May 28, 2009 

Office of Health Plan Standards and 

Compliance Assistance 

Employee Benefits Security Administration 

Room N-5653 

U.S. Department of Labor 

200 Constitution Avenue, N.W. 

Washington, DC 20210 

Re: Comments on the Mental Health Parity Act Interim Final Regulations 

 RIN 1210-AB30 

Dear Sir / Madam: 

The American Benefits Council (the "Council"), the U.S. Chamber of Commerce (the 

"Chamber") and the National Retail Federation ("NRF") appreciate the opportunity to 

provide comments to the Department 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" or "MHPAEA"), 75 Fed. Reg. 5410 (Feb. 2, 2010). We understand that 

a response submitted to one agency will be shared with the other agencies of jurisdiction 

("Agencies"). 

The Council is a public policy organization representing principally Fortune 500 companies 

and other organizations that assist employers of all sizes in providing benefits to 

employees. Collectively, the Council's members either sponsor directly, or provide services 

to, retirement and health plans that cover more than 100 million Americans. 

The Chamber is the world's largest business federation, representing more than three 

million businesses of every size, sector and region. More than 96 percent of the 

Chamber's members are small businesses with 100 or fewer employees, 71 percent of which 

have 10 or fewer employees, yet virtually all of the nation's largest companies are also 

active members. 
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The National Retail Federation is the world's largest retail trade association and the voice of 

retail worldwide. NRF’s global membership includes retailers of all sizes, formats and 

channels of distribution as well as chain restaurants and industry partners from the U.S. 

and more than 45 countries abroad. In the United States, NRF represents the breadth and 

diversity of an industry with more than 1.6 million American companies that employ nearly 

25 million workers. 

Our members typically include mental health and substance abuse coverage in their health 

benefits plans and strongly believe in the value of such coverage for employees and 

employers. As key stakeholders directly impacted by the mental health parity rulemaking, 

we are committed to assisting the Agencies in developing reasonable and administrable 

guidance for the provision of mental health and substance use disorder benefits provided to 

group health plans. Our specific comments are set forth below. 

1. Delay in Applicability Date and Extension of Good Faith Compliance Period

We recommend that the Agencies delay the applicability date of the Regulation until the 

first plan year beginning on or after January 1, 2012. The current applicability date of the 

Regulation for most plan sponsors is the first plan year beginning on or after July 1, 2010. A 

delay is justified since many of the provisions of the Regulation, including the nonquantitative treatment limit rule and the "substantially all"/"predominant" tests, are 

unanticipated and much more difficult to comply with than could have been expected. The 

single group health plan rule is particularly burdensome for the increasing number of 

larger employers that utilize a behavioral health company on a "carve out" basis to provide 

and manage mental health and substance use benefits. 

A delay is also justified so that the Agencies can consider how the Patient Protection and 

Affordable Care Act ("PPACA") affects compliance with the Regulation. As a result of 

PPACA, plan sponsors are concerned that making design changes that are necessary to 

fulfill the parity requirements under the Regulation will eliminate their status as a 

"grandfathered" plan. PPACA also requires that employers that set up new health plans 

will be required to cover preventive care services with no cost-sharing for plan years 

beginning on or after September 23, 2010. This new rule will have an impact on the ability 

of plans to pass the "substantially all"/"predominant" tests as to cost sharing. 

Additionally, PPACA increases the size of small employers for which the small employer 

exemption is available from 50 to 100 employees for purposes of the PHSA (see sections 

2726 and 2791 of the PHSA), but PPACA does not provide a conforming change in the small 

employer size under ERISA or the Internal Revenue Code, nor does it provide a clear 

effective date for this change. None of these important issues could have been considered 

by the Agencies in issuing the Regulation. 

In addition to a delay in the applicability date, we request a continuation of the good faith 

compliance period with respect to the requirements of the Act that was provided under the 

Regulation to give plan sponsors additional time to come into compliance with the 
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Regulation's requirements. If, however, the applicability date is not delayed, we request 

that the Agencies adopt a good faith compliance period with respect to the requirements of 

the Regulation for the first plan year to which the Regulation otherwise applies. 

