May 26, 2009 

Centers for Medicare & Medicaid Services 

Department of Health and Human Services 

Attention: CMS-4137-NC 

P.O. Box 8017 

Baltimore, MD 21244-8010 

Re: Request for Information 

 Mental Health Parity and Addiction Equity Act of 2008 

Dear Sirs: 

Behavioral Health Systems (BHS) was formed in 1989 as a privately held Alabama 

corporation. We created and administer a preferred provider organization (PPO) of 

mental health-related hospitals, physicians and professionals. BHS markets this PPO to 

large, private employers under a “carve-out” arrangement, through which BHS 

administers their employees’ mental health/substance abuse benefits. BHS staff oversees 

the care provided through this network, and process all claims between the employer 

client and BHS providers. 

BHS is an open-model PPO which contracts with a broad network of specialty providers 

on a negotiated fee-for-service basis. This ensures maximum freedom of choice, and the 

ability of BHS to handle any size member volume. 

BHS offers the lowest cost structure possible for mental health and substance abuse 

benefits on a fee-for-service rate basis, with no risk borne by BHS. This ensures 

maximum cost savings accrue directly to the client, that they have full knowledge of cost 

and utilization, and that client preference regarding plan design/coverage limits are easily 

accommodated. 

Employers currently participating in the BHS managed care/EAP programs have realized 

a savings in the 25 – 50% range, while at the same time increasing benefits to their 

employees. 

BHS has the sole endorsement of the Employers Coalition for Healthcare Options 

(Alabama) and the Louisiana Business Group on Health as the endorsed mental/nervous 

provider on behalf of their memberships, and maintained a similar endorsement from the 

Alabama Healthcare Council during its existence. 
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BHS represents 500 clients, 502,000+ covered lives, and 10,800+ providers across the 

nation. The opinions expressed below are not only BHS’ opinion. We have thoroughly 

discussed MHPAEA with all BHS clients, and this represents the opinion of the BHS 

client base. 

II, A. Comments Regarding Economic Analysis, Paperwork Reduction Act, and 

Regulatory Flexibility Act 

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

issuers 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? 

BHS clients’ plans include the following policies that would be adversely impacted by 

MHPAEA: 

1. Discouraging recidivism. It is a BHS goal to ensure the effectiveness of benefit 

dollars spent by discouraging recidivism. BHS recognizes several factors 

associated with recidivism. Non-compliance with the prescribed post-discharge 

aftercare treatment plan is the most common and prevalent factor. Individuals 

diagnosed with substance abuse or a serious mental illness are likely to be the 

least compliant with the treatment regimen. BHS has implemented several 

methods of reducing recidivism, including: 

• Required participation in an aftercare program of up to two years duration 

following active treatment. 

• Frequent contact with the patient and family to provide support and 

promote the patient’s participation in the prescribed aftercare program. 

• A benefit penalty to discourage patient non-compliance, including 

decreased benefit levels for subsequent treatment episodes or loss of 

benefits for a particular level of care. 

MHPAEA prohibits the benefit penalty by requiring mental health benefits 

consistent with the “predominant” benefit levels that apply to “substantially all” 

benefits. MHPAEA, by requiring continued coverage of substance abuse 

treatment following successive relapses, actually empowers the user and 

promotes recidivism. By not allowing the plan to limit the number of treatment 

episodes, MHPAEA forces the employer to terminate a non-compliant employee 

in order to contain plan costs, and requires the plan to pay multiple episodes of 

treatment for non-compliant dependents whose coverage cannot be terminated. 

2. Precertification and concurrent review. BHS network providers are contractually 

required to adhere to BHS precertification/concurrent review procedures, and are 

prohibited from billing the patient for any services not precertified. Although 

MHPAEA allows the plan to apply utilization review protocols to out-of-network 

providers, these providers are not contractually bound to BHS procedures. Plans 

will be limited to retrospective review for services by out-of-network providers. 

Neither the member nor the out-of-network provider will be aware the services 
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are not covered until the claim is denied. The member will be liable for any outof-network services denied for lack of medical necessity. 

3. Exclusive provider network. One major advantage BHS offers is its “open 

network” philosophy. All current clients of BHS retain BHS as their exclusive 

provider choice (EPO model) given BHS’ flexibility to add providers as 

requested. Requested providers affiliated on a patient-specific basis are 

reimbursed as any network provider. Under MHPAEA, out-of-network providers 

have no incentive to affiliate with the BHS provider network, even on a patientspecific basis, resulting in increased costs to the patient (higher deductible and 

copay), loss of BHS control over the utilization review process, and a potentially 

lower quality of care for the patient from providers not reviewed according to 

network affiliation criteria. 

