GAO

United States General Accounting Office

Chairman, Committee on Health,

Education, Labor, and Pensions,

U.S. Senate

May 2000 MENTAL HEALTH

PARITY ACT

Despite New Federal

Standards, Mental

Health Benefits

Remain Limited

GAO/HEHS-00-95

Page 1 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Contents

Letter 3

Appendixes Appendix I: Survey Scope and Methods 24

Appendix II: Summary of Survey Responses 29

Appendix III: State Laws on Mental Illness and Substance Abuse

Treatment 40

Appendix IV: Comments From the Health Care Financing

Administration 62

Appendix V: GAO Contact and Staff Acknowledgments 64

Tables Table 1: State Laws Affecting Mental Health Benefits Compared

With the Federal Mental Health Parity Act of 1996 as of

March 2000 8

Table 2: Lifetime Dollar Limits for Noncompliant Employer Plans,

199912

Table 3: Compliant Employer Plans Reporting More Restrictive

Limits on Mental Health Benefits Than Medical and Surgical

Benefits, 1999 12

Table 4: Selected Design Features for a Typical Employer-Sponsored

Group Health Plan, 1999 13

Table 5: Employers’ Plans That Have Further Restricted Mental

Health Benefits Since 1996 14

Table 6: Estimated Cost Increases for Full Parity in Mental Health

and Substance Abuse Benefits 17

Table 7: Selected Survey Sample and Response Data 26

Table 8: Mental Health Benefits Offered Now 29

Table 9: Mental Health Benefits Ever Offered Since December 1996 29

Table 10: Number of Lives Benefits Cover 30

Table 11: Plan Insurance 30

Table 12: Plan Type 30

Table 13: Administered by a Managed Behavioral Health Care

Company 31

Table 14: Financial Risk of Administering Organization 31

Table 15: Plan Design Features for Current Plan 32

Table 16: Current Plan in 1996 33

Table 17: Mental Health Benefits in Any Plan 33

Table 18: Plans Covering the Most Lives in December 1996 33

Table 19: Plan Design Features in December 1996 34
Contents

Page 2 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Table 20: Reasons for Benefit Changes After December 1996, Part 1 35

Table 21: Reasons for Benefit Changes After December 1996, Part 2 36

Table 22: Administered by a Managed Behavioral Health Care

Company in 1996 37

Table 23: Managed Care in Current Plan Compared With

December 1996 37

Table 24: Employees’ Access to Benefits 37

Table 25: Employee Eligibility for Coverage 38

Table 26: Exemption Filed 38

Table 27: Reasons Exemption Not Filed 38

Table 28: Compliance and Claims Costs 39

Table 29: Claims Cost Increases 39

Table 30: State Laws Addressing Coverage of Mental Illness and

Substance Abuse as of March 1, 2000 41

Abbreviations

APA American Psychiatric Association

CBO Congressional Budget Office

DSM Diagnostic and Statistical Manual of Mental Disorders

ERISA Employee Retirement Income Security Act of 1974

HCFA Health Care Financing Administration

HHS Department of Health and Human Services

HIPAA Health Insurance Portability and Accountability Act 1996

HMO health maintenance organization

ICD Internal Classification of Disease

NCSL National Conference of State Legislatures

POS point of service
Contents

Page 3 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

PPO preferred provider organization

SAMSHA Substance Abuse and Mental Health Services Administration
Contents

Page 4 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996
Page 3 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

United States General Accounting Office

Washington, D.C. 20548

Health, Education, and

Human Services Division

B-283034 Letr

May 10, 2000

The Honorable James M. Jeffords

Chairman, Committee on Health,

Education, Labor, and Pensions

United States Senate

Dear Mr. Chairman:

An estimated 40 million American adults suffer from some type of mental

illness each year, 5.5 million of them suffering from a severe mental illness

such as schizophrenia or major depression. Private health insurance plans

typically provide lower levels of coverage for the treatment of mental

illness than for the treatment of other illnesses. Consequently, treatment

for patients with severe mental illness, who often require repeat

hospitalizations, can exhaust their mental health coverage.

To help address the discrepancies in coverage between mental and other

illnesses, the Congress passed the Mental Health Parity Act of 1996. The

law imposed new federal standards on mental health coverage offered

under most employer-sponsored group health plans.1 Specifically, the law

prohibits employers from imposing annual or lifetime dollar limits on

mental health coverage that are more restrictive than those imposed on

medical and surgical coverage. Although the act has been in effect for just

over 2 years, questions persist about the actual cost of complying with the

law and the benefits it provides to consumers. Therefore, in preparation for

the law’s September 30, 2001, sunset and possible reauthorization, you

asked us to report on

• the extent to which employers comply with the law and how they have

revised their health plans,

• the law’s effect on claims costs, and

• the steps federal agencies have taken to ensure compliance with the law.

1

The Mental Health Parity Act also generally applies to certain state and local government

health plans, church plans, and certain other health plans, although self-funded state and

local government health plans may elect exemption from the act.
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Page 4 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

To determine employers’ compliance and responses to the law, we

conducted a mail survey of 1,656 employers with more than 50 employees

offering mental health benefits. We obtained a response rate of 52 percent.

Because our goal was to measure the effect of federal—not state—parity

requirements, we surveyed employers in the 26 states and the District of

Columbia that did not have state laws that were more comprehensive than

the federal Mental Health Parity Act as of July 1999.2 The survey gathered

information on how employer-sponsored plans have changed since the

Mental Health Parity Act was enacted, what changes can be attributed to it,

and the effect of the law on claims costs. Because this survey was based on

a random sample, stratified by employer size, we weighted the results so

they would be statistically representative of all 103,000 employers with

more than 50 employees offering mental health benefits in these 26 states

and the District of Columbia. Unless otherwise indicated, the confidence

intervals for our survey results are not greater than plus or minus 5

percentage points and differences we report are statistically significant.

While large employers and those located in the Northeast were somewhat

less likely to respond to our survey than other employers, we do not believe

that this noticeably skews our results because we did not identify

significant differences in the extent to which employers complied with the

federal parity act by employer size or location.3 Nonetheless, as with any

survey based on a sample, appropriate caution should be used in

interpreting the results, given sampling and other potential measurement

errors. Appendix I provides more details about our survey’s scope and

methodology, and appendix II provides summary data of the survey

responses.

To identify steps the federal agencies have taken to ensure compliance with

the Mental Health Parity Act, we interviewed officials from the Department

of Health and Human Services’ (HHS) Health Care Financing

Administration (HCFA) and the Department of Labor’s Pension and Welfare

Benefits Administration. To determine the extent to which states have

2

These states were Alabama, Alaska, Arizona, California, Florida, Idaho, Illinois, Iowa,

Kansas, Massachusetts, Michigan, Mississippi, Nevada, New Mexico, New York, North

Dakota, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Utah, Washington, West

Virginia, Wisconsin, and Wyoming.

3

The survey was stratified by employer size so that the results are weighted to be

representative of small, medium-sized, and large employers’ relative size in the population

rather than their response rate. Further, large employers were more likely than small or

medium-sized employers to provide complete responses, allowing us to determine whether

they complied with the law.
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Page 5 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

passed conforming laws and regulations, we requested the National

Conference of State Legislatures’ (NCSL) Health Policy Tracking Service to

develop a summary of each applicable state law. We conducted our work

between June 1999 and March 2000 in accordance with generally accepted

government auditing standards.

Results in Brief Most employers responding to our survey reported that they are complying

with the federal mental health parity law, but because of its narrow scope

and reductions in mental health benefits that the employers have made to

offset the required enhancements, compliance may have little effect on

employees’ access to mental health services. Eighty-six percent of the

responding employers in the 26 states and the District of Columbia

reported that as of December 1999 their plans were in compliance with the

federal parity requirement that annual and lifetime dollar limits for mental

health benefits be no more restrictive than those for all medical and

surgical benefits. Our survey found that 14 percent of plans were

noncompliant—a noncompliance rate similar to Labor’s preliminary

estimates based on investigations of employer-sponsored plans. In

contrast, in 1996 before the parity law was enacted, only about 55 percent

of responding employers reported offering parity in dollar limits. Many

responding employers cited the federal Mental Health Parity Act as a

significant or primary reason for changing the dollar limits in their health

benefit plans.

Although most employers’ plans now have parity in dollar limits for mental

health coverage, 87 percent of those that comply contain at least one other

plan design feature that is more restrictive for mental health benefits than

for medical and surgical benefits. For example, about 65 percent of plans

restrict the number of covered outpatient office visits and hospital days for

mental health treatment further than those for other health treatment. In

addition, many employers may have adopted newly restrictive mental

health benefit design features since 1996 specifically to offset the more

generous dollar limits they adopted as a result of the federal law. About

two-thirds of these newly compliant employers changed at least one other

mental health benefit design feature to a more restrictive one compared

with only about one-fourth of the employers that did not change their dollar

limits.

While most employers have not examined changes in their plans’ claims

costs, the federal parity law appears to have had a negligible effect on

claims costs. Only about 3 percent of responding employers reported that
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Page 6 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

compliance with the law increased their claims costs, and virtually no

employers have dropped their mental health benefits or health coverage

altogether since the law was enacted. In addition, published estimates of

the cost of federal parity are typically less than 1 percent. More

comprehensive parity laws as enacted by some states are generally

estimated to have higher but modest cost increases of about 2 to 4 percent.

Federal agencies have made varying progress in performing their oversight

roles under the parity law. Labor is in the process of expanding its oversight

role to include not only the complaint-driven approach used in its oversight

of private employer-sponsored health plans but also one that in the future

may include randomly selected employer investigations to gauge overall

compliance with parity and other federal standards. HCFA has not yet fully

determined the nature and extent of its oversight responsibilities. Before it

can exercise an oversight role, it must first identify states that are not

enforcing the federal standards. HCFA initially identified seven states that

appeared not to have a parity law. As of May 2000, HCFA reported that four

of these states are enforcing the federal standards through conforming

legislation or other means and that it is still working with the three other

states to assist them in enacting similar protections. HCFA has determined

that laws in 20 states appear to fully conform to the federal standards and is

still evaluating whether laws in the remaining 24 states fully conform to the

federal standards.

Background Private health insurance plans typically provide lower levels of coverage

for the treatment of mental illness than for the treatment of other illnesses.

Issuers of coverage—employers and health insurance carriers—often limit

mental health coverage through the use of plan design features that can be

more restrictive for mental health benefits than for medical and surgical

benefits.4 Commonly found are (1) lower annual or lifetime dollar limits on

what the plan will pay for mental health benefits, (2) lower service limits

for mental health benefits such as the number of covered hospital days or

outpatient office visits, and (3) higher cost-sharing features for mental

health benefits such as deductibles, copayments, or coinsurance. In the

absence of a requirement that benefits for mental and other health

coverage be equal, an employer plan might cover unlimited hospital days

4

An employer may provide group coverage to its employees either by purchasing a group

policy from an insurance carrier (fully insured coverage) or by funding its own health plan

(self-funded coverage) and assuming the financial risk.
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Page 7 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

and outpatient visits and impose a lifetime limit of $1 million for medical

and surgical coverage. For mental health services, that same plan might

cover only 30 hospital days and 20 outpatient visits per year and impose a

$50,000 lifetime limit.

Issuers provide more limited mental health coverage primarily because of

cost concerns. Limits on hospital days, outpatient office visits, and annual

or lifetime dollar amounts may reflect issuers’ concern about the high costs

associated with long-term, intensive psychotherapy and extended hospital

stays. An issuer may also restrict mental health benefits to protect itself

from adverse selection. That is, a plan with relatively generous mental

health benefits is more likely to attract a disproportionate number of

individuals with a high demand for mental health care services, thus driving

up the claims and premium costs of the plan. In response to growing

concern about perceived inequities in health insurance coverage for mental

health treatment, the Congress passed the Mental Health Parity Act of

1996.5 The act amended the Employee Retirement Income Security Act of

1974 (ERISA) and the Public Health Service Act to require that annual and

lifetime dollar limits for mental health coverage be no more restrictive than

for all medical and surgical coverage.6 To achieve parity in dollar limits, a

plan may impose a dollar limit that does not distinguish between mental

health and all medical and surgical coverage, impose a dollar limit on

mental health benefits that is no lower than the limit on all medical and

surgical benefits, or eliminate dollar limits entirely.7 The law contains

several exemptions. It does not apply to

• plans sponsored by an employer with 50 or fewer employees,

• group plans that experience an increase in plan claims costs of at least 1

percent because of compliance, or

• coverage sold in the individual (nongroup) market.

5

P.L. 104-204, title VII, 110 Stat. 2847, 2944-50 (to be classified at 29 U.S.C. 1185a and 42

U.S.C. 300gg-5).

6

Provisions implementing the Mental Health Parity Act were later added to the Internal

Revenue Code of 1986 under the Taxpayer Relief Act of 1997.

7

The law also provides that in the case of a plan under which annual or lifetime dollar limits

differ for categories of medical and surgical benefits, the plan may comply by calculating a

weighted average annual or lifetime dollar limit for mental health benefits based on a

formula specified by the secretary of Labor.
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Furthermore, the law does not require any plan to offer mental health

coverage, does not cover substance abuse treatment, and does not prevent

a plan from imposing more restrictive service limits (hospital days or

outpatient visits) or cost-sharing provisions on mental health coverage than

on medical and surgical coverage. The law became effective for group

health plans for plan years beginning on or after January 1, 1998. Without

legislative action, the act will sunset on September 30, 2001.

