Magellan Behavioral Health IFR MHPAEA Comments 1

May 3, 2010 

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

Office of Health Plan Standards and Compliance Assistance

Employee benefits Security Administration

Room N-5653

US Department of Labor

Attention: RIN 1210-AB30

200 Constitution Avenue NW 

Washington DC 20210

Centers for Medicare and Medicaid Services

Department of Health and Human Services

Attention: CMS-4140-IFC

P.O. Box 8016

Baltimore MD 21244-1850

U.S. Department of the Treasury

Internal Revenue Service

Attention: CC:PA:LPD:PR (Reg-120692-09)

Room 5205

P.O. Box 7604

Ben Franklin Station 

Washington DC 20044

Dear Sir or Madame: 

Magellan Behavioral Health (Magellan) welcomes the chance to comment on the Interim Final Rules 

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

2008 (IFR). Magellan is one of the largest carve-out managed behavioral health care organizations

(MBHO) in the country. As a carve-out organization, we are responsible for the administration of 

the behavioral health benefits provided by our customers to group health plan members. Magellan 

customers include both health plans and employers, covering approximately 40 million members 

nationwide. 
Magellan Behavioral Health IFR MHPAEA Comments 2

Magellan has long demonstrated its strong commitment to mental health parity in many ways, 

including testifying in favor of parity legislation before Congress in 2001 and actively supporting

passage of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Act of 2008

(MHPAEA); we were very pleased when Congress finally passed this comprehensive parity law. 

However, we were dismayed to see the Departments release regulations under MHPAEA as interim 

final rules requiring implementation without having first solicited any comments from the industry, 

provider, and advocate communities. We have significant concerns with the IFR and believe that it 

does not accurately reflect the intent of Congress in passing MHPAEA. Because feedback was not 

obtained prior to promulgation of the regulations, the IFR is ambiguous in several places and does

not translate well to the manner in which group health plans are structured and managed. It is clear 

that there are areas where the Departments would have benefited from a much better understanding 

of the current environment for managing behavioral health benefits and medical/surgical benefits. 

We believe that broad and comprehensive input on proposed regulations would have enabled the 

Departments to fashion alternative regulatory provisions that would satisfy the ultimate purposes of 

MHPAEA without the complexity and confusion for plans and MBHOs created by the IFR.

The release of these regulations in interim final form violated the Administrative Procedures Act 

(APA), which requires good cause for any dispensation of the APA‘s prior notice and comment 

requirements. To the contrary, there was no good cause to issue the MHPAEA regulations as 

interim final rules. The preamble to the IFR states that ―These rules are being adopted on an interim 

final basis because the Secretaries have determined that without prompt guidance some members of 

the regulated community may not know what steps to take to comply with the requirements of 

MHPAEA, which may result in an adverse impact on participants and beneficiaries with regard to 

their health benefits under group health plans and the protections provided under MHPAEA. 

Moreover, MHPAEA‘s requirements will affect the regulated community in the immediate future.‖

75 Fed. Reg. 5419. Quite the opposite, plans were required to comply with MHPAEA for new 

benefit plans and renewals after October 3, 2009, meaning that most plans have already taken steps 

to comply with MPHAEA for their 2010 plan year, and those good faith compliance efforts were 

successfully undertaken without any confusion and without the aid of any prompt guidance from the 

Departments. Therefore, the notice and public procedure thereon required by the APA were neither 

impracticable, nor unnecessary, nor contrary to the public interest - - the hallmarks of the good 

cause exception. We urge you to follow your legal obligations under the APA, withdraw the IFR, 

issue new proposed regulations based upon the comments submitted on the IFR, and then carefully 

consider the comments received in response to the proposed regulation before promulgating a final 

regulation. We also ask that you allow for at least a one year time period for compliance from the 

effective date of the final regulations to allow adequate time to make changes to benefit structures, 

obtain state regulatory approval where required, and to make necessary information technology 

changes.

PREAMBLE

The Regulations should not Address Scope of Services.

The Departments note that the IFR does not address the scope of services issue and invite 

comments on whether and to what extent MHPAEA addresses the scope of services or continuum 

of care provided by a group health plan or health insurance coverage. 75 Fed. Reg. 5416 and 5417 

(Feb. 2, 2010). While MHPAEA does include a reference to ―limits on the scope ... of treatment‖ in 

the definition of ―treatment limitations‖ [discussed further below on pages 7-8], MHPAEA contains 
Magellan Behavioral Health IFR MHPAEA Comments 3

no mention of a mandate to extend the scope of services covered by group health plans, a concept 

sufficiently momentous that it would have been expressly stated by Congress if intended. Instead, it 

is clear from express language in both the statutory language and the legislative history that Congress 

intended plans to have full discretion to define which mental health or substance abuse benefits they 

will cover, if any, and that there is no federal mandate to provide any mental health or substance 

abuse benefit. Mandating coverage for specific disorders or treatments through a regulation would 

clearly exceed the Departments‘ regulatory authority since such a mandate is not contemplated in 

the statute. 

To the contrary, MHPAEA is quite explicit that the parity requirements are limited in their reach 

and extent. As codified, together with the 1996 Mental Health Parity Act, the statute explicitly 

prohibits construing anything in the combined parity law ―as affecting the terms and conditions of 

the plan or coverage relating to [mental health and substance abuse benefits] under the plan or 

coverage, except as provided in subsection (a).‖1 This language unequivocally precludes transforming 

the limited statutory requirements for parity into mandates to cover specific treatments or treatment 

settings. The only terms and conditions affected by MHPAEA are those set forth in subsection (a): 

financial requirements [(a)(3)(A)(i)], treatment limitations[(a)(3)(A)(ii)], and coverage of out-ofnetwork providers [(a)(5)].

The legislative history for MHPAEA, as reflected in the 2007 Senate Committee Report on the bill 

that became MHPAEA, makes clear that MHPAEA does not establish a mandate for coverage of 

particular behavioral health treatments or treatment settings. This report expressly disclaims such a 

mandate in the following statement: ―The provision would apply to benefits for any mental health 

condition that is covered under the group health plan. The bill would not require plans to offer 

mental health benefits, nor would it require that those plans cover all types of mental health services or ailments if 

the plan covered any mental health services or ailments.‖ (Sen. Rep. No. 110-53, 110th Cong., 1st Session 

(2007) at p. 7)(emphasis added).

Moreover, most plans subject to state insurance laws already are obligated by state law to cover a 

minimum scope of services. Full or limited mental health and/or substance use disorder mandated 

benefit laws exist in 45 states and the District of Columbia. These state mandates, which outline the 

diagnosis and coverage expectations for insured plans operating from the particular state, remain in 

effect and serve to work with MHPAEA to set out the requirements for plans operating in the 

various states. 

Given the absence of authority for the Departments to establish mandates and the existence of 

relevant state mandates, promulgation of mandates related to scope of services is neither appropriate 

nor necessary. 

The Departments Significantly Underestimated the Costs Associated with Implementing 

the IFR.

The cost estimates discussed in the IFR are seriously flawed in many ways. The Departments 

themselves tout the practices of MBHOs and expressly rely on the ability of MBHOs to contain 

costs under the new parity requirements:

 

1 Codified at 26 U.S.C. §9812 ; 29 U.S.C. §1185a (b)(2); 42 U.S.C. §300gg-5(b)(2).
Magellan Behavioral Health IFR MHPAEA Comments 4

―Since the early 1990s, many health insurers and employers have made use of specialized vendors 

known as behavioral health carve-outs to manage their mental health and substance abuse benefits. 

