1

May 28, 2009 

Office of Health Plan Standards and Compliance Assistance 

Employee Benefits Security Administration, Room N-5653 

U.S. Department of Labor 

200 Constitution Avenue, N.W. 

Washington, DC 20210 

Attention: MHPAEA Comments 

To Whom It May Concern: 

Mental Health America appreciates the opportunity to respond to the Request for 

Information Regarding the Paul Wellstone and Pete Domenici Mental Health Parity and 

Addiction Equity Act of 2008 (MHPAEA), published in the April 28, 2009 Federal Register. 

For over a century, Mental Health America (MHA) has been dedicated to improving 

access to quality behavioral health services for all Americans. Along with our network 

of over 300 state and local affiliates nationwide, we are committed to improving mental 

health care and substance use treatment and promoting mental wellness. Advocacy by 

MHA and our affiliates along with other mental health and addiction treatment 

organizations over the course of many years resulted in enactment of the MHPAEA to 

prohibit unequal treatment of mental health and substance use conditions by employersponsored and other group health plans. 

Most people diagnosed with mental health and/or substance use conditions are 

employed. And, untreated mental health and substance use conditions can greatly 

affect employee productivity and attendance. Moreover, if left unaddressed, these 

conditions can become extremely disabling and costly. In fact, the World Health 

Organization has pronounced mental health disorders to be the leading cause of 

disability in the United States based on burden of disease.1 Serious mental illnesses 

alone are estimated to have cost $193 billion in lost wages in 2002,2 which exceeds the 

gross revenue of 499 of the Fortune 500 companies. 

In enacting the MHPAEA, Congress made clear that the goal of this new law was to 

remedy the long history of employers and insurers not providing comparable coverage 

for mental health and substance use conditions compared to medical and surgical 

benefits.3 In order to achieve this goal, the implementing regulations must reflect the 

patient/consumer focus and protective intent of the law and ensure access to a 

meaningful range of evidence-based interventions. 

 

With striking scientific advances over the last half century, mental disorders can now be 

reliably diagnosed and for virtually every such disorder, there are a range of treatments 
2

and services that have been shown to be effective. Those treatments have efficacy rates 

comparable to or exceeding those for many medical and surgical conditions. 

The MHPAEA explicitly requires group health plans that provide mental health or 

substance use benefits to ensure that the financial requirements (for example, 

copayments, deductibles, and out-of-pocket expenses) and treatment limitations (for 

example, limits on the number of visits, days of coverage) are no more restrictive for 

mental health and substance use benefits than the predominant financial requirements 

or treatment limitations applied to substantially all medical and surgical benefits 

covered by the plan. 

An overly strict interpretation of the MHPAEA could thwart its fundamental purpose 

and result in a situation similar to the outcome following enactment of the Mental 

Health Parity Act of 1996 (Pub. L. 104-204). The General Accounting Office (GAO) 

found in a May 2000 review of the 1996 parity act’s implementation that 86% of 

employers surveyed reported that they had complied with the 1996 mental health 

parity law, but the vast majority of those employers substituted new restrictions on 

access to mental health benefits, thereby evading the spirit of the law. As GAO 

documented, employers were routinely limiting mental health benefits more severely 

than medical and surgical coverage, most often by restricting the number of covered 

outpatient visits and hospital days, and by imposing far higher copayments, 

deductibles, and other cost-sharing requirements on mental health care. As a result, 

many people with “good insurance coverage” were not getting needed treatment for 

mental health conditions at all.4 

In light of these issues and concerns, our responses to questions posed in the Request for 

Information are as follows: 

1. Financial Requirements and Treatment Limitations 

Do plans currently impose other types of financial requirements or treatment 

limitations on benefits?

The MHPAEA defines the term ``financial requirement'' as including deductibles, 

copayments, coinsurance, and out-of-pocket expenses. The statute likewise defines the 

term “treatment limitation” as including limits on the frequency of treatment, number of 

visits, or days of coverage “or other similar limits on the scope or duration of 

treatment.” 

But the lists of types of limitations and requirements included in these definitions are 

illustrative and should not be interpreted as the only treatment limitations and financial 

requirements to which parity applies under the new law. Use of the term “includes” in 

these definition makes this point clear. The first question in the Request for Information
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asking for other examples of treatment limitations and financial requirements indicates 

recognition of the illustrative nature of these definitions. As pointed out above, an 

overly restrictive interpretation of these definitions will result in a new federal parity 

standard that does little to achieve the goal of this legislation which is essentially to end 

discriminatory limits on access to mental health and substance use treatment. 

