length about the medical necessity of further treatment. Many of our members believe that
such tactics dissuade psychologists and patients from requesting needed services, while
unnecessarily invading patient privacy. Services on the medical side are not subject to such
intense management. For further discussion regarding intensity of management of mental
health services see Finch RA. Phillips K. Center for Prevention and Health Services. An
Employer’s Guide to Behavioral Health Services: A Roadmap and Recommendations for
Evaluating, Designing, and Implementing Behavioral Health Services. Washington, DC:
National Business Group on Health; 2005.

We also comment specifically on two other non-quantitative treatment limitations provided in
the IFR for which parity would be required. The first concerns health plan methods for
determining usual, customary and reasonable charges, and the second would address
standards for provider admission to participate in health plan networks.

How a health plan determines usual, customary and reasonable (UCR) charges can be
complex, but such charges drive the plan enrollees’ level of responsibility for out-of-network
payment. Now under the IFR, if UCR charges are applied on a basis that requires higher
payments as applied to mental health/substance use disorder services than for medical/surgical
services these charges would violate the MHPAEA.

We would argue that health plan UCR determinations are in fact a quantitative financial
requirement, rather than a nonquantitative treatment limitation, since these determinations
have a direct impact on enrollee out-of-pocket expenses related to their access to out-of-
network benefits. While more obscure than, for example, the imposition of a higher
copayment requirement, a UCR determination that results in a higher out-of-pocket expense
for mental health and substance use disorder services is a type of financial requirement—as an
out-of-pocket expense—to which the MHPAEA clearly applies.

As with medical/surgical services, plan enrollees often prefer to choose their mental
health/substance use disorder providers from outside a plan’s provider network. In-network
providers are paid for services under a negotiated reimbursement schedule, and in-network
reimbursement contracts typically prohibit balance billing (charging the patient for a payment
amount beyond the negotiated in-network payment rate).

Health plans reimburse providers for out-of-network services, however, based on formulas
where there is no industry standardized formula. As a result, insurance industry
reimbursement practices have made patients seeking and receiving out-of-network mental
health/substance use disorder services vulnerable to higher and discriminatory requirements.
Since there exists no industry standard, health plans can establish arbitrary and discriminatory
formulas that would now violate MHPAEA when applied to mental health/substance use
disorder services.

For medical/surgical services most health plans follow a process of establishing out-of-
network payments based on a formula determination of UCR. A typical UCR determination
is based on payment at a percentile (e.g. 50-75" percentile) of non-negotiated insurance
billings for a specific service code or current procedural terminology (CPT) code. A formula



We note, however, that while the Departments discuss the prohibition of this practice in
commentary to the rule, this prohibition is not specifically elucidated in the rule itself. We
strongly urge that the Departments provide this prohibition in the regulatory provision.

Thank you for considering our comments. We look forward to publication of the regulation
that implements the cost exemption provided in MHPAEA in the near future. The APA
would appreciate the opportunity to assist the Departments with any clarification regarding
our comments or regarding any other aspects of the rulemaking in which we may be of
assistance. Please contact Doug Walter, Legislative & Regulatory Counsel, Government
Relations, American Psychological Association Practice Organization at (202) 336-5889 or

dwalter@apa.org.

Sincerely,

KAthoutur Co Nowdal , Pur

Katherine C. Nordal, Ph.D.
Executive Director for Professional Practice



use disorders. These individuals and their families have had to meet separate and additional
out-of-pocket costs, not imposed on physical health services, before gaining insurance
payment for their mental health and substance use disorder treatment. As a result, separate
deductibles and out-of-pocket maximums have been a barrier to care where individuals have
had to forego care when they could not meet the separate requirements. The Departments’
determination to fully implement the MHPAEA by prohibiting separate cumulative financial
requirements will dramatically improve access to mental health and substance use disorder
services for individuals and their families who need and use mental health and substance use
disorder services.

The APA agrees with the application of the MHPAEA to nonquantitative treatment
limitations and urges that this application be retained in the final regulation.

As mentioned above, Congress clearly intended to end benefits discrimination upon
enactment of the MHPAEA. We appreciate and support that the Departments have applied
this Congressional intent to the limitations that health plans place on mental health and
substance use disorder benefits that are not quantitative and yet limit the scope or duration of
these benefits when compared to medical/surgical benefits.