They use information technology, clinical algorithms and selective contracts to control spending on 

mental health and substance abuse treatment. There is an extensive literature that has examined

costs savings and impacts on quality of these organizations. Researchers have reviewed this 

literature and estimated reductions in private insurance spending at 20%-48% compared to fee-forservice indemnity arrangements.‖ 75 Fed. Reg. 5422 (Feb. 2, 2010).

―The OPM encouraged its insurers to consider carve-out arrangements when implementing the 

parity directive in 2000 for the FEHBP. This is because of the ability of behavioral health carve-outs

to use utilization management tools to control utilization and spending in the face of reductions in 

cost-sharing and elimination of limits. Thus, parity in a world dominated by behavioral carve-outs 

has meant increased utilization rates, reduced provider fees, reduced rates of hospitalization and

fewer very long episodes of outpatient care. Intensive treatment was more closely aligned with 

higher levels of severity.‖ Id.

The cost estimates presented in the IFR are based primarily on the experiences of the FEHBP and 

of some insured plans in states with parity mandates. This reliance is flawed if the IFR provision 

regarding so-called nonquantitative treatment limitations restricts our ability to manage behavioral 

health benefits, because the FEHBP was a managed plan for which benefit management techniques 

were used and none of the state laws limit or prohibit management of behavioral health benefits. 

Neither, therefore, is a good indicator of additional claims costs plans will experience in connection 

with unmanaged benefits in the face of the nonquantitative treatment limitations section of the IFR. 

Even the parity advocates pointed to utilization management as a mitigating factor regarding the

anticipated costs of parity: ―Parity advocates, however, insist that most of these predictions are way 

out-of-date, based on parity's impact on indemnity plans that had little control over spending. Now 

with managed care, they say, cost increases will be nonexistent or minimal. They claim that all the 

evidence thus far points to a conclusion that parity barely increases overall costs and possibly even 

lowers them -- and almost certainly lowers them if one factors in the indirect savings to employers 

from reduced absenteeism and higher productivity as workers who had mental or substance abuse 

problems return to work sooner in improved health‖ (Mental Health Parity What Can It 

Accomplish in a Market Dominated by Managed Care?, Alan L. Otten, June 1998) More succinctly, 

according to Roland Sturm, a prominent researcher at the Rand-UCLA Research Center on 

Managed Care for Psychiatric Disorders quoted in the Otten article, "[i]f you want parity and are 

willing to take managed care, costs are not going to go through the roof. ... If you stick with fee-forservice, no managed care, they will." 

With the creation of the nonquantitative treatment limitations category, some of the very benefit 

management practices that the Departments praise in the IFR preamble are in jeopardy. The impact 

of the IFR on utilization management techniques is unclear. Because utilization management 

techniques for medical/surgical and behavioral health treatments differ significantly, an ―apples to 

apples‖ comparison is not possible; some interpretations of the IFR therefore conclude that the IFR 

effectively prohibits all management of behavioral health benefits. Without effective utilization 

management techniques, costs will increase. 

The cost estimates also do not take into account the impact of restrictions on other practices 

deemed by the Departments to be nonquantitative treatment limitations, such as formulary design 
Magellan Behavioral Health IFR MHPAEA Comments 5

for prescription drugs and provider reimbursement rates. For example, any required changes to 

provider reimbursement will obviously have a significant cost impact for plans as well as for 

consumers who pay coinsurance based on those reimbursement rates and resulting premiums

increases. Alteration of the methods by which plans apply the techniques included as

nonquantitative treatment limitations under the IFR were not contemplated in the cost studies relied 

upon by the Departments; however, such alteration will have a very real impact on costs. 

The cost studies are further uninstructive in other areas. Notably, parity requirements were applied 

only to in-network benefits under the FEHBP. According to a report by the U.S. Department of 

Health and Human Services, ―while all plans complied with the parity policy for services offered by 

in-network providers, no plan extended parity to care delivered by out-of-network providers.‖ 

Evaluation of Parity in the Federal Employees Health Benefits (FEHB) Program: Final Report (2004) (emphasis 

added.). A number of the state parity mandates also permit plans to limit benefits to in-network 

providers. For plans subject to the IFR, it is the out-of-network benefit that presents the greatest 

risk for runaway costs. Yet, that risk was not measured in the studies relied upon by the 

Departments. Finally, as the Departments acknowledge, few of the state parity laws mandate as 

extensive coverage as MHPAEA. Id., footnote 15. 

Overall, neither the parity measures applied to the FEHBP nor parity requirements under state laws

is comparable to the parity standards required under the IFR; therefore, the cost impact results from 

these studies have little useful or predictive value for the probable cost impacts that plans will 

experience by implementing the IFR requirements, particularly surrounding nonquantitative 

treatment limitations.

The Departments’ Estimates of Legal Costs Associated with IFR Compliance are a Minor 

Fraction of the Real Costs.

The Departments seriously underestimate the legal costs associated with compliance: ―The 

Departments assume that the average burden per plan will be one-half hour of a legal professional‘s 

time at an hourly labor rate of $120 to conduct the compliance review and make the needed changes 

to the plan and related documents. This results in a total cost of $27.8 million in the first year. The 

Departments welcome public comments on this estimate.‖ 75 Fed. Reg. 5426. This estimate is 

woefully inadequate, with regard to the estimates of both fees and hours. We believe the actual 

internal and external legal costs will be exponentially higher. To-date we have spent hundreds of 

hours of attorney time in addressing the IFR, and we are far from done with the legal work that will 

be necessary as part of our implementation efforts. In addition, attorneys for our customer health 

plans and employer groups have also spent many hours, with the number varying depending on the 

complexity of their benefit plan(s). The analysis is not complete, so the hours will continue to add 

up. It seems that the Departments assume that this review will be conducted by the plans‘ internal 

counsel. This is likely true for larger plans, although even those plans may seek outside legal advice 

on some of the ambiguous issues. Even when this legal work is handled in-house, the compliance 

activities will take a significant number of hours to complete, creating a strain on the company‘s legal 

resources. 

Many of the employer plans do not have internal, employed attorneys on staff to assist with this. 

Those plans are using outside law firms to advise them on the necessary changes to their benefit 

plans. These plans will pay rates much higher than the $120 per hour referenced in the IFR and will 

require much more than just one-half hour of attorney time. In our experience, typical law firm fees 
Magellan Behavioral Health IFR MHPAEA Comments 6

range from $185 to over $700 an hour per attorney, depending on the firm and geographic region

and experience of the attorney; we have yet to find a firm with a rate as low as $120 per hour for 

attorney time. Employment and benefits law is very specialized and these firms tend to be at the 

higher end of the range for fees. A firm that we use as external employment and benefits counsel 

has a range of $360 an hour for junior associates to $725 an hour for partners. Given the 

complexity of these regulations and the ambiguity in some of the language, legal analysis and advice 

is needed on much of the regulatory requirements. 

MEANING OF TERMS

The IFR Inappropriately Expands the Definitions of “Mental Health Benefits” and 

“Substance Use Disorder Benefits.”