Other examples of treatment limitations that health plans disproportionately use to 

limit the “scope or duration of treatment” for mental health or substance use conditions 

include the following: 

• Prior authorization requirements that are applied more frequently and with 

higher standards for approval; 

• More restrictive medical necessity and appropriateness criteria; 

• “Fail first” policies that require consumers to suffer adverse outcomes from a 

preferred treatment or medication before the treatment or medication 

recommended by their providers will be covered; 

• “Step therapy” requirements that require consumers to try a series of preferred 

medications or treatments prior to accessing the recommended treatment; 

• Exclusion of certain specialized services like collaborative care, assertive 

community treatment, residential treatment, and partial hospitalization; 

• Higher evidence-based standards; 

• More frequent restrictions on treatments due to experimental status; 

• Stricter cost effectiveness requirements; 

• Lower provider fees; 

• Limitations on covering specific types of providers; 

• More restrictive provider licensure requirements; 

• More limited preferred provider networks or phantom networks with invalid 

phone numbers and names of providers no longer practicing or accepting new 

patients; 

• Requirement to prove current threat of harm to self of others as the justification 

for inpatient care; and 

• Separate deductibles or lifetime limits. 

The MHPAEA regulations should clarify that the parity standard applies to these other 

types of treatment limitations as well. The law certainly contemplates that mental 

health and substance use benefits will be managed by group health plans using some of 

these techniques but the overriding principle of parity dictates that management must 

be conducted in a fair and non-discriminatory way. 
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These treatment limitations could also be characterized as imposing higher financial 

requirements if as a result of discriminatory application of these limitations the 

consumer is subjected to higher out-of-pocket costs for mental health or substance use 

therapies compared to medical or surgical treatments. 

How do plans currently apply financial requirements or treatment limitations to (1) 

medical or surgical benefits and (2) mental health and substance use disorder benefits? 

Are these requirements or limitations applied differently to both classes of benefits? 

Do plans currently vary coverage levels within each class of benefits? 

Health plans often impose higher co-payments, deductibles, and other cost-sharing 

requirements, as well as restrictions on the number of outpatient visits and inpatient 

days covered. However, these benefit design limitations are only the most obvious 

examples of discriminatory treatment of mental health and substance use care. 

Regulations implementing the MHPAEA must also take into account evidence 

indicating mental health and substance use benefits have historically been much more 

strictly managed than medical and surgical benefit in ways that, were they to continue, 

would circumvent congressional intent and objectives explicitly delineated in the new 

law. 

States with preexisting parity laws have not seen large increases in mental health and 

substance use care utilization, presumably due to strict medical management. Research 

shows that while health care costs in general have been increasing, the share going to 

mental health has remained steady with spending on general health care growing twice 

as fast as spending on mental health care over a 30-year period through 2002.5 There 

have also been reports of low rates of spending on mental health services in health 

maintenance organizations relative to overall mental health spending6 and private 

insurance spending on substance use treatment has declined over the last decade.7 

Moreover, a recent study reported that about two-thirds of primary care physicians 

could not get outpatient mental health services for their patients – a rate that was at 

least twice as high as that for other services – due in part to health plan barriers and 

inadequate coverage.8

How do plans currently apply financial requirements or treatment limitations to (1) 

medical or surgical benefits and (2) mental health and substance use disorder benefits? 

Are these requirements or limitations applied differently to both classes of benefits? 

Do plans currently vary coverage levels within each class of benefits? 

In light of this question, we analyzed health care utilization data from Milliman, Inc., a 

leading actuarial firm, and contrasted service utilization for a number of mental health, 

substance use, and general health conditions to determine if there were patterns of 

differential treatment.9 We examined rates at which individuals received services for 

differing diagnoses, rates of in-network and out-of-network utilization, and the 
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stringency with which services were managed. What we found is that the data 

indicates health plans treat behavioral health and general health conditions unequally 

in several important respects: 

• The rates at which individuals receive care relative to the overall prevalence of 

disorders are substantially lower for behavioral health conditions than for 

general health. 10

• Reimbursement rates are less generous for behavioral health disorders than other 

chronic illnesses. This points towards a differential pattern of reimbursement for 

mental health and substance use conditions, as contrasted with other chronic 

general health conditions, as a partial explanation for the differential rates of 

service utilization.11 

• Out-of-network utilization is higher for behavioral health disorders than general 

medical conditions. 12 Out-of-network utilization can reflect the adequacy of the 

in-network provider panels and also the reimbursement rates, since poorer 

reimbursement attracts fewer providers into the panel. Additionally, out of 

network use is typically associated with higher out-of-pocket expenses, which 

would indicate differential cost sharing for the treatment of behavioral disorders 

as contrasted with other chronic conditions. 