2. The Current Scope of the Regulation Should Not be Changed – Plans Must Be 

Able to Exclude Treatments and Treatment Settings as a Matter of Plan Design

MHPAEA provides that mental health and substance use disorder benefits are defined as 

benefits with respect to services for mental health or substance use disorder conditions (as 

applicable) as defined under the terms of the plan and in accordance with applicable federal 

and state law. See ERISA § 712(e)(4) & (5). Consistent with this language, the Regulation 

makes clear that plan sponsors have flexibility with regard to designing mental health and 

substance use disorder benefits. More specifically, under the Regulation – 

• group health plans are permitted to exclude coverage for a particular mental health 

or substance use condition; 

• group health plans are permitted to exclude coverage for a particular treatment or 

treatment setting with respect to a mental health or substance use disorder 

condition; and 

• group health plans are permitted to exclude coverage for treatment settings or 

providers where licensure requirements are not satisfied. 

That flexibility must be retained in any final regulation in order for plan sponsors to 

continue to provide the most appropriate benefits with regard to plan participants based on 

clinical effectiveness and in order for plan sponsors to manage costs associated with the 

provision of mental health and substance use benefits. This is particularly important given 

the inflexible nature of the Regulation’s "substantially all"/"predominant" tests and the 

unexpected and unwarranted imposition of parity requirements with respect to medical 

management (discussed below). 

3. Provide Relief Under "Substantially All"/"Predominant" Tests

MHPAEA prohibits group health plans that provide medical and surgical benefits and 

mental health or substance use disorder benefits from applying financial requirements or 

treatment limitations that are more restrictive than the predominant financial requirements 

or treatment limitations that apply to substantially all medical and surgical benefits. ERISA 

§ 712(a)(3)(A). The Act does not define the term "substantially all." 

The Regulation adopts a "substantially all"/"predominant" test that is inflexible and 

unnecessarily complicated. Under the "substantially all" test, in order for any type of 

financial requirement (or quantitative treatment limit) to apply to mental health or 

substance use disorder benefits, that particular "type" of requirement must first apply to 

two-thirds of the medical and surgical benefits within a particular classification. This test is 
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failed by many plans even where the vast majority of the medical or surgical benefits in that 

category are subject to some form of cost sharing. 

 

The reason the "substantially all" test is failed with some frequency is that plan sponsors do 

not uniformly use copays or coinsurance in a particular classification – both forms of costsharing are commonly used. 

This problem is most prevalent for the outpatient classification. For example, coinsurance 

is typically applied to facility charges (e.g., hospital charges), including facility charges 

associated with outpatient coverage. However, copays are more typical for outpatient 

provider charges (e.g., doctor). In such circumstances, most outpatient coverage is subject 

to cost-sharing, but in many cases no single type of cost sharing (coinsurance or copays) 

would meet the two-thirds test. In addition, plan sponsors seek to incentivize certain 

behavior as a measure of cost control as well as encourage certain wellness-related 

behaviors. Indeed, many plan sponsors exempt certain types of preventive care or wellness 

visits from cost-sharing altogether. For example, well-child visits and lab tests may be 

provided without any cost sharing, or office visits for diabetes care may be offered with 

reduced copays. This approach promotes better health outcomes, benefiting plan 

participants and plan sponsors. 

As a result of the Regulation’s "substantially all" test, plan sponsors will have to decide 

whether to modify their medical and surgical benefits so that either copays or coinsurance 

will apply to two-thirds of the medical and surgical benefits in a particular classification. 

In most cases, the likely modification will be to increase the benefits subject to coinsurance 

rather than copays, since coinsurance is often the type of financial requirement that comes 

closest to satisfying the "substantially all" test. This will negatively impact participants by 

driving up their out-of-pocket costs for medical and surgical benefits. It could also 

negatively impact participants who utilize mental health and substance use benefits since 

they will be required to pay coinsurance rather than copays. 

Alternatively, plan sponsors could eliminate cost-sharing for mental health and substance 

use disorder benefits. This approach, however, will likely drive up costs for plan 

participants through greater cost-sharing for premiums or other out of pocket costs. It is 

also possible that some plan sponsors will narrow the mental health or substance use 

disorder conditions that are covered by the plan, or eliminate coverage entirely. 

