Medical Necessity Criteria

MHPAEA requires disclosure of medical necessity criteria. Criteria for medical
necessity determinations are currently made available to plan participants, beneficiaries
and contracting providers upon request and, in some cases, as a matter of routine
disclosure, without the need for a request by the participant, beneficiary and contracting
provider. The information disclosed may range, depending on the circumstances, from
the specific criteria relevant to a plan participant or beneficiary’s particular request for
benefits or may be a broad disclosure of the complete set of medical necessity criteria for
all benefits under the plan to a contracted clinical provider.

This practice of disclosure is a result of market-driven demand by health care consumers
and providers for transparency in the elements that define benefits available to plan
participants, beneficiaries, and contracted providers. In addition, there are existing state
and federal legal and regulatory disclosure requirements for plan and health issuer benefit
plan information including medical necessity criteria information. This transparency,
and the prior development of federal and state law disclosure requirements, along with
private accreditation standards, has driven plans and health issuers to make the disclosure
of medical necessity criteria utilized by plans a routine function of the business of
administering plan benefits. We fully support the need for such transparency and
disclosures.

We interpret the MHPAEA as codifying, in plain language, the existing best practices for
disclosure of this information in accordance with existing law and current practices and
operating procedures prevalent in the health care industry.

Further, health insurance carriers (including both insurers and managed care entities such
as health maintenance organizations) who are accredited by organizations such as the
National Committee on Quality Assurance (NCQA) or URAC (which is also known as
the American Accreditation HealthCare Commission, Inc.) also have this requirement
placed upon them within the existing accreditation standards. Specifically, NCQA
standards UM 2 and UM 7A require the disclosure of medical necessity criteria to
participants and beneficiaries (UM 7A) and practitioners (UM 2). URAC standard HUM
4 also addresses a disclosure requirement for utilization management requirements and
procedures including medical necessity criteria.

Implementation:

While the federal parity law stipulates that regulations will be promulgated by October 3,
2009, the guidance contained within these interim regulations will not be timely enough
for plans with an implementation date of January 1, 2010. It is common for plans to
require their members to choose a health plan with a January 2010 start date in the prior
October, and so regulations promulgated by October 3, 2009 will be too late to provide
guidance for plans. Plans must complete design and any needed regulatory filings well
before the October enrollment period. We request that if a plan implements a parity-


approaches, therapists have variations in training and experience at delivering these
treatments. As has been noted in the 2006 Institute of Medicine report, Improving the
Quality of Health Care for Mental and Substance Use Conditions, there is significant,
often unjustified variation in treatment for some behavioral illnesses. Therefore,
behavioral health requires a different management approach that is case and provider
specific and that includes reviews against practice standards, outcomes management,
concurrent and retrospective reviews/consultations during the course of the treatment
and/or treatment record reviews to ensure the quality and efficacy of the treatment. OPM
has recognized this issue, in FEHBP’s implementation of MHPAEA, stating that “plans
may manage care through referrals, prior authorization, treatment plans, pre-certification
of inpatient services, concurrent review, discharge planning, case management,
retrospective review, and disease management programs.”

Medical Management of Out of Network Benefits

The MHPAEA will also impact the Out of Network (OON) benefits which many plans
offer. The requirement that plans must offer behavioral health OON benefits if they offer
medical OON, will require plans and employers to offer OON behavioral health benefits
to some members who did not previously have such a benefit. With OON services it
tends to be difficult to control the quality of the services (with an even greater variability
in treatment provided) and to coordinate the care. The services are more costly and harder
to manage and as a result it is expected that this provision will result in higher costs for
consumers, plans, and employers.

We believe that the MHPAEA explicitly allows plans to require the OON provider to
follow the terms and conditions of the plan that may include utilization and medical
management of the benefit. Implementation of this provision will be a key to trying to
coordinate care, maintain or improve quality, and keep employers and consumers costs
down.