Specifically, the IFR requires that a group health plan may not impose a nonquantitative
treatment limitation with respect to mental health or substance use disorder benefits in any
classification unless, under the terms of the plan, “.. . any processes, strategies, evidentiary
standards, or other factors used in applying the nonquantitative treatment limitation to mental
health or substance use disorder benefits in the classification are comparable to, and are
applied no more stringently than, the processes, strategies, evidentiary standards, or other
factors used in applying the limitation with respect to medical/surgical benefits in the
classification, except to the extent that recognized clinically appropriate standards of care may
permit a difference.” This is a reasonable standard to apply to nonquantitative treatment
limitations, requiring parity treatment of mental health and substance use disorder benefits
with medical/surgical benefits as a general rule while allowing differences only where
clinically appropriate.

The illustrative list of nonquantitative treatment limitations to which the MHPAEA applies is
also helpful since it includes some of the most common limitations that have been applied
inequitably to mental health and substance use disorder services. Psychologist practitioners
and the patients they serve will greatly benefit in the application of the law to the various
nonquantitative treatment limitations provided in the IFR. Of course, applying the law to
medical management standards that limit or exclude benefits based on medical necessity or
appropriateness, or based on whether a treatment is experimental or investigative will have
the broadest favorable impact for our members, and we support its inclusion in the list.

For more than a decade, we have heard from our members about health plans using intensive
management of mental health benefits as a way of discouraging psychologists and their
patients from seeking necessary and appropriate services. For example, we have had recent
complaints from member psychologists about health plans conducting lengthy and intrusive
telephone interviews—as much as half an hour long—in which the psychologist must argue at

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is applied to the aggregated insurance industry data and is used to determine the applicable
percentile and reimbursement amount.

While it is difficult to determine what formulas are in use by any particular health plan—with
a lack of transparency, the formulas are arcane and often considered proprietary—it is
believed that some health plans use a different formula for mental health/substance use
disorder services. Unlike medical/surgical services where out-of-network services’
reimbursement is based on non-negotiated rates these plans use negotiated rates for purposes
of mental health/substance use disorder services’ reimbursement. As a result, plan enrollees
accessing out-of-network mental health and substance use disorder services may be subject to
higher balance billing amounts.

For example: a health plan enrollee seeks care from an out-of-network primary care medical
provider, who charges $175 for the visit. The health plan pays $125 for the visit, which is at
the 75" percentile using a generally accepted industry UCR database based on non-negotiated
rates. Of this $125 payment the patient pays a $25 out-of-network copayment and the plan
pays $100. The patient is responsible for $50 related to the balance billing amount. Under
the same plan, the health plan enrollee also seeks out-of-network mental health care by seeing
a psychologist, who charges $175 for the visit. The health plan pays only $100 for the visit
based on a negotiated reimbursement schedule. Of this $100 payment, the patient pays a $25
out-of-network copayment and the plan pays $75. The patient is responsible for $75 related
to the balance billing amount. The different processes used by the plan to determine out-of-
network UCR charges for medical/surgical versus mental health/substance use disorder
services has resulted in a $25 higher balance billing charge for the enrollee for the
psychologist office visit.

It is this type of disincentive placed on individuals seeking out-of-network mental health
services that MHPAEA is meant to end. For this reason, the APA is particularly supportive of
inclusion of this nonquantitative treatment limitation in the IFR, where the same process for
determining UCR rates will be required of health plans when enrollees receive out-of-network
medical/surgical and mental health/substance use disorder services.

We turn now to a third nonquantitative treatment limitation to which the MHPAEA would
apply, regarding health plan standards for provider admission to participate on a health plan’s
network. The Departments’ cite that approximately half of mental health care is delivered
solely by primary care physicians. (See 75 Fed. Reg. 5410 at 5423, citing Wang PS, Lane M,
Olfson M, Pincus HA, Wells KB, and Kessler RC (2005, June). “Twelve month use of mental
health services in the United States,” Archives of General Psychiatry, 62, 629-640.) As the
Departments’ note, this trend is likely due in large part to discrepancies in cost sharing for
services delivered by mental health professionals and primary care physicians. We briefly
discuss below, for example, the impact of plan classification of psychologists and other
mental health providers as “specialists” for purposes of imposing higher patient cost sharing,
which represents an aspect of this discrepancy.

The APA also submits that patients are being treated by primary care providers in part
because they do not have adequate access to mental health providers in their health plan’s



AMERICAN
PSYCHOLOGICAL
ASSOCIATION

PRACTICE ORGANIZATION

May 3, 2010

Internal Revenue Service
Department of the Treasury

Employee Benefits Security Administration
Department of Labor

Centers for Medicare and Medicaid Services
Department of Health and Human Services

Re: Interim Final Rules under the Paul Wellstone and Pete Domenici Mental Health Parity
and Addiction Equity Act of 2008 (published in 75 Fed. Reg. 5410 et seq.)