The MHPAEA statute vests in plans full discretion to define mental health benefits and substance 

abuse benefits so long as plan definitions comply with applicable law: MHPAEA defines ―mental 

health benefits‖ as ―benefits with respect to services for mental health conditions, as defined under 

the terms of the plan and in accordance with applicable Federal and State law‖ and ―substance use 

disorder benefits‖ as ―benefits with respect to services for substance use disorders, as defined under 

the terms of the plan and in accordance with applicable Federal and State Law.‖ But, the IFR 

hampers and constrains the plan discretion granted by Congress by appending additional external 

referents for defining what constitutes a mental health condition: ―Any condition defined by the 

plan as being or as not being a mental health condition must be defined to be consistent with 

generally recognized independent standards of current medical practice (for example, the most 

current version of the Diagnostic and Statistical Manual of Mental Disorders (DSM), the most 

current version of the ICD, or State guidelines).‖ Similar language referencing the DSM, ICD and 

state guidelines appears in the substance use disorder definition as well. These additional criteria go 

beyond the terms of the MHPAEA statute and are contrary to Congress‘ intent. The Senate 

explicitly rejected requiring plan definitions to conform to the DSM when it rejected the language in 

HR 1424 that would have required coverage for all DSM conditions.

Also, the addition of the references to DSM and ICD is causing confusion with regard to how some 

disorders are classified because some disorders in the DSM have purely medical treatments 

associated with them, such as detoxification related to acute substance use, medical sequelae of 

eating disorders, and medical complications of psychotropic drug use, etc. 

Autism coverage is an ICD/DSM diagnosis that illustrates the confusion caused by tying the 

definition of ―mental health benefit‖ to the DSM and ICD. Children with autism generally receive 

medical services, such as neurological examinations, speech therapy, and occupational therapy, as 

well as behavioral health treatments. If a plan covers these medical services, is the plan then required 

to provide the behavioral health coverage for this condition? This is unclear under the IFR. Further 

complicating the issue, some states specifically define autism as a medical condition. For example,

the District of Columbia mandate for insured plans to provide coverage for habilitative services for 

children with birth defects under the age of 21 includes autism as a birth defect. D.C. Code § 31-

3271. The habilitative services that plans are required to cover are ―services, including occupational 

therapy, physical therapy, and speech therapy, for the treatment of a child with a congenital or 

genetic birth defect to enhance the child's ability to function.‖ It is difficult to conceive that a state 

mandate to provide what are traditionally physical health services could now be construed to also 

require coverage of mental health services simply because autism is a DSM diagnosis. Discussions 
Magellan Behavioral Health IFR MHPAEA Comments 7

by plans of a bill currently pending before the D.C. legislature to add a mandate to cover applied 

behavior analysis (ABA) for autistic children up to $25,000 annually reflect considerable uncertainty

about the legality of the dollar cap on ABA services due to the ambiguity caused by including the 

DSM and ICD in the IFR definition of ―mental health benefits.‖ In addition to the District of 

Columbia, at least 13 other states have bills pending that contain dollar caps for either ABA services 

or autism coverage as a whole. These states have not addressed the application of federal parity to 

these caps when conducting their cost analyses and leave plans without clear direction. 

In these cases where state guidelines and DSM are in conflict, the IFR gives no indication which 

should prevail for the handling of these benefits. In addition, a number of the existing state 

mandates are only for ABA type services; these services are more analogous to medical/surgical

services like physical therapy or occupational therapy than traditional mental health services. Some 

states seem to be trying to define ABA as a medical type service in their definitions, presumably in 

order to preserve dollar caps for this service. Because costs for ABA services can quickly add up, 

these states seek to balance mandating some ABA services against keeping health plan premium 

costs at a reasonable level for other plan members. As it stands today, the impact of the IFR on 

these mandates is uncertain and the interpretation by state regulators may vary state by state. 

We recommend that the Departments withdraw the DSM and ICD references in the meanings given 

to ―mental health benefits‖ and ―substance use disorder benefits.‖ While we appreciate the 

Departments‘ interest in preventing plans from arbitrarily recharacterizing benefits to be ―medical‖ 

in order to avoid having to satisfy parity requirements, the approach chosen by the Departments is 

overly prescriptive and creates confusion. We believe that the Departments‘ objective can be met by 

simply holding plans to the concept of reasonableness in defining what is and is not a behavioral 

health benefit. 

The IFR Inappropriately Expands the Definition of “Treatment Limitations.”

The MHPAEA definition of ―treatment limitations‖ is: ―Treatment limitation – 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.‖ 29 USCS § 1185a (a)(3)(B)(iii). The IFR 

appropriately clarifies this definition by adding ―days in a waiting period‖ as an additional example 

but then goes on to arbitrarily expand the statutory definition to incorporate an entirely new concept 

– nonquantitative treatment limitations, which are in stark contrast to ―quantitative treatment 

limitations that are expressed numerically,‖ and ―otherwise limit the scope or duration of benefits 

for treatment under a plan.‖

By inventing this new concept of nonquantitative treatment limitations, the definition of ―treatment 

limitations‖ used by the Departments now goes well beyond the scope of the language or intent of 

MHPAEA. The MHPAEA definition does not merely reference other limits on the scope or 

duration of treatment; if it did, the IFR‘s amplification to include non-numerical issues might have 

some merit. But the statute did not stop with ―other;‖ the definition referenced ―other similar limits 

on the scope or duration of treatment.‖ By use of the term ―similar,‖ Congress clearly intended to 

address only certain kinds of treatment limitations; namely, those that are similar to the limits 

itemized in the statutory definition. All of the limitations named in the statutory definition are 

indisputably numerical, quantitative limitations; the only limitations that can reasonably be 

considered similar are other numerical, quantitative limitations. Even if the ―illustrative list‖ of 

processes and practices the IFR lumps together to try to explain its concept of ―non-quantitative 
Magellan Behavioral Health IFR MHPAEA Comments 8

treatment limitations‖ could legitimately be considered to be treatment limitations – which, as 

discussed below, we dispute -- these processes and practices clearly bear no resemblance at all to the 

limitations identified in the statutory definition; by definition, they are not numerical. 

Although the Departments clearly recognize the numerical nature of the treatment limitations listed 

in the statutory definition, they disregard the framework of the statutory definition and fabricate an 

entirely new definition. The Departments do not have discretion to simply disregard Congress‘ 

intentional use of the word ―similar.‖ The purpose of regulations is to clarify statutes, not to create 

entirely new legal requirements. MHPAEA does not require elimination of any and all plan features 

and practices that may incidentally result in non-coverage of particular services. MHPAEA is quite 

specific in the types of changes required to bring behavioral health benefits into parity with 

medical/surgical benefits. There is nothing at all in the legislative history or language of MHPAEA 

that contemplates any treatment limitations other than numerical treatment limitations. This concept 

was not included in or contemplated in the cost analysis performed by the Departments. Moreover, 

the behavioral health community had no opportunity to comment on this concept due to the 

promulgation of this regulation as an interim final rule. We urge you to remove all references to

nonquantitative treatment limitations in the IFR. 

The IFR’s Establishment of Benefit Classifications is Overly Prescriptive and Results in 

Inappropriately in Mandating Benefits.

The general parity requirement of paragraph (c)(2) of the IFR contains the basic mandate of 

MHPAEA regarding financial requirements and treatment limitations for behavioral health benefits 

being no more restrictive than those that meet the predominant/substantially all test for 

medical/surgical benefits, but introduces the concept of ―classifications‖ to apply the parity 

requirement. While this approach would seem to be sensible and more rational than comparing 

financial requirements and treatment levels across all levels and types of care, the particular 

classifications selected and their ramifications for plan design are problematic.