Interfacing with State Laws

Guidance is needed regarding how to determine the relationship between state and federal
laws with regard to parity. There are state-specific mandates regarding the treatment of
mental health and substance use disorders. For example, many states mandate the
coverage of a specific mental health condition but only up to a certain cost level or within
specific treatment limits. We believe that, in many cases, the financial and treatment
limitations were the quid pro quo for the state legislative decision to create the mandate.
It is not clear how the financial requirements and treatment limitations inherent in these
mandates relate to the federal parity law. We do know that the intent of the parity law
was to not preempt state coverage mandates. We look for guidance on how to to interpret
state benefit mandate limits within MHPAEA


compliant benefit in good faith on January 2010, without the benefit of reviewing the
interim final regulations at the time of filing the benefit plan, then the plan should not be
subject to penalties “after the fact”. Furthermore, any changes that are required to make
the benefit plan compliant with the parity law should not be implemented in mid-year.
This would be onerous, costly, and confusing for members. Any such changes should be
implemented in the following plan year.

Respectfully submitted,

Ian Shaffer MD, MMM
Chief Medical Officer


VR San

A Health Net Company”

May 28, 2009

Attn: MHPAEA Comments

Office of Health Plan Standards and Compliance Assistance
Employee Benefits Security Administration

Room N-5653

U.S. Department of Labor

200 Constitution Avenue, NW

Washington, DC 20210

Attn: CMS-4137-NC

Centers for Medicare & Medicaid Services
Department of Health and Human Services
P.O. Box 8017

Baltimore, MD 21244-8010

CC:PA:LPD:PR (REG-120692-090)
Room 5205

Internal Revenue Service

P.O. Box 7604

Ben Franklin Station

Washington, DC 20044

Submitted via the Federal eRulemaking Portal: www.regulations.gov

Re: Request for Information Regarding the Paul Wellstone and
Pete Domenici Mental Health Parity and Addiction Equity Act of 2008
(74 Fed. Reg. 19155, April 28, 2009)

Dear Sir/Madam:

Managed Health Network, Inc. A Health Net Company (“MHN”) is pleased at this 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). We are responding to a
Request for Information (RFI) published in the Federal Register on April 28, 2009 (74 Fed. Reg.
19155). We applaud the efforts to improve the equity for those suffering from mental illnesses
and substance use disorders (behavioral illnesses). Within the Act there are several areas that
MHN requests clarification and we have identified those below.

Financial Requirements

The MHPAEA may require some plans to significantly change their administration of financial
requirements. Due to some ambiguity in the law, there needs to be clarification on whether plans
can continue to have separate and no more restrictive financial requirements


(specifically deductibles and out of pocket maximums (OOP)) for behavioral illness
services as compared to medical services or whether plans must only have a single
deductible and/or out of pocket maximum that includes both medical and behavioral
services. We strongly believe that the law is written to allow either separate or shared
financial requirements as long as the deductibles and out-of-pocket maximums are no less
restrictive for the behavioral health services .

Moving away from a separate, but no less restrictive, deductible alternative would also
pose substantive administrative challenges and additional cost for plans and members.
Because management of behavioral health is considered a specialty service, plans and
purchasers have often chosen to directly contract with a specialized Managed Behavioral
Healthcare Organization to administer the behavioral health services. Therefore, if a
single deductible were mandated, there would be two organizations involved in the
benefit administration, the medical plan or insurer and the separate behavioral health plan
or insurer. Communicating accurate, up to date deductible information for accurate
management of the benefit (i.e. cross-accumulation of the deductible) will be an intensive
administrative process with significant costs. In some circumstances, a single employer
may have multiple medical insurers (offering various medical benefit options) but a
single behavioral health specialty insurer. If a single deductible were mandated the
specialty insurer would have a nearly insurmountable administrative burden of tracking
and coordinating benefits across multiple, disparate systems that count the cost of each
benefit against the deductible, potentially simultaneously. In effect the two (or more)
carriers would need overlapping, redundant claims functions and systems.'