We believe that these results are unintended consequences of the "substantially all" test and 

the narrow set of classifications permitted under the Regulation. Moreover, we do not 

believe that MHPAEA requires the inflexible classifications and testing methods imposed 

under the Regulation. To address these unintended consequences, and to generally ease 

compliance burdens associated with the test, we recommend the following specific changes: 

• The Regulation should allow additional classifications or sub-classifications so that 

the two-thirds test can be more easily met. In particular, the Regulation should 

allow outpatient benefits to be divided between facility charges and provider 
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charges. Other legitimate classifications or sub-classifications should be permitted 

for comparison purposes, including comparing types of providers (primary versus 

specialist; physician versus other licensed professionals), durable medical equipment 

("DME"), and therapists. 

 

• The Regulations should permit plan sponsors to exclude services that are provided 

with no cost sharing or at reduced cost sharing from the "substantially all" test, 

particularly if offered to encourage wellness. This is particularly important since 

section 2713 of the PHSA, as added by PPACA, requires coverage of preventive 

services without cost sharing. 

• The Regulation should permit testing based on the "actuarial equivalence" of cost 

sharing in a particular classification. Under this concept, if two-thirds of the 

benefits in a particular classification are subject to some form of cost sharing, an 

actuarially equivalent mix of cost-sharing should then be permitted for mental 

health and substance use benefits. 

 

• The "substantially all"/"predominant" tests are complicated and administratively 

burdensome and costly. The Regulation should provide that the calculations do not 

need to be repeated every year absent changes in plan design or indications that 

actuarial methods were wrong or data is not accurate. 

4. Non-quantitative Treatment Limits 

One of the most unexpected requirements of the Regulation is the requirement for parity 

for non-quantitative treatment limits. MHPAEA explicitly imposes parity requirements 

with respect to treatment limitations and financial requirements, as well as out-of-network 

coverage. The Act does not, however, expressly extend parity requirements to medical 

management techniques. In fact, the Act includes a rule of construction that states that 

nothing shall be construed as affecting the terms and conditions of the plan or coverage to 

the extent that the plan terms and conditions do not conflict with the Act's parity 

requirements. ERISA § 712(b). Since there is no explicit parity requirement for medical 

management in the Act, none should be implied in regulatory guidance by the Agencies. 

As such, we recommend that the nonquantitative treatment limitations rule be eliminated 

in the final rule. 

Our understanding is that the category of non-quantitative treatment limitations, which 

includes medical management, was created in response to comments submitted by mental 

health advocates that equated medical management with denial of access to services that 

they argued were de facto treatment limitations. This is far from true. Plan sponsors 

deploy medical management as an important tool for quality improvement by assuring that 

there is appropriate coordination and level of care. Better treatment outcomes result from 

the management of mental health and substance use benefits. 
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Differences in medical management practices exist because of the variability in the evidence 

base for treatment and services for mental health and substance use conditions as compared 

to medical and surgical conditions. Most medical and surgical conditions have well 

established treatment protocols. In contrast, the treatment protocols for many mental 

health and substance use conditions are less certain. 

In addition, many health plans manage the services of a physician different than the 

services delivered by another licensed provider regardless of whether the provider is 

delivering mental health services or medical services. For example, a health plan may use a 

brief notification system when the treating provider is a physician (or psychiatrist). But the 

same plan may require more information from a non-physician provider such as a licensed 

counselor or psychologist to certify medical necessity for treatment and services. This 

practice is similar to the medical management used for medical and surgical benefits, where 

services of a physician typically are not subject to preauthorization for outpatient care, but 

other clinicians (such as speech, occupational and physical therapists) may be subject to 

preauthorization. 

We believe that the intent of this Regulation is not to increase the use of medical 

management for medical and surgical conditions. However, that is the likely result of the 

non-quantitative treatment limit rule since plan sponsors are unlikely to limit the 

management of mental health and substance use conditions, given its important role in 

ensuring the quality and affordability of coverage for those conditions. 

