Mitch Zamoff 

 Acting Chief Legal Officer 

 UnitedHealth Group 

 9900 Bren Road East, MN008-T700 

 Minnetonka, MN 55343 

Submitted Via Federal Rulemaking Portal: http:www.regulations.gov

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, NW 

Washington, D.C. 20210 

Attention: MHPAEA Comments

RE: Request for Information Regarding the Paul Wellstone and Pete Domenici 

Mental Health Parity and Addiction Equity Act of 2008 

Dear Sir or Madam: 

 This will provide our comments to the Request for Information (the “RFI”) 

Regarding the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 

2008 (the “MHPAEA”) published in the Federal Register on April 28, 2009 (74 Fed. Reg. 19155). 

UnitedHealth Group uses its resources and expertise to support consumers, patients, 

care providers, employers, and benefit sponsors, so that they can make more informed health care 

decisions. Our breadth of services and leadership in both private and public programs enable us to 

adapt to a constantly evolving environment in order to make health care more accessible, affordable, 

and personalized. As one of America’s leading health care companies, UnitedHealth Group serves 

more than 70 million Americans each year. Partnering with more than 650,000 physicians and 

other care providers, 5,200 hospitals, 80,000 dentists, and 65,000 pharmacies in all 50 states, we 

touch nearly every aspect of health care delivery and financing. This includes UnitedHealth 

Group’s subsidiary, OptumHealth, which manages mental health and substance use disorder 

services along with employee assistance program services for over 43 million people, making it the 

largest managed behavioral health organization in the country. 

Mental health and substance use disorder treatment coverage is an essential 

component of the American healthcare system. The MHPAEA was carefully constructed by 

Congress and supported by a wide array of health care stakeholders including UnitedHealth Group, 

the health insurance industry at large, mental health providers and consumer advocacy groups 

because of its thoughtful and balanced construction of the law to support such coverage in a fair and 
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equitable manner. The regulations and guidance to be issued under the MHPAEA must be equally 

reasoned and balanced to ensure consistency with the law’s language and intended goals. 

UnitedHealth Group respectfully requests that the Department of Labor (“DOL”) 

consider the following comments and responses to the RFI when issuing regulations and guidance 

with respect to the provisions of the MHPAEA. For ease of reference we have included each of the 

RFI’s questions or requests for comments in bold italicized type followed by our response in plain 

text. Note: in a number of our responses we cite different sources of information. The citations for 

each section can be found as endnotes to that specific section. 

A. (i) What policies, procedures, or practices of group health plans and health insurance 

issues may be impacted by 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? 

The MHPAEA will impact a variety of policies, practices, and procedures for those 

companies issuing health insurance. Many of these impacts will also be felt both directly 

and indirectly by plan sponsors and participants. In assessing these impacts, and the 

associated costs and benefits, it is vital to review what the MHPAEA does and does not 

address. 

The MHPAEA does not contain a coverage mandate. The MHPAEA does not define any 

mandate for a plan to provide coverage of mental health or substance use disorders nor does 

it define coverage requirements for any particular mental health or substance use disorder 

conditions or treatments. The law reserves to plans and health insurance carriers the right to 

define which diagnoses they will cover as mental health and substance use disorder benefits 

(subject to other applicable federal and state laws). While the hope would be that all major 

diagnoses for both mental health and substance use disorders would be covered, this will be 

a determination made by the plan sponsor or health insurance issuer in response to a variety 

of market-driven considerations. The control of the scope of the benefits offered or 

provided by the plan or health insurance coverage has been a part of plan design process 

historically and it is not anticipated that MHPAEA will change this process and therefore 

there should be little cost impact arising from this element of plan design. The cost 

implications of the MHPAEA are truly driven by the changes required by the MHPAEA in 

parity of treatment limitations, financial requirements and out-of-network coverage. The 

flexibility for plans to choose the scope of their coverage for which mental health and 

substance use disorder conditions and treatments will be provided by a plan is an important 

benefit for stakeholders as it broadens plan design choices and can allow plans and health 

insurance issuers to provide a wider variety of affordable options to consumers. 

The MHPAEA clearly allows for the terms and conditions of the plan to be determined by 

the plan sponsor and health insurance issuers provided that the defined boundaries of the 

MHPAEA with respect to treatment limitations and financial requirements are applied. Any 

interpretation which expands beyond the language of the MHPAEA in an attempt to alter 

plans’ and health insurance issuers’ ability to define the terms and conditions of the plan 
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would have a critical and negative effect on the affordability of mental health and substance 

use disorder benefits under this law. 

The MHPAEA does require plans to significantly alter the administration of financial 

requirements. Financial requirements must now be no more restrictive for mental health and 

substance use disorder benefits than they are for medical and surgical benefits. 

Due to some ambiguity in the language of the law, there needs to be clear guidance in the 

regulations with respect to the language in the MHPAEA that states “there are no separate 

cost sharing requirements that are applicable only with respect to mental health or substance 

use disorder benefits.” We strongly believe that the language in the law is written to allow 

for plans and health insurance issuers to have the flexibility to apply either separate or 

shared (also referred to as “integrated” or “combined”) financial requirements to mental 

health and substance use disorder benefits. In the event of a plan applying separate financial 

requirements to mental health and substance use disorder benefits those requirements must: 

(a) not be applied only to mental health and substance use disorders – meaning the plan must 

have a similar requirement on the medical and surgical benefits of the plan; and (b) the 

financial requirement must be no more restrictive on the mental health and substance use 

disorder benefits than the similar requirement applied to the medical and surgical benefits. 

The contrary interpretation would suggest that a plan must have combined cost sharing 

requirements. This interpretation would have a direct impact on the administrative cost of 

plans and create a disadvantage for a significant number of plan participants by increasing 

the cost sharing requirements applicable to their mental health and substance use disorder 

benefits. This today would result in limiting access to care and the duration of care both of 

which could result in fewer positive outcomes for members seeking mental health and 

substance use disorder treatment. This is not an isolated or small issue – as many plans do 

not utilize this plan design currently. For example, UnitedHealth Group’s subsidiary that 

specializes in the administration of mental health and substance use disorder benefits 

currently administers plans that offer separate cost sharing requirements for over 5 million 

plan participants. 

The administrative cost impact of this point is driven in some part by the fact that mental 

health and substance use disorder benefit administration and management is a highly 

specialized field and many plans and purchasers have chosen to directly contract with a 

specialized managed behavioral healthcare organizations (MBHOs) to administer the mental 

health and substance use disorder benefits under the plan (this is commonly referred to as a 

“carve-out”). In cases where plans utilize a carve-out arrangement there would be at least 

two organizations involved in the single shared financial requirement approach – the plan 

administrator for medical and surgical benefits and the plan administrator, or carve-out 

vendor, for mental health and substance use disorder benefits. These organizations would, 

in order to administer shared cost sharing requirements, have to develop and program 

interfaces which would allow the communication and sharing of accurate, confidential data 

(such as claims information to be applied to a deductible) in order to ensure accurate 

management of the benefit and the shared cost sharing requirement. 
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This is an intensive administrative process and there are significant costs connected with 

establishing and maintaining these interfaces which can vary widely based on the 

complexity or similarity of the systems and exchanges as well as the timing of data 

exchanges (real-time, daily, weekly etc.). A shared deductible in this context would require 

that the plan and its administrators build the necessary system interfaces to share and 

coordinate data exchanges which could have a range of cost from $420,000 - $750,000 for 

each interface required. The number of interfaces required will depend on the plan and 

number of different medical and surgical plan administrators as well as the number of 

mental health and substance use disorder benefits vendors it has, but for a typical health 

insurance issuer who needs to interface with 40-50 other plan administrators on behalf of its 

plan customers, the cost could be as much as $17 million to $30 million per plan 

administrator.

In addition, there can be a direct financial impact on the individual plan participant due to 

this specific issue. The impact to the plan participant due to a plan design that has integrated 

financial requirements can be significant and negative. The general assumption is that a 

shared deductible is less costly for the member since both costs – the cost of mental health 

and substance use disorder care as well as the cost of medical and surgical care – are applied 

toward the same deductible and out-of-pocket expense maximum. Theoretically this is true 

for some participants but not for participants in plans with medical deductibles of >$ 1,000, 

which is an increasingly common plan design. 

As of 2007, between 12.5 and 14.8 million people nationally were enrolled in high 

deductible plans or plans where deductibles were greater than or equal to $1,000. (Reuther 

2007). According to the Kaiser Family Foundation and Health Research & Educational 

Trust survey published in 2008, 8-9% of employer groups were going to offer only high 

deductible health plans as a cost saving option for the employers as plan sponsors during the 

next renewal period. With this shift to higher deductible plans, more members are faced 

with high first dollar payment for mental health and substance use disorder health services. 

