Center for Medicare & Medicaid Services
May 3, 2010
Page 14 of 16

of clearly articulating the requirement that these disclosures be made across all group health plans
(or health insurance coverage offered in connection with a group health plan) and on the other
hand, the flexibility to deliver these disclosures in the most efficient manner and a manner
responsive to consumer demands.

(3) Cost Exemption

The specific procedures for a plan to apply for and obtain the exemption need to be described and
published so plans are fully informed as to how to apply for and obtain the exemption if they wish
to do so.

(4) Cost of Compliance Estimate

The IFR requested comments on the cost of compliance estimate contained in the IFR. As
discussed throughout this document in support of the various recommendations, achieving a July 1,
2010 applicability date will be difficult, complex and costly for employers, health plans and MBHOs
wishing to comply with MHPAEA and the IFR as currently written. This is even more of a concern
following the passage of the Patient Protection and Affordable Care Act which also requires plans
and carriers to review their plans and implement significant changes. The resource and cost
implications for plan sponsors and carriers to comply with the IFR as currently drafted are
considerable.

Based on our experience, the estimate provided by the IFR that a plan could determine compliance
with a half-hour of a professional’s time to review the plan and plan documents and make
necessary changes significantly underestimates the process and costs for compliance review,
operational changes and implementation. For example, a plan that purchases benefits on an
insured basis must review its plan design for compliance and communicate desired changes to its
insurer of choice. That insurer must then make changes to the necessary certificates of coverage
(in many cases such changes must then be filed with State insurance regulators for approval), and
the new documents must be issued to plan participants to provide them the opportunity to review
and make their enrollment decisions. The IFR’s assumption of one half-hour of professional legal or
compliance time does not appear to account for or align with these necessary processes.

Based on our experience, a typical plan review to determine compliance, amendment of the plan
and implementation of any changes necessitated by the requirements of the IFR as written will
likely cost $25,000-$40,000 (this figure is based on the cost of a typical claims compliance audit as a
proxy for a parity plan compliance audit/review). This estimate presumes that all the requirements
are clearly understood and implementation is straight-forward which, as evidenced by the
numerous questions submitted to CMS and the other regulatory Agencies since the publication to
the IFR, would seem to be an inaccurate presumption. This cost doesn’t include the cost impact of
benefit changes to achieve compliance, merely the cost to identify those changes and implement
them.


Center for Medicare & Medicaid Services
May 3, 2010
Page 5 of 16

Over 66% of consumers covered by mental health and substance use disorder carve out plans
administered by UnitedHealth Group’s OptumHealth business do not have combined deductibles
currently.

In addition, the size of deductibles is significant — the same recent survey noted above showed
that in the insurance market, 52% of Preferred Provider Option (PPO) plans and 71% of Point of
Service (POS) plans have deductibles of $1,000 or more.” The impact of this issue for UnitedHealth
Group’s UnitedHealthcare business alone can be seen in the more than 4 million members who
currently have deductibles of $500 or more. Most of these individuals will face higher costs due to
the likely approach taken by their plan sponsors to comply with the IFR.

Recommended Modification:

Amend 45 CFR § 146.136(c)(v)(A) to read: “A group health plan (or health insurance coverage
offered in connection with a group health plan) may apply any cumulative financial requirement or
cumulative treatment limitation for mental health or substance use disorder benefits in a
classification that accumulates separately from any established for medical/surgical benefits in the
same classification, provided such separate cumulative financial requirement or cumulative
treatment limitation for mental health or substance use disorder benefits is no more restrictive
than any established for medical/surgical benefits in the same classification.”

(2) Calculation of “Substantially All”

Issue:

The IFR sets forth a mathematical formula for calculating whether or not "substantially all" of the
medical/surgical benefits within a specific classification are subject to a specific type of financial
requirement or quantitative treatment limitation such as a copayment or visit limit. The purpose
of this calculation is to determine whether or not a specific type of requirement or limit can be
applied to the mental health and substance use disorder benefits in the same classification. We
are concerned that the proposed calculation formula has two flaws: (A) it will lead to the
unintended consequence of deeming most current mental health and substance use disorder cost
sharing provisions impermissible — thus removing a key tool that helps to reduce the overall plan
premium and likely resulting in higher plan premiums for consumers overall; and (B) it will require
an excessively complicated, time-consuming and costly actuarial calculation that will create a
disproportionate administrative burden on employers and can lead to counterintuitive results.

(A) Unintended Consequence of “Substantially All” Test - Elimination of Cost-Sharing for Mental

Health & Substance Use Disorder Benefits

The specific issue with the calculation is that the IFR very precisely states that a plan must
compare like type of requirement to like type of requirement only (e.g. copayment MUST be
compared to copayment only and not to coinsurance or cost sharing requirements generally).
This means for many plans that neither type of cost sharing — copayment or coinsurance — will be
permitted under mental health and substance use disorder portion of the benefit plan because


Count toward deductible?
Count toward OOP Max?

