From: Blanchard, Holly [mailto:Holly.Blanchard@nebraska.gov] 

Sent: Wednesday, May 13, 2009 10:28 AM 

To: EBSA, E-OHPSCA - EBSA 

Subject: Mental Health Parity RFI

To whom it may concern:

The Nebraska Department of Insurance recently received a Request for Information on the Paul

Wellstone and Pete Domenici Mental Health Parity and Addition Act of 2008 (MHPAEA). Please

find attached our comments to the questions presented.  

If you have any questions, or require additional information, please feel free to contact me.

Thank you in advance for your assistance,

  

Holly Blanchard

Life and Health Administrator

Nebraska Department of Insurance

Holly.Blanchard@nebraska.gov

402-471-4742
MEMO 

To: Jolie Matthews, NAIC; Dept. of Treasury, Dept of Labor, Dept of Health and Human Services, Ann  

Frohman, Director, Nebraska Department of Insurance

From:   Holly Blanchard, Life and Health Administrator, Nebraska Department of Insurance

Date:   05/05/09

Re: Mental Health Parity Act RFI

Treasury:      Doc 26 CFR Part 54

               RIN‐1545‐B170

Labor:         Doc 29 CFR Part 2590

      RIN 1210‐AB30

   

Health and Human Services: Doc 45 CFR Parts 144 and 146 [CMS‐4140‐NC]

      RIN 0938‐AP65

On 05/04/09 I received a RFI regarding the Mental Health Parity Act. To address questions I have

prepared the following response. The information provided is derived from our laws, and from

discussions with industry personnel.  

Q. What policies, procedures, or practices of group health plans and insurance issuers may be impacted

MHPAEA? What direct or indirect costs would result? What direct or indirect benefits would result?

Which stakeholders will be impacted by such benefits and costs?

A. Group health plans will be affected in the sense that coverage will be broadened by the

implementation of the MHPAEA. A concern that has been addressed is that major group plans will not

offer Mental Health, or Substance Abuse Benefits in an effort to avoid applicability of the MHPAEA, thus

eliminating benefits that were previously available. It has been estimated that 113 million people across

the country will have the right to non‐ discriminatory mental health coverage, including 82 million

individual enrolled in self‐funded plans (regulated under ERISA), who cannot be assisted by the current

state parity laws. Concerns have been addressed over cost containment issues that could result should

these individuals receive treatment that would have previously not been considered for benefits. It can

be argued that the benefits would offset the costs in the sense that people who receive the appropriate

Mental Health/Substance Abuse treatments will be healthier, and incur fewer claims than they

previously would have had their disorder gone untreated. The loss ratio of the insurers could be directly

impacted with the use of increased treatments for Mental Health/Substance Abuse. Administrative costs

may also rise as there are additional benefits to be considered, additional claims must be paid. These

factors could ultimately impact the policyholder through increased premiums.  

Q. The statute provides that the term “financial requirement” includes deductibles, copayments,

coinsurance, and out‐of‐pocket expenses, but excludes an aggregate lifetime limit and an annual limit.

The statute further provides that the term “treatment limitation” includes limits on the frequency of

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

treatment. Do plans currently impose other types of financial requirements or treatment limitations on

benefits? How do plans currently apply financial requirements or treatment limitations to 1. ) medical

and surgical benefits and 2. ) mental health and substance use disorder benefits? Are these
requirements or limitation applied differently to both classes of benefits? Do plans currently very

coverage levels within each class of benefits?

A. Plans currently impose other types of financial requirements or treatment limitations on benefits

through aggregate lifetime and annual limits, depending on the verbiage of the contract. Some contracts

do not impose lifetime or annual aggregate limits.  An additional measure is reasonable and customary

deductions (also referred to as usual and customary deductions.) Group plans establish a benefit

allowance based on the service, average regional charge, and frequency of occurrences. Financial

requirements are currently applied through 1.) Deductibles, copayments, and out‐of‐pocket expenses.

Additional reduction in considerations may be imposed for specific treatments (CPT’s). For example, a

company (insurer) may pay a surgeon fee at 100%, but a co‐surgeon fee at a reduced rate (usually 25%).