During the past decade, most states also passed laws regulating mental

health benefits.8 As of March 2000, NCSL reported that laws in effect in 43

states and the District of Columbia addressed mental health coverage in

employer-sponsored group health plans.9 More than half, or 29, of the state

laws are more comprehensive than the federal parity law by requiring

parity not only in dollar limits but also in service limits or cost-sharing

provisions. Sixteen of these states require full parity. That is, they mandate

that mental health coverage be included in all group plans sold, and they

require parity in all respects, including dollar limits, service limits, and cost

sharing. Laws in six states essentially parallel the federal law. Laws in eight

states and the District of Columbia are more limited and might not conform

to the federal law, merely requiring, for example, that plans containing

mental health benefits include a nominal amount of coverage (less than

$1,000 annually) for inpatient or outpatient mental health care. Seven states

have no laws addressing mental health benefits. (See table 1.)

Table 1: State Laws Affecting Mental Health Benefits Compared With the Federal

Mental Health Parity Act of 1996 as of March 2000

8

Tracy Delaney, Overview of State Laws Affecting Coverage of Mental Illness and Substance

Abuse Treatment (Washington, D.C.: NCSL , Health Policy Tracking Service, Mar. 1, 2000).

9

A smaller number of state laws also apply to coverage sold in the individual insurance

market.

Scope of state law State

No law Alabama, Idaho, Iowa, Michigan, Oregon,a Utah, Wyoming

More limited than the

federal lawb

California,c District of Columbia, Illinois, Massachusetts,

Mississippi, North Dakota, Ohio, Washington, Wisconsin

Meets federal lawd Alaska, Arizona, Florida, New Mexico,e South Carolina, West

Virginia
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Note: Our survey population included all 21 states and the District of Columbia identified in the table as

having no law, a law more limited than the federal law, or a law that meets the federal law. We also

surveyed employers in 5 states identified in the table as exceeding the federal law. We included

Nevada and Tennessee because their more comprehensive laws became effective after our sample

was selected. We included Kansas and Pennsylvania because, although they require that mental

health benefits be included in most coverage sold, they otherwise mirror the federal parity law by

requiring parity only in dollar limits. Finally, we included New York because of unclear statutory

language and HCFA’s initial determination that the state may not be enforcing the minimum federal

standards.

a

A law more limited than the federal law becomes effective July 2000.

b

State law does not require parity in dollar limits but may mandate mental health benefits, impose

minimum service levels, or place limits on cost-sharing features for mental health benefits.

c

A law that exceeds the federal law becomes effective July 2000.

d

State law requires parity in dollar limits but not in services or cost sharing.

e

A law that exceeds the federal law becomes effective October 2000.

f

Law requires parity in dollar limits and also imposes parity in services or cost sharing or mandates that

mental health benefits be included.

Source: GAO review of data compiled by NCSL.

Appendix III describes the laws in each state that affect the terms and

conditions of mental health and substance abuse benefits.

Exceeds federal lawf Arkansas, Colorado, Connecticut, Delaware, Georgia, Hawaii,

Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland,

Minnesota, Missouri, Montana, Nebraska, Nevada, New

Hampshire, New Jersey, New York, North Carolina,

Oklahoma, Pennsylvania, Rhode Island, South Dakota,

Tennessee, Texas, Vermont, Virginia

Scope of state law State
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Enforcement authority for the Mental Health Parity Act is divided among

federal agencies and the states. Labor is responsible for ensuring that

private sector employer-sponsored group health plans comply with the

law—an extension of Labor’s regulatory role under ERISA.10 In states that

do not adopt and enforce statutes or regulations that meet or exceed the

federal parity standards, HCFA is responsible for directly enforcing the

federal standards on carriers.11 The agency is authorized to impose a civil

monetary penalty on carriers of up to $100 per day per violation for each

individual affected by a carrier’s failure to comply.12 In states that have

standards conforming to the federal parity law, state insurance regulators

have primary enforcement authority over insurance carriers.13

Most Employers

Report Complying With

the Federal Law but

Also Limit Mental

Health Benefits

Most employers responding to our survey (86 percent) reported that they

comply with the federal parity standards, although the 14 percent that do

not comply represent 9,000 to 13,000 employers in the 26 states and District

of Columbia we surveyed. However, of the plans that do comply, 87 percent

contain one or more other design features such as office visit limits or

hospital day limits that restrict mental health benefits to a greater extent

than medical and surgical benefits. In addition, employers that newly

adopted the federal standards were much more likely than other employers

to also restrict mental health benefits by changing other plan features,

suggesting an attempt to mitigate the effect of the parity law. Finally, other

changes in the health care market besides parity laws also can affect

10ERISA allows employers to offer uniform national health benefits by preempting states

from directly regulating employer-sponsored benefit plans. As a result, states are unable to

directly regulate self-funded plans but can regulate health insurers. Under ERISA, Labor is

responsible for ensuring that employer-sponsored group health plans meet certain fiduciary,

reporting, disclosure, and appeal requirements related to the provision of health benefits.

11HCFA is also responsible for enforcing the parity standards on state and local government

health plans.

12The Department of the Treasury also enforces the requirements for generally all

nongovernmental group health plans, including church plans, by imposing an excise tax

under the Internal Revenue Code as a penalty for noncompliance.

13This federal and state regulatory scheme applies to other federal health insurance

standards, including those established under the Health Insurance Portability and

Accountability Act of 1996, the Newborns’ and Mothers’ Health Protection Act of 1996, and

the Women’s Health and Cancer Rights Act of 1998. To facilitate coordination of their shared

oversight responsibilities, HHS, Labor, and the Department of the Treasury entered into a

memorandum of understanding effective April 21, 1999. See 64 Fed. Reg. 70,164 (Dec. 15,

1999).
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Page 11 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

mental health benefit designs, such as the increasing use of managed care

techniques.

Most Employers Are

Complying With the Law

Employers report that they are largely complying with the federal mental

health parity law. That is, where employers’ plans impose annual or lifetime

dollar limits, the limits are at least as generous for mental health benefits as

they are for all medical and surgical benefits. Eighty-six percent of

employer plans we surveyed reported compliance with the federal parity

requirement as of December 1999, representing about 68,000 to 74,000

employers in the 26 states and the District of Columbia we surveyed.14 In

contrast, 14 percent reported that they were noncompliant, representing

about 9,000 to 13,000 employers in the 26 states and the District of

Columbia.15 Both HCFA and Labor officials found the 14 percent

noncompliance rate comparable with their own assessments. For example,

on the basis of a preliminary review of its findings, Labor recently

determined that 12 percent of about 200 employers it investigated were out

of compliance with federal parity standards. In contrast, in 1996 before the

parity law was enacted, only about 55 percent of employers had parity in

the annual and lifetime dollar limits for mental health and medical and

surgical benefits.16 When asked why employers changed their annual or

lifetime dollar limits, more than 75 percent (plus or minus 8.6 percent) of

those responding cited the federal Mental Health Parity Act as a significant

or primary reason for the change. Among the employer plans in our survey

that were not in compliance with the federal parity law, most had lifetime

limits for mental health coverage that did not exceed $100,000, as shown in

table 2.

14The compliance rate excludes employers that did not know their plan’s annual or lifetime

dollar limits or did not respond to the question. We could not determine compliance for 21

percent of employers in 1999 because their responses did not provide complete information.

We were less likely to know the compliance for small employers than medium-sized and

large employers.

15Our survey results did not find significant differences in the rate of employer

noncompliance based on characteristics such as employer size, industry, or geographic

region or whether the plan was fully insured or self-funded.

16Respondent uncertainty and item nonresponse prevented us from determining parity for

51 percent of employers in 1996. We were less likely to determine parity for both small

employers and those in the South compared with employers of other sizes and in other areas

of the country.
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Table 2: Lifetime Dollar Limits for Noncompliant Employer Plans, 1999

a

These plans met the federal requirement for parity in lifetime dollar limits but were out of compliance

because they had annual dollar limits for mental health services that were more restrictive than those

for medical and surgical benefits.

Source: GAO survey of employers’ mental health benefits.

Most Employers’ Plans

Contain Other Design

Features That Are More

Restrictive for Mental

Health Benefits Than for

Medical and Surgical

Benefits

Most employers’ plans we surveyed contain other plan design features that

are more restrictive for mental health than for medical and surgical

benefits. Typically, these features include limits on the number of covered

hospital days and outpatient office visits as well as higher cost-sharing

features such as copayments and coinsurance. In December 1999, 87

percent of compliant employer plans contained at least one design feature

more restrictive for mental health benefits.17 Most prevalent were

restrictions on the outpatient office visit and hospital day limits, as

indicated in table 3.

Table 3: Compliant Employer Plans Reporting More Restrictive Limits on Mental

Health Benefits Than Medical and Surgical Benefits, 1999

Lifetime dollar limit Percent of noncompliant plans

$25,000 or less 37 (± 9.8)

$25,001 to $100,000 25(± 8.7)

More than $100,000 12 (± 6.4)

No limit 14 (± 7.1)a

17As of December 1999, noncompliant plans did not differ significantly from compliant

plans, with about 93 percent (± 5.5 percent) of noncompliant plans also containing at least

one such restriction.

Mental health plan design feature Percent

Lower outpatient office visit limits 66

Lower hospital day limitsa 65

Higher outpatient office visit copaymentsa 27

Higher outpatient office visit coinsurancea 25
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a

The differences between compliant and noncompliant plans placing more restrictive limits on mental

health services for these plan design features were not statistically significant.

Source: GAO survey of employers’ mental health benefits.

In contrast, very few health plans we surveyed impose any limits on

hospital days or office visits for nonmental health conditions—about 10

and 8 percent, respectively. Table 4 illustrates the variation in selected

design features for the most popular health plan of employers we surveyed.

Table 4: Selected Design Features for a Typical Employer-Sponsored Group Health

Plan, 1999

a

Outpatient office visit coinsurance includes the most frequent levels for plans with coinsurance.

Source: Based on the mode of reported limits and coinsurance in GAO survey of employers’ mental

health benefits.

Employers’ Plans That

Changed Dollar Limits to

Comply With the Law Were

More Likely to Add Other

Restrictions

According to our survey, employers that newly adopted the federal parity

requirements were more likely than those that did not change dollar limits

after 1996 to further restrict access to mental health coverage by tightening

other design features. About 65 percent (plus or minus 8.2 percent) of

employers that adopted annual or lifetime parity in dollar limits after 1996

changed at least one other mental health design feature to a more

restrictive one. Most commonly changed were outpatient office visit limits

and hospital day limits, as shown in table 5. Only 26 percent (plus or minus

5.2 percent) of employers that did not change dollar limits after 1996—that

is, plans that were already in compliance or that remain out of

Higher cap on enrollee out-of-pocket costs 12

Higher hospital stay coinsurance 10

Higher hospital stay copaymentsa 5

Design feature Mental health Medical and surgical

Lifetime dollar limit $1 million combined with

medical and surgical

$1 million combined with

mental health

Hospital day limit 30 days Unlimited

Outpatient office visit limit 20 days Unlimited

Outpatient office visit coinsurancea 50% 20%

Mental health plan design feature Percent
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compliance—have changed at least one mental health design feature to

become more restrictive. This suggests that many employers have changed

mental health benefit design features in order to mitigate or offset the more

generous annual and lifetime dollar limits required by the Mental Health

Parity Act.

Table 5: Employers’ Plans That Have Further Restricted Mental Health Benefits

Since 1996

a

Includes employers’ plans that already had parity in 1996 and those that did not have parity in 1996

and remained out of compliance in 1999.

b

The differences in the percentage of newly compliant and other employers that increased hospital stay

and office visit copayments after 1996 are not statistically significant.

Source: GAO survey of employers’ mental health benefits.

Benefit design feature change Newly compliant

Other

employersa

Fewer office visits covered 51% (± 9.3) 11%

Fewer hospital days covered 36 (± 8.9) 11

Increased outpatient office visit copaymentsb 20 (± 7.7) 13

Increased outpatient office visit coinsurance 11 (± 5.8) 3

Increased hospital stay coinsurance 7 (± 4.6) 2

Increased hospital stay copaymentsb 3 (± 3.4) 7

Increased cap on enrollee’s out-of-pocket costs 18 (± 7.1) 7
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Other Market Changes Also

Affect Mental Health Benefit

Design

Our survey results show that 89 percent of employers’ most popular health

plans contain managed care features. In addition, about 14 percent of the

survey respondents indicated that their employee health plans contained

more managed care features in 1999 than they did in 1996. Moreover, the

mental health benefits in many employers’ health plans are administered by

a managed behavioral health organization that coordinates and manages

the mental health care. The Surgeon General estimates that almost 177

million Americans with health insurance were enrolled in managed

behavioral health organizations in 1999.18 About 7 percent of employers

responding to our survey reported that their mental health benefits were

separately administered by a managed behavioral health care organization

under a carve-out arrangement in 1999. However, the extent to which

mental health benefits are carved out may be understated because

employers may not have been aware whether plans they purchase from a

carrier carve out the mental health benefits.

Some analysts and advocates for mentally ill persons suggest that managed

care can, under certain circumstances, diminish access to mental health

services. For example, the National Advisory Mental Health Council

concluded in its 1997 and 1998 reports to the Congress that parity alone

does not guarantee improved access to mental health care because of the

counteracting effect of managed care.19 Managed care techniques that can

influence access to care include primary care gatekeepers, capitation,

financial incentives to providers, the size and composition of provider

networks, utilization review, and case management services.