It is well established that access to, and duration of, medical and surgical as well as mental 

health and substance use disorder services are negatively impacted by deductible and out-ofpocket expenses set at this level1

. The Commonwealth Fund Biennial Survey of 2005 

demonstrated the incremental effect of increasing deductibles on those seeking treatment 

even when ill 2

 (See also Figure in appendix). In mental health and substance use disorder 

treatment the impact of high first dollar cost is even greater than it is for medical and 

surgical treatments. Price elasticity studies have shown that demand for mental health and 

substance use disorder health care is more sensitive to price than medical and surgical care. 

McGuire, Taube and Horgan estimated that a 1% increase in cost of services decreases 

demand for services by 0.4 – 1% in contrast to medical and surgical care where the decrease 

in demand is only 0.13 -0.16%.3-5 

It is important to note that, in mental health and substance use disorder coverage the pattern 

of service use (utilization) is much higher (mental health and substance use disorder 

treatment episodes average eight (8) visits while medical and surgical treatment episodes 

average three (3) visits per episode of care) and more frequent (mental health and substance 

use disorder treatment frequency averages one (1) to two (2) visits per week while medical 
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and surgical treatment frequency averages one (1) visit per month). Thus, given the 

frequency and higher utilization for mental health and substance use disorder benefits, 

accumulation of costs is far quicker for participants accessing these benefits. Many studies 

have demonstrated the sensitivity of access and duration of treatment in mental health and 

substance use disorder care, especially substance use disorder care, to financial requirements 

set by higher cost sharing models.6-9 For example, for substance use disorders a $10 

increase in cost sharing resulted in a 1% increase in the probability of a treatment 

reoccurrence due to a resultant shortening of the episode of prior care.10 – 11

With these factors in mind, it is important that plans have the ability to construct separate 

lower deductible and out-of-pocket expense maximums for plan participants faced with high 

medical and surgical expense deductibles and out-of-pocket expense maximums in order to 

allow members to have less of a financial disincentive and barrier to accessing mental health 

and substance use disorder health treatment which will ensure they receive necessary 

treatment when they need it. Guidance from research suggests levels of ideal copayment, 

deductible and out-of-pocket expense maximums that will have less impact on access and 

utilization of services.1,7,12 Plans have historically been unwilling to adjust the medical 

deductible to accommodate mental health and substance use disorder health needs since it is 

estimated that approximately 95% of plan participants only access the medical and surgical 

benefits. Absent the ability to have separate cost sharing requirements for mental health and 

substance use disorder benefits which are no more restrictive than the similar requirements 

for medical and surgical benefits, purchasers are forced to utilize higher shared cost sharing 

requirements that are applied to both medical and surgical benefits as well as mental health 

and substance use disorder benefits with resulting significant negative cost and treatment 

effects for those participants who need mental health and substance use disorder treatments. 

This issue of financial requirements and the ability of a plan to utilize either plan design 

option – shared financial requirements or separate but no more restrictive financial 

requirements – is discussed further in our response to question B.1. below but we note it 

here because a contrary interpretation would have a very significant and negative cost 

impact to plans and plan participants. 

Section Endnotes: 

1. Ringel, J.S., & Sturm, R. (2001). Financial burden and out-of-pocket expenditures for mental health across 

different socioeconomic groups: Results from Healthcare for Communities. The Journal of Mental Health Policy 

and Economics, 4, 141-150. 

2. The Commonwealth Fund Biennial Health Survey 2005 

3. McGuire, T. Financing Psychotherapy: Cost, effects and Public Policy (Cambridge, Mass. Ballinger Press 1981) 

4. Taube, C. Estimating the Probability and Level of Ambulatory Mental Health Services Use Health Services 

Research 21, no.2 ( 1986): 321-340 

5. Horgan, C., “The demand for Ambulatory Mental Health Services” Health Services research 21 no.2 ( 1986):291-

319 

6. Sethi, Rachel, Jee, Joanne (2006) Designing Employer Sponsored Mental Health Benefits. US Department of 

Health and Human Services publication 

7. LoSasso, A.T., & Lyons, J.S. (2002). The effects of copayments on substance abuse treatment expenditures and 

treatment reoccurrence. Psychiatric Services, 53(12), 1605-1611. 

8. Barry, C., Richard, F. The Cost of Mental Health Parity: Still An Impediment. Health Affair 25:623 – 634 

9. Weissman, E., Pettigrew, K., Sotsky, S., & Regier, D.A. (2000). The cost of access to mental health services in 

managed care. Psychiatric Services, 51(5), 664-666. 
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10. . Lo Sasso, A.T., & Lyons, J.S. (2004). The sensitivity of substance abuse treatment intensity to co-payment 

levels. The Journal of Behavioral Health Services & Research, 31(1), 50-65. 

11. LoSasso, A.T., & Lyons, J.S. (2002). The effects of copayments on substance abuse treatment expenditures and 

treatment reoccurrence. Psychiatric Services, 53(12), 1605-1611. 

12. Simon, GE, Grothaus, ML. Impact of Visit Copayments on Outpatient Mental Health Utilization by 

Members of a Health Maintenance Organization. Am J. Psych 1996, 153:331-338 

The MHPAEA does make changes to the application and use of copayments and deductibles. 

The MHPAEA states that financial requirements for mental health and substance use 

disorder services must be no more restrictive than the “predominant” financial requirement 

applied to “substantially all” medical and surgical benefits. The MHPAEA defines 

“predominant” to mean “the most common or frequent of such type of requirement” as 

applies to “substantially all medical and surgical benefits”. The interpretation of this 

language could have a wide range of effect on the cost to the plan and plan participants. 

One interpretation of this section of the MHPAEA would require that each type of financial 

requirement (i.e., deductible, copayment, and coinsurance) for mental health or substance 

use disorder benefits could only be a single amount across the board – regardless of the 

mental health specialty or level of care involved – as the “predominant” requirement to be 

compared for parity purposes to the “predominant” financial requirement (i.e., deductible, 

copayment, and coinsurance) under the medical and surgical benefits of the plan due to the 

use of the term “substantially all.” This would necessitate a significant change to the 

current practices of plans. This interpretation does not account for the fact that plans apply 

varying dollar amounts within each type of financial requirement (i.e., deductible, 

copayment, and coinsurance) for medical and surgical benefits in order to reflect the medical 

specialty, level of care, and cost of care involved. The MHPAEA could theoretically be 

interpreted to prohibit the plan from doing likewise for mental health or substance use 

disorder benefits, which would be a radical departure from current, widely accepted plan 

design and plan administration practices. This would create a striking and vast negative 

impact on health care costs for plans and plan participants. 

To illustrate this point using copayments, medical and surgical benefits utilize a range of 

copayment amounts depending on the type of service and/or level of care. For example, a 

plan design may provide a design where an office visit to the primary care physician (PCP) 

has a $15 copayment, a visit to a cardiologist has a specialty copayment of $35, a $100 

copayment is applied to an emergency room visit, and a $250 copayment is assessed per 

admission for inpatient hospital care. Similarly, plans currently apply varying copayment 

amounts for mental health or substance use disorder benefits as well, depending on the type 

of service or level of care. However, the MHPAEA might be construed, as noted above, to 

require that there be only one single financial requirement applied to all mental health or 

substance use disorder benefits because the law requires the application of the 

“predominant” copayment applicable to “substantially all” medical and surgical benefits. 

The MHPAEA does not contain language that addresses the variances that exist for 

copayments based on the type of service or level of care involved. 

Thus, using the example above, the $15 copayment could be applied to all mental health 

substance use disorder services admission at a inpatient facility, irrespective of type or level 
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of service in contrast to the financial requirements assigned to a type and/or level of care 

that is similar to medical services (i.e. $250 copayment for a mental health inpatient 

admission.). This could result in the plan being left to collect an inpatient admission 

copayment of only $15, since PCP visits are arguably the most “predominant” service 

utilized under medical and surgical benefits and therefore the copayment for PCP visits will 

be the “predominant” financial requirement applied to “substantially all” medical and 

surgical benefits. This result would increase plan costs substantially and create significant a 

disparity between the administration of medical and surgical benefits and mental health and 

substance use disorder benefits that is directly contrary to the intent of the MHPAEA. 

The MHPAEA supports parity between mental health and substance use disorder benefits on 

the one hand and medical and surgical benefits on the other in a manner that takes into 

account the comparison of benefits that allows for the varied levels of care and treatment 

types, e.g. inpatient to inpatient and outpatient to outpatient utilized by both medical and 

surgical as well as mental health and substance use disorder benefits. 