MHPAEA does not include any prescribed benefit classification scheme within which parity 

requirements must be satisfied. Instead, recognizing that there are not always common 

characteristics between medical/surgical treatments and behavioral health treatments, Congress left 

the determination of these issues to plans. While initial drafts of the House bill did contain 

proposed benefit classifications, Congress ultimately rejected this approach as unnecessary. Indeed, 

the committee report on the Senate bill that ultimately led to MHPAEA expressly declared that 

plans would not be deprived of discretion in this regard by the parity law:

This section does not prohibit health plans from:

 1. negotiating separate reimbursement or provider payment rates and service delivery 

systems for different benefits or

 2. managing the provision of mental benefits in order to provide medically necessary 

treatments under the plan (as a means to contain costs and monitor and improve 

the quality of care) or

 3. taking into consideration similar treatment settings or similar treatments when applying the 

provisions of this section. 

Sen. Rep. No. 110-53, 110th Cong., 1st Session, Part VII, Section-by-Section Analysis, 

Section 2 (2007) (emphasis added).

Allowing plans discretion to determine which treatments and treatment settings are sufficiently 

similar to permit rational comparisons for purposes of satisfying the parity requirements, rather than 
Magellan Behavioral Health IFR MHPAEA Comments 9

mandating review within narrow mandated benefit classifications, better aligns the MHPAEA parity 

objectives with the real-world treatment environments that patients encounter.

The Departments‘ arbitrary creation of six discrete benefit classifications into which every single 

possible treatment or treatment setting must fit has not only exceeded the parameters of MHPAEA 

but has created surprise and confusion for plans. There are many behavioral treatments that simply 

do not fit any of the six classifications prescribed by the IFR. For example, behavioral health 

residential treatment care does not involve the same level of medical specialty, intensity of care, or 

costs as either inpatient hospitalization or outpatient visits, so why must this type of treatment be 

forced into one of these classifications for purposes of parity? A better match for residential 

treatment would be to medical treatment at skilled nursing facilities; indeed, some plans have in the 

past covered residential treatment facilities as a type of skilled nursing facility. With the 

classifications dictated by the IFR, such a benefit design – which in no way discriminated against 

behavioral health benefits – is no longer possible. Similarly, administration of electroconvulsive 

therapy (ECT) or a psychological test such as the MMPI does not require the same level of medical 

specialty, intensity of care, or costs as PCP visits – which are usually the most common outpatient 

care -- so why must these behavioral health services be considered outpatient care for purposes of 

parity? In the example of ECT this procedure is more analogous to outpatient surgery. For ECT the 

patient is not permitted to eat/drink prior to the procedure. Anesthesia medication is applied via an 

IV catheter inserted into a vein. A muscle relaxant is also given. Electrodes monitor the patient 

heart (EKG), brain waves (EEG – electroencephalogram), and muscle movement in the foot (EMG 

– electromyelogram). Patient receives oxygen via a mask. After the ECT treatment the patient is 

closely monitored by nurses in a recovery room for approximately 45 minutes following the 

procedure. The whole process is very much like most outpatient surgery procedures. While the plans 

may impose financial requirements or treatment limitations on the medical/surgical outpatient 

procedures, plans are prevented from doing so for the behavioral health services since the entire 

outpatient category must be considered as a whole and the  ̳substantially all‘ and  ̳predominant‘ tests 

do not permit exceptions for these types of services. The Departments even acknowledge that it is 

not possible to fit all behavioral health treatments into the medical model: ―The Departments 

recognize that not all treatments or treatment settings for mental health conditions or substance use 

disorders correspond to those for medical/surgical conditions.‖ 75 FR 5416. Yet, rather than 

allowing plans to identify common features to perform rational comparisons of similar, 

corresponding treatments, the Departments have burdened plans with the obligation to selectively 

assign all treatments and treatment settings to six arbitrary and incomplete categories that do not 

adequately address the types of behavioral health care that patients need.

Furthermore, the inclusion of prescription drugs as one of the six mandated classifications was 

completely unanticipated and goes well beyond the focus and intent of MHPAEA. MHPAEA 

makes no mention or consideration at all of prescription benefits. Not only do the Departments 

exceed their authority in creating this classification, but their creation of a prescription drugs 

classification as a subset of both medical/surgical and behavioral health benefits unnecessarily 

distorts benefit plan design. Prescription drug benefits are almost universally administered by plans 

completely separate from either medical/surgical benefits or behavioral health benefits. Rather than 

comprising a classification within medical/surgical and behavioral health benefits, prescription drug 

coverage is a totally separate set of benefits alongside and on par with both medical/surgical and 

behavioral health benefits. Requiring plans to realign their benefit design in this fashion without any 

prior hint of concerns of inequality related to prescription benefits and no legislative history 

indicating that Congress wished to address this area is especially inappropriate considering the lack 
Magellan Behavioral Health IFR MHPAEA Comments 10

of notice and opportunity to be heard by the affected industry, the provider community, or the 

advocates. In addition, adding prescription drugs as a classification that plans must take into account 

in plan design creates yet another set of costs that were not included in the studies on which the 

Departments rely for the analysis of parity costs. 

Our most serious concern with the impact of the six classifications is the IFR‘s application of the 

classification concept to create, silently, a benefit mandate, wholly contrary to the purpose and intent 

of MHPAEA. Paragraph (c)(2)(ii)(A) requires a plan that provides mental health or substance abuse

benefits in any classification to provide mental health or substance abuse benefits ―in every

classification in which medical/surgical benefits are provided.‖ The federal mental health parity 

statutes as amended by the MHPAEA explicitly disclaim any mandate for coverage of any mental 

health or substance abuse benefit: 

―Nothing in this section shall be construed—

(1) as requiring a group health plan (or health insurance coverage offered in connection with 

such a plan) to provide any mental health or substance use disorder benefits‖ (emphasis 

added). 29 USC 1185a(b). 

But the language of the IFR does just that. An employer with limited resources that wishes to 

provide at least a minimum level of behavioral health benefits, such as outpatient care, is likely to 

drop all behavioral health coverage if providing coverage in one classification triggers a requirement

to cover all classifications. And, because of the inclusion of prescription drugs as a classification, the 

mandate goes even further. If a patient‘s PCP prescribes an anti-depressant and the patient uses plan 

benefits to obtain the medication, the plan will be deemed to be providing a behavioral health 

benefit in one of the classifications and therefore will be required to provide benefits in all 

classifications, even though the plan design contemplated no coverage for behavioral health 

treatments and even if the PCP prescribed the medication for a condition other than a behavioral 

health condition, for example, as an aid for sleeping. Plans that currently choose not to cover 

behavioral health benefits may go even further and drop coverage of behavioral health medications 

as well. Neither of the results described here would be good for behavioral health patients. 

Finally, the consequences of requiring all plan benefits to be placed into one of the six classifications

listed in the IFR coupled with the ramifications of the ―substantially all‖ test could be construed as 

actually creating the opposite of parity. As stated in the IFR‘s preamble: If a type of financial 

requirement or quantitative treatment limitation does not apply to at least two-thirds of the medical 

surgical benefits in a classification, that type of requirement or limitation cannot be applied to 

mental health or substance use disorder benefits in that classification. 75 FR 5414. This requirement 

allows for flexibility in the benefit construction for the medical/surgical benefits but not for 

behavioral health benefits. Even if a particular treatment setting (for example, Residential 

Treatment Center) within a classification of mental health benefits (here, inpatient, out-of-network) 

has the exact same financial requirements and treatment limitations as a rationally comparable 

treatment (in this case, Skilled Nursing Facility) within that same classification for medical/surgical

benefits, a plan may still be in violation of the IFR. This is not parity; this is mandated enrichment

of behavioral health benefits, which was neither the intent nor the purpose of MHPAEA.
Magellan Behavioral Health IFR MHPAEA Comments 11

FINANCIAL REQUIREMENTS

The Regulations should Not Prohibit Separate Cumulative Financial Requirements and 

Treatment Limitations.