18HHS, Mental Health: A Report of the Surgeon General (Washington, D.C.: Substance Abuse

and Mental Health Services Administration, Center for Mental Health Services, National

Institutes of Health, National Institute of Mental Health, 1999).

19The National Advisory Mental Health Council is a congressional advisory council made up

of the National Institutes of Health and the National Institute of Mental Health within HHS.
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Conversely, other research suggests that managed care can have a more

positive effect on access to mental health services. According to a recent

study of eight large employers that insure more than 2.4 million Americans

through managed-care programs for mental health and substance abuse,

the employers in the study have eliminated most of the day and lifetime

limits and significantly decreased copayments. Employees’ use of mental

health and substance abuse benefits has increased overall, with greater use

of outpatient and alternative treatment settings and a decrease in inpatient

care. Among factors that the study authors attributed to the success of

these programs were the availability of a full continuum of treatment

settings in the managed care networks and strong referral mechanisms to

connect employees to appropriate services.20

Most Employers Are

Not Aware of the Law’s

Effect on Claims Costs,

Which Appears to Be

Negligible

While most of the employers we surveyed reported that they did not know

whether compliance with the law increased their plans’ claims costs, early

concerns that the act’s passage would increase claims costs by more than 1

percent appear to have been unfounded. Our findings corroborate past

studies’ estimates that implementing federal parity would have a negligible

effect on employers’ claims costs. Researchers anticipate higher yet

modest claims costs for employers in states that enact more

comprehensive parity laws.

Most Employers Have Not

Examined Changes in

Claims Costs but Few

Report Cost Increases

About 60 percent of the responding employers did not know whether

compliance with the Mental Health Parity Act increased their plans’ claims

costs, and about 37 percent reported that compliance had not raised their

claims costs. Only about 3 percent of the respondents suggested that

claims’ costs increased as a result of the act.21 However, as noted above,

compliance with the act was associated with increased restrictions for

other plan features, such as office visit or hospital day limits, which may

20Kristen Reasoner Apgar, Report to the Office of Personnel Management: Large Employer

Experiences and Best Practices in Design, Administration, and Evaluation of Mental Health

and Substance Abuse Benefits—A Look at Parity in Employer-Sponsored Health Benefit

Programs (Washington, D.C.: Washington Business Group on Health, Mar. 2000).

21The act allows an exemption for group plans that experience an increase in health benefit

costs of 1 percent or more because of compliance with the law’s requirements. Federal

agencies estimated that as many as 10 percent of health plans affected by the law, or 30,000

health plans, could be eligible for the exemption. However, as of March 2000, Labor officials

reported that only nine employers nationally had claimed an exemption.
B-283034

Page 17 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

have limited the extent to which claims costs would increase. In addition,

less than 1 percent of responding employers actually dropped coverage of

mental health benefits or their health benefits plans altogether after the law

was enacted, which may further illustrate the lack of employer concern

about increased costs.

Several studies aimed at estimating the costs of the federal parity law

concluded that requiring parity only in dollar limits would result in cost

increases of less than 1 percent. For example, the Congressional Budget

Office estimated that the Mental Health Parity Act would result in claims

costs increases of 0.16 percent, while Coopers and Lybrand predicted

claims cost increases of about 0.12 percent.22

More Comprehensive Parity

Laws Are Expected to Have

Higher Yet Modest Cost

Increases

Many states have enacted mental health laws that are more comprehensive

than the federal Mental Health Parity Act and thus are likely to have a

greater effect on claims costs than the federal law. Unlike the federal law,

these laws require parity not only in dollar limits but also in service limits,

cost-sharing provisions, or both. In addition, many state laws mandate the

inclusion of mental health benefits in fully insured group health plans and

cover substance abuse and chemical dependency. Public and private health

policy researchers have examined the estimated or actual costs resulting

from more comprehensive state parity laws. In addition to estimates of

increased claims costs in several states, several studies have examined the

potential premium cost increases associated with full parity nationally.

Most studies estimate the cost of full parity for individual states and on a

national basis to be between 2 and 4 percent, as summarized in table 6.

Table 6: Estimated Cost Increases for Full Parity in Mental Health and Substance

Abuse Benefits

22Coopers and Lybrand, “An Actuarial Analysis of S. 2031, ‘The Mental Health Parity Act of

1996,’” n.p., Sept. 1996.

Study Scope Increasea

Coopers and Lybrandb National 3.2%

Milliman and Robertsonc National 3.9
B-283034

Page 18 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

a

The national figures are estimates of premium increases. The figures for the individual states

represent an expected increase in claims costs. The percentages are a composite of the estimated

cost increases for fee-for-service, preferred provider organization, point of service, and health

maintenance organization (HMO) plans. Typically, cost estimates assume that HMO and other

managed care plans have lower cost increases.

b

Coopers and Lybrand, An Actuarial Analysis of the Domenici-Wellstone Amendment to S. 1028

“Health Insurance Reform Act” to Provide Parity for Mental Health Benefits Under Group and Individual

Insurance Plans, for American Psychological Association (n.p.: Apr. 1996).

c

Milliman and Robertson, Premium Rate Estimates for a Mental Illness Parity Provision to S. 1028,

“The Health Insurance Reform Act of 1995” (n.p.: Apr. 1996).

d

Congressional Budget Office, CBO’s Estimates of the Impact on Employers of the Mental Health

Parity Amendment in H.R. 3103 (Washington, D.C.: May 1996).

e

Mathematica Policy Research, The Costs and Effects of Parity for Mental Health and Substance

Abuse Insurance Benefits, for the Substance Abuse and Mental Health Services Administration

(Washington, D.C.: Mar. 1998).

f

Department of Banking, Insurance, Securities, and Health Care Administration, Report of the

Department of Banking, Insurance, Securities, and Health Care Administration on Mental Health and

Substance Abuse Parity (Act 25) to the Vermont General Assembly (Washington, D.C.: Jan. 1999).

g

North Carolina Psychological Association, North Carolina Comprehensive Major Medical Plan for

Teachers and State Employees: Data on the Mental Health Benefit (Raleigh, N.C.: Apr. 1999).

h

Between 1992 and June 1998, mental health payments as a percentage of total health payments for

the N.C. Comprehensive Major Medical Plan for Teachers and State Employees decreased from 6.4 to

3.1 percent, representing a cumulative cost reduction of 52 percent. In this health plan, the mental

health benefits are managed by a managed behavioral health care organization.

i

Price Waterhouse Coopers is the result of a merger between Price Waterhouse and Coopers and

Lybrand.

j

Price Waterhouse Coopers estimated the claims costs increases of parity for mental health and

substance abuse benefits in Arizona, California, Delaware, Kentucky, Massachusetts, Michigan,

Missouri, Nebraska, New Jersey, New Mexico, Nevada, North Carolina, Ohio, Oregon, South Carolina,

and Vermont.

Congressional Budget Officed National 4.0

Mathematica Policy Researche National 3.6

Department of Banking, Insurance,

Securities, and Health Care Administrationf

Vermont 0-3

North Carolina Psychological Associationg North Carolina h

Price Waterhouse Coopersi 16 statesj 2.5-3.9

Study Scope Increasea
B-283034

Page 19 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Federal Agencies Have

Made Varying Progress

in Overseeing the

Implementation of the

Parity Law

Federal agencies have made varying progress in performing their oversight

roles under the act. Labor’s role is expanding from a largely complaintdriven approach to one that also uses investigations to more systematically

measure employers’ compliance with the law. HCFA remains in the early

stages of identifying states that have not adopted conforming laws or are

not otherwise enforcing the federal standards. Once these states are

identified, HCFA must initiate a multistep process to establish itself as the

enforcement authority for insurance carriers found not to be enforcing the

federal parity standards in these states.

Labor’s Oversight Activities

Are Expanding

Labor has traditionally relied on a complaint-driven approach to identify

noncompliance with federal health plan standards. However, with the

enactment of several federal health insurance reforms since 1996, including

the Mental Health Parity Act, Labor’s enforcement role has significantly

expanded.23 Accordingly, the agency has undertaken several initiatives to

improve and expand its oversight, customer service function, and

consumer and employer education efforts.24 On April 6, 2000, the agency

published its strategic enforcement plan to make public its goals and

intended approach to ensuring that employee benefit plans comply with

federal standards, including mental health parity.25

In particular, the agency has initiated a limited number of investigations to

more systematically determine health plan compliance. As of March 2000,

Labor officials said they had completed investigations of approximately 200

employers that varied by size and geography. In addition to reviewing their

compliance with other ERISA requirements, Labor had reviewed 215 of the

plans that were subject to the Mental Health Parity Act and found 26, or 12

percent, that were not in compliance, according to officials.26 These plans

23The Health Insurance Portability and Accountability Act of 1996, the Newborns’ and

Mothers’ Health Protection Act of 1996, and the Women’s Health and Cancer Rights Act of

1998.

24For additional information on Labor’s initiatives, see Private Health Insurance: Progress

and Challenges in Implementing 1996 Federal Standards (GAO/HEHS-99-100, May 12, 1999)

and Health Insurance Standards: New Federal Law Creates Challenges for Consumers,

Insurers, Regulators (GAO/HEHS-98-67, Feb. 25, 1998).

2565 Fed. Reg. 18,208 (Apr. 6, 2000).

26The number of plans that Labor reviewed is larger than the number of employers reviewed

because the employers could offer more than one health plan with mental health benefits.
B-283034

Page 20 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

typically retained annual or lifetime limits that were lower for mental

health coverage than for medical and surgical coverage or contained other

violations of the law. The agency plans to conduct approximately 1,000

investigations annually, according to agency officials. The agency is

considering developing a sampling model that it may use to help evaluate

compliance.

HCFA Continues to

Evaluate the Extent of Its

Oversight Role

Enactment of the Mental Health Parity Act and other recent federal

insurance reforms has created a broad new regulatory role for HCFA. The

agency must enforce federal requirements on insurers in states where it

determines that a state has not enacted legislation that meets or exceeds

the federal standards or has otherwise failed to “substantially enforce” the

federal standards. Its activities in support of this new role have been

evolving since the enactment of the Health Insurance Portability and

Accountability Act of 1996 (HIPAA).27 On August 20, 1999, the agency

issued enforcement regulations that prescribe the process by which it

assumes an enforcement role in a particular state and describes regulatory

responsibilities it may perform.28

In mid-1999, the agency undertook an initial state-by-state analysis to

determine whether state laws conform to the federal standards—a

precursor to determining whether the agency may be required to play an

enforcement role in a particular state. Agency officials said that their

preliminary examination indicated that 7 states appeared not to have laws

addressing the federal parity standards, 24 states had laws about which the

agency had questions concerning their conformance to the federal

standards, and 20 states appeared to have laws that fully conformed to

federal parity standards.

In December 1999, HCFA sent letters to the seven states without laws,

indicating that it had a reasonable question about whether the states’

standards substantially met the specified federal parity requirements.

HCFA officials said they would accept that states meet the federal

27For additional information on HCFA’s activities, see Implementation of HIPAA: Progress

Slow in Enforcing Federal Standards in Nonconforming State (GAO/HEHS-00-85, Mar. 31,

2000), (GAO/HEHS-99-100), (GAO/HEHS-98-67), and Private Health Insurance: HCFA

Cautious in Enforcing Federal HIPAA Standards in States Lacking Conforming Laws

(GAO/HEHS-98-217R, July 22, 1998).

2864 Fed. Reg. 45,786 (45 C.F.R. pt. 144, 146, 148, and 150).
B-283034

Page 21 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

standards if alternatives such as regulations or advisory bulletins existed

and had some statutory basis. As of May 2000, HCFA officials said that four

of these states had enacted conforming laws or other directives or

otherwise had demonstrated that they enforce the federal parity

requirements. In states that do not meet these standards through other

regulatory means, HCFA will begin its formal determination process in

which it can ultimately assume direct enforcement responsibilities. As of

April 2000, HCFA was still evaluating the laws in the 24 states where it had

questions concerning state conformance.

Conclusions The Mental Health Parity Act of 1996 sought to bring mental health benefits

closer to other health benefits. The act requires parity only in annual and

lifetime dollar limits and does not place restrictions on other plan features

such as hospital and office visit limits. Therefore, the changes employers

made to bring health plans into compliance with the act often included

further restrictions in these other plan features that may have offset the

parity achieved in dollar limits. Further, a significant minority of plans—

about 14 percent in the 26 states and the District of Columbia we

surveyed—continue to have lower mental health than medical and surgical

dollar limits in direct contradiction of the law. The net effect is that

consumers in states without more comprehensive laws have often seen

only minor changes in their health benefits, resulting in little or no increase

in their access to mental health services, and that the costs associated with

the federal law have been negligible for most health plans.

As the Congress considers proposals that would renew the Mental Health

Parity Act beyond 2001 or expand it to provide more complete parity

between mental health and other health benefits, the effects of the 1996 act

along with the experiences of the 29 states with more comprehensive parity

laws are instructive. These more comprehensive state laws, which require

parity not only in dollar limits but also in service limits, cost-sharing

requirements, or both may provide information about the potential costs of

extending parity—estimated to be about 2 to 4 percent. Further, the market

for mental health services has continued to evolve since 1996, with

managed care and carve-outs of mental health services increasingly

applied. Nonetheless, despite the federal and state parity laws and market

changes, many Americans are likely to remain in employer-sponsored

health plans that restrict benefits for mental illness more than for other

types of illnesses.
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Page 22 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Agency Comments HCFA and the Department of Labor commented on a draft of this report.