This ambiguity, and the cost impact of the interpretation of this ambiguity, with respect to 

the “alignment” of benefits for parity purposes also arises in the context of determining 

which medical and surgical copayment within the traditional outpatient level of care 

compares between medical and surgical benefits and mental health and substance use 

disorder benefits. It is extremely common for medical and surgical outpatient benefits to 

have differentiated copayments based on whether a provider is primary care provider or a 

specialty provider (e.g. cardiologist, gastroenterologist etc.). There are logical clinical 

reasons and policy arguments to support a plan’s choice to align the mental health and 

substance use disorder outpatient copayment to the medical and surgical benefits’ primary 

care or specialty care copayment. There could be cost differentials to either the plan or the 

participants depending on which category of medical office visits are used for alignment and 

parity of the mental health and substance use disorder outpatient copayment. Below is a 

cost illustration of the difference between aligning the outpatient mental health and 

substance use disorder benefit copayment to the medical and surgical benefit primary care or 

specialist outpatient copayment. 

Cost Illustration for Aligning the mental health and substance use disorder outpatient 

copayment to primary care instead of to specialty care. 

Assumptions for Purposes of Illustration: 

• 100,000 plan participant group 

• Total mental health and substance use disorder claims cost = $4.50 pmpm1

• In network outpatient utilization rate of 500 visits/1,000 group plan participants = 50,000 

visits for this 100,000 plan participant group 

• Specialist copayment = $35 

• Primary care copayment = $20 

• Average number of mental health and substance use disorder office visits per treatment 

episode = 8 office visits 

• Office visit for psychotherapy once/week 
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Cost for PLAN if mental health and substance use disorder copayment is mapped to: 

• Primary care 

o $1,000,000 ( $20 copay/visit x 50,000 visits/year) 

• Specialty care 

o $1,750,000 ($35 copay/visit x 50,000 visits/year) 

• Cost to plan (difference between specialty copayment and primary copayment total) = 

$750,000 

• PMPM Cost difference between aligning to Primary care versus specialty care = $0.63 

pmpm or a 13.9% cost increase 

Cost for individual PLAN PARTICIPANT per treatment episode: 

• Copayment if mental health and substance use disorder outpatient copayment is 

aligned to medical primary care copayment - $20 X 8 = $160/8weeks 

• Copayment if mental health and substance use disorder is aligned to medical 

specialty care copayment $35 X 8 = $280/ 8 weeks 

• Cost difference to plan participant = $120/ 8 weeks 

1. PMPM pricing is not necessarily reflective of typical mental health and substance use disorder benefit cost but was 

used for ease of illustration. 

From the illustration above it is clear there is a cost impact for either the plan and plan 

participants based on the alignment of outpatient copayments as between primary care and 

specialty care. There are many plan changes that can have an impact on plans and plan 

participants the issue of aligning mental health and substance use disorder financial 

requirements, in this case outpatient copayments, is one with significant ramifications in 

isolation, let alone in combination with other parity changes that must occur. As discussed in 

section B.2 below, we would recommend this issue of alignment of financial requirements, 

and treatment limitations, be addressed to bring clarity and a level of flexibility and choice 

by plans by defining how “predominant” financial requirements (and treatment limitations) 

are defined and how it is to be determined what is applicable to “substantially all” medical 

and surgical benefits. 

The MHPAEA does require plans to alter their administration of treatment limitations. The 

MHPAEA will remove or minimize treatment limitations such as annual outpatient visit 

limits, yearly inpatient day limits, annual and lifetime treatment episode limits. The removal 

of these limits – which currently function as cost controls – will have significant impact on 

the cost of plans and cost to plan participants. While not all benefit plans utilize such limits, 

and their removal will be a benefit for members whose care may have been impacted by one 

or more limits in the past, overall the removal of limits will increase the cost of the plan and 

benefit coverage for all plan participants. 

The magnitude of cost impact related to parity of financial requirements and benefit limits 

varies and is affected by a wide variety of variables such as plan size, utilization, etc. It is 

clear however that pre-parity plans with more restrictive treatment limitations (and/or 
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financial requirements) will experience greater cost changes as the result of parity 

requirements under the MHPAEA based on prior experience with state parity law changes. 

In our experience with the implementation of state parity laws, plans with restrictive preparity visit limits ( limits of ≤ 20 outpatient visits) and/or financial arrangements (e.g. high 

copayment levels such as $50 copayments) had mental health and substance use disorder 

benefit plan cost increases as high as 70%. These increases were the result of financial cost 

differentials between the pre-parity and post-parity design changes and utilization changes 

that resulted from those changes in limits. In some cases these increases were symptomatic 

of pent up demand for services1

. Several studies have performed cost impact analyses of 

post state-level and federal employee parity implementation. The identified plan cost 

increases ranged from no significant increase to greater than a 4% increase in total plan 

cost.2-8 These studies also consistently demonstrated that cost impacts were lower than 

those for plans with managed care than for those plans without managed care. The 

MHPAEA’s passage was predicated on improving access and coverage for mental health 

and substance use disorder benefits and services at an affordable cost. The stakeholders 

agreed that this affordable cost meant there was a need for plans, in the absence of the more 

restrictive financial requirements and treatment limitations prohibited by the MHPAEA, to 

be able to applied managed care terms and conditions.

These landmark studies have certainly been a major contributor to the acceptance of parity 

legislation by plans and health insurance issuers. Even though the findings are encouraging 

they cannot directly project the cost of implementing the MHPAEA of 2008. None of the 

studies, due to the absence of comparable state level legislation on this point, included in 

their analysis the cost associated with the extension of parity of financial requirements or 

treatment limitations to out-of–network services as is required in MHPAEA. 

The MHPAEA does impact the Out-of-Network (OON) benefits plans offer. The 

requirement that plans must offer mental health and substance use disorder OON benefits if 

they offer medical and surgical benefits OON will require plans and health insurance issuers 

to offer OON mental health and substance use disorder health benefits to members who did 

not previously have such a benefit in many cases. OON services are challenging to 

administer for plans and health insurance issuers because of the difficulties in controlling the 

quality of the services and in coordinating the care. 

OON services have long been an area of greater cost for plans (OON reimbursement rates 

typically exceed in-network negotiated discounted reimbursement rates) and plan 

participants (patients can be balance billed the difference between plan or health insurance 

benefit levels and actual provider charges) due to, in part, a lessened ability of plans and 

plan administrators to manage utilization of services and quality of services. This is because 

OON providers are not contractually obligated to respond to requests for information 

necessary for the plan to conduct utilization review, case management or quality-of-care 

reviews. Thus, the expansion of OON benefits coupled with the need for parity of treatment 

limitations and financial requirements applied to those OON services will be a driver of 

higher OON utilization and thus higher cost to plans and plan participants. Quantifying the 
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cost impact of OON parity benefit changes is difficult because there is no direct comparable 

experience upon which to base such estimates 

The MHPAEA does impact state mental health legislation. Another area of potential high 

cost impact lays in the possibility for federal parity preemption of state mental health 

legislation, particularly laws mandating coverage of autism benefits. Currently eleven states 

have passed legislation mandating coverage for specific treatments of Autism Spectrum 

Disorder. These laws, with one exception, all include dollar and/or age limits for the 

mandated services. 

Some of these autism mandates include mandates for particular treatments, such as Applied 

Behavioral Analysis (ABA) which is an intensive educational/behavioral rehabilitative 

approach focused on building skill, learning and behavior modification. Services are offered 

at least for 20 hours per week and can extend over several years depending on the age and 

the complexity of the child’s condition. Several actuarial analyses done by states and by 

United Behavioral Health have projected the increased cost to plan participants to be any 

where from $0.29 per member (or plan participant) per month (“pmpm”) to $4.59pmpm 8-11. 

Variability of cost is based on condition prevalence, distribution of case severity, treatment 

access (limitation of experienced providers), wide variation in service rates ($25-

$75/hour/child for ABA implementation) and the variability amongst ABA therapists in 

application of these techniques. Despite the variability of projected cost of autism services, it 

is clear that the cost impact is greater for the treatment of Autism Spectrum Disorders than 

for other benefits for children. Whitworth and Hussein demonstrated a significantly higher 

median total healthcare cost for children with autism than for those with asthma and diabetes 

for example (autism - $2,103.58 vs. $850.27 and $1,605.20 respectively).12 The impact 

from autism relates both to treatment limitations and financial requirements as state laws 

have included both types of limitations on these mandates due to concerns about the very 

significant cost of these services. 

The analysis of the potential cost impact of autism legislation is difficult. The passage of 

autism legislation is a relatively recent phenomenon and the various mandates contained 

within these laws do vary considerably. There is little experience to date to demonstrate 

with any accuracy the actual costs of these mandates. For these reasons, state legislatures 

while supporting these mandates have included treatment limitations and financial 

requirement limitations on these mandated services to protect against unpredictable and 

catastrophic costs to plans. Thus, the state autism mandates include defined financial 

requirements and treatment limitations such as annual dollar maximums and age limits as a 

mechanism to manage the cost of such mandates to plans and plan participants. 