The Departments‘ prohibition of separate cumulative financial requirements and treatment 

limitations for medical/surgical and behavioral health benefits is a requirement found nowhere in 

MHPAEA and, further, is contrary to the express language in MHPAEA. After barring more 

restrictive financial requirements for behavioral health, 29 USC §1185a(a)(3)(A)(i) proscribes 

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

substance use disorder benefits.‖ Parallel language in §1185a(a)(3)(A)(ii) applies to treatment 

limitations. 

Scrutiny of the statutory language reveals the Departments‘ interpretation to be ill-conceived. If 

cumulative financial requirements and treatment limitations were intended to be shared, there would 

be no reason to compare such financial requirements and treatment limitations as applied to 

behavioral health benefits to such financial requirements and treatment limitations as applied to 

medical/surgical benefits. Indeed, no comparison is possible with a single, shared benefit term. The 

―no more restrictive‖ language would be meaningless unless MHPAEA allowed for financial 

requirements that were separately applied to behavioral health benefits; if separate requirements are 

not permitted at all, then there is no basis or need to make them ―no more restrictive.‖ Moreover, if 

the statute were intended to prohibit separate but equal (or lower) cumulative financial requirements, 

the use of the word ―only‖ in the second phrase in each of the provisions would be meaningless. If 

Congress had intended to foreclose separate but equal (or lower) cumulative financial requirements, 

such as cost sharing requirements, MHPAEA would simply prohibit all separate cumulative 

requirements. Instead, MHPAEA prohibits separate financial requirements that are applicable only

to behavioral health benefits. 

The Departments should promulgate regulations that give full meaning to Congress‘ intent as 

reflected in statutory language. By ignoring the statutory language, the IFR inappropriately renders it 

meaningless. 

Although the Departments do acknowledge that MHPAEA does not prohibit separately 

accumulating financial requirements and treatment limitations for medical/surgical and behavioral 

health benefits, IFR paragraph (c)(3)(v) explicitly prohibits separate accumulation, based on the 

Departments‘ mistaken assumption that combined accumulation works to the best interest of 

behavioral health patients. Plans with cumulative financial requirements and treatment limitations 

now must apply such financial requirements and treatment limitations on a single, combined basis. 

As a result of the new shared accumulator requirement, MBHOs are faced with the task of 

developing and implementing IT solutions to permit the wholly separate and distinct claims systems 

of MBHOs and the medical benefit administrators for each impacted group health plan to interface 

electronically with each other every single time a claim for either medical/surgical or behavioral 

health treatment provided to a group health plan member is received so that the MBHO and the 

medical benefit administrators can each properly apply claims activity to member deductibles, outof-pocket maximums, and any day or session limits. This has a similar impact on health plans that 

maintain separate IT systems for their behavioral health and medical/surgical benefits. While 

seemingly straightforward in concept, the task of requiring multiple different claims systems to ―talk 

to each other‖ on anything resembling a real-time basis is a task of monumental proportion. The 
Magellan Behavioral Health IFR MHPAEA Comments 12

resulting unnecessary administrative burdens will lead to corresponding cost increases for plans that 

will undoubtedly be passed on to consumers as premium increases. For example, the medical 

benefit administrator for one Magellan customer provided the customer an estimate of $400,000 just 

to establish the required bi-directional accumulator feeds. 

The IFR prohibits separate deductibles and out-of-pocket maximums even when the separate 

behavioral health deductibles and out-of-pocket maximums would be more favorable for plan 

members. While comorbidity of medical/surgical and behavioral health conditions certainly occurs, 

it is more common for persons with behavioral health conditions to be ―medically healthy.‖ For 

―medically healthy‖ individuals, the unified deductible acts as a barrier because the single, combined

deductible inevitably will be higher than the stand-alone behavioral health deductible, which in most 

group health plans is currently much lower than the medical deductible. For ―medical healthy‖ 

members, the barrier to accessing behavioral health treatment under a single deductible will be 

higher than the barrier arising from a separate deductible. The combined and, in most cases, higher 

single deductible for behavioral health and medical/surgical treatments will act as a disincentive for 

lower income plan members in accessing behavioral health benefits. Similarly, a separate, low outof-pocket maximum would offer better protection against catastrophic treatment costs to ―medically 

healthy‖ persons with behavioral health conditions than a single, higher out-of-pocket maximum. 

Given the significant costs that plans will expend as a result of the requirement to implement and 

maintain bi-directional communication with medical benefit administrators, the advantages of 

separate cumulative financial requirements for medically healthy members, and the statutory support 

in MHPAEA for allowing separate cumulative requirements, we urge the Departments to reconsider 

their decision to require combined cumulative requirements and to allow plans flexibility to 

determine which option to apply based on applicable circumstances.

Clarification of the Kinds of Data Plans may use to Conduct Calculations Prescribed by the 

IFR is Needed.

In the test prescribed in paragraph (c)(3)(i)(C) of the IFR for determining ―substantially all‖ and 

―predominant,‖ each plan must perform calculations based on ―the dollar amount of all plan 

payments for medical/surgical benefits in the classification expected to be paid under the plan for 

the plan year (or for the portion of the plan year after a change in plan benefits that affects the 

applicability of the financial requirement or quantitative treatment limitation.‖ The IFR does not 

delineate how plans should identify the ―dollar amount of ... plan payments ... expected to be 

paid;‖ instead, it allows plans discretion to use ―any reasonable method‖ to do so. IFR paragraph 

(c)(3)(i)(E).

While we welcome the Departments‘ approach in allowing plans to exercise discretion, the absence 

of greater direction in this regard is unfortunately causing confusion regarding the type of data that 

plans may use for these calculations. We are aware that some health insurers and benefit 

administrators are simply plugging in aggregate claims data across their book of business for all 

medical benefits they manage; the resulting conclusions regarding predominant types and levels of 

financial requirements and treatment limitations applicable to substantially all medical/surgical 

benefits are based on prevalence across plans, as opposed to prevalence within any particular plan. 

Others are relying on actuarial methods, using even broader data sources, to project the dollar 

amounts reasonably expected. Still others are engaged in painstakingly investigating and scrutinizing 

plan-specific claims data to figure out for each specific plan which financial requirements and 
Magellan Behavioral Health IFR MHPAEA Comments 13

treatment limitations can be applied to behavioral health benefits. Although we believe that each of 

these methods should be considered reasonable, it is not clear which of these methods the 

Departments would accept as reasonable and therefore permitted by the IFR.

The source of data permitted by the IFR has a direct, profound impact on the burdensomeness of 

the required calculations, as described below in these comments. The more specific the data, the 

more time and effort will be required in performing the calculations. 

To dispel the confusion and reduce the burdensomeness of the calculations, we recommend that the 

Departments retain the plan discretion allotted in paragraph c)(3)(i)(E), but clarify that ―any 

reasonable method‖ may include actual historical plan-specific claim cost distributions, aggregate 

expected distribution of claim costs, or any other method reasonably calculated to project expected 

claims dollars and that the method is not required to be plan-specific.

The Calculation Methodology Prescribed by the IFR, including Plan-to-Plan Analysis, is 

Overly Complicated and Burdensome.

Paragraph (e) states that the parity requirements must be satisfied separately with respect to each 

separate combination of benefits that a beneficiary can simultaneously receive. This requirement is 

overly complicated and burdensome, and the complication is only intensified by the required parity 

tests established by the IFR in paragraph (c).

