefits in the benefit classifications outlined in the MHPAEA regulation, a large group plan must provide benefits in every classification for which medical/surgical benefits are provided. See 45 CFR 146.136(c)(2)(ii)(A).
◦ The Act 106 and Act 150 benefits are minimum levels of coverage, and are not to be construed as functioning as a cap or ceiling on any benefits required to be provided as a result of the implementation of MHPAEA and the ACA.
◦ While a large group policy is not required to cover EHBs, it may not have annual or lifetime dollar limits on its coverage of the EHBs in the plan that it follows for purposes of compliance with this ACA limitation.7
Finally, the Department offers two examples of how the interaction of these statutory and regulatory provisions would work in practice. (The Department also commends a close reading of the examples in 45 CFR 146.136.)
⇒ Example 1: An enrollee is prescribed residential treatment for a substance use disorder.8 This benefit is required to be covered directly under Act 106 (for all group policies) and indirectly through the EHB benchmark's inclusion of Act 106 benefits (for individual and small group policies). Under Act 106, the enrollee may receive 30 days per year and 90 days of lifetime treatment based on a certification and referral from a licensed physician or licensed psychologist. Under MHPAEA, these limits may only apply if they are imposed on analogous medical/surgical benefits. Also under MHPAEA, any medical management standards applied to a determination of coverage for the benefit must be in parity with those used for analogous medical/surgical benefits.
◦ If the enrollee has a large group policy, the enrollee will have, at a minimum, the Act 106 level of benefits, but under MHPAEA may have a greater level of benefits depending on what limitations may apply to analogous inpatient medical/surgical benefits. In any case, if the large group policy is complying with a state EHB benchmark plan that includes SUD residential treatment, under the ACA it must be provided without annual or lifetime dollar limits. In addition, medical management techniques may only be used with respect to those benefits once the Act 106 minimum coverage requirements have been met, and then only insofar as they comply with the NQTL requirements of MHPAEA.
◦ If the enrollee has a small group policy, the enrollee would have, at a minimum, the Act 106 level of benefits, as a result of both Act 106 and the ACA EHB requirement. Medical management techniques may only be used with respect to those benefits once the Act 106 minimum coverage requirements have been met, and then only insofar as they comply with the NQTL requirements of MHPAEA: under MHPAEA, the enrollee may have a greater level of benefits depending on what limitations may apply to analogous inpatient medical/surgical benefits. In addition, because those benefits are incorporated into the EHB benchmark plan, under the ACA the benefits must be provided without annual or lifetime dollar limits, and, for plan years beginning on or after January 1, 2017, without any quantitative limits.
◦ If the enrollee has an individual policy, Act 106 does not apply to the coverage of this benefit. However, because the Act 106 benefits are included in the EHB benchmark, as part of the required MH/SUD benefits, the enrollee effectively would have, at a minimum, the Act 106 level of benefits (though without the constraints on the use of medical management techniques), and as a result of MHPAEA may have a greater level of benefits depending on what limitations may apply to analogous inpatient medical/surgical benefits. In any case, under the ACA, because those benefits are incorporated into the EHB benchmark plan, the benefits must be provided without annual or lifetime dollar limits, and, for plan years beginning on or after January 1, 2017, without any quantitative limits.