There is the potential for the MHPAEA to eliminate the cost controls that states have 

included in their mandates for autism coverage. The preemption, or non-preemption, of the 

financial requirements and treatment limitations provided as part of these coverage mandates 

could be a tipping point for plans in deciding whether to cover mental health and substance 

use disorders because the inclusion of these autism mandates without the financial 

requirements and treatment limitations provided for by state laws represents an open-ended 

financial exposure for the plan and plan participants. We have seen self-funded plans who 
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wished to cover benefits for Autism Spectrum Disorders decline to offer such coverage due 

to potential federal preemption under the MHPAEA and the uncertainty of highly 

unpredictable costs given lack of evidence and data to project the costs associated with this 

treatment and the associated utilization. This presents a potential area of conflict between 

the MHPAEA and state law which gives rise to the need for clarification of preemption of 

state law by the MHPAEA. Autism is just one example of a state law issue that may be 

addressed by the MHPAEA preemption provision but it is certainly not the only such 

example. This topic of preemption and the interplay of the MHPAEA and state law is 

addressed further in our response to question B.2. below. 

Section Endnotes: 

1. Branstrom, R.B., & Sturm, R. (2002). An early case study of the effects of California’s mental health 

parity legislation. Psychiatric Services, 53(10), 1215 

2. Barry, C.L., Frank, R.G., & McGuire, T.G. (2006). The costs of mental health parity: Still an 

impediment? Health Affairs, 25(3), 623-634. 

3. Goldman, H.H., Frank, R.G., Burnam, A., et al (2006). Behavioral health insurance parity for federal 

employees. New England Journal of Medicine, 354(13), 1378-1386. 

4. Melek, S.P., Pyenson, B.S., & Fitch, K.V. An actuarial analysis of the impact of HR 1424: “The Paul 

Wellstone Mental Health and Addiction Equity Act of 2007.” Milliman, Inc. July 5, 2007 

5. Rosenbach, M., Lake, T., Young, C., et al (2003). Effects of the Vermont Mental Health and 

Substance Abuse Parity Law. U.S. Department of Health and Human Services. 

6. Simon, GE, Grothaus, ML. Impact of Visit Copayments on Outpatient Mental Health Utilization by 

Members of a Health Maintenance Organization. Am J. Psych 1996, 153:331-338 

7. Lu, C. Frank, R. Demand Response of mental Health Services to Cost Sharing Under Managed Care. 

The Journal of mental Health Policy and Economics. 11:113-125 

8. A Study of Assembly Bill A-999; A Report to the New Jersey State Assembly by the Mandated 

Health Benefits Advisory commission Feb 2007 

9. Cumming, T Public Actuary report to the Oklahoma House of Representatives Dec 2008 

10. Cost analysis- SB1537 of 2008, Pertaining to Private Insurance Coverage for Autism Diagnosis and 

Treatment 

11. United Behavioral Health Actuarial Analysis 2008 

12. Whitworth, F. Hussein, M, Vanderpoel D., Direct cost of Treatment in Autism: Burden of Illness 

Abstract Academy health Meeting 2005; 22:abstract no. 3950 

In summary, the MHPAEA will impact plans and plan participants in a variety of areas 

including issues of cost sharing, benefit plan design, and plan administration. Direct costs 

include expected higher costs for mental health and substance use disorder health services 

due to the required changes in benefit design and the very probable increased use of OON 

services. Indirect costs result from changes that arise under the MHPAEA such as the 

increased administrative burden to manage changes in financial requirements and likely 

increased utilization will result in increases to plan costs and premiums for plan participants. 

Direct benefits of the MHPAEA will be: (1) to arguably give members increased access to 

services and (2) in some cases, for plans which now must offer an OON option, additional 

choice for individual plan participants seeking services and treatment. Indirect benefits 

include the potential for enhanced functionality for an individual plan participant with 

mental health and substance use disorder problems, both at work and home. These changes 

will positively impact all stakeholders – plan sponsors, plan administrators, health insurance 

issuers, plan participants and consumers, in terms of health, costs, and health benefits. 
Department of Labor 

May 28, 2009 

Page 12 of 31 

 

A. (ii) Are there unique costs and benefits for small entities subject to MHPAEA (that is, 

employers with greater than 50 employees that maintain plans with fewer than 100 

participants)? What special consideration, if any, is needed for these employers or plans? 

What costs and benefits have issuers and small employers experienced in implementing 

parity under State insurance laws or otherwise? 

Small group benefit plans, as defined in this question, will be subject to all of the issues 

outlined in our comments in section A.(i) above. While these costs are not “unique” to these 

plans, small groups are particularly vulnerable to cost increase issues. In particular, these 

plans are more susceptible to the impact of “catastrophic cases” – meaning that one or two 

seriously ill members can have a dramatic impact on the costs of the overall plan given its 

small size. This is as true for mental health and substance use disorders as it is for medical 

and surgical cases. The impact of the changes discussed above in A.(i), and the resulting 

cost impacts, create an enormous pressure on these small groups with respect to the 

temptation to exclude mental health and substance use disorder benefits which are not 

limited by treatment limitations and financial requirements by simply providing no coverage 

for these conditions at all. This option would allow these small groups to control overall 

plan costs and the unpredictable (and potentially catastrophic) effect for the plan and its 

participants posed by the risk of these high cost cases. This risk is heightened with the 

plan’s inability to utilize financial requirements and treatment limitations under the 

provisions of the MHPAEA. 

Parity implementation costs in states where there are existing specific parity requirements 

mandated by state law vary depending on the extent of the particular state law’s parity 

requirements. However, increases of up to 15% in annual mental health and substance use 

disorder benefits costs are not unusual. Experience has shown that in these circumstances 

small groups have tended to choose more restrictive policies – policies which have more 

treatment limitations and financial requirements – for mental health and substance use 

disorders benefits such as an annual 20 visit limit for outpatient treatment, an annual 30 day 

for inpatient treatment or a lifetime episode limit for substance use disorder treatment. 

These measures have been necessary in order to control plan costs and make the benefits 

affordable for all plan participants. The ability of small groups to do this will be virtually 

eliminated under the MHPAEA since these plans typically do not have and, in many cases, 

as a practical matter cannot have, restrictions of the same type on substantially all of their 

medical and surgical benefits. The MHPAEA will also put increased pressure on costs for 

these small groups if they have members who need specialized mental health and substance 

use disorder needs. Thus for the small group segment the loss of coverage for mental health 

and substance use disorder entirely is a potential consequence of the provisions of the 

MHPAEA. 

In addition to the vulnerability of small groups to outlier catastrophic costs, these plans, by 

virtue of their size, experience wider variability in benefit costs from year to year. This 

variability may result in a plan qualifying for the cost exemption provided for under the 

MHPAEA in one plan year but not in the next. This fact, coupled with the administrative 

burden of applying for and obtaining the cost exemption under the MHPAEA and the fact 
Department of Labor 

May 28, 2009 

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that the exemption is only good for a single plan year may also have the unintended 

consequence of these plans dropping coverage of mental health and substance use disorders 

altogether. The MHPAEA sets forth a clear outline of the cost exemption qualifications and 

process but to the extent the process can be accessible and administratively less burdensome 

for small groups we believe such a process would better serve the overall goals of the 

MHPAEA with respect to these groups. 

A. (iii) Are there additional paperwork burdens related to MHPAEA compared to those 

related to MHPA 1996, and, if so, what estimated hours and costs are associated with 

those additional burdens? 

The MHPAEA is a much more extensive piece of legislation in terms of its impact on plans 

and health insurance issuers than the MHPA of 1996. The MHPAEA will significantly 

increase the paperwork required for plans and health insurance issuers with respect to 

recordkeeping, reporting to governmental agencies and third-party disclosures. 

Typical steps that are necessary for plans to become compliant with the MHPAEA will 

generate a significant level of paperwork for recordkeeping purposes. For example, in order 

to document review and assessment of plan designs to ensure compliance with the 

MHPAEA, plans or plan administrators must compare their medical and surgical benefit 

plan offerings against their mental health and substance use disorder health plan offerings. 

In most plans, this involves multiple medical and surgical benefit options being compared 

against multiple mental health and substance use disorder benefit options. The comparison 

process often results in plan design changes and the creation of additional benefit plan 

offerings. These plan changes and new plan design offerings must be documented and 

communicated to all stakeholders – the plan participants, the plan administrators, applicable 

regulatory agencies etc. It is not possible to accurately estimate the specific impact in terms 

of hours or costs at this time but it must be noted that each plan must be reviewed and 

changes made and that generates significant record-keeping paperwork, third-party 

disclosure requirements and filings with governmental agencies to ensure compliance with 

the MHPAEA and other legal and regulatory filing and disclosure requirements. 