Few employers offer only one set of health benefits to their employees, with no opportunity for 

choice. Instead, most employers provide multiple medical/surgical benefit plan selections (ranging 

from two to as many as 72, or in some cases even more) and one or more behavioral health benefit 

plan options. There are numerous different financial requirements and treatment limitations 

applicable to each of the possible medical/surgical benefit plan choices. For such employers, and 

the managed care organizations that support them, conducting the tests prescribed in paragraphs 

(c)(3(i)(A) and (B) for every single medical/surgical benefit package offered by the plan will be 

extremely burdensome. The burden is further compounded by the sheer multiplicity of benefit 

choices that employees can make, effectively resulting in hundreds, if not thousands, of 

individualized benefit plan permutations that must be analyzed for compliance with the parity 

requirements in the IFR. For example, in order for a plan that offers 72 medical/surgical options to 

determine the permissible financial requirements, the plan must determine ―substantially all‖ for 

each of the 72 plans in each of the six classifications, resulting in 432 sets of calculations just to 

determine ―substantially all‖ for all of the plan options. In addition, if there are different levels for 

the financial requirements and treatment limitations applicable to substantially all medical/surgical 

benefits, the plan then must determine which level is predominant for each plan option, raising the 

number of calculations required to 864. This is an absurd administrative burden that provides no 

value to the consumer. In a technical advisory meeting in February, the Departments indicated that 

they did not intend for plans to spend considerable time on administrative tasks, however the 

current language in the IFR requires just that. Following are descriptions of the enormous 

challenges involved in marshalling and conducting the analyses for the tests prescribed by the IFR.

Quantitative Tests

Unless plans are permitted to utilize some form of aggregate data, as discussed above, just the initial 

step of obtaining the data required to conduct the tests will prove a substantial challenge for most 

employers. Doing so will require culling cost data on thousands of claims from multiple claim 
Magellan Behavioral Health IFR MHPAEA Comments 14

administrators whose claims systems are not configured to report data based on the prescribed 

classifications and the discrete types of financial requirements and treatment limitations set forth in 

the IFR, and that may not even have cost data relating to all benefits chosen by each employee. 

Depending on the extent of managed care carve-outs utilized by an employer, there may be separate 

claims administrators for radiology benefits, for certain oncology benefits, and for sleep 

management benefits, in addition to the administrators for all other types of medical/surgical claims. 

In addition, the ability of the various claim administrators to furnish the data on a timely basis will 

be significantly impaired by the avalanche of simultaneous requests for similar data by each of their 

customers subject to the IFR, outside normal business processes, for purposes of parity compliance. 

Further, parity compliance must now compete for attention with even greater compliance issues 

arising from passage of the federal health care reform law (the Patient Protection and Affordable 

Care Act). 

Once the data is obtained, the employer must then engage in the mathematical exercises prescribed 

by the IFR for each separate combination of medical/surgical and behavioral health benefits. 

Differences among the plan packages in classifying certain services as inpatient or outpatient will 

complicate the analyses. This requires a significant upfront investment from the health plans and 

other medical benefit administrators to extract claims data at the benefit category level because, as 

noted above, claim history is not currently stored at such a detailed level. Each plan design requires 

manual work (the work is not automatable given the unique medical/surgical benefit designs that are 

different for each plan especially, at the large group level where plans customize designs) to do the 

allocations and complete the ―substantially all‖ and ―predominant‖ tests. This contrasts with a 

common-sense approach that would have plans compare the financial requirements between the 

medical/surgical benefits and the behavioral health benefits and make a rational and thoughtful 

judgment about which financial requirements are used substantially all of the time and what levels 

are predominant.

The Departments suggest in the preamble that employers can minimize some of the complexity by 

avoiding the ―predominant‖ test and simply defaulting to the richest benefit option for each 

financial requirement or treatment limitation that meets the ―substantially all‖ test. 75 Fed. Reg. 

5414. This is an option that is guaranteed to result in higher benefit costs for the employer – not an 

attractive option at any time and not at all acceptable in the face of parity-enriched behavioral health 

benefits with unpredictable cost impacts and a shaky economy with an uncertain future. 

―Substantially all‖ and ―predominant‖ are elastic concepts; if Congress had wanted to specify 

percents and measurements, it could have easily done so. The regulations should allow similar 

flexibility and permit plans to adopt a reasonable measurement to ensure substantial parity between 

like medical/surgical and behavioral health benefits rather than impose the onerous, time-consuming 

analysis prescribed in paragraph (c)(3)(i) and the micro-managing plan-by-plan requirement 

prescribed in (e)(1). At a minimum, we recommend that the Departments give plans a choice to 

utilize the methodology set forth in (c)(3)(i) or, for outpatient benefits, to simply latch behavioral 

health financial requirements and treatment limitations onto the financial requirements and 

treatment limitations applicable to PCP services. Absent these changes, we request that the 

regulations clarify that in using ―any reasonable method may be used to determine the dollar amount 

expected to be paid under a plan for medical/surgical benefit,‖ actual historical actual plan-specific 

claim cost distributions need not necessarily be used if an alternate, aggregate expected distribution 

of claim costs is reasonable.
Magellan Behavioral Health IFR MHPAEA Comments 15

Non-Quantitative Tests 

The complexity of separate plan-to-plan analysis for the quantitative tests is daunting, but ultimately 

achievable; the complexity of plan-to-plan analysis in connection with the IFR‘s newly-introduced 

category of non-quantitative treatment limitations poses exponentially greater challenges, making 

achievement of the analyses impracticable. As discussed in more detail later on page 21 of these 

comments, due to the ambiguous and unfounded nature of the IFR‘s conceptualization of nonquantitative ―treatment limitations,‖ which seriously impairs any ability to analyze them, plans face 

almost insurmountable obstacles to assembling the relevant information regarding the various terms 

and conditions that the IFR has dubbed non-quantitative treatment limitations. 

Gathering information regarding the existence of ―comparable restrictions‖ applied to 

medical/surgical benefits in connection with the array of non-quantitative treatment limitations 

specifically identified in paragraph (c)(4) as well as any unnamed other non-quantitative treatment 

limitations yields similar challenges to those encountered in assembling data for the quantitative tests 

from multiple medical/surgical plans and their vendors already overburdened with parity compliance 

data requests. But, while comparability may be facially apparent for some non-quantitative 

treatment limitations applied to medical/surgical and behavioral health benefits, for many others, 

subjective judgment is needed to even hazard a guess as to whether the ―restrictions‖ are 

comparable. Reaching a conclusion limited to the issue of comparability is likely to require personto-person communication and discussion on each and every process, strategy, evidentiary standard, 

and other factor used in applying any particular nonquantitative treatment limitation. Evaluation of 

the relative stringency of application of a non-quantitative treatment limitation, along with the 

embedded ―processes, strategies, evidentiary standards, or other factors used in applying‖ it, that is 

eventually determined to be comparable requires additional consultation between the MBHO and 

the medical/surgical benefit administrator. This examination must repeatedly occur over and over 

with respect to each identified non-quantitative treatment limitation along with each associated 

process, strategy, evidentiary standard, and other factors for each set of medical/surgical benefits. 

Even more challenging is the task of gathering information to identify rationales utilized in the 

administration of medical/surgical benefits to support non-quantitative treatment limitations that 

may be applied differently to behavioral health benefits. Over and above the administrative burden 

and serious difficulties encountered in securing information about comparability and stringency in 

application, obtaining information about the underlying rationales for medical/surgical benefit 

administration approaches is even more challenging because of a number of factors:

Because of the significant differences between medical/surgical and behavioral 

health treatment and the management of benefits for such varying treatments, a 

common vocabulary or frame of reference does not always exist. Just explaining the 

nature of each inquiry requires considerable communication and interaction between 

the medical/surgical side and the behavioral health side.