IP-

OON | Co-pay Per day
MH
SUD

Combined MH/SUD
Per admission

MH

SUD

Combined MH/SUD
Count toward deductible?
Count toward OOP Max?
Coinsurance MH
SUD
Combined MH/SUD
Count toward deductible?
Count toward OOP Max?

OP- | Co-Pay
INN Per visit

MH

SUD

Combined MH/SUD
If plan utilizes tiering, click on
the "+" sign at line 188 and
provide specifics
Count toward deductible?
Count toward OOP Max?
Coinsurance MH
SUD
Combined MH/SUD
Count toward deductible?
Count toward OOP Max?

¥

OON | Co-Pay Per visit

MH

SUD

Combined MH/SUD
If plan utilizes tiering, click on
the "+" sign at line 206 and
provide specifics
Count toward deductible?
Count toward OOP Max?
Coinsurance MH
SUD
Combined MH/SUD
Count toward OOP Max?



Center for Medicare & Medicaid Services
May 3, 2010
Page 10 of 16

In addition, the complexity and ambiguity of these provisions will make implementation both
disruptive and costly — particularly if the IFR’s applicability date is not modified to July 1, 2011.
Based on our experience, we believe that this cost and disruption are more likely to hinder than to
enhance access to affordable, effective, and quality treatment for mental health and substance
use disorder conditions. We focus below on medical management standards portion of the IFR
specifically in an effort to illustrate this point.

Medical Management Standards

Issue:

We are concerned that the non-quantitative treatment limitations provisions will undercut and
eliminate the very benefits of medical management described in the IFR because such techniques
are not applied in a “comparable” (as described in the IFR) fashion for most medical/surgical
benefits. The IFR notes that these techniques, employed by managed behavioral health
organizations, “...obtain cost savings for plan sponsors by providing focused case management and
directing care to a broad network of mental health and behavioral health specialists...who ensure
that appropriate care for mental health and substance use disorders is provided.”* The IFR’s
requirement that the processes and strategies to apply these standards must be comparable to
those applied to medical/surgical benefits at the group health plan level is undefined and
complicated to apply. These processes and strategies are applied at the carrier, plan administrator
and managed behavioral health organization (MBHO) level. Accordingly, these standards do not
vary materially from employer to employer across a specific carrier, plan administrator or MBHO.

Services and practices for the treatment of mental health and substance use disorder are by
nature different than those for medical and surgical conditions (i.e. partial hospitalization,
intensive outpatient, locked inpatient units, crisis intervention, office visits once or twice a week).
These differences extend to the kinds of care factors that affect access to and duration of
treatment and quality of care, e.g. 40% — 50% of inpatient admissions are legally forced,’ 67% of
patients engaged in outpatient treatment drop out before completing,” prior to the advent of
managed care post-discharge follow-up to inpatient treatment occurred in less than 42% of cases.
Because of these differences and challenges, it is important to have the ability to utilize the
appropriate medical management tool(s) based on demonstrated industry best practices — and not
simply be required to align mental health and substance use disorder management to the
repertoire of tools and the processes primarily used for medical and surgical management.

6

Medical management research has demonstrated that not all medical management techniques
are effective for every service or condition.’ Studies have shown that to be effective medical
management methodologies must be tailored to fit the unique characteristics and trends of the
population served, the conditions being treated and the services being provided (e.g.
precertification for some medical admissions identified a less than 2% rate of inappropriate
admissions, while precertification for behavioral health admissions reported a 50% reduction in
inappropriate admissions).® In addition, the research showed that effective medical management


Center for Medicare & Medicaid Services

May 3, 2010
Page 7 of 16
Outpatient Surgery (Facility and Professional Fees) Coinsurance $280 28%
Outpatient Major Diagnostic and Therapeutic (CT, PET, $200 20%

MRI, MRA, Nuclear Medicine, Dialysis, Chemotherapy, Coinsurance
Radiation Oncology)

Prosthetics, DME, Home Health,
Ambulance

Coinsurance

Under this typical medical expense plan design and experience, approximately 23% of the total
outpatient in-network benefits payable have no cost sharing; 26% are services subject to a
copayment; and 51% are services subject to a coinsurance. Such a plan could not pass the
proposed two-thirds test, even though total cost sharing (26% + 51%, or 77%) is greater than two-
thirds of the total expected plan payments. This failure to meet the “substantially all standard”
would result in the required elimination of copayment requirements on behavioral health services
even though copayments would be required on similar medical services.

In order to address this result where a plan is unable to apply a copayment or coinsurance for
behavioral health benefits, a plan may modify the benefits such that mental health and substance
use disorder office visits are subject to coinsurance (which is subject to first meeting a deductible
and increases as the charge for services increases) rather than set flat dollar amount copayments.
This would also negatively impact consumers who today have a flat dollar copayment but would
now experience a coinsurance level that could result in a significantly higher out of pocket
expense.