Finally, with respect to reporting or filing with governmental agencies, clarification of the 

MHPAEA’s cost exemption provision (see our response to question B.6. below) will have 

an effect. Depending on what the process is for reporting and filing paperwork required for 

a plan to claim the cost exemption, along with the required notifications to plan participants, 

there will be additional paperwork burden and cost associated with that particular element of 

the MHPAEA. 

B. 1. 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.
Department of Labor 

May 28, 2009 

Page 14 of 31 

 

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

on benefits? 

With respect to financial requirements, the MHPAEA very precisely defines “financial 

requirements” to include “deductibles, copayments, coinsurance, and out-of-pocket 

expenses.” It does not set forth any language with respect to “other financial requirements”. 

The definition of financial requirements does include reference to aggregate lifetime and 

annual limits which are addressed under the Mental Health Parity Act of 1996. Outside of 

these defined “financial requirements” and aggregate lifetime and annual financial limits 

there are no other financial requirements applied by plans that are addressed under the 

language of MHPAEA. Thus, the answer to this question is that there are no other relevant 

financial requirements as that term is defined under the MHPAEA. 

With respect to “treatment limitations”, it should be noted that plans and health insurance 

issuers do, in some cases, apply other types of similar treatment limitations – as that term is 

defined currently by the MHPAEA. The definition of “treatment limitation” in the 

MHPAEA includes “limits on the frequency of treatment, number of visits, days of coverage, 

or other similar limits on the scope or duration of treatment.” Currently plans and health 

insurance issuers frequently will apply the types of treatment limitations specifically listed 

(e.g. number of visits days of coverage) and will in some cases also apply “other similar

limits on the scope of duration of treatment”. In answering this question, and considering 

proposed regulations, the treatment limitations to be considered must be similar limits on the 

scope or duration of treatment in order for the provisions of the MHPAEA to apply. The 

similarity of a treatment limitation for the purpose of the MHPAEA must have some time, 

duration or frequency element similar to the treatment limitations which the MHPAEA 

specifically lists such as number of visits or days of coverage. 

For example, one additional limit we would consider falling within this definition but not 

specifically listed currently by the MHPAEA, is a limit on a number of episodes of 

treatment. For example, some plans and health insurance issuers currently limit the number 

of episodes of inpatient detoxification treatment available to a plan participant or insured to 

a certain specified number of episodes per lifetime. 

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? 

Plans and health insurance issuers utilize financial requirements and treatment limitations 

both in medical and surgical benefits as well as mental health and substance use disorder 

benefits. There is a wide variety in the use and application of financial requirements and 

treatment limitations applied by plans and health insurance issuers due to the demands of the 

marketplace and wide variety in plan designs utilized by plan sponsors and insurance 

purchasers in meeting their varied objectives in offering, promoting, sponsoring and 

providing benefit plans. 

Are these requirements or limitations applied differently to both classes of benefits? 
Department of Labor 

May 28, 2009 

Page 15 of 31 

 

In some cases yes and in other cases no. Currently most plans and insurance issuers apply 

some forms of both financial requirements and treatment limitations (as those terms are 

defined by the MHPAEA) to both classes of benefits – medical and surgical benefits on the 

one hand and mental health and substance use disorder benefits on the other. In some cases 

plans and health insurance issuers vary the application of financial requirements and 

treatment limitations between the two classes of benefits and in some cases plans and health 

insurance issuers plan designs are already designed such that there is no disparity between 

the application of financial requirements and treatment limitations between the two classes 

of benefits. 

However, it typically has been more common to see greater restrictions placed on the mental 

health and substance use disorder benefit in terms of financial requirements and treatment 

limitations and it is for this reason that we supported passage of the MHPAEA. We have 

also come across examples of plans where parts of the mental health and substance use 

disorder benefit were more generous than the medical and surgical benefit because the 

employer wanted to encourage use of the mental health and substance use disorder benefit. 

Do plans currently vary coverage levels within each class of benefits? 

Yes. It is extremely common for plans and health insurance issuers to apply varied financial 

requirements and treatment limitations within a class of benefits – meaning medical and 

surgical benefits as one “class of benefits” and mental health and substance use disorder 

benefits as a second “class of benefits”. Frequently plans and health insurance issuers will 

apply variances in benefit levels and in the application of financial requirements and 

treatment limitations on the basis of the level of care, type of treatment setting or type of 

care involved. The most notable and predominant levels of care are inpatient care and 

outpatient care. In addition, in many cases, plans and health insurance issuers often 

delineate a separation within each class of benefits between in-network benefits and out-ofnetwork benefits and apply differing levels of financial requirements and treatment 

limitations to those sub-divisions within the class of benefits. 

For example, a plan may provide in-network benefits for inpatient coverage of 80% 

coverage with 20% coinsurance for the plan participant but for in-network outpatient visits 

the coverage may be 100% after payment by the plan participant of a $20 copayment. That 

same plan for out-of-network benefits might only provide for out-of-network inpatient 

coverage of 60% with 40% coinsurance for the plan participant and for out-of-network 

outpatient coverage might only be 50% after payment by a plan participant of 50% 

coinsurance. Thus, plans typically vary coverage within a class of benefits based on innetwork and out-of-network coverage and inpatient and outpatient levels of care. 

In assessing compliance with the MPHAEA, plans and health insurers presume that the 

requirements of the MHPAEA will assess the “predominant” financial requirements and 

treatment limitations applicable to “substantially all medical and surgical benefits covered 

by the plan (or coverage)” with respect to similar coverage. Meaning the plan or health 

insurance issuer will ensure that in-network inpatient coverage financial requirements and 

treatment limitations for mental health and substance use disorder are aligned with the 
Department of Labor 

May 28, 2009 

Page 16 of 31 

 

predominant financial requirements and treatment limitations on in-network inpatient 

treatment for medical and surgical benefits and likewise for in-network outpatient coverage 

financial requirements and treatment limitations, etc. This presumption should be clearly 

articulated in the regulations with respect to the terms “predominant” and “substantially all” 

contained in the MHPAEA. We discuss the need for this clarification in detail in B.2. below. 

B. 2. What terms or provisions require additional clarification to facilitate compliance? 

Overall, the MHPAEA provides clear, defined application of rules with respect to treatment 

limitations, financial requirements and out-of-network coverage to ensure the objective of 

equitable treatment of mental health and substance use disorder benefits with those benefits 

provided for medical and surgical treatment. However, there are a number of areas where 

further clarity regarding the application of parity within the bounds of the legislative 

language would be of assistance to all stakeholders. 

What specific clarifications would be helpful? 

We believe the following specific clarifications are vital for all stakeholders.. 

Flexibility on Design of Financial Requirements: 

 

The application of parity to plan financial requirements, including deductibles and out-ofpocket expense maximums is a critical component of the MHPAEA. It is essential that, in 

implementing this key element of parity, plan sponsors have the flexibility to design plans 

with either shared or separate deductibles and out-of-pocket expense maximums. A 

combined deductible or out-of-pocket expense limit would involve a single deductible or 

out-of-pocket expense maximum applicable to both the medical and surgical benefits and to 

the mental health and substance use disorder benefits. A separate deductible or out-ofpocket expense maximum would involve two “parallel” deductibles or out-of-pocket 

expense maximums – one applicable to the medical and surgical benefits and one applicable 

to the mental health and substance use disorder benefits. Separate deductibles and out-ofpocket expense maximums would be designed to meet the parity standard established by the 

MHPAEA – namely that the financial requirements applicable to mental health and 

substance use disorder benefits be no more restrictive than those applicable 

to comparable medical and surgical benefits. 

 

The MHPAEA’s plain language states that plans must ensure that “there are no separate cost 

sharing requirements that are applicable only with respect to mental health or substance use 

disorder benefits.” (Emphasis added). The interpretation of this language is that a plan 

cannot have a financial requirement (deductible, copayment, coinsurance and out-of-pocket 

expense) for mental health and substance use disorders that it does not also have for medical 

and surgical benefits. That is, you cannot have a separate financial requirement that is 

applicable ONLY to mental health and substance use disorder benefits where the plan does 

not also have a comparable requirement applicable to medical and surgical benefits. This 

language of the MHPAEA does allow for separate and no more restrictive deductibles and 

out-of-pocket expense maximums. 
Department of Labor 

May 28, 2009 

Page 17 of 31 

 

It is necessary to read this language in context of the language of the whole paragraph. The 

language specifically states that financial requirements applicable to such mental health and 

substance use disorder benefits may be “no more restrictive than the predominant financial 

requirements” applied to the medical and surgical benefits. This language would be 

meaningless unless the law allowed for financial requirements that were separately applied 

to mental health and substance use disorder benefits because if separate requirements are not 

permitted then there is no basis or need to make the statement that financial requirements be 

“no more restrictive”. 