Both generally agreed with our findings and conclusions and provided

technical comments, which we have incorporated as appropriate.

Appendix IV contains the comment letter from HCFA.

As we agreed with your office, unless you publicly announce this report’s

contents earlier, we plan no further distribution of it until 30 days after its

issue date. We will then send copies to the Honorable Donna E. Shalala,

Secretary of Health and Human Services; the Honorable Nancy-Ann Min

DeParle, Administrator of HCFA; the Honorable Alexis M. Herman,

Secretary of Labor; the Honorable Leslie B. Kramerich, Acting Assistant

Secretary for the Pension and Welfare Benefits Administration; and other

interested congressional committees and members and agency officials. We

will also make copies available to others on request.

Please call me at (202) 512-7114 if you have any questions. Other contacts

and major contributors are listed in appendix V.

Sincerely yours,

Kathryn G. Allen

Associate Director, Health Financing

and Public Health Issues
Page 23 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996
Page 24 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Appendix I

Survey Scope and Methods ApApenednxidexiIs

To determine employers' compliance and responses to the Mental Health

Parity Act of 1996, we conducted a mail survey of employers in selected

states between November 1999 and February 2000. We sent the survey to a

random sample of employers, stratified by size, in the District of Columbia

and 28 states initially identified as having mental health parity laws similar

to the federal law or that had no parity law of their own (and thus the

federal act was in effect). 1 The survey collected information about

1. the current most popular health plan that contains mental health

benefits;

2. the same plan in 1996, if available then, or the most popular health plan

containing mental health benefits offered in 1996 and how it compares

with the current plan; and

3. the cost of changes made to mental health benefits as a result of the

law.

To develop the questions we used in our survey, we reviewed the

requirements of the law as well as the existing research addressing the

issue of mental health parity. In addition, representatives from the

Department of Health and Human Services' (HHS) Substance Abuse and

Mental Health Services Administration (SAMHSA), the Washington

Business Group on Health, and Mercer/Foster Higgins reviewed a draft of

the survey and provided us with comments. We pretested the survey with

five private employers of varying sizes in California, Illinois, Michigan, and

the District of Columbia.

1

Our survey results are based on responses from surveys sent to employers in the District of

Columbia and the following 26 states: Alabama, Alaska, Arizona, California, Florida, Idaho,

Illinois, Iowa, Kansas, Massachusetts, Michigan, Mississippi, Nevada, New Mexico, New

York, North Dakota, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Utah,

Washington, West Virginia, Wisconsin, and Wyoming. The initial sample also included

Kentucky and Louisiana, but these states were later removed from the sample after further

review of state laws.
Appendix I

Survey Scope and Methods

Page 25 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Sample Design We selected our sample to be representative of employers subject to the

law—private employers with more than 50 employees who offer medical

benefits, including mental health benefits, to their employees. We excluded

public employers (state and local governments) because their plans are

allowed to elect exemption from the federal mental health parity law.2 In

addition, because our goal was to measure the effect of federal rather than

state parity, we excluded states that had mental health parity laws that

exceeded the parity requirements of the federal law in order to avoid

confounding our results. On the basis of a preliminary review of state laws

that we requested from the National Conference of State Legislators

(NCSL) in July 1999, we initially identified 28 states and the District of

Columbia as eligible for inclusion in our survey.

Using our list of eligible states, Dun and Bradstreet identified all private

employers' headquarters offices with more than 50 employees in its

database of U.S. businesses.3 In addition, because certain aspects of health

benefits may vary depending on employer size and because more small

employers exist than larger ones, we divided the employers into three

strata by size before sampling in order to improve the precision of our

estimates. The three strata were

1. small employers, with 51 to 100 employees;

2. medium-sized employers, with 101 to 200 employees; and

3. large employers, with more than 200 employees.

Response Rate and

Adjustments to

Population and Sample

Sizes

The initial sample, drawn by Dun and Bradstreet, consisted of 2,500

employers in 28 states and the District of Columbia. Further review of state

laws revealed that Kentucky and Louisiana had mental health parity laws

that were more comprehensive than the federal law. Employers in these

states were removed from the sample (102 cases).

2

As of April 2000, 530 self-insured state and local government plans had filed for an

exemption from the federal parity standards.

3

We included only single-site firms and the headquarters offices of multisite businesses in

the survey. We drew our population and sample from Dun and Bradstreet's database of 11

million U.S. businesses, a source commonly used for employer surveys.
Appendix I

Survey Scope and Methods

Page 26 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

We received responses from 1,212 of the remaining 2,398 employers, and

102 were deemed undeliverable.4 We conducted three follow-up attempts to

increase the response rate—a second mailing of the survey to all

nonrespondents, a letter encouraging participation, and telephone calls to

about 63 percent of randomly selected nonresponding employers.

We adjusted the population and sample sizes for employers that we

determined were not subject to the federal law for the following reasons:

• they did not offer a health plan or had health plans without mental

health benefits for their employees (279 cases) or

• they reported having fewer than 50 employees (70 cases).

In adjusting both the population and sample sizes, we assumed that the

proportion of employers who were incorrectly identified as eligible for our

survey was the same for both responding and nonresponding employers

and we adjusted both the sample and population sizes accordingly. A total

of 863 eligible responses were obtained out of an adjusted sample of 1,648

employers, for an overall response rate of 52 percent. See table 7 for details

of the population and sample sizes, number of responses received,

adjustments made, and response rates per strata.

Table 7: Selected Survey Sample and Response Data

a

Includes both ineligible and eligible responses.

b

Sample was adjusted based on proportion of ineligible responses.

c

Response rate was based on eligible responses and adjusted sample size.

4

About 126 employers provided summary plan descriptions that we abstracted in order to

complete the questionnaire, as applicable.

Size of

business

Initial

population

size

Initial sample

size

Total number of

responsesa

Adjusted

population size

Adjusted

sample sizeb

Number of

eligible

responses

Adjusted

response ratec

Small 79,320 1,263 636 44,664 711 392 55%

Medium 37,150 592 283 26,038 407 216 53

Large 40,531 645 293 32,709 530 255 48

Total 157,001 2,500 1,212 103,483 1,648 863 52%
Appendix I

Survey Scope and Methods

Page 27 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Sampling Error Because we used a sample to develop our estimates, our results contain

sampling error that occurs from not collecting data from all employers

subject to the federal law in the states we surveyed. Sampling error

indicates how closely we can reproduce from a sample the results that we

would expect to obtain if we were to survey all eligible employers.

The sampling errors for the point estimates used in this report are based on

the design of the survey and the response-adjusted sample weights. These

sampling errors were used to calculate 95 percent confidence intervals

around our estimates, which means that the chances are about 19 in 20 that

the actual percentage being estimated falls within the range defined by our

estimate, plus or minus the sampling error. Unless otherwise indicated in

the report, the sampling error for the survey results presented in this report

is no greater than 2.5, for a confidence interval of plus or minus 5

percentage points. Sampling errors were larger for some analyses of

subgroups, such as employers that were newly compliant with the federal

law. All differences we report are statistically significant unless we note

otherwise.5 Statistical significance means that the differences observed

between the subgroups are unlikely to be attributed to chance.

Analysis of Survey

Nonresponses

To identify potential biases in the responses we received that may occur

when certain employers respond and others do not, we compared key

characteristics—size of business, geographic region, and type of industry—

of employers that responded to the survey with those that did not. We

found that large employers were less likely to participate in the survey than

small and medium-sized firms. In addition, employers in the Northeast

were less likely to respond to the survey while those in the Midwest were

more likely to participate. Despite these differences, compliance with the

mental health parity law among responding employers did not vary

significantly by employer size, type of industry, or geographic region.

However, we were unable to determine whether the compliance of

nonresponding employers differed significantly from that of those

participating in the survey. Where differences exist, the estimates could

incorrectly attribute the characteristics of the responding employers to the

nonresponding employers. For example, if employers with noncompliant

5

Statistical significance was measured at the 95 percent confidence level (p< .05),

which means that the probability of detecting a difference between subgroups

where none exists is no greater than 5 percent.
Appendix I

Survey Scope and Methods

Page 28 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

plans were less likely to respond to the survey, our compliance estimate

would underestimate the portion of noncompliant employer plans.

Limitations We weighted the results so they would be statistically representative of

private employers with more than 50 employees who offer mental health

benefits in the District of Columbia and the 26 states. The results of our

survey cannot be generalized to employers with fewer than 50 employees,

government employers, or private employers in states other than those we

surveyed.

As with all surveys that rely on self-reported data, some degree of

measurement error—error that occurs when the responses received do not

accurately reflect reality—exists in the results. Measurement error may

have occurred in our survey if respondents either misunderstood a

question or used outdated information, such as old summaries of their

health plan, to answer a question. We contacted some employers by

telephone to obtain, clarify, or verify information related to certain

problematic responses. To ensure completeness and accuracy in the

contractor keypunched data, we independently verified 3 percent of the

surveys, or 38, for keypunch accuracy.

Finally, not every respondent answered every question. Relatively high item

nonresponse included questions pertaining to the health plan in place in

1996. To see how item nonresponse may affect two of our key results—

parity in annual and dollar limits for 1999 and 1996—we tested to see if

there were significant differences between employers for whom we could

determine the parity of their benefits and those for whom we could not.

Employers were compared on size, geographic region, and type of industry.

Our ability to determine parity in 1999 varied only by employer size, for

which item nonresponse meant that we could not determine compliance

for 24 percent of small employers. Our ability to determine parity in 1996

varied by both employer size and geographic region. Item nonresponse for

1996 health plan data meant that we could not determine parity for 58

percent of small employers and 60 percent of respondents from the South.
Page 29 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Appendix II

Summary of Survey Responses ApendxiI

Following are the responses we received to our survey of employers’

mental health benefits. The sum of the combined responses may not equal

100 percent because of rounding. In addition, because not every employer

responded to each question, we have provided the total number of

responses for each question. As with the survey, we divided the summary of

responses into three parts:

• Information about the employer’s current health plan that both covers

the largest number of lives and contains mental health benefits.

• Information about the same plan in 1996 or the most popular health plan

containing mental health benefits offered in 1996 compared with the

1999 plan.

• Information about the cost of changes made to mental health benefits as

a result of the Mental Health Parity Act.

The Employer’s

Current Health Plan

That Covers the

Largest Number of

Lives and Contains

Mental Health Benefits

Table 8: Mental Health Benefits Offered Now

Table 9: Mental Health Benefits Ever Offered Since December 1996

a

Question applies only to employers indicating mental health benefits are not included in any of their

health plans.

b

Confidence intervals ranged from ±3.3 to ±8.4 percent.

Are mental health benefits included in any of the health plans offered employees?

(n = 1,097)

Response Percent

Yes 79

No 15

No health plan offered 6

Have mental health benefits ever been included in any of the health plans offered

employees since Dec. 1996? (n = 125)a

Response Percentb

Yes 4

No 61

No health plan offered 35
Appendix II

Summary of Survey Responses

Page 30 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Table 10: Number of Lives Benefits Cover

Table 11: Plan Insurance

Table 12: Plan Type

How many lives are covered by the plan that has the largest number of covered

lives and contains mental health benefits? (Please include active and retired

employees and their dependents.) (n = 745)

Median 122

Range 2-333,652

Is this health plan fully insured or self-insured? (n = 848)

Response Percent

Fully insured 64

Self-insured or self-funded 32

Don’t know 4

What type of plan is this health plan? (n = 837)

Response Percent

Conventional indemnity 8

Preferred provider organization (PPO) 45

Point-of-service (POS) 12

Health maintenance organization (HMO) 32

Other 4
Appendix II

Summary of Survey Responses

Page 31 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Table 13: Administered by a Managed Behavioral Health Care Company

Table 14: Financial Risk of Administering Organization

a

Question applies only to employers contracting with a managed behavioral health care company for

the administration of their mental health benefits.

b

Because only a subset of respondents answered this question, the confidence intervals ranged from

±7.4 to ±12.5 percent.

Does your organization contract with a managed behavioral health care company

for separate administration of mental health benefits? (n = 846)

Response Percent

Yes 7

No 86

Don’t know 6

What level of risk does the organization administering the mental health benefits

bear? (n = 59)a

Response Percentb

Bears no financial risk 41

Bears some financial risk 10

Bears all financial risk 10

Don’t know 38
Appendix II

Summary of Survey Responses

Page 32 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Table 15: Plan Design Features for Current Plan

a

All data reflect plan feature for in-network benefits, as applicable. Estimates reflect plans that apply

design features both to mental health and medical surgical services combined and to those that apply

a separate limit or amount for mental health services and for medical surgical services.

b

Copayment and coinsurance reflect amount for tenth visit.

What is the amount of the limit or cost-sharing feature that applies to the following plan design features?