⇒ Example 2: An enrollee in a plan, whether individual, small group or large group, needs a prescription for an opioid reversal agent, such as Naloxone.9 (Opioid reversal agents are required to be covered by any EHB benchmark plan, since a benchmark plan must cover ''at least the greater of: (i) One drug in every United States Pharmacopeia (USP) category and class; or (ii) The same number of prescription drugs in each category and class as the EHB-benchmark plan.'' See 45 CFR 156.122(a)(1) (relating to prescription drug benefits). ''Anti-Addiction/Substance Abuse Treatment Agents- Opioid Reversal Agents'' are a category-class of drugs that must be covered.10 ) Assume that the policy requires that, before any prescription is pre-authorized, the patient must be seen by a provider (primary or specialist), and assume also that the policy does not require that a patient see a specialist before receiving a medical/surgical prescription drug; but as applied, before a plan pre-authorizes an opioid reversal agent, the plan requires confirmation that the patient was seen by an SUD specialist. This policy, as applied, would violate parity requirements: the processes, strategies, evidentiary standards or other factors used in applying the prior authorization requirement to a prescription for an opioid reversal agent would be applied in a manner that is not comparable to, and is more stringent than, the manner in which the prior authorization requirement would be applied to medical/surgical prescription drugs.11 In short, in this scenario, if medical/surgical prescription drugs, including pain medications (such as opioids), may be pre-authorized after a patient is seen by either a primary or specialist provider, then opioid reversal agents such as Naloxone may not be denied pre-authorization under a requirement that a patient be seen by an SUD specialist.
The Department is committed to ensuring residents of this Commonwealth are receiving all of the MH/SUD benefits guaranteed to them by law, and looks forward to working with industry to ensure full compliance with these laws. Questions concerning this notice may be directed to the Bureau of Life, Accident and Health, Office of Insurance Product Regulation, 1326 Strawberry Square, Harrisburg, PA 17120, ra-rateform@pa.gov.
TERESA D. MILLER,
Insurance Commissioner
[Pa.B. Doc. No. 16-1884. Filed for public inspection October 28, 2016, 9:00 a.m.] _______
1 See information from the Federal Department of Labor at https://www.dol.gov/ebsa/healthreform/regulations/acaimplementationfaqs.html (Parts V, VII and XVII); https://www.dol.gov/ebsa/faqs/faq-mhpaea.html; https://www.dol.gov/ebsa/pdf/fsmhpaea enforcement.pdf. Additional information is available from the Federal Department of Health and Human Services at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/MHAPEAChecklistWarningSigns.pdf.
2 The framework of the regulation at 45 CFR 146.136(c) suggests that the ''predominant/substantially all'' requirement also applies to NQTL, but neither the regulation nor its preamble explains how that analysis would work in practice, and they effectively substitute the ''comparable to, and are applied no more stringently than'' test for NQTLs. 45 CFR 146.136(c)(4)(i). Thus, the preamble to the Final Rule assumes parity between most NQTLs: ''the regulations do not require plans and issuers to use the same NQTLs for both [MH/SUD] benefits and medical/surgical benefits,'' but at the same time a plan may not have ''separate treatment limitations that are applicable only with respect to [MH/SUD] benefits. Moreover. . .it is unlikely that a reasonable application of the NQTL requirement would result in all [MH/SUD] benefits being subject to an NQTL in the same classification in which less than all medical/surgical benefits are subject to the NQTL.'' 78 FR 68240, 68245 (November 13, 2013).
3 Both the Commonwealth's 2016 EHB Benchmark Plan and 2017 EHB Benchmark Plan are available at https://www.cms.gov/cciio/resources/data-resources/ehb.html# Pennsylvania.
4 The following analysis assumes the exemplar plans being discussed are nongrandfathered. Provisions relating to EHB compliance and annual and lifetime limits may vary with grandfathered plans.
5 See Insurance Federation of Pennsylvania, Inc., et al. v. Insurance Department, 601 Pa. 20, 970 A.2d 1108 (May 27, 2009); see also Notice 2003-06, 33 Pa.B. 4041 (August 9, 2003).
6 See fn. 5, supra.
7 https://www.cms.gov/CCIIO/Resources/Files/Downloads/ehb-faq-508.pdf (FAQ 10).
8 For a discussion in MHPAEA regulations regarding application of MHPAEA to categorization of ''intermediate services'' such as care in a residential treatment facility, see 78 FR 68240, 68246-47 (November 13, 2013).
9 Assume for purposes of this example that the large group policy covers prescription drugs.
10 See http://www.usp.org/usp-healthcare-professionals/usp-medicare-model-guide lines.
11 See Example 5 in 45 CFR 146.136(c)(4).
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