VIA EMAIL: E-OHPSCA.EBSA@dol.gov
To The Departments:

The American Psychological Association (*APA” or “we”), the professional organization

representing more than 152,000 members and affiliates engaged in the practice, research and

teaching of psychology, appreciates the opportunity to comment on the interim final rules

(“IFR”) for the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity |
Act of 2008 (“MHPAEA”), as published on February 2, 2010, in the Federal Register (75 Fed. |
Reg. 5410 et seq.). For several years the APA sought passage of federal legislation that ends i
health insurance benefits discrimination against people needing and seeking treatment for

mental health and substance use disorder services. With passage of MHPAEA we believe that

Congress has ended this discrimination, and we are particularly pleased that the IFR

implements the law to its full extent.

Our comment focuses on our agreement with the parity standard provided in the IFR, the
appropriate prohibition on separate deductibles and other financial requirements that insurers
have applied to mental health and substance use disorder benefits, and the application of the
new law to “nonquantitative” treatment limitations. While we fully agree with and support
the IFR as published, we offer some relatively minor suggestions that may assist insurers in
implementing the law and providers and consumers in understanding it.

750 First Street, NE Katherine C. Nordal, Ph.D \
Washington, DC 20002-4242 Executive Director |
(202) 336-5800 i
(202) 336-5997 fax E-mail: practice@apa.org

(202) 336-6123 TDD Web: www.APApractice.org

An affiliate of the American Psychological Association


network. We hear frequent complaints that patients cannot access mental health providers on
health plan networks. This is often signaled by our psychologist members receiving calls
from desperate prospective patients, who say that they have called several mental health
providers in a health plan’s network but cannot get an appointment for a visit. We also
receive complaints from member psychologists who are told that a network is closed to
psychologists seeking to join, even where there is evidence of inadequate patient access to
mental health services.

We believe that this situation is exacerbated by a stigma that is still associated with seeking
services for mental health and substance use disorders. Plan enrollees are reluctant to
complain to their employer’s human resources department about access to mental health care,
when they would not hesitate to complain about accessing a pediatrician, orthopedist, or other
provider for a physical problem. This reluctance to complain may allow health plans to
employ higher standards for mental health provider admission to network panels, as compared
to panels for medical/surgical benefits.

We agree with the Departments that a “shift in source of treatment from primary care
physicians to mental health professionals could lead to more appropriate care, and thus, better
health outcomes” (75 Fed. Reg. 5410 at 5423). Therefore, the APA applauds the
Departments’ for applying the parity law to this nonquantitative treatment limitation that plan
enrollees seeking mental health and substance use disorder treatment have faced for many
years.

The APA agrees with the Departments that psychologists and certain other mental health
providers should not be classified as “specialists” for the purposes of applying higher
copayments. The Departments provide this MHPAEA prohibition in the commentary to the
tule, but it should also be included in the rule itself.

The APA appreciates that the Departments recognize in commentary a common practice by
health plans to characterize psychologists and certain other mental health providers as
“specialists” for purposes of applying a higher copayment level for psychotherapy and other
services and that continuation of this practice would violate MHPAEA (75 Fed. Reg. 5410 at
5413). This is indeed a common practice that has had a chilling effect on patient access to the
services that psychologists provide. In addition, as the Departments discuss in the IFR such
higher copayment levels as applied to psychologists’ services has inappropriately driven
patients to seek care for their mental health and substance use disorder needs from primary
care physicians (75 Fed. Reg. 5410 at 5423).

For these reasons the APA had urged the Departments in our comments to the RFI last spring
to apply the parity standard so that the copayment level for outpatient psychotherapy visits,
for example, should be compared to the primary physician office copayment level rather than
a specialist level. As with our discussion of the law’s prohibition of separate deductibles and
other cumulative financial requirement above, applying MHPAEA to prevent this practice
will make an important improvement in the lives of many individuals needing and seeking
treatment for their mental health and substance use disorders, who have avoided treatment
because they could not afford high copayments.


The APA agrees with and supports the parity standard devised by the Departments as one that
ensures that mental health and substance use disorder benefits are not discriminated against in

health plan benefit design.

We believe that the parity standard devised by the Departments fully and appropriately
implements the statutory requirement in MHPAEA, Specifically, the IFR reflects the
MHPAEA requirement that a group health plan, providing both medical/surgical and mental
health/substance use disorder benefits, must ensure that the financial requirements and
treatment limitations applicable to mental health/substance use disorder benefits are no more
restrictive than those requirements or limitations placed on medical/surgical benefits.