If the intent of the law was to prohibit separate cost sharing provisions, the use of the word 

“only” in the language would be meaningless – the language of the MHPAEA would simply 

prohibit separate cost sharing requirements period. In addition, we note that the Federal 

Employee Health Benefit Plan (FEHBP) Carrier Letter dated April 20, 2009 directs health 

insurance issuers (also known as “carriers”) to implement the requirements of the MHPAEA 

and it states “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, this interpretation would be consistent with the existing parity law requirements 

under the MHPA of 1996 which allows plans to apply annual and lifetime limits either by 

means of a combined aggregate limit for medical/surgical and mental health and substance 

use disorder benefits or through separate limits that are equivalent to, or no more restrictive 

than, those for medical and surgical benefits. 

 

For these reasons, we strongly recommend that the regulations allow for, and clearly 

articulate, that plan sponsors have the flexibility to design or select plans (or coverage) 

which provide valuable mental health and substance use disorder benefits, in parity with 

medical and surgical benefits, using either combined or separate, but no more restrictive, 

financial requirements. This range of design options within the framework of the MHPAEA 

is essential to encouraging mental health and substance use disorder coverage and keeping 

such coverage affordable for all stakeholders. 

Lastly, we strongly believe where plans choose to implement combined financial 

requirements, it would support health care reform goals of simplification and cost-control, if 

the necessary data exchange interfaces (discussed above in our response to A.i.) were 

subject to standard industry wide formats and coding. 

Management of the Benefit: 

The law clearly was intended to allow for the management by plans of the mental health and 

substance use disorder benefits. The MHPAEA amends the construction clause in Section 

712 of ERISA which contains language which states “Nothing in this section shall be 

construed...” The MHPAEA then adds to that clause the language “...in the case of a group 

health plan (or health insurance coverage offered in connection with such a plan) that 

provides mental health or substance use disorder benefits, as affecting the terms and 

conditions of the plan or coverage relating to such benefits under the plan or coverage, 
Department of Labor 

May 28, 2009 

Page 18 of 31 

 

except as provided in subsection (a)” (Emphasis added). This means that the only terms and 

conditions to which the law applies are the provisions for parity of financial requirements, 

treatment limitations and out-of-network coverage defined by the MHPAEA. The location 

of this provision in the law was purposeful and was specifically placed where it was so that 

it falls outside of the scope of the parity provisions. This was done so that the benefits 

would not be required, with respect to other terms and conditions of the plan, to be managed 

in the same way as the medical and surgical benefits, except for the financial requirements, 

treatment limitations and out-of-network coverage requirements. This was done in 

recognition of the very real differences between the two classes of benefits. 

Management of the benefit is a critical component in plan administration for keeping the 

cost of the MHPAEA requirements in line with the assumptions and projections utilized by 

the Congressional Budget Office (CBO) in their analysis of the MHPAEA. Without the 

ability to uniquely manage the mental health and substance use disorder benefit costs with 

other plan terms and conditions that are not addressed by the MHPAEA, costs will increase 

substantially over the estimates done by the CBO. (See our response to A.(i) above for 

additional discussion on this issue). 

The federal government in its provision and administration of mental health and substance 

use disorder benefits (including coverage purchasing decisions) has recognized the need for 

different terms and conditions and benefit management for mental health and substance use 

disorder benefits. For example, the Department of Defense TRICARE program requires 

pre-certification and concurrent review for non-emergency admissions to psychiatric and 

residential treatment facilities and for outpatient visits that go beyond a pre-determined 

number of visits. TRICARE does not uniformly apply these same requirements across 

medical and surgical services. Additionally the Office of Personnel Management (OPM) 

has recognized, in FEHBP’s implementation of the MHPAEA, 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.” (See FEHB Program Carrier Letter, Letter No. 2009-08 dated April 

20, 2009). 

Accordingly, we believe the regulations should clarify and reinforce that the MHPAEA does 

not require parity in all aspects of plan terms and conditions, just those elements specifically 

addressed in the MHPAEA – namely financial requirements, treatment limitations and outof-network coverage. 

Definition Clarification: “Predominant” & “Substantially All”:

As noted previously, the MHPAEA requires that the financial requirements applicable to 

any mental health or substance use disorder benefits provided by the plan must be no more 

restrictive than the “predominant” financial requirements applied to “substantially all” 

medical and surgical benefits covered by the plan. The MHPAEA goes on to state that the 

“predominant” financial requirement means “the most common or frequent of such type of 

financial requirement.” Therefore, the MHPAEA could be interpreted to require that each 

type of financial requirement (i.e., deductible, copayment, and coinsurance) for mental 
Department of Labor 

May 28, 2009 

Page 19 of 31 

 

health or substance use disorder benefits can only be a single amount across the board -- 

regardless of the mental health specialty or level of care involved. 

As a result of this ambiguity, the definition of “predominant” needs further clarification, as 

we do not believe the intent of the MHPAEA was to eliminate the plan’s ability to apply 

varying financial requirements (such as copayments and coinsurance amounts) based on the 

level of care provided as is common practice today. We believe the intent of the MHPAEA 

was for financial requirements applicable to mental health or substance use disorder benefits 

provided by a plan to be no more restrictive than the “predominant” financial requirement 

applied to similar levels of care for the medical and surgical benefits covered by the plan. 

This interpretation permits each type of mental health or substance use disorder benefit to be 

compared to its medical and surgical benefit counterpart for purposes of determining the 

applicable financial requirement and ensure compliance with the MHPAEA. Similarly, the 

term “substantially all” requires clarification as there is no definition of how “substantially 

all” is to be measured or assessed by plans. 

The proper interpretation would be to allow outpatient mental health or substance use 

disorder benefits to have a copayment and coinsurance that is no more restrictive than the 

“predominant” copayment and coinsurance for similar medical and surgical benefits. 

Inpatient mental health or substance use disorder benefits would have a copayment and 

coinsurance that is no more restrictive than the “predominant” copayment and coinsurance 

for similar inpatient medical and surgical benefits and likewise for outpatient benefits. This 

same methodology would apply to other levels of care as appropriate and to distinctions 

between in-network and out-of-network benefits. 

Accordingly we urge you to clarify this matter in the final regulations in a manner that 

supports this intended interpretation. The clarification should state that for purposes of 

parity compliance the “predominant” requirement be the most common or frequent type of 

such requirement with respect to the similar coverage within the class of benefits, e.g. 

comparing inpatient mental health and substance use disorder requirements to inpatient 

medical and surgical requirements. The term “substantially all” should likewise be defined 

with respect to similar coverage within the class of benefits. 

Definition Clarification: “Financial Requirements” & “Cost Sharing Requirements”:

Section 512(a)(1) of the MHPAEA requires that the “financial requirements applicable to 

such mental health or substance use disorder benefits are no more restrictive than the 

predominant financial requirements applied to substantially all medical and surgical benefits 

covered by the plan (or coverage), and that there are not separate cost sharing requirements 

that are applicable only with respect to mental health or substance use disorder benefits.” 

We note that the MHPAEA defines “financial requirement” as including “deductibles, 

copayments, coinsurance and out-of-pocket expenses” but the MHPAEA contains no 

definition of “cost sharing requirements.” The language of the section, as currently written, 

cannot be fully and clearly interpreted and applied absent clarifying regulations specifically 

defining “cost sharing requirements.” 
Department of Labor 

May 28, 2009 

Page 20 of 31 

 

The defined term “financial requirements” already includes those elements which are 

considered within the industry to constitute cost sharing mechanisms – namely deductibles, 

copayments, coinsurance and out-of-pocket expense requirements. We believe the term 

“cost sharing requirements” is redundant to the existing defined term “financial 

requirements” since there is nothing in the industry identified as a cost sharing requirement 

that is not already listed in the definition of “financial requirement” provided in the 

MHPAEA. 

Accordingly, we believe the regulations should confirm that the term “cost sharing 

requirements” has the same definition as “financial requirements.” 

Definition Clarification: “Treatment Limitation”: 

In contrast to the definition of “financial requirement,” which lists those specific plan design 

elements which constitute “financial requirements” without any undefined terms, the 

definition of “treatment limitation” contains the undefined phrase “or other similar limits on 

the scope or duration of treatment,” which would benefit from clarification. 

