L01R02 (2/07)

Blue Cross and Blue Shield of Minnesota

P.0. Box 64560 742 >\
St. Paul, MIN 55164-0560 Vv) W)
651 662-8000 lS

800 382-2000 ®
May 3, 2010

The Honorable Timothy Geithner
Secretary, U.S. Department of the Treasury

The Honorable Kathleen Sibelius
Secretary, U.S. Department of Health and Human Services

The Honorable Hilda Solis
Secretary, U.S. Department of Labor

By Electronic Mail

Re: Comments on Interim Final Rules Under the Paul Wellstone and Pete
Domenici Mental Health Parity and Addiction Equity Act of 2008
RIN 1210-AB30

Dear Mr. and Mmes. Secretary:

Blue Cross Blue Shield of Minnesota appreciates the opportunity to provide
comments to the Departments of Labor, Treasury and Health and Human
Services regarding the Interim Final Rules (the “Regulation’) under the Paul
Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of
2008 (the “Act”).

Blue Cross Blue Shield of Minnesota (BCBSMN) is a non-profit health plan that
provides coverage to over 2.7 million persons in all market segments. BCBSMN
has participated in the development of the comment letters of both BCBSA and
AHIP and incorporates those comment letters by reference. The scope of this
letter will be limited to the issues related to the “Substantially All” and
predominant tests included in the Regulation.

Minnesota state law has required mental health parity since 1995. This law
requires that if a contract provides coverage for alcoholism, mental health or
chemical dependency services, the cost-sharing requirements for these
outpatient services must be the same as the cost-sharing requirements for

outpatient medical services. This requirement also applies for inpatient services.

BCBSMN anticipated that the requirements of the Act would be met by applying
this type of analysis to all affected groups.

bluecrossmn.com

Blue Cross and Blue Shield of Minnesota is a nonprofit independent licensee of the Blue Cross and Blue Shield Association

®


However, as BCBSMN has applied the Regulation’s “Substantially All” test to its
benefit plans, over 60% fail. This is despite the fact that these plan designs meet
Minnesota’s equal treatment by type of service parity requirement. BCBSMN’s
analysis has found that benefit plans that have only deductible/co-insurance
generally pass the test. However, benefit plans that use a combination of co-
payments and co-insurance, generally fail to meet the requirements of the
Regulation. This means that benefit plan changes will be necessary for more
than 100,000 members in fully insured plans and more than 700,000 members in
self-insured plans.

The benefit changes that will be required to make our plans compliant often
involve a choice of either 1) covering MH/CD less richly than under the equal
treatment by type of service standard in order to meet the Regulation; or 2)
covering MH/CD at 100%, causing overall health care and premiums costs to
increase with no ability to control utilization. From BCBSMN’s perspective,
neither of these alternatives is desirable.

The following is an example of the results we are finding for one of our most
common plan types (inpatient and outpatient services subject to deductible
coinsurance with $25 office call co-pays and preventive services covered at
100%). This type of plan fails the “Substantially All” test based upon our
evaluation and interpretation of the Regulation’s test. For simplicity, only testing
of the inpatient and outpatient categories for in-network coverage of a single
contract type is displayed.

Benefit Summary
Overall Deductible: $300
Overall Coinsurance: 80%
Preventive Care: 100%
Office Visits: $25 Co-pay
Ancillary Svcs Assoc with

Office Visits: Subject to Deduct/Coins
PT/OT/ST/Chiro Office Visit: $25 Co-pay
PT/OT/ST/Chiro Therapy: Subject to Deduct/Coins
Lab and X-ray: Subject to Deduct/Coins
MHICD IP/OP Services: Subject to Deduct/Coins
MHI/CD Office Visit: $25 Co-pay
MHICD Ancillary Svcs Assoc

with Office Visit: Subject to Deduct/Coins
Substantially All Test:
Inpatient: % of Projected Claims
$300 Deduct = 99.9%
80% Coins = 99.9%
100% Coins = 0.1%
Outpatient/Professional: % of Projected Claims

$300 Deduct = 84.3%


80% Coins = 86.0%
100% Coins = 14.0%
$25 Co-pay = 10.3%

Summary of Results for Sample Plan:

e Passes “Substantially All” test for IP Services, because the
deductible/coinsurance covers 99.9% of all IP services, and all IP MH/CD
are subject to deductible/coinsurance.

e Passes “Substantially All’ test for OP/PR Ancillary Services Subject to
Deduct/Coins, because deductible/coinsurance covers 84.3%/86.0% of all
OPIPR services.

e Fails “Substantially All’ test for OP/PR Office Visits, because OP/PR
copays cover only 10.3% of projected claims which is less than the
required 2/3.

BCBSWMN has more than 300 fully and self-insured groups that renew in July. A
large portion of these groups will fail the “Substantially All’ test. For BCBSMN’s
total book of groups renewing in July, 48% of the groups will fail. This will affect
more than 30,000 members. Again, these benefit plans meet Minnesota’s equal
treatment by type of service parity requirement.

Based on this analysis, the benefit plan design of the failing groups will have to
be changed significantly. As noted earlier, it appears that benefit plans that
include both co-payments and co-insurance will need to be eliminated. Given the
March 23, 2010 effective date for the grandfathering provisions of the Patient
Protection and Affordable Care Act of 2010 (PPACA), BCBSMN is extremely
concerned that the significant benefit plan design modifications required under
the Regulation will eliminate the grandfather status for the affected groups and
members.

BCBSWN believes that the market disruption that will occur due to the application
of the substantially all test is an unanticipated consequence of the Regulation.
Blue Cross Blue Shield of Minnesota respectfully requests that the
implementation of the Regulation be delayed for six months so that these
consequences can be more fully understood and addressed.

Thank you for your consideration of these comments. If you have any questions
please contact Lois Wattman at Lois Wattman@bluecrossmn.com.

Sincerely,

A AZ

Kathleen A. Mock
Vice President
Public and Health Affairs