If the final Regulation retains the concept of parity for "non-quantitative" limits, it should be 

narrowed so that any non-quantitative treatment limit is truly "similar" to a day or visit 

limit as contemplated by the Act's statutory language. The provision could be narrowed so 

that it only addresses medical management programs that are essentially a subterfuge for a 

quantitative limit. An example would be a utilization review protocol that provided that 

the plan would never authorize more than five counseling sessions for a particular 

condition. In addition, the Regulation could prohibit medical management programs that 

are objectively discriminatory. An example might be where a plan provides only for 

retrospective review for medical necessity for outpatient medical and surgical, but all 

outpatient mental health or substance use disorder benefits are subject to preauthorization, 

or where a plan provides for different financial penalties for non-compliance with a 

preauthorization requirement. 

In addition to the provisions requiring parity for medical management, we are also 

concerned with the provision in the non-quantitative treatment limit rule that relates to 

provider network adequacy and admission standards. We believe that these criteria are in 

no way similar to the day or visit treatment limits addressed by MHPAEA. Moreover, such 

rules are unnecessary since states regulate provider networks for insured business, and 

health insurers use the same networks for their self-insured customers. In addition, a 

number of accrediting bodies, such as URAC and NCQA, already establish standards for 

health plans that address the adequacy of networks. 
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Finally, we object to the inclusion of provider reimbursement and UCR charges as 

nonquantitative treatment limitations. MHPAEA's goal was to provide parity for mental 

health and substance use benefits provided to patients. It was not intended to provide 

parity in reimbursement and UCR practices with respect to providers. It is unreasonable to 

expect plan sponsors to review provider agreements by July 1, 2010 even in the event a 

health insurer that provides third-part administrative (TPA) services was willing to share 

that information. In addition, if a plan sponsor provides medical and surgical benefits, but 

a separate carve out vendor provides mental health and substance use services, there plan 

sponsors could assure parity as to provider reimbursement or UCR charge, given the 

proprietary nature of these payment arrangements and the sponsors’ lack of access to that 

information. 

 

5. EAPs and Wellness Programs

 

The Regulation should specifically confirm that, if a plan sponsor offers mental health and 

substance use disorder benefits in all classifications and also offers an overlay of, for 

example, additional mental health services provided through an EAP or additional 

substance abuse services (e.g., smoking cessation) offered through a wellness program, the 

EAP or wellness program would not be subject to the parity requirements. 

6. Small Employer Exemption

Changes under PPACA increased the size of the employer for whom the small employer 

exemption is available to employers with one to 100 employees for purposes of the PHSA. 

See PHSA §§ 2726, 2791 (as amended by section 1563 (c)(2) of PPACA). 

It appears, however, that the PHSA definition of small employer is not specifically 

incorporated into the parity requirements under ERISA and the Code because new ERISA 

section 715 and new Code section 9815 do not incorporate by reference section 2791 

(defining small employer) of the PHSA (because it is not included in part A of title XXVII of 

the PHSA). As a result, the definition of small employer under ERISA and the Code might 

still only apply to employers with an average of two but not more than 50 employees on 

business days during the prior year. This creates an inconsistency for an employer who 

offers an insured plan that is covered by ERISA, the Code and the PHSA (with regard to the 

insurance issuer offering the policy). We request guidance that incorporates the PHSA 

definition into ERISA and the Code to resolve this inconsistency for purposes of the mental 

health parity requirements. 

We also request guidance as to when the change in the size of a small employer is effective. 

We believe that this change is effective in 2014, when the key PPACA insurance reforms 

that affect the small group market take effect (e.g., the rating requirement, the offering of 

small group coverage through an Exchange). 

* * * 
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We appreciate the opportunity to provide comments with respect to the Interim Final Rule 

implementing the Paul Wellstone and Pete Domenici Mental Health Parity and 

Addiction Equity Act of 2008. Please do not hesitate to contact Kathryn Wilber at 202- 

289-6700 or kwilber@abcstaff.org, Randel K. Johnson at 202-463-5448 or

rjohnson@uschamber.com, or Neil Trautwein at 202-626-8170 or trautweinn@nrf.com with 

any questions or if we can be of further assistance. 

Sincerely, 

Kathryn Wilber 

Senior Counsel, Health Policy 

American Benefits Council 

Neil Trautwein 

Vice President, Employee Benefits Policy Counsel 

National Retail Federation 

Randel K. Johnson 

Vice President, Labor, Immigration & Employee Benefits 

U. S. Chamber of Commerce