We believe that examination of the already enumerated types of limitations included in the 

definition of treatment limitations coupled with the language “or other similar limits on the 

scope or duration of treatment” provides a framework upon which the regulations can, and 

should, build in terms of providing a clear, unambiguous definition of those plan design 

elements which constitute “treatment limitations” which must comply with the parity 

requirements of the MHPAEA. As previously discussed above, in our response to item B.1., 

the treatment limitations to be considered must be similar limits on the scope or duration of 

treatment in order for the provisions of the MHPAEA to apply. The “similarity” of a 

treatment limitation for the purpose of the MHPAEA must have some temporal, frequency 

or durational aspect similar to the specific enumerated treatment limitations which the 

MHPAEA already lists in the definition of “treatment limitation” such as number of visits or 

days of treatment. 

We do not believe it was the intent of the legislation, nor does the actual language of the law 

support, inclusion of things like evidence based treatments as a “similar limit on the scope or 

duration of treatment”. Limitations on treatment types are not “similar” to limitations on the 

number of visits or days of coverage. In addition, the definition of mental health benefits 

states that services for mental health conditions are defined under the terms of the plan and 

in accordance with applicable federal and state law (i.e. the plan decides what services, or 

treatments, it covers – which typically are evidence based treatments that are determined to 

be medically necessary). Also, the medical and surgical side does not require coverage of 

all evidence-based treatments. This is another provision that could result in increased costs 

if the regulators decide to go against the intent of the law and require coverage of all 

evidence-based treatments. 

Therefore, the regulations should clarify that the term “other similar limits on the scope or 

duration of treatment” includes only those elements of a plan design which limit the 
Department of Labor 

May 28, 2009 

Page 21 of 31 

 

treatment in terms of time, frequency or duration. As previously stated, the only addition we 

can think of that would be a “similar limit on the scope or duration of treatment” is 

limitations on the number of episodes of treatment and we suggest that this category be 

added to the list of treatment limitations. 

Implementation & Enforcement:

The MHPAEA stipulates that regulations will be promulgated by October 3, 2009. The 

guidance and clarifications contained within these regulations will not be timely enough for 

many plans with an implementation date of January 1, 2010 (or earlier). These plans make 

plan design decisions and changes well prior to January 1 to ensure that communication of 

changes to plan participants, enrollment and implementation processes for plan changes can 

occur with an efficient and seamless administration of benefits. For example, 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 such that the clarifications can be accounted for in plan designs 

and plan disclosure materials necessary for plans and participants to make informed plan 

enrollment choices. The quantity and depth of comments submitted in response to the RFI 

is evidence of the need for clarification and in its absence plans are making decisions using 

good faith interpretations of the MHPAEA. 

Accordingly, we request that if a plan implements a plan design based on a good faith 

interpretation of the provisions of the MHPAEA as set forth in the statute without the benefit 

of being able to review and implement the regulations, then the plan should be exempt from 

any enforcement action and monetary penalties for non-compliance with the MHPAEA if it 

is later determined that the plan is not fully compliant with the parity law due to the 

regulations. 

Furthermore, any changes that are required to make the benefit plan compliant with the 

parity law should not be required to be implemented in mid-year but should be deferred until 

the start of the next plan year. Otherwise, changes to the plan would be onerous, costly, and 

confusing for plan participants. Furthermore, state regulatory agencies responsible for 

review and approval of health insurance coverage do not have the capacity to rapidly rereview and approve plans in mid-year. This sort of provision for good faith compliance 

efforts by plans and health insurance issuers would be similar to allowances made in the 

effective date, implementation and enforcement of other federal regulations such as the 

privacy regulations promulgated under the Health Insurance Portability & Accountability 

Act (HIPAA). 

Guidance on Preemption of State Laws:

We would request that the regulation provide clarification with respect to 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 disorder problems (e.g. state 

mandates regarding length of stay, autism mandates etc.) and it is not clear how these 

mandates relate to the federal parity law and whether such provisions may or may not be 
Department of Labor 

May 28, 2009 

Page 22 of 31 

 

preempted by the MHPAEA. We do know that the intent of the parity law was to not 

preempt state coverage mandates. 

Specifically, we would request: (1) further clarification and definition of the preemption 

language of the MHPAEA and (2) clarification on how a plan or health insurance issuer may 

obtain an advisory opinion or guidance in some other form with respect to particular state 

law interactions with the MHPAEA. 

Application of the MHPAEA to particular types of plans:

We request clarification with respect to which entities are subject to the MHPAEA. It is our 

understanding that the law applies to Medicaid Managed Care plans; however, we have 

received questions regarding this interpretation so we are seeking clarification that the law 

does indeed apply to Medicaid Managed Care plans. 

In addition, we would request clarification with respect to the application of the MHPAEA 

to Medicare plans, including both Medicare Advantage and Medicare Supplement plans and 

coverage. 

Application of the MHPAEA to Employee Assistance Programs (EAP):

It is also our understanding that the law does not apply to Employee Assistance Programs 

(EAPs) and we would request specific clarification in the regulations confirming this as well. 

The law applies to group health plans (or health insurance coverage offered in connection 

with such plans) that provide both medical and surgical benefits and mental health or 

substance use disorder benefits. EAPs do not provide medical and surgical benefits and 

therefore, based on a reading of the plain language of the MHPAEA, we do not believe that 

the law applies to them. Furthermore, EAPs are most often sold as separate plans and are 

intended to provide short-term mental health and substance use disorder benefits for 

assessment and evaluation leading to appropriate referrals for treatment when necessary. 

B. 3.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? 

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 specific 

request for benefits to a broad disclosure of the complete set of medical necessity criteria for 

all benefits under the plan to a contracted provider in order to facilitate communication and 

understanding of plan and health insurance carrier protocols with respect to utilization 

review and care management processes. 
Department of Labor 

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This practice of disclosure is a result of market-driven demand by health care consumers and 

providers for transparency in the elements which define benefits available to plan 

participants, beneficiaries, and contracted providers. In addition, there are existing legal and 

regulatory disclosure requirements for plan and health insurance issuer benefit plan 

information including medical necessity criteria information. This transparency and the 

prior development of federal and state law disclosure requirements and accreditation 

standards have driven plans and health insurance issuers to make the disclosure of medical 

necessity criteria utilized by plans and health insurance coverage purchased by such plans a 

routine function of the business of administering plan benefits. We fully support the need 

for such transparency and disclosures with the flexibility of achieving such disclosures 

electronically whenever possible and practical. 

The MHPAEA codifies in plain language, the already existing best practices for disclosure 

of this information in accordance with existing law and current industry best practices and 

operating procedures prevalent in the health care industry as noted above. 

For example, existing federal regulations under ERISA require that a plan (including 

insurance coverage purchased in connection with a plan) provide the plan’s medical 

necessity criteria in the event that such criteria are utilized in the review and determination 

of a claim for benefits under the plan by a claimant – who can be a participant, beneficiary 

or contracted provider among others. The relevant provisions are included at 29 CFR 

2560.503-1 “Claims Procedure”. Specifically, the regulations require that a plan provide a 

participant, beneficiary or representative (often the provider) with both the specific 

provision of a plan relied upon in a benefit determination (see 29 CFR 2560.503-1(g)(ii)) as 

well as requiring disclosure of any internal rule, guideline, protocol or similar criterion (see 

29 CFR 2560.503-1(g)(v)(A)). Thus plans and issuers have routinely provided to 

participants, beneficiaries and contracted providers the criteria utilized in making benefit 

determinations under the plan or insurance coverage. 

In addition there are state insurance laws which require disclosure of medical necessity 

criteria in both the narrow context of a utilization review denial of a claim for benefits 

(similar to the federal ERISA requirement noted above) or in a broader context related to 

disclosure of plan benefit information. For example, in a more narrow context, Texas law 

requires disclosure of medical necessity criteria used in making a specific determination by a 

plan or health insurance issuer directly or through their utilization review agent (see 28 TAC 

10.102I(3)). With respect to broad disclosure, take as one example, California law which 

requires disclosure of medical necessity criteria utilized by an insurer to the public upon 

request (see Calif. Ins. Code 10123.135(f)(2)(E)). 

Currently 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. ) are also subject to this requirement 

as a matter of accrediting standards. Specifically, NCQA standards UM 2 and UM 7A 

require the disclosure of medical necessity criteria to participants and beneficiaries (UM 7A) 
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and practitioners (UM 2). URAC standard HUM 4 also addresses a disclosure requirement 

for utilization management requirements and procedures including medical necessity criteria. 

To whom is this information currently made available and how is it made available? 

The MHPAEA requirement clarifies, in very succinct fashion, that the criteria for medical 

necessity under the plan (or coverage) with respect to mental health and substance use 

disorder benefits, be made available by the plan administrator (or health insurance issuer). 

Specifically the MHPAEA requires that the criteria be disclosed “in accordance with 

regulations to any current or potential participant, beneficiary, or contracting provider upon 

request.” (See 29 U.S.C. 1185a, as amended by the MHPAEA). 