The Departments essentially keep in place the current parity standard, effective since 1998, as
it applies to annual and lifetime dollar limits. We agree and support retention of this standard
for annual and lifetime dollar limits.

For all other financial requirements and quantitative treatment limitations, the Departments
employ a two step test, based on the statutory language of MHPAEA. The first step is to
determine whether the type of financial requirement or quantitative treatment limitation
applies to substantially all—meaning two-thirds—of all medical/surgical benefits in a
classification. If not, the requirement or limitation cannot be applied to mental
health/substance use disorder benefits. If it is applied to substantially all medical/surgical
benefits, then the second step is applied to determine the predominant level—meaning the
level that applies to more than one-half of the medical/surgical benefits. The predominant
level may be applied to mental health/substance use disorder benefits. This level may be
reached by a combination of levels, the least restrictive of which is then applied.

In our comments in response to the Departments’ Request for Information (“RFI”) published
on April 28, 2009 (74 Fed. Reg. 19155 et seq.), the APA had urged the Departments to adopt
a parity standard like the two-step standard in the proposed rule. Having engaged for many
months in discussions regarding and in the drafting of the MHPAEA with other insurance,
consumer and provider groups in an effort to assist Congress in writing the law, the APA
believes that the parity standard being implemented by the Departments fulfills Congress’s
intent with respect to the law.

During this discussion and drafting it became apparent to the various participating groups that
this second step—applying the predominant level—would be necessary for some financial
requirements and treatment limitations. The Mental Health Parity Act of 1996 provided
parity only for annual and lifetime dollar limits. These are relatively simple financial
requirements imposed by health plans or coverage, since plans generally do not apply a limit
or have a single limit for the entire benefit.

The concept of the “predominant” level was necessary to address the greater complexity
associated with a broader range of financial requirements or treatment limitations, where there
may be a number of varying levels associated with a particular financial requirement or
treatment limitation. For example, while most health plans have a single lifetime limit that
applies to its medical/surgical benefits, it may impose several levels of copayment



requirements that are applied to various services, such as primary physician, specialty,
chiropractic, physical therapy, and various other services.

The APA’s primary concern with implementation of the parity standard with regard to these
more complex financial requirements and treatment limitations was to ensure that the
“predominant” level was employed so that mental health and substance use disorder services
are compared to the prevailing or common financial requirements or treatment limitations
imposed on medical/surgical services. In other words, we sought to ensure that mental health
and substance use disorder services were not compared to outlier requirements or limitations
that would, in essence, allow health plans to avoid the intent of the law. We believe that the
application of the “predominant” standard as provided in the IFR addresses our concern and
will provide parity in the application of these various requirements and limitations to mental
health and substance use disorder services.

The APA also agrees with the Departments’ determination of six discrete classifications of
benefits in which parity is applied: inpatient/in-network, inpatient/out-of-network,
outpatient/in-network, outpatient/out-of-network, emergency care and prescription drug
coverage. In our comments to the RFI, we had suggested that it is reasonable and acceptable
to compare inpatient-to-inpatient and outpatient-to-outpatient medical/surgical benefits with
mental health/substance use disorder benefits for applying the parity standard to financial
requirements and treatment limitations. This reflects the statutory language of MHPAEA,
which distinguishes inpatient from outpatient coverage in general. The six categories should
allow health plans to apply parity appropriately without overburdening them with multiple
classifications.

We also appreciate the specific provision in the IFR that applies the MHPAEA to out-of-
network benefits. This provision is particularly important for our members and their patients,
since plan enrollees often seek and psychologists often provide out-of-network services. We
are pleased that the IFR reflects clear Congressional intent to apply parity to out-of-network
services.

The APA agrees with the Departments’ determination that the MHPAEA prohibits health
plans from applying separate deductibles, out-of-pocket maximums or other cumulative
financial requirements on mental health/substance use disorder benefits.

We are pleased that the Departments have determined that, while the statutory language of ‘
MHPAEA is vague with regard to separate deductibles, out-of-pocket maximums and other

cumulative financial requirements, Congress clearly intended to completely end benefits

discrimination against mental health and substance use disorder services in enacting the law.

Therefore, plans that apply separate, even if equal, deductibles, out-of-pocket maximums or

other requirements on plan enrollees for mental health/substance use disorder services, when

such requirements are not placed on other services, are engaging in a form of discrimination

banned by the new parity law.

Separate deductibles and out-of-pocket maximums have represented a real burden to people
with private health coverage who have sought treatment for their mental health and substance