For example, if a member currently has a $20 copayment for an hour long therapy session that
costs $150, and the plan now has to change to a coinsurance at a level of 20% (which is relatively
common), the member’s out of pocket expense increases from $20 to $30 per session. These
increased out-of-pocket expenses can, as we noted previously, prove a disincentive to patients
seeking necessary treatment. Alternatively, a plan a might raise the premium contribution
amount charged to the plan participants because no cost share for outpatient mental health and
substance use disorder benefits can be imposed on participants seeking treatment. Both of these
scenarios, changing plan designs from flat copayment amounts to coinsurance amounts or
increasing premiums for plan participants, result in consumers having to pay more out-of-pocket
for the same coverage.

We believe that this is an unintended outcome of MHPAEA and will have negative consequences
for consumers. We request that you modify the "substantially all" test to account for this problem


Center for Medicare & Medicaid Services
May 3, 2010
Page 6 of 16

neither can pass the two-thirds threshold of the IFR’s “substantially all” test and the IFR does not
permit them to be considered together as a single cost sharing type of financial requirement.

Despite the fact that substantially all outpatient medical services have some form of cost sharing
type (copayment or coinsurance), no one type is attached to substantially all (two-thirds or more)
of services and thus no form of type of cost sharing satisfies the test of the IFR. This means that no

type of cost sharing can be applied to outpatient mental health and substance use disorder

benefits.

This is particularly problematic in the outpatient benefits classifications where outpatient benefit
costs account for 60% of all mental health and substance use disorder benefit costs. The types of
medical/surgical treatment delivered on an outpatient basis can include a much broader variety of
services than the office visits that make up the outpatient benefits classifications for mental health
and substance use disorders. For example the medical/surgical outpatient classification includes
ambulatory surgery, lab services, MRIs, and the like — not just the office visits that are typical for
mental health and substance use disorder benefits. This imbalance of the array of services within
the classification has a dramatic effect on the testing of financial requirements and quantitative
treatment limitations.

Illustration of Effect of IFR and Impact on Consumers:
Table 1 illustrates this issue by applying the “substantially all” standard to a typical health plan

(based on our customer experience). Total expected payments are derived from expected
utilization and cost of services across our medical plan book-of-business.

TABLE 1 - Application of “Substantially All Standard” to a Typical Health Plan

Type of Service Cost Sharing Total Expected
Payments in

One Plan Year
Type of Service (in
thousands)

Wellness Visits and Tests None $80 8%

Outpatient Lab/x-Ray and Minor

Diagnostics (excluding Wellness) None seo ne
Non-Wellness Office Visits - PCP Copayment $110 11%
Non-Wellness Office Visits - Specialist Copayment $140 14%

Urgent Care Copayment $10 1%



IP-INN Day Limits MH

SUD

Combined MH/SUD
IP-OON Day Limits MH

SUD

Combined MH/SUD
IP-INN+OON Day Limits MH

SUD

Combined MH/SUD.

OP-INN Visit Limits MH
SUD
Combined MH/SUD
OP-OON Visit Limits MH

SUD

Combined MH/SUD
OOP-INN+OON Visit Limits MH

SUD

Combined MH/SUD

Applies to:

SUD

Combined MH/SUD

Is behavioral-medical
sharing in place today?
(YIN)

MH

SUD

Combined MH/SUD

Is behavioral-medical
sharing in place today?
(Y/N)



Center for Medicare & Medicaid Services
May 3, 2010
Page 9 of 16

the IFR’s supposition that a plan can assess compliance with one half hour of a professional’s time
is a gross underestimate of the level of effort employers and health plans will need to undertake
to demonstrate parity under the IFR.

Given the current formula and test requirements, employers will be burdened with a substantial
new administrative requirement that will add cost and administrative effort to justify plan design
elements that — with respect to any other condition for which medical and surgical benefits are
available (e.g. cardiology, oncology, dermatology etc.) — are accepted and applied without the
need for demonstration of such testing. These elements, by their very inclusion in MHPAEA and
IFR, are recognized as elements which are commonly utilized and apply to “substantially all”
medical/surgical benefits and accordingly should also be applied to the corresponding mental
health and substance use disorder benefits.

We understand the goal of the IFR is to ensure that these same elements are not applied more
restrictively for mental health and substance use disorder benefits than they are applied for
medical/surgical benefits but the “substantially all” test does not address this issue. The
“substantially all test” determines whether or not a plan can apply these elements at all, not
whether they can apply them no more restrictively. We believe this is not the intent or goal of
parity. There should be no requirement for a plan to substantiate the application of the very
requirements and limitations that are otherwise applied to medical/surgical benefits merely
because the benefits relate to mental health and substance use disorder treatment.

Recommended Modification:

Amend section 45 CFR §146.136(c)(3)(i)(A) to remove the requirement that before a given type of
financial requirement or quantitative limitation may be applied to mental health and substance use
disorder benefits that requirement or limitation be applied to “substantially all” of the comparable
classification of medical benefits.

In the alternative:

Amend section 45 CFR §146.136(c)(3)(i)(A) to state that for purposes of meeting the “substantially
all” test of the general parity requirement, copayments and coinsurance (representing different
types of member out-of-pocket cost sharing types) may be combined and treated as a single type
of financial requirement.