4. Limited services. BHS has never used day or visit limits to manage plan costs, 

yet we have been able to reduce every client’s plan costs while offering members 

better benefits. MHPAEA will drive the employer to reduce covered services and 

diagnoses, while the member will forego necessary treatment due to higher outof-pocket costs. 

5. Separate deductibles and out-of-pocket maximums. These are difficult for a 

behavioral health carve-out plan to coordinate with the medical and surgical plan. 

If the employer rolls mental health and substance use disorder benefits back into 

the medical and surgical plan to avoid the difficulty of coordinating deductibles 

and out-of-pocket maximums, the employer doesn’t obtain the utilization review 

expertise and cost benefit of the behavioral health carve-out. 

With respect to financial impact on the plan sponsor, BHS has completed cost analyses 

on clients as large as 250,000 lives and has discovered the cost impact of parity will 

exceed the expected overall .5% increase. This will cause many employers to drop 

mental nervous and substance use disorder benefits in the state of this economy and 

have opposite the intended effect. Plan members will be forced to pay for services now 

excluded from coverage. 

II, B. Comments Regarding Regulatory Guidance 

 

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. Do plans currently impose other types of financial requirements or 

treatment limitations on benefits? How do plans currently apply financial 

requirements or treatment limitations to (1) medical and surgical benefits and (2) 

mental health and substance use disorder benefits? Are these requirements or 

limitations applied differently to both classes of benefits? Do plans currently vary 

coverage levels within each class of benefits? 
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As a behavioral health carve-out plan, BHS is uniquely qualified to respond regarding 

mental health and substance use disorder benefits. In every case with our clients, the end 

result has been that BHS has offered plan members increased services while reducing the 

plan sponsor’s costs. 

BHS recognizes several factors associated with recidivism. Non-compliance with the 

prescribed post-discharge aftercare treatment plan is the most common and prevalent 

factor. Individuals diagnosed with substance abuse or a serious mental illness are likely 

to be the least compliant with the treatment regimen. Among BHS methods of reducing 

recidivism, is a benefit penalty to discourage patient non-compliance. This includes 

decreased benefit levels (higher deductible and copay for the patient) for subsequent 

treatment episodes or loss of benefits for a particular level of care. 

MHPAEA prohibits the benefit penalty by requiring mental health benefits consistent 

with the “predominant” benefit levels that apply to “substantially all” benefits. 

MHPAEA, by requiring continued coverage of substance abuse treatment following 

successive relapses, actually empowers the user and promotes recidivism. By not 

allowing the plan to limit the number of treatment episodes, MHPAEA forces the 

employer to terminate a non-compliant employee in order to contain plan costs, and 

requires the plan to pay multiple episodes of treatment for non-compliant dependents 

whose coverage cannot be terminated. 

Furthermore, plan requirements and limitations are historically applied differently to the 

two classes of benefits because the services and treatments involved are not comparable. 

Medical and surgical services have nothing comparable to partial hospitalization, 

intensive outpatient programs, psychological testing or outpatient ECT. Medical and 

surgical treatment plans for a non-catastrophic illness typically include one or two office 

visits whereas a non-managed recommended outpatient treatment plan for depression 

might include weekly therapy with a counselor for a year or more, hours of psychological 

testing, and medication management by a psychiatrist. 

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

What specific clarifications would be helpful? 

Additional clarification is needed for the following: 

• How should the plan calculate the “predominant” benefit level? 

• How should the plan determine what constitutes “substantially all” benefits (i.e., 

need to ensure comparison is made between like coverages)? 

• Are separate but equal deductibles and out-of-pocket maximums allowed? 

• Confirm that MHPAEA does not include EAP plans, even those that provide a 

limited number of counseling sessions. 

• Where is the line between defining terms of the “benefits”, “covered 

diagnoses/conditions” and setting “treatment limits”? How can the plan 

differentiate limits and exclusions? Can the plan: 

o Exclude court-ordered or chronic services? 
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o Exclude a level of care (residential) for certain conditions (autism) while 

allowing it for others (substance abuse)? 

o Exclude type of treatment (long-term psychoanalysis)? 

o Define coverage as short-term for certain conditions (EAP, marital 

counseling) not otherwise covered? 

o Exclude an episode of inpatient care provided when a stay results in early, 

voluntary AMA discharge (when patient has been informed in advance of 

this repercussion)? 

o Exclude substance abuse coverage for dependents while providing it for 

employees? 

o Not cover all evidence-based treatment? 

o Exclude services for a condition (autism) but cover services for a 

secondary condition (depression)? 

• Could a benefit plan with a requirement for precertification via an EAP or a 

gatekeeper (like BHS) still allow for denial of any coverage (in-network or out-ofnetwork) if not complied with? What about a requirement for concurrent case 

management through BHS? 

• Can an employer exclude substance abuse services beyond one treatment episode? 