• Behavioral inpatient care is more stringently managed than inpatient care for 

general medical conditions.13 

These differences reflect differential access to care, i.e., a treatment limitation. In 

addition, out-of-network utilization often results in greater cost sharing for those with 

behavioral health conditions, which is a financial inequity. Reimbursement rate 

differentials may impact the composition of behavioral health provider panels which in 

turn could influence the greater out-of-network utilization. 

Testimony provided at field hearings on the MHPAEA legislation conducted by 

Representatives Patrick Kennedy from Rhode Island and former Representative Jim 

Ramstad from Minnesota is consistent with these actuarial analyses. Many witnesses 

reported that mental health and substance use conditions are managed much more 

restrictively than general health benefits and that children and adolescents in particular 

have great difficulty accessing care: 

• The father of a 17-yr old girl with alcoholism, after exhausting all the female 

adolescent inpatient options in Rhode Island, decided to admit her to the 

Hazelden Center in Minnesota. The parent was exasperated with the failure of 

his insurance provider, United Behavioral Health, in reimbursing for services 
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United had authorized. “I have a master’s degree in business, I have worked in 

the health care field for 27 years; yet I found it extremely difficult trying to obtain 

reimbursement for medically necessary services.”14

• Another Rhode Island resident detailed the need for the appropriate scope of 

services as well as problems that he had experienced in accessing care. “We 

could all agree that covered benefits should include inpatient, emergency 

services, crisis intervention, psychiatric and psychological evaluation, medication 

management, counseling, psychotherapy, to name a few, but consideration 

should also be given to include day treatment, intensive outpatient program, 

partial hospitalization, outreach, home visiting and specialized services for 

individuals with co-occurring disorders and social case management...[P]ayment 

and administrative practices need to be examined. Examples still prevalent in 

Rhode Island are low reimbursement rates and inadequate payment structure, 

high service co-pays and deductibles, limitation on number of visits and services, 

significant payment delays, capricious and arbitrary denials usually blamed on 

the computer or on human error and continual requests for claims 

resubmission...There exists, in some cases, selective micro management through 

frequent requirements for service authorizations and reauthorizations. For some 

outpatient services, especially our child and family intensive treatment services, 

we are frequently told that authorization is not needed and, after several months 

of services, payment is denied due to lack of authorization.” 15 

It is critical that the regulations make clear that the inequitable use of plan 

characteristics (including, but not limited to, utilization management techniques, 

reimbursement rates, and adequacy of provider panels) will qualify as treatment 

limitations and, as such, may not be applied to mental health and substance use benefits 

in a discriminatory and more restrictive fashion.

2. Terms/Provisions in the MHEAPA 

What terms or provisions require additional clarification to facilitate compliance? 

What specific clarifications would be helpful?

The regulations should include the following clarifications: 

• Parity means “equal to” – The regulations should emphasize that financial 

requirements and treatment limitations for mental health and substance use 

benefits must be “no more restrictive than” those for medical and surgical 

benefits as stated in the MHPAEA. 
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• Effect on state parity laws – The regulations should clarify and emphasize the 

continued applicability of state laws that provide for greater protection of mental 

health and substance use benefits. 

• Application to Medicaid managed care plans – The 1996 mental health parity law 

applied to Medicaid managed care plans and the regulations should make clear 

that MHPAEA applies to these plans as well. 

• Application to the Children’s Health Insurance Program (CHIP) – The 1996 

mental health parity law applied to CHIP and the regulations should make clear 

that MHPAEA applies to CHIP as well. 

• Cost Sharing and Treatment Limits – MHPAEA prohibits unequal financial 

requirements. Separate deductibles for behavioral health and other health 

services would comprise unequal financial requirements. The regulations should 

clearly indicate that separate deductibles are not consistent with the intent of the 

Act. 

• Number of employees – For purposes of the small employer exemption, there 

needs to be clarification on how the total number of employees be calculated if 

there are groups that pool their resources to offer coverage. 

• Application to non-federal government plans – There needs to be clarification on 

whether the provisions of the law also apply to state and local government group 

health plans. 