Il. Non-Quantitative Treatment Limitations

Non-quantitative treatment limitations were not identified in MHPAEA nor contemplated in the
legislative history of MHPAEA. Moreover, these limitations do not appear to constitute, in the
plain language of MHPAEA, “other similar limits on the scope or duration of treatment” (emphasis
added) similar to those specifically enumerated in MHPAEA such as day limits and visit limits (both
of which are quantitative limits). Non-quantitative treatment limitations are, by definition, distinct
from, and not similar to, quantitative limits — a fact reinforced by the separation of the definitions
and requirements in the IFR itself.



J

UnitedHealth Group
UnitedHealth Group
9900 Bren Road East
Minnetonka, MN 55343

Submitted Via Federal Rulemaking Portal: http:www.regulations.gov
May 3, 2010

Centers for Medicare & Medicaid Services
Department of Health & Human Services
Attention: CMS-4140-IFC

P.O. Box 8016

Baltimore, MD 21244-1850

RE: Request for Comments Regarding the Interim Final Rules under the Paul Wellstone and Pete
Domenici Mental Health Parity and Addiction Equity Act of 2008

File Code CMS-4140-IFC
Dear Sir or Madam:

UnitedHealth Group is pleased to provide the Centers for Medicaid & Medicare Services (“CMS”)
with our comments regarding the Interim Final Rules ( the “IFR”) under the Paul Wellstone and
Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (“MHPAEA”).

UnitedHealth Group, with 78,000 employees serving the health care needs of more than 70 million
individuals, recognizes both the specialized nature of behavioral health care and the distinct needs
of people requiring mental health and substance use disorder treatment. Our OptumHealth
Behavioral Solutions business has 30 years of experience in introducing groundbreaking programs
that improve the quality of behavioral care, make treatment more accessible and keep costs down
for consumers. OptumHealth Behavioral Solutions serves one in six insured Americans (43 million
consumers) and nearly half of the Fortune 100 companies. We have the world’s largest fully
credentialed behavioral health practitioner network, with over 84,000 care providers, and
currently provide behavioral health care to consumers in 44 states with existing parity laws.

This dedicated focus on behavioral health — combined with our real-world experience in guiding
consumers to effective, efficient and affordable care — enables us to offer a unique perspective on
the Interim Final Rules in the form of the comments and data contained in this letter. Our goal is
to support development of Final Rules that preserve MHPAEA’s intent of increased consumer
access to appropriate, quality and cost-effective behavioral health services.


Center for Medicare & Medicaid Services
May 3, 2010
Page 12 of 16

Il. Timing of the Applicability of the Interim Final Rules

Issue

We have significant concerns about the IFR’s current applicability date of July 1, 2010. We believe
this abbreviated timing will exacerbate the negative unintended consequences of the various
provisions of the IFR discussed in this letter and negatively impact millions of consumers in the
coming plan year.

The IFR was published on February 2, 2010, less than five full months before this applicability date
and well after plans had already made and implemented plan design changes to comply with
MHPAEA. The implementation of a new and comprehensive regulation in such a timeframe is a
difficult proposition at best, even absent the IFR’s complexities and ambiguities.

In general terms, many plans operate on a calendar year basis, and would not, therefore, have to
comply with the IFR until January 1, 2011. These plans however typically finalize any desired or
necessary plan design changes several months prior to the start of their plan year — for larger
employer plans it can be as far in advance as six months or more. This is to ensure they can
appropriately revise their plan documents, implement the changes and communicate those
changes to plan participants well in advance of the start of the plan year. This timing, in the
context of the IFR, means that plans are currently reviewing and making changes to ensure
compliance with the IFR, including making changes driven by the current provisions of the IFR that
we believe will result in higher out-of-pocket costs and reduced access to necessary treatment
that are discussed above in Sections I. and II.

Our initial thinking related to timing was that an applicability date of January 1, 2011, while not as
likely to enable thoughtful implementation as a July 1, 2011 date, would nonetheless be helpful in
that regard. Having worked through the timing of plan and employer decision making, however, it
is clear to us that the damage will be done. Plans and employers will implement the IFR as
currently written, resulting in the potential damage to consumers in areas such as higher out-of-
pocket costs and greater barriers to treatment arising out of the combined cost sharing,
“substantially all” test and medical management standards requirements unless the IFR's
applicability date is quickly changed to July 1, 2011 or after.

We believe the applicability date of the rules, unless immediately addressed, will result in negative
consequences to consumers even in the event that the Final Rules are modified as we have
recommended. Accordingly, we urge the Agencies to immediately address the applicability date of
the IFR to allow appropriate consideration and resolution of concerns with the IFR as currently
drafted and thoughtful implementation that is less likely to result in negative consequences for
consumers.

Recommended Modification:
Amend section 45 CFR §146.136(i) to revise the applicability date for plans to the first day of the
plan year beginning on or after July 1, 2011.