The non-quantitative treatment limitations relate to multiple facets of benefit 

administration; as a result, no one person affiliated with the MBHO is equipped to 

discuss all of the non-quantitative treatment limitations with the medical/surgical 

benefit administrators; likewise, no one person affiliated with the medical/surgical 

benefit administrator is equipped to discuss these issues with the MBHO. Multiple 

representatives from the medical/surgical benefit administrator and the MBHO must 

be involved. In some instances, the appropriate representative of the 
Magellan Behavioral Health IFR MHPAEA Comments 16

medical/surgical benefit administrator is not readily apparent. Once identified, 

availability for discussion and review becomes yet another issue. 

Many ―processes, strategies, evidentiary standards, or other factors‖ used in 

administering medical/surgical benefits have long histories, and those initially 

responsible for establishing the approaches of the medical/surgical benefit 

administrator are long departed from the company; identifying the rationales for 

applying -- or not applying -- the various non-quantitative treatment limitations to 

the various medical/surgical benefits is often simply not possible.

Many ―processes, strategies, evidentiary standards, or other factors‖ used in 

administering medical/surgical benefits involve trade secrets and other proprietary 

information that medical/surgical benefit administrators are unwilling to disclose, 

particularly to a competitor or potential competitor (e.g., provider contracting 

methodologies).

Assuming that all of the above obstacles can be overcome and that all of the desired information can 

be obtained, the information produced must be carefully examined to determine if there are 

rationales that support the use of non-quantitative treatment limitations, including the associated 

―processes, strategies, evidentiary standards, or other factors,‖ for the plan‘s behavioral health 

benefits. Translating the gathered information and attempting to apply it to behavioral health 

benefits will require intensive clinical research and analysis. 

Because of the separate plan-by-plan analysis required by paragraph (e)(1), this daunting exercise 

must be completed for each separate medical/surgical benefit plan option and the associated benefit 

administrators and, in some instances, their subcontractors as well. For example, one of Magellan‘s 

health plan customers has 60 rented medical/surgical provider networks, each of whose 

credentialing standards and reimbursement methodologies would require examination for 

comparability, stringency, and rationales. Doing a professional, thorough job in obtaining and 

processing the information necessary to assess compliance with the parity requirements applicable to 

non-quantitative treatment limitations would take years to complete. 

Aside from the difficulty in obtaining the necessary information and determining the supportability 

of the various non-quantitative treatment limitations, the requisite plan-by-plan parity requirement 

compliance analysis is likely to yield different results for the different medical/surgical benefit 

packages and therefore require completely different practices for the behavioral health benefit 

package associated with each set of medical/surgical benefits. For example, preauthorization of 

behavioral health benefits may be permissible for medical/surgical benefit Option A but not Option 

B, while retrospective review is permissible for Options A and B but not Option C; or a specified 

reimbursement methodology is permissible to pay providers for behavioral health services furnished 

to members administered by medical/surgical benefit administrator X while the exact same 

providers must be paid under a completely different reimbursement methodology for behavioral 

health services furnished to members administered by medical/surgical benefit administrator Y. 

The resulting patchwork of benefits supplied in attempted compliance with the IFR‘s requirements 

for non-quantitative treatment limitations will inevitably lead to member, provider, and MBHO staff 

confusion.
Magellan Behavioral Health IFR MHPAEA Comments 17

To avoid overloading plans with administrative tasks and causing confusion for members, providers 

and plan personnel, we recommend that employers be permitted to satisfy MHPAEA by ensuring 

that their behavioral health benefits are no more restrictive than the predominant benefits applicable 

to substantially all medical/surgical benefits across all plans provided by the employer. 

Guidance is needed for Identifying the Predominant Treatment Limitations and Financial 

Requirements when a Single Set of Behavioral Health Benefits is Offered with Multiple 

Medical/Surgical Options.

The Departments recognize in the preamble that an employer may offer numerous medical/surgical 

benefit packages that are paired with one single behavioral health benefit package. See, e.g., 75 Fed. 

Reg. 5418. While the preamble notes that the parity requirements must be satisfied with respect to 

each of the possible combinations of medical/surgical and behavioral health benefits, no guidance is 

offered as to how the parity requirements can be satisfied if the employer desires to continue 

providing a single behavioral health benefit option and the results of the ―predominant‖ type and 

level analysis are different for each of the different medical/surgical benefit packages. For example, 

assume the analysis reveals that within a particular classification prescribed by the regulation, for 

medical/surgical Option A, a copayment of $25 is predominant, for Option B, a copayment of $30 

is predominant, and for Option C, a coinsurance of 20% is predominant. While it is clear that the 

copayment for Option A is less restrictive than the copayment for Option B, it is not clear whether 

the Option A $25 copayment or the Option C 20% coinsurance is less restrictive and which 

therefore can, or should, be applied to the employer‘s single behavioral health benefit package. The 

IFR provides no guidance on how employers can resolve this dilemma. 

Requiring employers with single behavioral health benefit packages to instead establish silos of 

behavioral health benefits to correspond to each of the different medical/surgical benefit options is 

not an acceptable alternative for some employers. Multiplying the number of behavioral health 

benefit designs would increase both the cost and the complexity of benefit administration, surely not 

a result intended or anticipated by the Departments. For example, both MCO and MBHO 

Customer Service Associates and Care Managers would need additional training and would have to 

take additional steps to assure that they are consulting the appropriate plan design before quoting 

eligibility to plan members and providers or making administrative or clinical benefit authorization 

determinations. The resulting complexity is likely to contribute to higher exposure for human error 

and longer handle time (both of which affect administrative fees charged to employers). MCOs and 

MBHOs would also face greater complexity in loading benefits into their claims systems and other 

computer systems. In addition, employers would need to add detailed information and 

communication about multiple behavioral health benefit designs in their summary plan descriptions.

In order to preserve the ability of employers to maintain a single set of behavioral health benefits 

when desired, along with multiple medical/surgical benefit options, we recommend that the IFR be 

modified to permit employers to:

(i) Utilize actuarial methods to determine which of the predominant levels and types of 

financial requirements or treatment limitations can be applied; and/or

(ii) Establish maximum quantitative limits for MHSA benefits by testing ―substantially all‖ and 

―predominant‖ across an employer‘s entire population rather than for each specific plan an 

employee may elect.
Magellan Behavioral Health IFR MHPAEA Comments 18

The Methodology for Determining the Permissible Financial Requirements and Treatment 

Limitations should be More Flexible.

The methodology prescribed in paragraph (c)(3) for identifying permissible behavioral health 

financial requirements and quantitative treatment limitations cannot be employed universally. 

Rather than allow plans to simply determine if substantially all medical/surgical benefits are subject 

to a patient cost share and then identify the predominant medical/surgical cost share that can be 

applied to behavioral health benefits, the IFR creates a new standard – type of financial requirement 

or treatment limitation – as the unit on which comparisons must be based. By mandating use of this 

unit to analyze the prevalence of financial requirements and treatment limitations, the IFR creates 

seriously flawed results in some instances for plans that split the application of copayment and 

coinsurance to medical/surgical benefits, an increasingly common phenomenon. 