3. Medical Necessity

What information, if any, regarding the criteria for medical necessity determinations 

made under the plan with respect to mental health or substance use disorder benefits is 

currently made available by the plan? To whom is this information currently made 

available and how is it made available? Are there industry standards or best practices 

with respect to this information and communication of this information? 

MHPAEA requires plans to provide the criteria they use to make medical necessity 

determinations to current or potential enrollees or contracting providers, upon request. 

Most medical necessity standards used by health plans focus on the following criteria: 

• Customary standard of practice, i.e., whether the treatment accords with 

professional standards of practice; 
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• Evidence-base, i.e., whether there is sufficient evidence to demonstrate 

effectiveness; 

• Medical service, i.e., whether the treatment is considered medical rather than 

social or custodial; and 

• Cost, i.e., whether the treatment is considered cost-effective by the insurer. 

The following additional clarifications would strengthen these criteria: 

• Evidence from national experts should be considered if rigorous trial data are not 

available for a particular treatment service; 

• Services must be available to maintain or restore function and to prevent or 

ameliorate medical conditions in addition to treating injuries or illnesses; and 

• Cost effectiveness must include the patient’s desired outcomes and not simply 

changes in clinical status. 

In addition, the regulations should require health plans to do the following: 

• Set timeframes for disclosure of medical necessity criteria; 

• Detail appeal and enforcement mechanisms; 

• Make available to beneficiaries, upon request, the standards used to determine 

medical necessity judgments (e.g., standard of practice, strength of the evidence 

base, definition of medical conditions); and 

• Make available to beneficiaries, upon request, the standards used to assess 

medical necessity for medical and surgical benefits. 

4. Denials of Reimbursement/Payment for Services

What information, if any, regarding the reasons for any denial under the plan of 

reimbursement or payment for services with respect to mental health or substance use 

disorder benefits is currently made available by the plan? To whom is this information 

currently made available and how is it made available? Are there industry standards or 

best practices with respect to this information and communication of this information? 

The MHPAEA requires plans to provide the reasons for any coverage denials with 

respect to mental health or substance use benefits to any current or potential enrollee 

upon request. 
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The regulations should require health plans to do the following: 

• Specify that consumers may receive at no charge copies of the documentation the 

plan used to make the coverage determination at issue; 

• Set timeframes for disclosure of reasons for claims denials; and 

• Outline the process for appealing the determinations, including time frames and 

enforcement mechanisms. 

5. Out-of-Network Coverage 

To gather more information on the scope of out-of-network coverage, the Departments 

are interested in finding out whether plans currently provide out-of-network coverage 

for mental health and substance use disorder benefits. If so, how is such coverage the 

same as or different than out-of-network coverage provided for medical and surgical 

benefits? 

Under MHPAEA, plans that cover medical or surgical services provided by out-ofnetwork providers must also cover mental health or substance use services provided by 

out-of-network providers if the plan covers mental health or substance use benefits at 

all. 

The regulations should require that plans provide information to consumers regarding 

the relative availability of in-network and out-of-network providers for each of the 

medical specialties in order to evaluate the adequacy of the networks and their 

equivalence 

6. Cost Exemptions

Which aspects of the exemption for increased cost resulting from the parity 

requirement, if any, require additional guidance? Would model notices be helpful to 

facilitate disclosure to Federal agencies, State agencies, and participants and 

beneficiaries regarding a plan's or issuer's election to implement the cost exemption? 

MHPAEA provides that plans may be exempt from the law if they can show that the 

parity requirements result in an increase in total costs of coverage by over 2 percent in 

the first year and one percent for each subsequent year. 

The regulations should clarify that assessment of whether a plan qualifies for a cost 

exemption must be determined on a retrospective basis and based on real experience 

with increased cost instead of hypothetical costs. 
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The regulations should provide guidance on the evidence that would be required to 

attribute any cost increase to the provision of equitable services as opposed to other 

market conditions, such as differential fee adjustments for differing specialties. 

7. Other Issues

Comments on other issues relevant to the development of the MHPAEA regulations. 

The regulations should provide a methodology for comparing types of service across 

medical specialty areas to determine their equivalence. In addition, the regulations 

could outline broad categories of care within which parity will be required; for example, 

inpatient in-network services as a category and inpatient out-of-network as a separate 

category. 