Center for Medicare & Medicaid Services
May 3, 2010
Page 11 of 16

requires the use of combinations of interventions integrated to not only promote medically
necessary treatments but also quality care. Recognizing research findings as well as the
fundamental differences between behavioral health and medical/surgical services, we suggest
refocusing medical management for mental health and substance use disorder treatment to align
with these best practice principles (i.e., defined and tailored to the specific needs of the
population, the use of multiple strategies with a goal of promoting use of efficient and quality
treatment) as the goal. Requiring parity of these medical management standards and processes to
each individual plan’s medical/surgical management strategy, as proposed in the current IFR, does
not facilitate the goals of implementing consistent best practices for behavioral health.

We are aware of concerns around medical management techniques and the degrees of variability
in their application. However, we suggest the use of other existing methodologies to address
these concerns and to ensure the use of best practices. Accreditation by organizations such as
National Committee for Quality Assurance (NCQA) and American Accreditation HealthCare
Commission/URAC (URAC) already provides the infrastructure for assessing and reviewing plans
and reporting demonstration of quality (MCOs and MBHOs accredited by NCQA cover over 109
million members).” We believe that revisiting and revising existing standards and performance
metrics to address these concerns and to promote best practices would be a more constructive
process. The transparency of the accreditation process and the reporting of performance
outcomes can facilitate focused attention and bring better clarity to health care system
stakeholders and encourage the proliferation of best practices for medical management.

We therefore recommend that non-quantitative treatment limitation requirements of the IFR be
removed. As an alternative, the IFR should be revised to stipulate that behavioral health medical
management standards be based on the demonstrated characteristics of the behavioral health
population of the plan and that appropriate tools be applied within clinically accepted standards.
The IFR should also be revised to remove the requirement that non-quantitative treatment
limitations be benchmarked against the “comparable” and “applied no more stringently”
standards of the IFR. Instead we recommend the use of an accreditation process with appropriate
modifications to confirm and monitor whether best practices are being applied to the
management of mental health and substance use disorder benefits.

Recommended Modification:
Amend 45 CFR §146.136(c)(4) to remove the category of non-quantitative treatment limitations.

In the alternative:

(1) Change the IFR’s applicability date to July 1, 2011; and

(2) Amend the specified parity standard for non-quantitative treatment limitations in 45 CFR
136(c)(4) to provide that non-quantitative treatment limitations shall be considered to comply with
the IFR provided that the plan benefit administrator is accredited by an appropriate accreditation
agency or, in the case of a group health plan purchasing coverage on an insured basis, that the
plan’s insurance carrier or managed behavioral health vendor is similarly accredited.


Center for Medicare & Medicaid Services
May 3, 2010
Page 8 of 16

by allowing plans to meet the “substantially all” threshold with respect to copayments and
coinsurance by treating these financial requirements as a single type for purposes of meeting the
two-thirds test.

(B) Complex, Costly Approach to Assess Parity That Can Result in Counterintuitive Outcomes.

The IFR establishes a number of defined terms and a formula for assessing parity with regard to
financial requirements and quantitative treatment limitations that is overly complex and leads to
results that do not support the goals of parity as demonstrated by section (A) above. These
defined terms and the formula require a level of complex actuarial analysis and diligence few
employers are equipped to handle and adds to our concern about effective implementation of
parity in the timeframe provided for under the IFR. We believe the current formulaic test does
not result in better access to mental health and substance use disorder benefits and treatment,
but simply adds administrative complexity and cost to those benefits. This complexity impacts
every employer and health plan with mental health and substance use disorder benefits.

The IFR begins, for example, by establishing the following defined parameters and variables in plan
design which must be used in order to assess parity:

e Six (6) benefit classifications — inpatient in-network; inpatient out-of-network; outpatient
in-network; outpatient out-of-network; pharmacy and emergency services;

e Two (2), at least, “coverage units” — individual and family;

e Six (6), at least, “types” of financial requirements or quantitative treatment limitations —
copayments, coinsurance, deductibles and out-of-pocket expense maximums as well as day
limits, visit limits and episodes of care limits;

This means there are at least 72 different plan design elements to be tested to satisfy the
“substantially all” test to determine if those elements that are applied on the medical/surgical
benefits can even be applied to mental health and substance use disorder benefits.

Then consider a group health plan that utilizes multiple plans and benefits packages and the
amount of assessment and calculation grows. For example, if an employer has 5 benefit plan
options for employees, with 72 different plan design elements to be assessed and subjected to the
IFR’s “substantially all” test, that means the plan must conduct over 350 assessments and
calculations to determine whether it can even apply those elements (copayments, coinsurance,
deductibles etc.) that are commonplace for medical and surgical benefits and are accepted
practice. To further illustrate this we have attached as Appendix 1 of this letter a chart showing
the systematic data collection classification by classification, plan design type by type for one
single plan with one single benefit package.

Add to these parameters the various “levels”, as defined by the IFR, of plan design elements that
may exist (e.g. differentiated copayments for primary care and specialty) for a given plan and that
would need to be assessed to address the IFR’s “predominant” test and it becomes very clear that


Center for Medicare & Medicaid Services
May 3, 2010
Page 4 of 16

services. These participants, who today need only pay $500 to satisfy their deductible and qualify
for coverage of their mental health/substance use disorder benefits, will now need to pay at least
double that amount ($1,000) to achieve the same coverage simply because the IFR will not permit
a separate deductible.