In addition, the impact on the member from shared or separate financial requirements can
be very negative, depending on member circumstances and financial requirements of the
plan. The general assumption is that a shared deductible is less costly for the member
since the costs of behavioral and medical care are assessed against the same deductible
and out of pocket maximum. We believe that, if forced to offer a single deductible, many
plans will opt to increase the behavioral health benefit deductible to match the already
higher medical deductible. In behavioral health the barrier of high first dollar cost is
great. Many studies have demonstrated the sensitivity of access and duration of treatment
in behavioral health to deductibles, co-payments and out of pocket maximum levels. A
number of plans have chosen to use low first dollar costs in behavioral health to enhance
access. This is likely to be lost by a requirement of a single, higher cost deductible and is
likely to reduce access to care for some who need it most.

Having the ability to construct separate, equal or lower deductibles and out of pocket
maximums for members needing behavioral health services and faced with high medical
deductibles allows those members to have less financial first dollar barriers to accessing
behavioral health treatment. Purchasers are not likely to be willing to adjust the medical
deductible downward (thereby increasing premium costs) to keep the behavioral health

"A shared deductible in this context would require that the carriers or administrators. build the necessary
system interfaces to share and coordinate the cost accumulators. We estimate that this could have a range of
cost from $200,000 - $750,000 for each interface.


financial requirements lower, since approximately 95% of the insured population only
accesses the medical surgical benefit. Without the ability to have separate deductible and
out of pocket maximums, purchasers are forced to adopt higher financial requirements for
behavioral health. It would be our recommendation to allow the purchaser to offer either
shared or separate deductibles and out of pocket maximums so that they can minimize
impact on access to behavioral health care.

Our recommendation is supported by the FEHBP Carrier Letter dated April 20, 2009 that
directs carriers to implement the MHPAEA and which states, while indicating a
preference for one deductible, “expenses incurred for mental health or substance use
disorders may be applied to the same medical and surgical deductibles and catastrophic
limits or to separate deductibles and catastrophic limits so long as they are for the
equivalent amounts.” In addition, the existing regulations that apply to annual and
lifetime limits allow for both one aggregate limit and two separate but equal limits.

The MHPAEA will also require changes in co-payment levels. The requirement that co-
payments for services be in parity, will mean that plans will need to “map” behavioral
health services to “comparable” medical services. This is fairly straightforward for
outpatient services such as medication visits and therapy sessions. However, clarification
is needed as to whether behavioral health represents a specialty service or a primary care
service, since many plans have different co-pays on the medical side for each type of
service. Inpatient services are also straightforward, but behavioral health has a group of
intermediate level services between inpatient and outpatient that have no clear equivalent
in the medical services. Intensive Outpatient Services (IOP, 3 hours a day of therapy ina
program, 3-5 times a week), Partial Hospital Programs (PHP, 4 or more hours a day of
therapy in a program 3-5 times a week), and Residential Treatment Centers (RTC, 24
hour supervision, 7 days per week, but often with no MD on site), are all examples of
behavioral health services with no clear medical equivalent. Decisions about how to
determine equivalence of co-pays (and deductibles) will impact how the plans administer
benefits, the costs to employers, and the costs to members. In some cases this may
reduce the co-pay for members seeking behavioral health services, but in other cases it
may increase those co-pay costs.

Medical Management of the Benefit:

We understand that the Congressional Budget Office took into account the use of
managed care arrangements in their analysis of potential costs in the implementation of
MHPAEA. Without the ability to uniquely manage the mental health and substance use
disorder benefit costs can potentially return to the dramatic 20% plus year over year
increases in behavioral health costs that led to the formation of managed behavioral
health organizations.

The treatment of behavioral health conditions is based on scientific data, as is the case in
the practice of physical medicine. For most medical conditions there are clear standards
of care derived from confirmatory objective outcomes and/or research based clinical
practice guidelines. While behavioral illness treatments also have clearly defined