Plan design

feature

Mental health benefita Medical surgical benefita

Number of

responses

Percent with

limit

Median amount

for plans with

limit (25th-75th

quartile)

Number of

responses

Percent with

limit

Median amount

for plans with

limit (25th-75th

quartile)

Annual dollar

limit 572 28%

$6,300

(1,500-1,000,000) 593 16%

$1,000,000

(5,000-2,000,000)

Lifetime dollar

limit

658 54

$1,000,000

(1,000,000-

2,000,000) 708 54

$1,000,000

(1,000,000-

2,000,000)

Annual out-ofpocket maximum 660 62$1,000

(750-1,500) 718 73

$1,000

(800-1,500)

Annual

deductible 757 47

$250

(200-300) 771 51

$250

(200-300)

Inpatient hospital

care copayment 642 22

$100

(50-240) 671 24

$100

(75-240)

Inpatient hospital

care coinsurance 720 51

20%

(10-20) 725 45

20%

(10-20)

Annual inpatient

hospital days 726 76

30 days

(30-30) 679 10

30 days

(30-70)

Outpatient office

visit copaymentb 710 70

$15

(10-20) 723 78

$10

(10-15)

Outpatient office

visit coinsuranceb 707 49

30%

(20-50) 674 35

20%

(10-20)

Annual outpatient

office visit 747 75

20 visits

(20-30) 683 8

20 visits

(20-30)
Appendix II

Summary of Survey Responses

Page 33 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

The Current Plan or the

Most Popular Health

Plan Containing Mental

Health Benefits

Offered in 1996,

Compared With the

1999 Plan

Table 16: Current Plan in 1996

Table 17: Mental Health Benefits in Any Plan

a

Question applies only to employers whose current plan was not offered or did not contain mental

health benefits in 1996.

b

Confidence intervals ranged from ±3.8 to ±6.0 percent.

Table 18: Plans Covering the Most Lives in December 1996

a

Question applies only to employers whose current plan was not offered or did not contain mental

health benefits in 1996.

b

Confidence intervals ranged from ±4.2 to ±9.9 percent.

Were mental health benefits offered through your current health plan at any time in

December 1996? (n = 802)

Response Percent

Yes 62

No, organization did not exist in December 1996 5

No, plan was not available or did not contain mental health

benefits 17

Don’t know 17

Were mental health benefits offered through any of the plans that you offered in

December 1996? (n = 268)a

Response Percentb

Yes 36

No 11

Don’t know 53

Please identify the type of plan in place in December 1996 that covered the most

lives and contained mental health benefits. (n = 94)a

Response Percentb

Conventional indemnity 16

Preferred provider organization (PPO) 41

Point-of-service (POS) 9

Health maintenance organization (HMO) 30

Other 4
Appendix II

Summary of Survey Responses

Page 34 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Table 19: Plan Design Features in December 1996

a

All data reflect plan feature for in-network benefits, as applicable. Estimates reflect plans that apply

design features both to mental health and medical surgical services combined and to those that apply

a separate limit or amount for mental health services and for medical surgical services.

b

Confidence interval ±5.0 percent.

c

Copayment and coinsurance reflect amount for tenth visit.

For the health benefits plan that was available in December 1996, what was the amount of the limit or cost-sharing feature

applied to the following plan design features?

Plan design feature

Mental health benefita Medical surgical benefita

Number of

responses

Percent with

limit

Median amount

for plans with

limit (25th-75th

quartile)

Number of

responses

Percent

with limit

Median amount for

plans with limit (25th75th quartile)

Annual dollar limits

379 51%b

$5,250

(1,500-15,000) 370 18%

$1,000,000

(200,000-1,000,000)

Lifetime dollar limits

413 66

$50,000

(25,000-1,000,000) 442 58

$1,000,000

(1,000,000-2,000,000)

Annual out-of-pocket

maximum 391 59

$1,000

(700-1,500) 431 72

$1,000

(750-1,500)

Annual deductible

464 50

$200

(100-250) 471 55

$200

(100-250)

Inpatient hospital

care copayment 398 19

$100

(50-250) 414 20

$100

(50-240)

Inpatient hospital

care coinsurance 448 52

20%

(10-20) 456 46

20%

(10-20)

Annual inpatient

hospital days 430 63

30 days

(30-30) 429 8

60 days

(30-120)

Outpatient office visit

copaymentc 419 58

$20

(10-25) 433 67

$10

(10-15)

Outpatient office visit

coinsurancec 456 55

50%

(20-50) 435 39

20%

(10-20)

Annual outpatient

office visit 442 60

20 days

(20-30) 428 6

20 days

(20-25)
Appendix II

Summary of Survey Responses

Page 35 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Table 20: Reasons for Benefit Changes After December 1996, Part 1

Where differences exist in the design features for mental health benefits in your

current plan and those available in December 1996, please indicate which factors

other than the Mental Health Parity Act influenced your decision to change these

features. (Check all that apply.) (n = 652)

Response Percent

No changes made 36

Employee needs or preferences 5

Cost containment efforts 15

Market trends in health plan benefits 8

Increased availability of managed health care services 5

State statutes or regulations 9

Don’t know 11

Other 10
Appendix II

Summary of Survey Responses

Page 36 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Table 21: Reasons for Benefit Changes After December 1996, Part 2

Where differences exist in the design features for mental health benefits in your current plan and those available in December

1996, please indicate whether changes were made primarily in response to the Mental Health Parity Act or primarily for the

other reasons checked in the question in table 20. (Check all that apply.)

Plan design feature

Number of

responses No change

Primarily or

more in

response to

the act

About as much in

response to the

act as for other

reasons

Primarily or

more for reasons

other than the

act

Don’t

know

Annual dollar limit 513 48% 25% 2% 9% 16%

Lifetime dollar limit 517 51 22 1 10 16

Annual out-of-pocket

maximum 501 61 7 2 14 16

Annual deductible 500 64 5 1 16 14

Inpatient hospital care

copayment 502 67 4 1 14 14

Inpatient hospital care

coinsurance 500 64 6 2 14 15

Annual inpatient hospital days 506 57 14 2 12 15

Outpatient office visit

copayment 501 61 6 1 18 14

Outpatient office visit

coinsurance 502 62 8 1 14 15

Annual outpatient office visit 506 54 17 2 13 15
Appendix II

Summary of Survey Responses

Page 37 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Table 22: Administered by a Managed Behavioral Health Care Company in 1996

Table 23: Managed Care in Current Plan Compared With December 1996

Table 24: Employees’ Access to Benefits

Did your organization contract with a managed behavioral health care company for

separate administration of mental health benefits in December 1996? (n = 577)

Response Percent

Yes 5

No 90

Don’t know 5

Were more managed care features (such as case management, utilization review,

precertification, provider networks, or individualized treatment plans) implemented

in your current plan for mental health benefits than in the one available in

December 1996? (n = 566)

Response Percent

Yes, implemented more managed care features 14

No, did not implement more managed care features 65

Don’t know 22

In your view, have the changes made to your mental health benefits since

December 1996 affected employees’ access to mental health services?

Type of access

Number of

responses

Greatly or

somewhat

increased

Neither

increased

nor

decreased

Greatly or

somewhat

decreased

Access to inpatient services 501 13% 84% 2%

Access to outpatient

services 500 16 80 4

Access to preventive

services 496 13 86 1

Access to mental health

services overall 501 17 81 3
Appendix II

Summary of Survey Responses

Page 38 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Table 25: Employee Eligibility for Coverage

The Cost of Changes to

Mental Health Benefits

as a Result of the

Mental Health Parity

Act

Table 26: Exemption Filed

Table 27: Reasons Exemption Not Filed

In considering all of the health plans offered by your organization since December

1996, would you say that the proportion of your employees who are eligible to

enroll in a health plan that contains mental health benefits has changed?

Number of

responses

Greatly or

somewhat

increased

Neither

increased nor

decreased

Greatly or

somewhat

decreased

Employees eligible to

enroll 522 8% 91% 2%

A provision of the Mental Health Parity Act allows an exemption for employers who

can demonstrate that compliance has resulted in an increase in total claims costs

of 1 percent or more. Has your organization filed for an exemption from the Mental

Health Parity Act? (n = 791)

Response Percent

Yes 1

No 78

Don’t know 21

Below are reasons why an organization might not file for an exemption from the

Mental Health Parity Act. Please indicate the reasons your organization did not

apply for an exemption. (Check all that apply.)

Response

Number of

responses Percent

No changes were necessary to comply with the act 620 32%

Not aware of exemption 619 28

Claims costs did not increase at least 1 percent 619 15

Changed benefit design to mitigate the cost of the act 619 5

Preferred to have employees benefit from the law 619 9

Did not examine changes in costs 619 18

Other 620 5

Don’t know 620 11
Appendix II

Summary of Survey Responses

Page 39 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Table 28: Compliance and Claims Costs

Table 29: Claims Cost Increases

a

Question applies only to employers indicating that compliance with the act increased their health

benefit plan’s claims costs.

b

Because only a subset of respondents answered this question, the confidence interval ranged from

±12.1 to ±15.1 percent.

Has compliance with the act increased your health benefit plan’s claims costs?

(n=772)

Response Percent

Yes 3

No 37

Don’t know 60

By about what percentage did your total health benefit claims costs increase from

complying with the act? (n = 33)a

Response Percentb

Less than 1 percent 19

1 to 2 percent 17

3 to 5 percent 22

More than 5 percent 15

Don’t know 27
Page 40 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Appendix III

State Laws on Mental Illness and Substance

Abuse Treatment ApendxiI

NCSL’s Health Policy Tracking Service tracks state laws regulating private

health insurance coverage. At our request, NCSL undertook a

comprehensive review of the state laws that affect mental illness and

substance abuse coverage and prepared a summary as of March 1, 2000.

That summary is the basis for table 30. Identified in the table are whether

each state has an applicable law, its effective date, the type of coverage (for

example, group or health maintenance organization (HMO) or individual

market), the illnesses whose treatments are covered (for example, mental

illness or substance abuse), and the scope of benefits. In addition, the “type

of benefit mandate” is specified, which describes the extent to which each

law requires that a benefit be covered. For example, a “mandated benefit”

clause within a law addressing the coverage of mental health benefits

requires that all coverage sold in the applicable market contain mental

health benefits that comply with the terms of the law. A “mandated

offering” clause generally requires that the terms of the law apply only if

mental health coverage is included in the health plan. Finally, with respect

to the requirements of the law as they pertain to the scope of benefits

offered in a health plan, the table indicates whether the law requires that

certain elements of coverage—inpatient benefits, outpatient benefits, costsharing, or dollar limits—be provided on a par with benefits for medical

and surgical coverage or specifies that minimum levels of coverage must be

offered.

Table 30 shows that as of March 1, 2000, laws in effect in 43 states and the

District of Columbia addressed mental health coverage in employersponsored group plans and, to a lesser extent, coverage sold in the

individual market. With regard to group plans, more than half, or 29, of the

state laws are more comprehensive than the federal law in that they require

parity not only in dollar limits but also in service limits or cost-sharing

provisions. In addition, many of these also mandate that mental health

benefits be included in all plans sold. Laws in 6 states essentially parallel

the federal law. Laws in 8 states and the District of Columbia are more

limited and may not conform to the federal law, while 7 states have no laws

addressing mental health benefits. Unlike the federal law, most states, or

41, and the District of Columbia either explicitly include substance abuse

within the scope of their mental health benefit laws or have separate

statutes addressing substance abuse coverage. However, 13 of these state

laws cover only alcoholism.

State laws also define mental illness differently. For example, some state

laws define mental illness narrowly to include only specified mental

illnesses. Commonly specified are schizophrenia, schizoaffective disorder,
Appendix III

State Laws on Mental Illness and Substance

Abuse Treatment

Page 41 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

bipolar affective disorder, major depression, obsessive compulsion, and

panic disorder. Other state laws define mental illness more broadly,

generally including the conditions classified as mental illness by the

American Psychiatric Association’s (APA) Diagnostic and Statistical

Manual of Mental Disorders (DSM). In addition, many state laws do not

define mental illness or do so in broad, nonspecific terms.

Table 30: State Laws Addressing Coverage of Mental Illness and Substance Abuse as of March 1, 2000

Type of

insurance

affected

lllness

covereda

Type of benefit

mandateb

Scope of benefits

Inpatient

(hospitalization)

Outpatient

services

Cost sharing:

copayments and

coinsurance

Dollar limits:

annual and

lifetimec

Alabama

1979

Group and

HMO

Alcoholism Mandated offering 30 days 1 inpatient day can

be converted to 3

outpatient sessions

Not specified Not specified

Alaska

1997d

Group.

Exemption if

cost increase

of 1% or more

or small

employer with

50 or fewer

employees

Mental illness,

excluding

alcoholism and

drug abuse

Mandated offering May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

Must be equal to

other illnesses

1997

Group. If 5

employees or

fewer, exempt;

if 20 or fewer,

must offer

coverage

Alcoholism

and drug

abuse

Minimum mandated

benefits or

mandated offering

for small group

Not specified Not specified Must be equal to

other illnesses

At least $9,600

every 2 years;

$19,200 lifetime
Appendix III

State Laws on Mental Illness and Substance

Abuse Treatment

Page 42 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Arizona

1998

Group.

Exemption if

cost increase

of 1% or more

or small

employer with

50 or fewer

employees

Mental illness,

excluding

alcoholism and

drug abuse

Mandated offering May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

Must be equal to

other illnesses

Arkansas

1997

Group.