In the case of the second type of plan design where there are separate but equivalent deductibles
of $250, a plan sponsor, in order to keep plan costs neutral, will likely adjust their deductible to a
higher amount (e.g. $350 or $400) and apply it to both medical and mental health benefits or even
combine the two amounts and impose a combined $500 deductible. Again, a plan participant will
need to spend more out-of-pocket to meet his or her deductible as a direct result of the
requirement to combine cost sharing under the IFR. In this scenario, the impact is not limited to
just those plan participants seeking mental health or substance use disorder treatment. This
change will also result in greater out-of-pocket costs to plan participants seeking medical care —
rather than meeting the previous separate $250 deductible for coverage of medical benefits, the
individual will now need to meet the higher combined deductible of $400 or $500.

For those affected, these increased out-of-pocket costs will likely provide a barrier to access to
necessary treatment and serve as a disincentive to individuals to seek needed treatment. Many
studies have demonstrated the sensitivity of access and duration of treatment in mental health
and substance use disorder care, especially substance use disorder care, to financial requirements
set by higher cost sharing models.’

Our experience in serving large employer carve out programs informs our views of how they will
likely implement the IFR. For example, one Fortune 100 customer covering over 500,000 members
has already combined their deductibles and increased the amounts for both the individual and
family deductibles applied to their benefits. The deductible had previously been $250 per
individual/ $750 per family and was limited to inpatient classification benefits only; it will now be
applied across all benefit classifications and the amounts will be increased.

In addition, several customers, who previously had a deductible for medical/surgical benefits, but
no deductible for mental health and substance use disorder benefits, now will apply the
deductible amounts to both medical/surgical benefits and mental health/substance use disorder
benefits. For example, one customer with over 50,000 members enrolled in consumer-driven
health plans, now will, in the coming plan year, subject mental health and substance use disorder
benefits, which were not previously subject to plan deductibles, to the plan deductibles of up to
$750 for in-network and $1500 for out-of-network benefits.

The examples above are not outlier examples or unusual circumstances. A recent industry survey
of employers offering health benefits indicates that deductibles are a commonly used plan design
element. In fact, 32% of the plans surveyed indicated they have a deductible of $500 or more, in

the smaller employer group market (employers up to 199 employees), that figure is 40%. In both
cases, the four-year trend shows significant increase in the number of plans using deductibles.


Center for Medicare & Medicaid Services
May 3, 2010
Page 15 of 16

(5) Non-Quantitative Treatment Limitations — Provider Reimbursement Rates/Plan
Methodologies for Usual, Customary and Reasonable Charges

We understand some parties may be addressing the issue of non-quantitative treatment
limitations with regard to provider reimbursement rates and plan methods for calculating usual,
customary and reasonable charges. As a threshold issue, the admission standards used by a plan
or insurer to admit providers to its network, including its reimbursement rates and its method for
determining usual, customary and reasonable charges are not limits on “the scope or duration of
treatment” and are definitely not, in the terms of MHPAEA, limits which are similar to day or visit
limits. We do not believe that it is the intent of MHPAEA or the IFR to support alignment of
payment for services. There is nothing in MHPAEA or its legislative history that suggests Congress
intended parity to require alignment of reimbursement rates for the very different services
treating mental health and substance use disorder conditions with those used to treat medical
conditions and the IFR should not be altered to support such alignment.

(6) Classifications of Benefits

We understand some observers may request that the IFR be revised to alter the current
classifications of benefits. It has been suggested by some that one solution to the calculation of
“substantially all” problem, discussed above in Section A.1.2. of this letter, is to sub-divide the
outpatient classification of the IFR to provide a classification for “office visits.” While this is a
potential solution to one concern, it may have other unforeseen consequences which could
negatively affect consumers. Accordingly, we note this as a possible alternate solution but we do
not believe it is as effective as our recommendation to eliminate the “substantially all” test or, in
the alternative, treat copayment and coinsurance as a single type of requirement for this test.

C. Summary of Recommendations & Conclusion

We believe the recommendations highlighted in this letter will ensure that the goals of MHPAEA
are met, minimizing unnecessary increases to out-of-pocket costs and potentially negative
unintended consequences that ultimately will harm consumers’ ability to obtain quality, effective
mental health and substance use disorder treatment without the need for significantly greater
out-of-pocket costs. On behalf of the 43 million consumers for whom we administer mental
health and substance use disorder benefits, we thank you for your thoughtful consideration of
these recommendations and the discussion of the issues and concerns underlying them.

While each of our recommendations is important, the most time critical is the need to swiftly
revise the applicability date of the IFR. Quick action here is necessary if plans, consumers and
health care providers are to understand and implement these complex changes to mental health
and substance use disorder benefits without jettisoning behavioral medical management best
practices, costing consumers more money out-of-pocket, disrupting the efficient delivery of quality
treatment and creating barriers to needed treatment. We urge you to address this concern as
expeditiously as possible.