As noted above, the Congress specifically noted in the plain language of this section that 

such disclosures be made in “accordance with regulations”. The language of the MHPAEA 

does not specify which regulations but as noted above, there are both federal and state 

disclosure requirements which are codified in existing regulations under ERISA and state 

law which are already in force and in practice by plans and health insurance issuers. 

We presume Congress did not intend to disrupt or disturb existing specific disclosure 

requirements already in place under federal regulations and state law but rather sought in 

clear concise language to codify what, and to whom, disclosures must be made. This 

establishes a consistent “floor” of disclosure requirements that has already developed in 

practice due to existing state and federal regulations. 

These existing regulations specify plan administrators and health insurance issuers must 

make disclosure of medical necessity criteria to a claimant – which is defined to include any 

plan participant or beneficiary as well as any party authorized to act on behalf of a claimant 

and specifically noting that providers can be authorized representatives of claimants. (See 

29 CFR 2560.503 (a) and (b)(4)). State law requirements vary with respect to the definition 

of parties to whom plans and health issuers must provide disclosure of medical criteria – 

from the narrower requirement to notify and disclose to the beneficiary and the provider in 

Texas law to the broader member of the “public” requirement of California law (both of 

which are noted above). The MHPAEA requirement in this regard is clear – the disclosure 

must be provided to any current or potential participants, beneficiaries and contracted 

providers. 

Are there industry standards or best practices with respect to this information and 

communication of this information? 

Yes. The industry standards and best practices are an outgrowth of the combined marketdriven need for transparency and existing federal, state and accreditation requirements for 

disclosure discussed above. 

However, plans and health insurance issuers do face one constraint in the disclosure of 

medical necessity criteria. This constraint arises in the context of instances where a plan or 

health insurance issuer has licensed, from a third-party, medical necessity criteria which are 
Department of Labor 

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not the property of the plan or health insurance issuer. In the ordinary course of business, a 

plan or health insurance issuer may not further disclose or distribute such criteria without 

potentially infringing upon the intellectual property rights of the third-party who owns the 

criteria and/or violating the terms or provisions of a licensing agreement by which the plan 

obtained the medical necessity criteria from the third-party. 

In order to comply with existing federal and state disclosure requirements currently, plans 

and health insurance issuers provide disclosure of a summary of the criteria as well as the 

source of the criteria without providing the actual medical necessity criteria so that they can 

comply with disclosure requirements but not be placed in violation of intellectual property 

rights or licensing agreement restrictions. This practice is necessary to meet disclosure 

requirements without violation of other legal requirements with respect to the content and 

ownership of these criteria. We believe this practice satisfies the MHPAEA requirement 

that a plan administrator or health insurance issuer “make available” the information and any 

regulations promulgated with respect to this requirement of the MHPAEA should reflect this 

practice as meeting the disclosure requirements for the medical necessity criteria under the 

MHPAEA language. 

B. 4. 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? 

Currently, pursuant to federal and state laws as well as accreditation standards, plans and 

health insurance issuers MUST provide the specific reason for any denial of a claim for 

benefits under the plan – including a denial of reimbursement or payment for services with 

respect to mental health or substance use disorder benefits. 

The provisions of the MHPAEA require that: “The reason for any denial under the plan (or 

coverage) of reimbursement or payment for services with respect to mental health or 

substance use disorder benefits in the case of any participant or beneficiary shall, upon 

request or as otherwise required, be made available by the plan administrator (or the health 

insurance issuer offering such coverage) to the participant or beneficiary in accordance with 

regulations.” 

Plans and health insurance issuers currently comply with this and other, broader disclosure 

requirements under the existing federal ERISA claims regulations and state laws and 

accreditation standards which in many cases apply more broadly to any claim for benefits as 

opposed to simply requests for reimbursement or payment for services as specified in the 

MHPAEA. 

To whom is this information currently made available and how is it made available? 

The information is typically made available to the individual, or their authorized 

representative, as well as the provider involved in the claim for benefits or payment. For 

example, the ERISA claims regulations require that the notification to a claimant – which 
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may include a plan participant or beneficiary – be a written notice of a claim determination 

and must include the specific reason or reasons for an adverse determination. (See 29 CFR 

2560.503-1(g)(1)i)). 

In addition, there are state laws related to claims and utilization management which contain 

similar requirements. For example, Alabama law requires the issuance of a written notice 

for a retroactive denial of a claim issued to a provider to include the specific reason for the 

denial. (See Code of Ala. Sec. 27-1-17 (g)). This is one example among many different 

state laws which apply to claim and benefit denial notices to patients, beneficiaries and 

providers. 

In addition, both NCQA and URAC accreditation standards explicitly require disclosure of 

the specific reason for a denial of benefits in writing to the patient and provider. NCQA 

utilization management standard UM 7 C with respect to notices of denials requires that the 

accredited organization provide to members and members’ treating provider a written notice 

of denial which contains the “specific reasons for the denial, in easily understandable 

language.” (See NCQA 2008 Utilization Management Standards). URAC also requires that 

the written notification of a non-certification decision include the principal reasons for the 

determination and requires that the principal reason must not be non-specific and be 

provided to the patient and attending physician or other ordering provider or facility 

rendering the services at issue. (See URAC Health Utilization Management Standards 

Version 6.0 – Standard HUM – 22). 

Are there industry standards or best practices with respect to this information and 

communication of this information? 

As noted above, the current industry standards and best practices are defined by federal and 

state law requirements as well as accreditation standards. The MHPAEA merely clarifies 

that these general practices and standards MUST be applied to any denial of reimbursement 

or payment for services with respect to mental health or substance use disorder benefits. 

Again, as with the medical necessity criteria disclosure requirements discussed in question 

B.3. above, we presume Congress did not intend to disrupt or disturb existing specific 

disclosure requirements already in place under federal regulations and state law but rather 

sought in clear concise language to codify what and to whom such disclosures must be made. 

This establishes a consistent “floor” of disclosure requirements that has already developed in 

practice due to existing state and federal regulations. We believe these practices satisfy the 

MHPAEA requirement that a plan administrator or health insurance issuer “make available” 

the specific reason for a denial of reimbursement or payment for services and any 

regulations promulgated with respect to this requirement of the MHPAEA should reflect 

these practices as meeting the disclosure requirements for the specific denial rationale for 

any reimbursement or payment of services under the MHPAEA language. 

B. 5. 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 
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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? 

Plans and health insurance issuers currently vary in the offering of out-of-network benefits 

for treatment of mental health and substance use disorders. Typically, the coverage for outof-network benefits varies between the two classes of benefits – medical and surgical 

benefits, on one hand, and mental health and substance use disorder benefits on the other. 

Plans and health insurance issuers classify and apply financial requirements and treatment 

limitations which are applicable to mental health and substance use disorder benefits in the 

same fashion as they do for in-network benefits. That is, plans vary coverage within the 

context of out-of-network benefits based on the type of coverage in terms of dividing 

inpatient and outpatient benefits. 

Again, in assessing compliance with the MPHAEA, plans and health insurers presume that 

the requirements of the MHPAEA will focus on the “predominant” financial requirements 

and treatment limitations applicable to “substantially all medical and surgical benefits 

covered by the plan (or coverage)” with respect to similar coverage (see discussion in 

response to B.1 and B.2. above), meaning the plan or health insurance issuer will ensure 

that for out-of-network benefits, just as with in-network benefits, inpatient coverage 

financial requirements and treatment limitations for mental health and substance use 

disorder would be aligned with the predominant financial requirements and treatment 

limitations on inpatient treatment for medical and surgical benefits and likewise for 

outpatient coverage financial requirements and treatment limitations. 

B. 6. Which aspects of the increased cost exemption, if any, require additional guidance? 

In the case that a plan chooses to seek a cost exemption there needs to be additional 

guidance on what the process is for filing an exemption. Specifically, what forms and data 

must be documented and filed, what form should actuarial certifications take and what other 

information, if any, must be documented and filed. In addition, clarification of the standards 

to be applied by the applicable agencies for the review and response to such filings would be 

informative to stakeholders. 

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? 

 Yes, we believe that model notices provided by the agencies would be helpful. 

Conclusion

 UnitedHealth Group appreciates this opportunity to provide you with our comments on the 

RFI for the MHPAEA. Should you have any questions regarding the information set forth in these 
Department of Labor 

May 28, 2009 

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comments please do not hesitate to contact us. Thank you again for the opportunity and your time 

and consideration of the enclosed comments. 

Sincerely, 

Mitch Zamoff 

Acting Chief Legal Officer 
Department of Labor 

May 28, 2009 

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Appendix Materials 

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Department of Labor 

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• Figure 14 is taken from the Commonwealth Fund Biennial Health Insurance 

Survey ( 2005) National 

• Survey of 4,350 individuals ages 19 – 64 years of age 

• Focused on self reported impact of high deductibles on access to treatment