Exemption if

cost increase

of 1.5% or

more or small

employer with

50 or fewer

employees

Mental illness

and

developmental

disorderse

Mandated benefits Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

1987

Group and

HMO

Alcoholism

and drug

dependency

Mandated offering Not less favorable

generally than to

other illnesses

Not less favorable

generally than to

other illnesses

Not less favorable

generally than to

other illnesses

$6,000 every 2

years; $12,000

lifetime

California

1974

Group Mental or

nervous

disorders

Mandated offering Not specified Not specified Not specified Not specified

July 2000

Group,

individual, and

HMO

Severe mental

illnessf

Mandated benefits Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

1990

Group Alcoholism Mandated offering Not specified Not specified Not specified Not specified

Type of

insurance

affected

lllness

covereda

Type of benefit

mandateb

Scope of benefits

Inpatient

(hospitalization)

Outpatient

services

Cost sharing:

copayments and

coinsurance

Dollar limits:

annual and

lifetimec
Appendix III

State Laws on Mental Illness and Substance

Abuse Treatment

Page 43 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Colorado

1992

Group Mental illness,

excluding

autism

Mandated benefits 45 days Covered under

major medical, not

less than $1,000

per year

Shall not exceed

50% of the

payment;

deductible shall

not differ from that

for other illnesses

Not specified

1998

Group Biologically

based mental

illnessg

Mandated benefits Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

1994

Group Alcoholism Mandated offering 45 days $500 annually Shall not exceed

50% of the

payment;

deductible shall

not differ from that

for other illnesses

Not specified

Connecticut

Jan. 2000

Group and

individual

Mental or

nervous

conditions,

including

alcoholism and

drug addictionh

Mandated benefits Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

Delaware

1997d

Group.

Exemption if

cost increase

of 1% or more

or small

employer with

50 or fewer

employees

Mental illness,

excluding

alcoholism and

drug abuse

Mandated offering May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

Must be equal to

other illnesses

1999

Group and

individual

Serious mental

illnessi

Mandated benefits Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

Type of

insurance

affected

lllness

covereda

Type of benefit

mandateb

Scope of benefits

Inpatient

(hospitalization)

Outpatient

services

Cost sharing:

copayments and

coinsurance

Dollar limits:

annual and

lifetimec
Appendix III

State Laws on Mental Illness and Substance

Abuse Treatment

Page 44 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

District of Columbia

1997

Group,

individual,

HMO, and

state

employee

plans

Mental illness

and alcohol

and drug

abusej

Mandated offering

for individual plans;

mandated benefits

for all others

45 days for mental

illness; 12 days of

detoxification and

28 days for

alcoholism and

drug abuse

75% for first 40

visits and 60% for

visits exceeding 40

for mental illness;

30 visits for

alcoholism and

drug abuse

Deductibles,

copayments, and

limits on total

amounts payable

to an individual in

a calendar year

may be applied

Lifetime limit of no

less than $80,000

or one-third of the

lifetime maximum

for other illness,

whichever is

greater

Florida

1992

Group and

HMO

Mental and

nervous

disordersk

Mandated offering 30 days $1,000 per benefit

year

May be different

after minimum

benefits are met

May be different

after minimum

benefits are met

1998d

Group.

Exemption if

cost increase

of 1% or more

or small

employer with

50 or fewer

employees

Mental illness,

excluding

alcoholism and

drug abuse

Mandated offering May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

Must be equal to

other illnesses

1993

Group and

HMO

Substance

abuse

Mandated offering Not specified 44 visit maximum,

$35 maximum

reimbursement per

visit

Not specified Annual limits not

specified;

minimum lifetime

benefit of $2,000

Georgia

1998

Group and

individual

Mental

disorders,

including

substance

abusee

Mandated offering 30 days 48 visits Must be equal to

other illnesses

Must be equal to

other illnesses

Hawaii

1988

Group,

individual, and

HMO

Mental illnessl Mandated benefits 30 days 30 visits Must be

comparable to

other illnesses

Must be

comparable to

other illnesses

1999

Type of

insurance

affected

lllness

covereda

Type of benefit

mandateb

Scope of benefits

Inpatient

(hospitalization)

Outpatient

services

Cost sharing:

copayments and

coinsurance

Dollar limits:

annual and

lifetimec
Appendix III

State Laws on Mental Illness and Substance

Abuse Treatment

Page 45 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Group and

individual.

Smallemployer

exemption if

25 or fewer

employees

Serious mental

illnessm

Mandated benefits Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

1988

Group,

individual, and

HMO

Alcohol and

drug

dependence

Mandated benefits No less than two

treatment

episodes per

lifetime

No less than two

treatment episodes

per lifetime

Must be

comparable to

other illnesses

Must be

comparable to

other illnesses

Idaho

No law

Illinois

1991

Group Mental,

emotional, or

nervous

disorders

Mandated offering Not specified Not specified Insured may be

required to pay up

to 50% of

expenses

Annual benefit

may be limited to

the lesser of

$10,000 or 25% of

the lifetime policy

limit

1995

Group Alcoholism Mandated benefits Not specifiedn Not specified Not specified Not specified

Indiana

1997d

Group.

Exemption if

cost increase

of 1% or more

or small

employer with

50 or fewer

employees

Mental illness,

excluding

alcoholism and

drug abuse

Mandated offering May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

Must be equal to

other illnesses

Jan. 2000

Type of

insurance

affected

lllness

covereda

Type of benefit

mandateb

Scope of benefits

Inpatient

(hospitalization)

Outpatient

services

Cost sharing:

copayments and

coinsurance

Dollar limits:

annual and

lifetimec
Appendix III

State Laws on Mental Illness and Substance

Abuse Treatment

Page 46 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Group,

individual, and

state

employees.

Exemption if

cost increase

of 4% or more

or small

employer with

50 or fewer

employees

Mental illnesso Mandated offering;

mandated benefits

for state employee

plans

Must be equal to

other illnesses for

plans that offer

coverage;

mandated benefits

for state employee

plans

Must be equal to

other illnesses for

plans that offer

coverage;

mandated benefits

for state employee

plans

Must be equal to

other illnesses for

plans that offer

coverage;

mandated benefits

for state employee

plans

Must be equal to

other illnesses for

plans that offer

coverage;

mandated benefits

for state employee

plans

Iowa

No law

Kansas

1997d

Group.

Exemption if

cost increase

of 1% or more

or small

employer with

50 or fewer

employees

Mental illness,

excluding

alcoholism and

drug abuse

Mandated offering May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

Must be equal to

other illnesses

1998

Group,

individual,

HMO, and

state

employee

plans

Mental

conditions,

alcoholism, or

drug abusep

Mandated benefits 30 days Not less than 100%

of the first $100,

80% of the next

$100, and 50% of

the next $1,640 per

year and not less

than $7,500 per

lifetime

Not specified Specified only for

outpatient

treatment

Kentucky

1986

Group Mental illnessq Mandated offering To the same

extent as

coverage for other

illness

To the same extent

as coverage for

other illness

To the same extent

as coverage for

other illness

To the same

extent as

coverage for other

illness

1980

Group Alcoholism Mandated offering Emergency

detoxification: 3

days reimbursed

at $40 per day

10 visits reimbursed

at $10 per visit

Not specified Not specified

Type of

insurance

affected

lllness

covereda

Type of benefit

mandateb

Scope of benefits

Inpatient

(hospitalization)

Outpatient

services

Cost sharing:

copayments and

coinsurance

Dollar limits:

annual and

lifetimec
Appendix III

State Laws on Mental Illness and Substance

Abuse Treatment

Page 47 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Louisiana

1982

Group, selfinsured, and

state

employee

plans

Mental illness Mandated offering Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

1997d

Group.

Exemption if

cost increase

of 1% or more

or small

employer with

50 or fewer

employees

Mental illness,

excluding

alcoholism and

drug abuse

Mandated offering May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

Must be equal to

other illnesses

Jan. 2000

Group, HMO,

and state

employee

plans

Serious mental

illnessr

Mandated benefits 45 days 52 visits; 1 day of

inpatient benefits

can be converted to

4 outpatient visits

Must be equal to

other illnesses

Must be equal to

other illnesses

1982

Group Alcoholism

and drug

abuse

Mandated offering Not specified Not specified Not specified Not specified

Maine

1996

Group.

Exemption if

small

employer with

20 or fewer

employees

Mental illnesss Mandated benefits Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

1996

Individual Mental illnesss Mandated offering Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

1984

Type of

insurance

affected

lllness

covereda

Type of benefit

mandateb

Scope of benefits

Inpatient

(hospitalization)

Outpatient

services

Cost sharing:

copayments and

coinsurance

Dollar limits:

annual and

lifetimec
Appendix III

State Laws on Mental Illness and Substance

Abuse Treatment

Page 48 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Group. Small

employer

exemption if

20 or fewer

employees

Alcoholism

and drug

dependency

Mandated benefits Not specified Not specified May place a

maximum limit on

benefits as long as

they are consistent

with the law

May place a

maximum limit on

benefits as long as

they are

consistent with the

law

Maryland

1994

Group and

individual

Mental illness,

emotional

disorder, drug

abuse

disorder, or

alcohol abuse

disorder

Mandated benefits Must be equal to

other illnesses

Unlimited visits but

subject to different

copayments: 80%

for visits 1-5, 65%

for visits 6-30, and

50% for 31 or more

per year

Must be equal to

other illnesses

Must be equal to

other illnesses

Massachusetts

1996

Group,

individual, and

HMO

Mental or

nervous

conditionst

Mandated benefits 60 days in a

mental hospital

$500 per year Not specified Lifetime maximum

must be equal for

inpatienttreatment

1991

Group,

individual, and

HMO

Alcoholism Mandated benefits 30 days $500 per year Not specified Not specified

Michigan

1988

Group for

inpatient;

group and

individual for

other levels.

Exemption for

cost increase

of 3% or more

Substance

abuse

Mandated offering

of inpatient and

mandated benefits

for other levels

To the extent

agreed upon

$1,500 per year for

outpatient and

intermediate

treatment

Charges, terms,

and conditions

shall not be less

favorable

$1,500 per year

for outpatient and

intermediate

treatment

Minnesota

1995

Group,

individual, and

HMOs

Mental health

and chemical

dependency

Mandated benefits

for HMOs;

otherwise,

mandated offering

Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

1986

Type of

insurance

affected

lllness

covereda

Type of benefit

mandateb

Scope of benefits

Inpatient

(hospitalization)

Outpatient

services

Cost sharing:

copayments and

coinsurance

Dollar limits:

annual and

lifetimec
Appendix III

State Laws on Mental Illness and Substance

Abuse Treatment

Page 49 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Group and

individual

Alcoholism,

chemical

dependency,

or drug

addiction

Mandated benefits At least 20% of

the total days

allowed but not

less than 28 days

per year

At least 130 hours

of treatment per

year

Not specified Not specified

Mississippi

1994

Group and

individual

Mental illness Mandated offering Services certified

as necessary

Services certified

as necessary

Not specified Not specified

1975

Group Alcoholism Mandated benefits Not specified Not specified Not specified Annual limit of

$1,000 per year;

lifetime limit not

specified

Missouri

1997

Group,

individual, and

HMO

Recognized

mental illness

and chemical

dependencyu

Mandated offering 90 days for mental

illness, 6 days for

detoxification

Must be equal for

mental illness; 26

visits for chemical

dependency

Must be equal for

mental illness and

chemical

dependency

Must be equal for

mental illness;

chemical

dependency may

be limited to not

less than 10

episodes of

treatment

Jan. 2000

Group,

individual, and

HMO

Mental illness,

including

alcohol and

drug abusev

Mandated offering Equal for mental

illness; at least 30

days for alcohol

and drug abuse if

offered

Equal for mental

illness; at least 20

visits for alcohol

and drug abuse if

offered

Shall not be

unreasonable in

relation to the cost

of services

provided

A lifetime limit

equal to four times

the annual limit

may be imposed

for alcohol and

drug abuse

1995

Group and

individual

Alcoholism,

chemical

dependency,

and drug

addiction

Mandated benefits

for alcoholism;

mandated offering

for others

30 days for

alcoholism; 80%

of reasonable

charges up to

$2,000 maximum

30 days for all levels

of care

Not specified Not specified

Montana

1997d

Type of

insurance

affected

lllness

covereda

Type of benefit

mandateb

Scope of benefits

Inpatient

(hospitalization)

Outpatient

services

Cost sharing:

copayments and

coinsurance

Dollar limits:

annual and

lifetimec
Appendix III

State Laws on Mental Illness and Substance

Abuse Treatment

Page 50 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Group.

Exemption if

cost increase

of 1% or more

or small

employer with

50 or fewer

employees

Mental illness,

excluding

alcoholism and

drug abuse

Mandated offering May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

Must be equal to

other illnesses

1997; exemptions expire Oct. 2001

Group.

Exemption if

cost increase

of 1% or more

or small

employer

(number not

specified)

Mental illness,

alcoholism,

and drug

addiction

Mandated benefits 21 days with

$4,000 maximum

every 2 years;

$8,000 lifetime

maximum for

alcohol and drug

addiction only

No less than $2,000

per year for mental

illness and $1,000

per year for alcohol

and drug addiction

No less favorable

generally than for

other illnesses up

to maximums

See specified

maximums under

inpatient and

outpatient

benefits.

Aggregate limits

may not be

imposed more

restrictively

Jan. 2000

Group and

individual

Severe mental

illnessw

Mandated benefits Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

Nebraska

Jan. 2000

Group and

HMO.

Exemption if

small

employer with

15 or fewer

employees

Serious mental

illnessx

Mandated offering Must be equal to

other illnesses

Must be equal to

other illnesses

May be different

from that for other

illnesses

Must be equal to

other illnesses

1989

Group and

HMO

Alcoholism Mandated offering 30 days per year

with at least 2

treatment periods

in a lifetime

60 visits during the

lifetime of the policy

No less favorable

generally than for

other illness

No less favorable

generally than for

other illness

Nevada

1997d

Type of

insurance

affected

lllness

covereda

Type of benefit

mandateb

Scope of benefits

Inpatient

(hospitalization)

Outpatient

services

Cost sharing:

copayments and

coinsurance

Dollar limits:

annual and

lifetimec
Appendix III

State Laws on Mental Illness and Substance

Abuse Treatment

Page 51 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Group.