Provisions will vary by company, but these are common business practices.  2.) Under Neb.Rev.Stat 44‐

793, legislature determined that if coverage is provided for mental health condition that an insurer

cannot establish any rate, term, or conditions that place a greater financial burden on an insured for

access to treatment for a serious mental illness.  Nebraska laws provide basic coverage of treatment of

alcoholism, but do not address other aspects of substance use disorders. With that in mind, companies

will provide benefits for coverage for alcohol, or substance use disorders with an aggregate annual limit

of visits, or a collective dollar amount limit. Copayments are usually applicable also.  

Q. What terms or provisions require additional clarification to facilitate compliance? What specific

clarifications would be helpful?

A. ) A problem may arise in that our statute limits Mental Health benefits to “serious mental illness”

including schizophrenia, schizoaffective disorder, delusional disorder, bipolar affective disorder, major

depression and obsessive compulsive disorder. The MHPAEA does not appear to delineate which mental

health  disorders fall within its parameters.  Additionally Nebraska mandate restricts the types of care

provided. In our opinion, it is unclear whether or not the federal act will allow for this since the term

“treatment limitation” means “limits on the frequency of treatment, number of visits, days of coverage,

or other similar limits on the scope or duration of treatment”, meaning that the MHPAEA states that

treatment limitations applicable to Mental Health or Substance Use disorder are no more restrictive

than the predominant treatment limitations applied to medical and surgical benefit plans.   Clarification

also needs to be provided regarding the implementation date of the Act. The Act states it will apply to

plans beginning in the first plan coverage year that is one year after the date of enactment (October 3,

2008), which we are translating for most plans will mean the effective date begins January 1, 2010.

Q. What information, if any, regarding the criteria for medical necessity determinations made under the

plan (or coverage) 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?

A. As previously stated, under Neb.Rev.Stat 44‐793, legislature determined that if coverage is provided

for mental health condition that an insurer cannot establish any rate, term, or conditions that place a

greater financial burden on an insured for access to treatment for a serious mental illness.  Nebraska

laws provide basic coverage of treatment of alcoholism, but do not address other aspects of substance

use disorders.  The laws concerning Mental Health benefits are available on our website

(www.doi.ne.gov) and can be accessed by the public. All companies must file their group products with

the Life and Health Division, where the products are heavily scrutinized to determine that Mental Health
benefits are provided and complaint with our statutes and regulations. This information must be

prominently displayed on a policy for the policyholder reference. Once approved, the products become

public information and can be viewed by anyone requesting the information. Industry standards are also

scrutinized to ensure consumer protection.  

Q. What information, if any, regarding the reasons for any denial under the plan (or coverage) 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?

A. The Companies must provide a provision in their policies that outlines the grievance procedure for an

insured if a claim for Mental Health or Substance Use disorder is denied. The insured is required to have

the opportunity to appeal the determination as outlined in Neb.Rev.Stat§44‐Article 73. The insured can

also request utilization review to determine appropriateness of treatment. All companies must file their

group products with the Life and Health Division, where the products are heavily scrutinized to

determine that Mental Health benefits are provided and complaint with our statutes and regulations.

This information must be prominently displayed on a policy for the policyholder reference. Once

approved, the products become public information and can be viewed by anyone requesting the

information. Industry standards are also scrutinized to ensure consumer protection.  

Q. 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?

A. This will again depend on the specific plan. Some plans allow out‐of‐network coverage for Mental

Health disorders at a reduced benefit, while other plans do not allow benefit consideration for out‐of‐

network coverage.  All coverage would have to be pre‐approved by the Life and Health Division and be

compliant with the applicable statutes and regulations.

Q. Which aspects of the increased cost exemption, 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?

A. There seems to be much confusion regarding the increased cost exemption. Questions that have been

addressed with us include: The companies have to annually justify cost increase of 2% (first year, 1%

thereafter) to opt out. How will the initial baseline be determined (how are projected losses to be

determined on areas that have never been offered?) If a company continues to opt out annually, how do

they track profit/loss ratio’s to actuarially justify an increased cost exemption?  A model notice would be

extremely helpful to facilitate the disclosure process.