 

Another issue to be clarified in the regulations is whether the inclusion of mental health 

medications on a plan formulary constitutes providing a mental health benefit such that 

the parity requirements in the MHPAEA are triggered. Our position is that since 

psycho-pharmaceuticals are a commonly used treatment for behavioral health disorders 

– often as the sole treatment – inclusion of them on the formulary would constitute a 

mental health benefit and therefore trigger the application of the MHPAEA. 

Passage of the MHPAEA signals the end of the historical discrimination against the 

treatment of mental health and substance use conditions. Clear patterns of 

discrimination and the methods used to effect this discrimination have been 

summarized here. Effective, clear, and prescriptive regulations are needed to insure 

that the intent of the Act is fully realized in its implementation such that persons with 

these disabling illnesses receive care equitably. 

On behalf of Mental Health America, we thank you for the opportunity to comment and 

look forward to working with you in implementing this landmark legislation. 

Sincerely, 

David Shern, PhD Kirsten Beronio, JD 

President and CEO Senior Director, Federal Health Policy 

Julie Clark, JD Sarah Steverman, MSW 

Vice President, Healthcare Reform Director, State Policy 
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1 World Health Organization, The World Health Report 2004: Changing History, Annex Table 3: Burden of disease in 

DALYs [“disability-adjusted life years”] by cause, sex and mortality stratum in WHO regions (2004). 

2 Ronald C. Kessler, Steven Heeringa, Matthew D. Lakoma, et al., “Individual and Societal Effects of Mental Disorders 

on Earnings in the United States: Results from the National Comorbidity Survey Replication,” American Journal of 

Psychiatry, May 7, 2008. 

 

3 United States House of Representatives, Committee on Education and Labor, House of Representatives Report No. 

110-374, Part 1 (2007). 

4 United States Government Accounting Office, Mental Health Parity Act: Despite New Federal Standards, Mental 

Health Benefits Remain Limited, May 2000. 

5 Richard G. Frank, Howard Goldman, and Thomas G. McGuire, “Trends in Mental Health Cost Growth: An 

Expanded Role for Management,” Health Affairs, May/June 2009. 

6 M. Audrey Burnam and Jose J. Escarce, “Equity in Managed Care for Mental Disorders: Benefit Parity is Not 

Sufficient to Ensure Equity,” Health Affairs, September/October 1999. 

7 Jon Gabel, et al., “Substance Abuse Benefits: Still Limited After All These Years,” Health Affairs, July 2007. 

8 Peter Cunningham, “Beyond Parity: Primary Care Physicians’ Perspectives on Access to Mental Health Care,” 

Health Affairs, April 2009. 

9

 The Milliman MedStat MarketScan data set includes service utilization data from 45 large employers representing 

approximately 100 payers and 24.2 million covered lives. 

10 For example, when looking at hypertension and depression as the contrast conditions, and controlling for the differences in 

prevalence rates, the Milliman data indicate that the rates at which individuals received treatment for hypertension was 2.9 times 

greater than the rates at which individuals received treatment for depression. 

11 The data show that services for depression were reimbursed less generously than those for hypertension. To compare 

reimbursement rates, we had to control for differences between the base rates at which different services are reimbursed. We 

therefore expressed the actual payment for services relative to a standard – in this care the Medicare allowable rate. On average, 

services for depression are reimbursed at 105% of the Medicare allowable rate and hypertension at 109%. Services for 

hypertension are therefore are reimbursed more generously than those for depression. When the analysis is expanded to include a 

number of mental health and substance use conditions, the overall rate of reimbursement is approximately 103% of the Medicare 

allowable rate while the comparable number for chronic general health conditions is 113% of the Medicare standard. 

12 The data show that services for depression were more frequently provided out-of-network than those for hypertension. 

Approximately 83% of services and treatment for depression were provided in-network while over 91% for hypertension were 

provided within the network. 

13 The data show that behavioral health disorders were 1.3 times more likely to be stringently managed than the services for 

other chronic illnesses: 60% of behavioral health conditions were stringently managed as contrasted with 43% of episodes for 

other chronic medical conditions. 

14 Testimony of Michael Noonan, Transcript of Campaign To Insure Mental Health and Addiction Equity Congressional 

Field Hearing on the Mental Health Equity Bill, Providence, Rhode Island, January 16, 2007, 62. 

www.mentalhealthamerica.net/equitycampaign/Rhode_Island_Equity_hearing_transcript.pdf. 

15 Testimony of Richard LeClerc, Transcript of Providence Field Hearing, 78.