Exemption if

cost increase

of 1% or more

or small

employer with

50 or fewer

employees

Mental illness,

excluding

alcoholism and

drug abuse

Mandated offering May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

Must be equal to

other illnesses

Jan. 2000

Group and

individual.

Exemption if

cost increase

of 2% or more

or small

employer with

25 or fewer

employees

Severe mental

illnessy

Mandated benefits 40 days 40 visits Must not be more

than 150% of outof-pocket

expenses required

for medical and

surgical

Must be equal to

other illnesses

1997

Group,

individual, and

HMO

Abuse of

alcohol or

drugs

Mandated benefits $9,000 inpatient

and $1,500 for

detoxification per

year

$2,500 per year Must be paid in

same manner

Must be paid in

same manner to

maximum benefit;

lifetime maximum

not specified

New Hampshire

1993

Group,

individual, and

HMO.

Different

benefits for

mental illness

specified

under major

medical and

nonmajor

medical plans

Mental or

nervous

conditions

Mandated benefits Ratio of benefits

substantially the

same as benefits

for other illnesses

under nonmajor

medical plans and

$3,000 per year

and $10,000 per

lifetime under

major medical

plans

Ratio of benefits

substantially the

same as benefits

for other illnesses

under nonmajor

medical plans and

not less than 15

hours per year

under major

medical plans

Ratio of benefits

substantially the

same as benefits

for other illnesses

Ratio of benefits

substantially the

same as benefits

for other illnesses

under nonmajor

medical plans and

$3,000 per year

and $10,000 per

lifetime under

major medical

plans

1995

Group and

HMO

Biologically

based mental

illnessz

Mandated benefits Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

New Jersey

1999

Type of

insurance

affected

lllness

covereda

Type of benefit

mandateb

Scope of benefits

Inpatient

(hospitalization)

Outpatient

services

Cost sharing:

copayments and

coinsurance

Dollar limits:

annual and

lifetimec
Appendix III

State Laws on Mental Illness and Substance

Abuse Treatment

Page 52 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Group and

individual

Biologically

based mental

illnessaa

Mandated benefits Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

1985

Group and

individual

Alcoholism Mandated benefits

for care prescribed

by a doctor

Must be equal to

other illnesses

Must be equal to

other illnesses

Benefits provided

to the same extent

as benefits for any

other sickness

Benefits provided

to the same extent

as benefits for any

other sickness

New Mexico

1998d

Group.

Exemption if

cost increase

of 1% or more

or small

employer with

50 or fewer

employees

Mental illness,

excluding

alcoholism and

drug abuse

Mandated offering May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

Must be equal to

other illnesses

Oct. 2000

Group.

Exemption if

cost increase

of 1.5% or

more for small

employer with

49 or fewer

employees or

2.5% or more

for larger

employers

Mental health

benefitsbb

Mandated benefits Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

1987

Group Alcoholism Mandated offering 30 days per year,

limited to no less

than two episodes

per lifetime

30 visits per year,

limited to no less

than two episodes

per lifetime

Consistent with

cost sharing

imposed on other

benefits

Consistent with

dollar limits

imposed on other

benefits

New York

1998

Type of

insurance

affected

lllness

covereda

Type of benefit

mandateb

Scope of benefits

Inpatient

(hospitalization)

Outpatient

services

Cost sharing:

copayments and

coinsurance

Dollar limits:

annual and

lifetimec
Appendix III

State Laws on Mental Illness and Substance

Abuse Treatment

Page 53 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Group Mental,

nervous, or

emotional

disorders and

alcoholism and

substance

abuse

Mandated offering 30 days mental

illness, 30 days

alcoholism or

substance abuse,

and 7 days

detoxification

$700 mental illness

and 60 visits for

alcoholism or

substance abuse

As deemed

appropriate by the

superintendent

and consistent

with cost sharing

for other benefits

As deemed

appropriate by the

superintendent

and consistent

with dollar limits

for other benefits

North Carolina

1997

State

employee

plans

Mental illness

and chemical

dependencycc

Mandated benefits Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

1997d

Group.

Exemption if

cost increase

of 1% or more

or small

employer with

50 or fewer

employees

Mental illness,

excluding

alcoholism and

drug abuse

Mandated offering May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

Must be equal to

other illnesses

1985

Group Chemical

dependencycc

Mandated offering $8,000 per year

and $16,000 per

lifetime

$8,000 per year and

$16,000 per lifetime

Same as for other

illness generally

$8,000 per year

and $16,000 per

lifetime

North Dakota

1995

Group and

HMO

Mental

disorders,

alcoholism,

and drug

addiction

Mandated benefits 45 days for mental

illness and 60

days for

substance abuse

30 hours for mental

illness and 20 visits

for substance

abuse

No deductible or

copayment for first

5 hours or visits,

not to exceed 20%

for remaining

hours or visits

Lifetime and

annual dollar limits

not specified

Ohio

1987

Group and

self-insured

Mental or

nervous

disorders and

alcoholism

Mandated offering;

mandated benefits

for alcoholism

At least $550 for

mental illness and

$550 for

alcoholism per

year

At least $550 for

mental illness and

$550 for alcoholism

per year

Benefits may be

subject to

reasonable

deductibles and

coinsurance

Lifetime dollar

limits not specified

Oklahoma

Jan. 2000

Type of

insurance

affected

lllness

covereda

Type of benefit

mandateb

Scope of benefits

Inpatient

(hospitalization)

Outpatient

services

Cost sharing:

copayments and

coinsurance

Dollar limits:

annual and

lifetimec
Appendix III

State Laws on Mental Illness and Substance

Abuse Treatment

Page 54 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Group.

Exemption if

cost increase

of 2% or more

or small

employer with

50 or fewer

employees

Severe mental

illnessdd

Mandated benefits Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

Oregon

July 2000

Group and

HMO

Mental or

nervous

conditions,

including

alcoholism and

chemical

dependencyee

Mandated benefits $5,000 for adults

and $7,500 for

children per 24

months for mental

health; $5,625 for

adults and $5,000

for children for

substance abuse

$2,500 for both

adults and children

per 24 months for

mental health;

$1,875 for adults

and $2,500 for

children for

substance abuse

No greater than for

the treatment of

other illnesses

Payments for all

treatment for

mental health and

substance abuse

are $13,125 for

adults and

$15,625 for

children.

Payments for

substance abuse

only are $8,125 for

adults and

$13,125 for

children per 24

months

1981

Individual Alcoholism Mandated offering $4,500 in a 24-

month period

$4,500 in a 24-

month period

Coverage must be

no less than 80%

of total

Lifetime, not

specified

Pennsylvania

1999

Group and

HMO. Smallemployer

exemption if

50 or fewer

employees

Serious mental

illnessi

Mandated benefits 30 days 60 visits; 1 day of

inpatient can be

converted to 2 visits

Must not prohibit

access to care

Must be equal to

other illnesses

Rhode Island

1995

Group,

individual,

HMO, and

self-insured

Serious mental

illnessff

Mandated benefits Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

Type of

insurance

affected

lllness

covereda

Type of benefit

mandateb

Scope of benefits

Inpatient

(hospitalization)

Outpatient

services

Cost sharing:

copayments and

coinsurance

Dollar limits:

annual and

lifetimec
Appendix III

State Laws on Mental Illness and Substance

Abuse Treatment

Page 55 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

1995

Group,

individual,

HMO, and

self-insured

Substance

dependency

and abusegg

Mandated benefits Three episodes of

detoxification or

21 days,

whichever comes

first, per year

30 hours for each

individual under

treatment and 20

hours for family per

year

Not specified Not specified

South Carolina

1994

Group Psychiatric

conditions,

including

substance

abusehh

Mandated offering $2,000 per year

overall total

$2,000 per year

overall total

May be different $2,000 annual;

$10,000 lifetime

maximum

1997d

Group.

Exemption if

cost increase

of 1% or more

or small

employer with

50 or fewer

employees

Mental illness,

excluding

alcoholism and

drug abuse

Mandated offering May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

Must be equal to

other illnesses

South Dakota

1998

Group,

individual, and

HMO

Biologically

based mental

illnessii

Mandated benefits Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

1979

Group,

individual, and

HMO

Alcoholism Mandated offering 30 days overall

each 6 months; 90

days lifetime

30 days overall

each 6 months; 90

days lifetime

On the same basis

as benefits

provided for other

illnesses

On the same basis

as benefits

provided for other

illnesses

Tennessee

1997d

Group.

Exemption if

cost increase

of 1% or more

or small

employer with

50 or fewer

employees

Mental illness,

excluding

alcoholism and

drug abuse

Mandated offering May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

Must be equal to

other illnesses

Type of

insurance

affected

lllness

covereda

Type of benefit

mandateb

Scope of benefits

Inpatient

(hospitalization)

Outpatient

services

Cost sharing:

copayments and

coinsurance

Dollar limits:

annual and

lifetimec
Appendix III

State Laws on Mental Illness and Substance

Abuse Treatment

Page 56 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Jan. 2000

Group.

Exemption if

cost increase

of 1% or more

or small

employer with

25 or fewer

employees

Mental or

nervous

conditionsk

Mandated benefits 20 days 25 visits Must be equal to

other illnesses

Must be equal to

other illnesses

1982

Group and

HMO

Alcohol and

drug

dependency

Mandated offering Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

Texas

1991

State

employee

plans only

Biologically

based mental

illnessjj

Mandated benefits Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

1997

Group and

HMO. Smallemployer

exemption if

50 or fewer

employees

Serious mental

illnesskk

Mandated benefits

with a mandated

offering for small

groups of 50 or

fewer

45 days 60 visits;

medication checks

are not counted

toward the limit

Must be equal to

other illnesses

Must be equal to

other illnesses

1981

Group, HMO,

and selfinsured.

Exemption for

self-insured

plans of 250 or

fewer

members

Chemical

dependencyll

Mandated benefits

with a mandated

offering for selfinsured plans of 250

or fewer members

Lifetime maximum

of three separate

series of

treatments,

including all levels

of medically

necessary care in

each episode

Lifetime maximum

of three separate

series of

treatments,

including all levels

of medically

necessary care in

each episode

Must be sufficient

to provide

appropriate care

Must be sufficient

to provide

appropriate care

Utah

1994

Group Alcohol and

drug

dependency

Mandated offering Not specified Not specified Not specified Not specified

Type of

insurance

affected

lllness

covereda

Type of benefit

mandateb

Scope of benefits

Inpatient

(hospitalization)

Outpatient

services

Cost sharing:

copayments and

coinsurance

Dollar limits:

annual and

lifetimec
Appendix III

State Laws on Mental Illness and Substance

Abuse Treatment

Page 57 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Vermont

1998

Group and

individual

Mental health

condition,

including

alcohol and

substance

abusemm

Mandated benefits Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

Must be equal to

other illnesses

Virginia

Jan. 1, 2000, to July 1, 2004

Group and

individual.

Small-group

exemption if

25 or fewer

members

Biologically

based mental

illness,

including drug

and alcohol

addictionnn

Mandated benefits Must be equal to

achieve the same

outcome as

treatment for any

other illness

Must be equal to

achieve the same

outcome as

treatment for any

other illness

Must be equal to

achieve the same

outcome as

treatment for any

other illness

Must be equal to

achieve the same

outcome as

treatment for any

other illness

Washington

1987

Group and

HMO

Mental health

treatment

Mandated offering Not specified Not specified Reasonable

deductible and

copayments

Not specified

1990

Group and

HMO

Chemical

dependency

Mandated benefits Not specified Not specified Not specified Not specified

West Virginia

1997d

Group.

Exemption if

cost increase

of 1% or more

Mental illness,

excluding

alcoholism and

drug abuse

Mandated offering May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

May impose terms

and conditions,

including cost

sharing and limits

on the number of

visits or days

covered

Must be equal to

other illnesses

1998

Group and

individual.

Exemption for

a cost

increase of

1%

Mental or

nervous

conditions

Mandated offering 45 days in a

mental hospital;

must be equal in a

general hospital

50% of the eligible

expenses up to

$500 per year; must

not exceed 50 visits

in 12 months

Not specified Lifetime and

aggregate limits

must be equal to

other illnesses

Type of

insurance

affected

lllness

covereda

Type of benefit

mandateb

Scope of benefits

Inpatient

(hospitalization)

Outpatient

services

Cost sharing:

copayments and

coinsurance

Dollar limits:

annual and

lifetimec
Appendix III

State Laws on Mental Illness and Substance

Abuse Treatment

Page 58 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Note: Years below state names are years laws became effective, based on the most recent major

amendments to statutes.

a

Illnesses that health plans subject to the law must cover. APA’s DSM IV defines 13 diagnoses that

mental health providers and consumer organizations commonly refer to as biologically based mental

illnesses. Between 3 and 13 of these diagnoses are referred to in various state parity laws concerning

mental illness.

b

Decribes the extent to which the law requires that a mental health benefit be included. A mandated

benefit clause requires that all coverage sold in the applicable market contain the mental health

benefits that complies with the terms of the law. A mandated offering clause could require that (1)

mental health coverage, if offered, complies with the terms of the law or (2) each issuer offer mental

health coverage that meets the terms of the law in at least one of its plans or as a separate rider. In

either case, the issuer may charge more for the plan with the mental health benefits or the rider.

c

Annual and lifetime dollar limits are the amounts of health coverage that an insurer will cover per

individual.

d

Year the law was adopted.

e

As defined in the Internal Classification of Disease (ICD) manual and DSM.

f

In California, severe mental illness is defined as (1) schizophrenia, (2) schizoaffective disorder, (3)

bipolar disorder (manic-depressive illness), (4) major depressive disorders, (5) panic disorder, (6)

obsessive compulsive disorder, (7) pervasive developmental disorder or autism, (8) anorexia nervosa,

and (9) bulimia nervosa.

g

In Colorado, biologically based mental illness is defined as (1) schizophrenia, (2) schizoaffective

disorder, (3) bipolar affective disorder, (4) major depressive disorder, (5) specific obsessive compulsive

disorder, and (6) panic disorder.