Can an employer require completion of 2-year aftercare program between 

substance abuse treatment episodes? How does requiring parity impact the 

employer’s ability to offer a drug-free work place? What is the employer’s 

recourse against employees with multiple positive drug screens and treatment 

episodes? Must the employer cover all treatment episodes for dependents? 

• If an employer offers employees a choice of three medical and surgical benefit 

levels (i.e., 90/10, 80/20, or 70/30), is this considered one plan or three plans? If 

all three medical and surgical benefit options have the identical mental health and 

substance use disorder benefit level (i.e., 80/20), under parity do the mental health 

and substance use disorder benefits have to be consistent with the predominant 

benefit level selected by the majority of the employees? Or, do the mental health 

and substance use disorder benefits for an employee have to be consistent with the 

medical and surgical benefit level selected by that employee? 

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? To whom 

is this information currently made available and how is it made available? Are 

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

communication of this information? 

BHS currently makes its medical necessity criteria available to providers, client 

companies, and members upon request. We do not perceive the MHPAEA requirement 

to make available medical necessity criteria as a change to current practices. 

URAC, an independent, nonprofit organization, is well known as a leader in promoting 

health care quality through its accreditation and certification programs. Their 

accreditation standards are considered industry best practice. BHS is accredited by 
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URAC for Health Utilization Management. These standards require accredited 

organizations to issue notification of non-certification decisions to the patient and 

provider. The notification must include the principal reasons for the determination not to 

certify, and a statement that the clinical rationale used in making the non-certification 

decision will be provided, in writing, upon request. 

ERISA claims regulations (29 CFR 2560.503-1) require that the notification of any 

adverse benefit determination by a group health plan that is based on a medical necessity 

exclusion or limit, include an explanation of the clinical judgment for the determination, 

applying the terms of the plan to the claimant’s medical circumstances, or a statement 

that such explanation will be provided free of charge upon request. 

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? To 

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

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

communication of this information? 

BHS currently includes the specific plan limitation or exclusion in its notification of 

adverse benefit determination. Notification is given to the patient and provider. We do 

not perceive the MHPAEA requirement to make available the reason for any denial under 

the plan as a change to current practices. 

ERISA claims regulations (29 CFR 2560.503-1) require that the notification of any 

adverse benefit determination by a group health plan that is based on an internal rule, 

guideline, protocol, or other similar criterion, include the specific rule, guideline, 

protocol, or other similar criterion; or a statement that such rule, guideline, protocol, or 

other criterion will be provided to the claimant free of charge upon request. 

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-ofnetwork coverage for mental health and substance use disorder benefits. If so, how 

is such coverage the same as or different than out-of-network coverage provided for 

medical surgical benefits? 

One major advantage BHS offers is its “open network” philosophy. All current clients of 

BHS retain BHS as their exclusive provider choice (EPO model) given BHS’ flexibility 

to add providers as requested. Requested providers affiliated on a patient-specific basis 

are reimbursed as any network provider. All BHS network providers meet strict 

credentialing criteria. 

BHS has many concerns over the MHPAEA requirement to provide out-of-network 

coverage if provided for medical and surgical benefits, and hopes the Departments will 

address whether a plan can exclude from coverage an out-of-network provider on the 

following basis: 
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• “Quality” (i.e., for having filed fraudulent claims) 

• “Criteria” (i.e., physician in aftercare) 

• “Specialty” (i.e., non-psychiatrist billing for psychiatric services) 

Additional concerns arise from the fact that out-of-network providers are not 

contractually bound to plan utilization review procedures. Plans will be limited to 

retrospective review for services by out-of-network providers. Neither the member nor 

the out-of-network provider will be aware the services are not covered until the claim is 

denied. The member will be liable for any out-of-network services denied for lack of 

medical necessity. 

Please clarify: 

• Can the plan apply a penalty to out-of-network providers for failure to obtain 

precertification if the penalty applies to in-network providers? 

• Can this penalty apply if there is no precertification requirement for medical and 

surgical? 

• Will companies who offer only a standard Blue Cross medical plan (with 

“participating providers”) be considered to have an in-network-only plan if the 

mental/nervous is carved out, or is the Blue network of participating providers so 

expansive that it could be called an in-network/out-of-network plan with no 

penalty? 

6. Which aspects of the increased cost exemption, if any, require additional guidance? 

Would model notices be helpful to facilitate disclosure to Federal agencies, State 

agencies, and participants and beneficiaries regarding a plan’s or issuer’s election to 

implement the cost exemption?

BHS strongly encourages the Department to develop such model notices. Clarification is 

also needed as to the entire process for filing a cost exemption. 

BHS appreciates the opportunity to comment on this important regulatory guidance. 

Sincerely, 

Patricia L. Friedley 

Executive Vice President & Chief Quality Officer