APPENDIX 1 — Sample of a portion of our proprietary tool to capture data to assess benefit plan
design and the various financial requirements and treatment limitations for parity compliance
for a single benefit package.

Deductible Individual (employee)

(IP + Individual +1
Intermediate + Family
OF) Other

Is behavioral-medical sharing in
place today? (Y/N)

Count toward OOP Max?
OOP Max Individual (employee)
Individual +1

Family

Other

Is behavioral-medical sharing in
place today? (Y/N)

Deductible Individual (employee)

OON

(IP + Individual +1

Intermediate + Family

OP) Other

Is behavioral-medical sharing in
place today? (Y/N)

Count toward OOP Max?

OOP Max Individual (employee)
Individual +1

Family

Other

Is behavioral-medical sharing in
place today? (Y/N)

IP- Per day
INN | Co-pay

MH
SUD

Combined MH/SUD
Per admission

MH

SUD

Combined MH/SUD
Count toward deductible?
Count toward OOP Max?
Coinsurance MH
SUD
Combined MH/SUD



Center for Medicare & Medicaid Services
May 3, 2010
Page 3 of 16

timing of the applicability of the IFR. We also include, in section B of this letter, commentary on
items that were specifically noted for comment in the IFR or where the Agencies solicited feedback.

|. Financial Requirements & Quantitative Treatment Limitations

The IFR’s language around many of the quantitative limits and financial requirements is clear and
consistent. However, we have concerns about how the requirement for “combined cost sharing”
and the “substantially all” calculation. We are specifically concerned that these provisions will
result in plan designs that increase consumer cost sharing and create hardship for consumers.

(1) “Combined Cost Sharing”

Issue:

The IFR states that health insurers may not utilize separate cost sharing provisions (such as
deductibles and out-of-pocket expenses limits) or separate cumulative treatment limitations (such
as limits on number of inpatient days) for medical/surgical and mental health services. Instead,
plans must now combine these provisions and limits. We believe this prohibition goes beyond the
language of MHPAEA. It also does not align with historic parity practices reflected in the 1996
Mental Health Parity law which permitted separate limits for other financial requirements subject
to parity such as annual and lifetime benefit maximums.

We are concerned that this provision could lead to unintended, negative consequences for
consumers who seek coverage for mental health and substance use related services. The
requirement to combine deductibles and out-of-pocket maximums will result in higher consumer
out-of-pocket costs. This will be true both for consumers in need of only mental health/substance
use disorder benefits as well as those who use medical/surgical benefits.

These higher out-of-pocket costs in turn may prove a deterrent to consumers who are in need of
treatment. This is completely contrary to MHPAEA’s intent (namely greater access to treatment)
because it may lead consumers faced with higher out-of-pocket expense not to seek necessary
treatment.

Illustration of Impact on Consumers:

To understand the potential implications for consumers should the IFR requirements be
implemented as written, consider the following two common plan design scenarios: (1) separate
deductibles but with the mental health/substance use disorder deductible at a significantly lower
level than that for medical (e.g. a $1000 deductible for medical and a $500 deductible for mental
health/substance use); and (2) separate but equivalent deductibles (e.g. a $250 deductible for
medical and a $250 deductible for mental health/substance use).

In the first scenario, a plan required to combine these deductibles will likely do so at or above the
higher medical deductible, as this will have the least impact to the cost for the plan and plan
participants EXCEPT for those plan participants who utilize mental health/substance use disorder


Center for Medicare & Medicaid Services
May 3, 2010
Page 2 of 16

While we firmly support this goal, we are among many in the behavioral health community who
believe that the IFR goes beyond the intent of the 2008 parity law, and will have unintended,
negative consequences and will disrupt access to appropriate behavioral health care. Families and
employers across the country may face higher costs, less assurance of receiving the most
appropriate care, and — in some cases — loss of behavioral health coverage altogether. Now more
than ever, Americans need stable access and affordable coverage. We are committed to
advocating vigorously on behalf of the nearly 43 million consumers we serve to help prevent these
consequences.

Accordingly, we welcome the opportunity for constructive dialogue that this IFR comment process
provides and the chance to continue this dialogue and provide additional data and information
supporting the comments set forth in this letter.

A. Summary of Recommendations & Discussions of Issues

The recommendations offered below stem from our careful reading and assessment of how to
implement the IFR’s requirements across our behavioral health programs. To support our
recommendations, we provide specific examples and data based on our experience as the nation’s
largest provider of mental health and substance abuse programs. We believe these recommended
changes are necessary in order to best serve consumers and to reduce potential unintended
consequences associated with the rules in their current form.

Accordingly, we recommend the Final Rule for MHPAEA:

e Postpone the applicability date from the current date of July 1, 2010 to July 1, 2011 to allow
proper transitioning and implementation of the new requirements from the current date of
July 1, 2010 to July 1, 2011.

e Allow group health plans (or health insurance coverage offered in connection with a group
health plan) to continue to treat deductibles for mental health or substance use disorder
benefits separately from those established for medical/surgical benefits, provided that such
deductibles or other cumulative treatment limitations are no more restrictive than any
established for medical/surgical benefits in the same classification.

e Remove the requirement that before a given type of financial requirement or quantitative
limitation may be applied to mental health or substance use disorder benefits, that
requirement or limitation be present in “substantially all” of the comparable class of medical
benefits.

e Remove the elements requiring parity for non-quantitative treatment limitations.