1998

Group Alcoholismoo Mandated offering 30 days Not specified Must be equal up

to 30 days; cannot

exceed 50% for

outpatient

Not less than $750

per year and not

less than an

amount equal to

the lesser of

$10,000 or 25% of

the lifetime policy

limit

Wisconsin

1981

Group and

HMO

Mental

disorders and

alcohol and

drug abuse

Mandated benefits The lesser of 30

days or $7,000

minus a

copayment of up

to 10% for group

plans and $6,300

for HMOs

$2,000 per year

minus a copayment

of up to 10% for

group plans and

$1,800 for HMOs

Copayment of up

to 10%

Lifetime limits not

specified

Wyoming

No law

Type of

insurance

affected

lllness

covereda

Type of benefit

mandateb

Scope of benefits

Inpatient

(hospitalization)

Outpatient

services

Cost sharing:

copayments and

coinsurance

Dollar limits:

annual and

lifetimec
Appendix III

State Laws on Mental Illness and Substance

Abuse Treatment

Page 59 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

h

In Connecticut, mental and nervous conditions are defined as mental disorders, as defined in the

most recent edition of DSM, and include alcoholism and drug addiction as defined by DSM.

i

Serious mental illness means any of the following: (1) schizophrenia, (2) bipolar disorder, (3)

obsessive compulsive disorder, (4) major depressive disorder, (5) panic disorder, (6) anorexia nervosa,

(7) bulimia nervosa, (8) schizoaffective disorder, and (9) delusional disorder.

j

In the District of Columbia, mental illness is defined as any psychiatric disease identified in the most

recent edition of ICD or DSM. Alcohol abuse and drug abuse are defined as any pattern of the

pathological use of alcohol or a drug that causes impairment in social or occupational functioning or

that produces physiological dependency as evidenced by physical tolerance or by physical symptoms

when it is withdrawn.

k

As defined by DSM.

l

In Hawaii, mental illness is defined as a syndrome of clinically significant psychological, biological, or

behavioral abnormalities that results in personal distress or suffering, impairment of capacity for

functioning, or both.

mIn Hawaii, serious mental illness is defined as (1) schizophrenia, (2) schizoaffective disorder, and (3)

bipolar mood disorder, as defined in the most recent edition of DSM, that is severe enough to result in

substantial interference with the activities of daily living.

n

The Illinois statute reads: “no policy of group accident and health insurance delivered in this state

which provides inpatient hospital coverage for sickness shall exclude from such coverage the

treatment of alcoholism.” No further specifications are provided.

o

Indiana defines “coverage for services for mental illness” to include benefits with respect to mental

health services as defined by the contract, policy, or plan for health services. However, the term does

not include services for the treatment of substance abuse or chemical dependency.

p

In Kansas, nervous and mental conditions are defined as disorders specified in DSM IV but not

conditions not attributable to a mental disorder that are a focus of attention or treatment.

q

In Kentucky, mental illness is defined as psychosis, neurosis, or any emotional disorder.

r

In Louisiana, severe mental illness includes (1) schizophrenia or schizoaffective disorder, (2) bipolar

disorder, (3) pervasive developmental disorder or autism, (4) panic disorder, (5) obsessive compulsive

disorder, (6) major depressive disorder, (7) anorexia and bulimia, (8) Asperger’s disorder, (9)

intermittent explosive disorder, (10) posttraumatic stress disorder, (11) psychosis not otherwise

specified when diagnosed in a child younger than 17 years old, (12) Rett syndrome, and (13) Tourette

syndrome.

s

In Maine, mental illness is defined as (1) schizophrenia, (2) bipolar disorder, (3) pervasive

developmental disorder or autism, (4) paranoia, (5) panic disorder, (6) obsessive compulsive disorder,

and (7) major depressive disorder.

t

Massachusetts defines mental and nervous conditions as they are defined by APA’s standard

nomenclature.

u

In Missouri, recognized mental illness is defined as conditions classified as “mental disorders” in DSM

but does not include mental retardation. Chemical dependency is defined as the psychological or

physiological dependence on and abuse of drugs, including alcohol, characterized by drug tolerance or

withdrawal and impairment of social or occupational role functioning or both.

v

In Missouri, mental illness is defined as the following disorders in ICD: (1) schizophrenic disorders and

paranoid states (295 and 297, except 297.3); (2) major depression, bipolar disorder, and other affective

psychoses (296); (3) obsessive compulsive disorder, posttraumatic stress disorder, and other major

anxiety disorders (300.0, 300.21, 300.22, 300.23, 300.3, and 309.81); (4) early childhood psychoses

and other disorders first diagnosed in childhood or adolescence (299.8, 312.8, 313.81, and 314); (5)

alcohol and drug abuse (291, 292, 303, 304, and 305, except 305.1); (6) anorexia nervosa, bulimia,

and other severe eating disorders (307.1, 307.51, 307.52, and 307.53); and (7) senile organic

psychotic conditions (290).

wIn Montana, severe mental illness is defined as the following disorders as defined by APA: (1)

schizophrenia, (2) schizoaffective disorder, (3) bipolar disorder, (4) major depression, (5) panic

disorder, (6) obsessive compulsive disorder, and (7) autism.
Appendix III

State Laws on Mental Illness and Substance

Abuse Treatment

Page 60 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

x

In Nebraska, serious mental illness before January 1, 2002, is defined as (1) schizophrenia, (2)

schizoaffective disorder, (3) delusional disorder, (4) bipolar affective disorder, (5) major depression,

and (6) obsessive compulsive disorder. Serious mental illness on and after January 1, 2002, is defined

as any mental health condition that current medical science affirms is caused by a biological disorder

of the brain and that substantially limits the life activities of the person with the serious mental illness.

Serious mental illness includes but is not limited to (1) schizophrenia, (2) schizoaffective disorder, (3)

delusional disorder, (4) bipolar affective disorder, (5) major depression, and (6) obsessive compulsive

disorder.

y

In Nevada, severe mental illness is defined as any of the following mental illnesses that are

biologically based and for which diagnostic criteria are listed in DSM IV: (1) schizophrenia, (2)

schizoaffective disorder, (3) bipolar disorder, (4) major depressive disorders, (5) panic disorder, and (6)

obsessive compulsive disorder.

z

In New Hampshire, biologically based mental illnesses are defined as (1) schizophrenia, (2)

schizoaffective disorder, (3) major depressive disorder, (4) bipolar disorder, (5) paranoia and other

psychotic disorders, (6) obsessive compulsive disorder, (7) panic disorder, and (8) pervasive

developmental disorder or autism.

aaIn New Jersey, biologically based mental illnesses are defined as mental or nervous conditions that

are caused by a biological disorder of the brain and that result in a clinically significant or psychological

syndrome or pattern that substantially limits the functioning of a person with an illness including, but

not limited to, (1) schizophrenia, (2) schizoaffective disorder, (3) major depression, (4) bipolar disorder,

(5) paranoia and other psychotic disorders, (6) obsessive compulsive disorder, (7) panic disorder, and

(8) autism.

bbIn New Mexico, mental health benefits means the mental health benefits described in the group

health plan or group health insurance offered in connection with the plan but does not include

substance abuse benefits or gambling addiction.

ccIn North Carolina, mental illness is defined as (1) an illness that, when applied to adults, so lessens

their capacity to use self-control, judgment, and discretion in the conduct of their affairs and social

relationships as to make it necessary or advisable for them to be under treatment, care, supervision,

guidance, or control and (2) a mental condition, other than mental retardation alone, that, when applied

to minors, so impairs their capacity to exercise age-adequate self-control or judgment in conducting

their activities and social relationships that they are in need of treatment. North Carolina defines

chemical dependency as the pathological use or abuse of alcohol or other drugs in a manner or to a

degree that impairs personal, social, or occupational functioning and that may, but need not, include a

pattern of tolerance and withdrawal.

ddIn Oklahoma, severe mental illness is defined as (1) schizophrenia, (2) bipolar disorder, (3) major

depression, (4) panic disorder, (5) obsessive compulsive disorder, and (6) schizoaffective disorder as

defined in the most current edition of DSM.

eeIn Oregon, chemical dependency is defined as an addictive relationship with any drug or alcohol that

is either physical or psychological or both and that interferes recurringly with an individual’s physical,

psychological, or social adjustment to common problems. Chemical dependency does not include

addiction to or dependency on tobacco, tobacco products, or foods. The Oregon law does not provide

a specific definition for mental or nervous conditions.

ffIn Rhode Island, serious mental illness is defined as any mental disorder that current medical science

affirms is caused by a biological disorder of the brain and that substantially limits the life activities of a

person with the illness. The term includes but is not limited to (1) schizophrenia, (2) schizoaffective

disorder, (3) delusional disorder, (4) bipolar affective disorders, (5) major depression, and (6)

obsessive compulsive disorder.

ggIn Rhode Island, substance dependency and substance abuse are a pattern of pathological use of

alcohol or other psychoactive drugs characterized by impairments in social or occupational

functioning, debilitating physical condition, inability to abstain from or reduce consumption of the

substance, or the need for daily use of the substance for adequate functioning.

hhIn South Carolina, psychiatric conditions are defined as mental and nervous conditions, drug and

substance addiction or abuse, alcoholism, or other conditions that the most current edition of DSM

defines, describes, or classifies as psychiatric disorders or conditions.
Appendix III

State Laws on Mental Illness and Substance

Abuse Treatment

Page 61 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

iiIn South Dakota, biologically based mental illness is defined as (1) schizophrenia and other psychotic

disorders, (2) bipolar disorder, (3) major depression, and (4) obsessive compulsive disorder.

jjIn Texas, biologically based mental illness is defined as a serious mental illness that current medical

science affirms is caused by a physiological disorder of the brain that substantially limits the life

activities of the person afflicted with the illness and includes (1) schizophrenia, (2) paranoid and other

psychotic disorders, (3) bipolar disorders (manic-depressive disorders), (4) major depressive

disorders, and (5) schizoaffective disorders.

kkIn Texas, serious mental illness is defined as the following psychiatric illnesses as defined by DSM:

(1) schizophrenia, (2) paranoid and other psychotic disorders, (3) bipolar disorders (hypomanic, manic,

depressive, and mixed), (4) major depressive disorders (single episode or recurrent), (5)

schizoaffective disorders (bipolar or depressive), (6) pervasive developmental disorders, (7) obsessive

compulsive disorder, and (8) depression in childhood and adolescence.

llIn Texas, chemical dependency is defined as the abuse of or psychological or physical dependence on

or addiction to alcohol or a controlled substance.

mmIn Vermont, mental health condition is defined as any condition or disorder involving mental illness or

alcohol or substance abuse that falls under any of the diagnostic categories listed in the mental

disorders section of ICD as periodically revised.

nnIn Virginia, biologically based mental illness is defined as any mental or nervous condition caused by

a biological disorder of the brain that results in a clinically significant syndrome that substantially limits

a person’s functioning. The following diagnoses are specifically defined as biologically based mental

illness as they apply to adults and children: (1) schizophrenia, (2) schizoaffective disorder, (3) bipolar

disorder, (4) major depressive disorder, (5) panic disorder, (6) obsessive compulsive disorder, (7)

attention deficit hyperactivity disorder, (8) autism, and (9) drug and alcoholism addiction.

ooIn West Virginia, alcoholism is defined as a chronic disorder or illness in which the individual is

unable, for psychological or physical reasons or both, to refrain from the frequent consumption of

alcohol in quantities sufficient to produce intoxication and, ultimately, injury to health and effective

functioning.

Source: Tracy Delaney, Overview of State Laws Affecting Coverage of Mental Illness and Substance

Abuse Treatment (Washington, D.C.: NCSL, Health Policy Tracking Service, Mar. 1, 2000).
Page 62 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Appendix IV

Comments From the Health Care Financing

Administration ApendxiIV
Appendix IV

Comments From the Health Care Financing

Administration

Page 63 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996
Page 64 GAO/HEHS-00-95 Implementation of the Mental Health Parity Act of 1996

Appendix V

GAO Contact and Staff Acknowledgments ApendxiV

GAO Contact John Dicken, (202) 512-7043

Staff

Acknowledgments

JoAnne Bailey, Randy DiRosa, Mary Freeman, and Betty Kirksey made key

contributions to this report.

In addition, Dae Park provided statistical support, Richard Lipinski and

Elsie Picyk provided programming assistance, Mary Reich provided legal

review, and Susan Anthony and Mark Vinkenes assisted in the design and

development of the questionnaire.

(101843) Letr
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