Highlighted below are the primary concerns that drive these recommendations, focusing on the
projected unintended consequences to consumers, as well as specific detailed recommendations
for the modification of the IFR. Our concerns may be grouped into three key areas: financial
requirements & quantitative treatment limitations, non-quantitative treatment limitations and


Center for Medicare & Medicaid Services
May 3, 2010
Page 13 of 16

B. Review of IFR Comment Requests & Additional Issues

The IFR specifically requested comments in several areas where our experience suggests that it
should not be changed. However in an effort to be fully responsive to the IFR as well as to address
points that may be raised by other commentators to the IFR, we briefly review the following issues:
(1) “Scope of Services”; (2) Disclosure Requirements; (3) Cost Exemption; (4) Cost of Compliance
Estimate; (5) Non-Quantitative Treatment Limitations — Provider Reimbursement Rates/Plan
Methodologies for Usual, Customary and Reasonable Charges; and (6) Classifications of Benefits.

(1) “Scope of Services”

The IFR addresses “scope of services” by requiring that plans provide services for the treatment of
mental health and substance use disorder benefits in each classification for which the plan
provides medical/surgical benefits. The IFR specifically requested comments on this topic.

MHPAEA does not contain any mandate of coverage for mental health or substance use
disorder conditions, nor would its language or legislative history support it. Accordingly,
we believe the IFR should not further attempt to define “scope of services” or impose any
form of mandate for a specific set of services or scope of services.

(2) Disclosure Requirements

MHPAEA and the IFR set forth very clear expectations with respect to disclosure and transparency
of information for consumers, providers, plan participants and potential plan participants.
UnitedHealth Group has been, and continues to be, committed to the goal of providing full
disclosure of information regarding benefits coverage and treatment.

The MHPAEA requirements for disclosure of medical necessity criteria and of the specific rationale
for denial of coverage for treatment or benefits are addressed through a variety of state and
federal law requirements applicable to group health plans, third-party administrators and insurers.
For example, denial rationale disclosure is an express requirement of the claims regulations for
ERISA group health plans (see 29 CFR 2560.503-1), and disclosure of medical necessity criteria to
the public upon request is mandated of an insurer under California law by California Insurance
Code 10123.135(f)(2)(E)). In many cases insurers, plan administrators and third-party
administrators have extrapolated such requirements and made them standard practice across the
operations for all consumers for operational efficiency.

We understand some commentators may feel the MHPAEA and IFR requirements are not
sufficiently defined. We respectfully disagree. Plans and carriers currently already meet these
requirements using a variety of mechanisms driven by the demands of consumers, providers and
customers and in response to the laws noted above. MHPAEA and the IFR have recognized these
factors and struck an appropriate balance between, on the one hand, being prescriptive in terms


Center for Medicare & Medicaid Services
May 3, 2010
Page 16 of 16

UnitedHealth Group appreciates the opportunity to provide you with our comments on the IFR for
MHPAEA. Should you have any questions regarding the information set forth in these comments
please do not hesitate to contact us. Thank you again for your time and thoughtful consideration
of the enclosed comments.

Sincerely,

O usr stro

Dawn M. Owens
Chief Executive Officer
OptumHealth, a division of UnitedHealth Group

* Sethi, R. & Jee, J. (2006). Designing Employer Sponsored Mental Health Benefits. US Department of Health and
Human Services publication; LoSasso, A.T., & Lyons, J.S. (2002). The effects of copayments on substance use treatment
expenditures and treatment reoccurrence. Psychiatric Services, 53(12), 1605-1611; Barry, C.L., Frank, R.G., & McGuire,
T.G. (2006). The costs of mental health parity: Still an impediment? Health Affairs, 25(3), 623-634. Weissman, E.,
Pettigrew, K., Sotsky, S., & Regier, D.A. (2000). The cost of access to mental health services in managed care.
Psychiatric Services, 51(5), 664-666.)

* Henry J. Kaiser Foundation, “Employer Health Benefits 2009 Annual Survey”, 2009.

° 75 FR 5425

* Internal Data from OHBS analysis

5 Olfson M., Dropout from Outpatient Mental Health Care in the United States. (2009) Psychiatric Services 60:898-907
® Nelson, EA Effects of Discharge Plan and Compliance with Outpatient Appointment and Readmission,( 2000)
Psychiatric Services 51:885 - 889

bs Flynn, K.E., Smith, M.A., & Davis, M.K. (2002). From physician to consumer: The effectiveness of strategies to manage
health care utilization. Med Care Res Rev., 59(4), 455-481.

® Wickizer, T.M., & Lessler, D. (2002). Utilization management: Issues, effects, and future prospects. Annual Review of
Public Health, 23, 233-254.

° National Committee for Quality Assurance