While separate analyses for copayment and coinsurance may be appropriate measures in many plans, 

for some plans, the forced separate analyses create artificially small analytical units that skew the 

results so that neither copayment nor coinsurance can satisfy the ―substantially all‖ test: If all 

medical/surgical benefits in a classification are subject to a patient cost share, but copayment and 

coinsurance are each applied to 50% of the medical/surgical benefits, neither copayment nor 

coinsurance can satisfy the ―substantially all‖ threshold of 2/3 of the medical/surgical benefit. A 

plan with this kind of mix of financial requirements for medical/surgical benefits is precluded by the 

IFR from imposing either copayment or coinsurance to behavioral health benefits, even though all

medical/surgical benefits require a patient cost share. As discussed above, employers that desire to 

pair a single uniform set of behavioral health benefits to multiple different medical/surgical benefit 

designs could encounter a similar anomalous result: if one medical/surgical benefit option applies 

only coinsurance to all medical/surgical benefits and another applies only copayment to all 

medical/surgical benefits, although each financial requirement meets the ―substantially all‖ test 

relative to the individual medical/surgical plan package, neither copayment nor coinsurance can 

meet the ―substantially all‖ test for both of the medical/surgical offerings paired with the behavioral 

health benefits. In picking either the copayment or coinsurance, the employer is compliant for the 

behavioral health benefits paired with the one relevant medical/surgical option but cannot then 

apply either copayment or coinsurance to behavioral health benefits paired with the other set of 

medical/surgical benefits. These kinds of anomalous results were not intended by MHPAEA. As 

noted in the preamble to the IFR2, the overriding purpose of MHPAEA was to eliminate 

discrimination against behavioral health benefits. The purpose was not to give behavioral health 

patients a pass on sharing in the cost of care. We assume that such anomalous results were also not 

the intention of the Departments. 

The history of MHPAEA evidences the legislative intent behind the parity requirement for financial 

requirements and treatment limitations in the House Energy and Commerce Committee Report that 

supports this. The report states that: ―The purpose of H.R. 1424, the `Paul Wellstone Mental 

Health and Addiction Equity Act of 2007' is to have fairness and equity in the coverage of mental 

health and substance-related disorders vis-à-vis coverage for medical and surgical disorders. This bill 

expands the Mental Health Parity Act of 1996 (Public Law 104-204) by requiring group health plans 

that offer benefits for mental health and substance-related disorders to do so on similar terms as 

care for other medical and surgical diseases. The legislation ensures that plans do not charge higher 

 

2 One of Congress‘ primary objectives in enacting MHPAEA was to improve access to mental health and substance use 

disorder benefits by eliminating discrimination that existed with respect to these benefits after MHPA 1996. 75 Fed. Reg. 

5422 (Feb. 2, 2010).
Magellan Behavioral Health IFR MHPAEA Comments 19

copayments, coinsurance, deductibles, and impose maximum out-of-pocket limits and lower day and 

visit limits on mental health and addiction care than the plan has for medical and surgical benefits. 

After years of discriminatory practices in plan design, health plans will be required to offer parity in 

treatment of mental illness and medical illness or face penalties by the Department of Health and 

Human Services, the Department of Labor, and the Internal Revenue Service.‖ (H. Rep. 110-374, 

Part 3, 110th Cong., 2nd Session (2008)). 

Given that the stated goal of Congress in enacting MHPAEA was to eliminate discrimination and 

barriers for behavioral health treatment, the parity analysis should focus on the burden to the patient 

rather than the label given to the financial requirement or treatment limitation (e.g., ―copayment‖ vs. 

―coinsurance‖). To cure the flaw in the methodology of the IFR, we recommend that the

Departments give plans more flexibility to determine how to best identify substantially all and 

predominant financial requirements or treatment limitations by allowing plans discretion to:

Make use of the concept of ―type‖ where medical/surgical benefits have fairly homogenous 

financial requirements or treatment limitations. With respect to a plan with relatively 

homogenous patient cost share requirements, separate measurement of copayment and 

coinsurance will result in a fair picture of which requirement or limit (if either) applies to 

substantially all medical/surgical benefits; and/or

Conduct combined analyses of like financial requirements (such as copayment and 

coinsurance) or treatment limitations to determine which, if any, affects substantially all 

medical/surgical benefits and is predominant and therefore may be applied to behavioral 

health benefits; and/or

Apply the financial requirements and treatment limitations applicable to PCP services to 

outpatient behavioral health services, and/or; 

Apply the type of financial requirement or treatment limitation that imposes a burden on 

behavioral health patients that is substantially equivalent to or less restrictive than the burden 

imposed on medical/surgical patients in the same classification, based on actuarial data. 

To give plans this type of flexibility, we recommend creation of a new paragraph (c)(3)(i)(C) 

substantially as follows:

(C) Alternative Measurement of ―Substantially All‖ and ―Predominant‖– (i) If two or more 

types of financial requirements or treatment limitations are significantly alike, such financial 

requirements or treatment limitations may be considered together for purposes of the 

determination described in paragraph (c)(3)(i)(A). Types of financial requirements or 

treatment limitations are considered significantly alike when they have a common purpose 

and similar impact on patients, for example, copayment and coinsurance. The plan may 

include all types of financial requirement or treatment limitation reviewed in making a 

determination in accordance with paragraph (c)(3)(i)(B) to determine the predominant level 

and type. The plan may apply a different type of financial requirement or treatment 

limitation to behavioral health benefits so long as the burden on patients as a result of the 

selected type of financial requirement or treatment limitation is substantially equivalent to 

the burden on patients resulting from the predominant medical/surgical financial 

requirement or treatment limitation; and/or

(ii) Unless there is good reason to suspect that the financial requirements and quantitative 

treatment limitations applicable to primary care physicians (PCPs) are not the predominant 
Magellan Behavioral Health IFR MHPAEA Comments 20

financial requirements and treatment limits applicable to substantially all medical/surgical 

benefits in accordance with the tests set forth in paragraphs (c)(3)(i)(A) and (B), the financial 

requirements and treatment limitations applicable to in-network and out-of-network PCPs 

may be applied to the corresponding in-network and out-of-network outpatient behavioral 

health benefits.

The Requirement for Annual Re-Calculation of “Substantially All” and “Predominant” 

should be Removed.

The methodology prescribed in IFR paragraph (c)(3) for identifying permitted behavioral health 

financial requirements and quantitative treatment limitations will result in instability in behavioral 

health benefit plan designs because the calculations are wholly dependent on the range and 

distribution of medical/surgical costs, which may vary from year to year, changing which financial 

requirements and treatment limitations apply to "substantially all" medical/surgical benefits and 

which is the "predominant" level. For example, if the administrator of medical/surgical benefits 

implements an increase in reimbursement to certain specialty providers that provide services subject 

to coinsurance, coinsurance at the level applied to those services may become predominant for a 

plan for which the analysis the previous year indicated a different level of coinsurance for behavioral 

health benefits or even resulted in applying copayment to behavioral health. Or, an epidemic or 

other phenomenon affecting utilization of medical/surgical treatment might cause a spike in certain 

treatments that result in changing the distribution of costs. 

Because paragraph (c)(3)(i)(C) requires the analysis to be conducted for each plan year, behavioral 

health benefit schedules can end up flip-flopping from year to year, solely because of changes 

affecting medical/surgical benefits that may be outside the control of the plan sponsor or MBHO. 

Such changes will result in confusion to plan members and providers; possible uncertainty for 

MBHO staff responsible for advising members and providers; costs for plan sponsors to repeatedly 

modify plan documents and issue new summary plan descriptions or material modification 

summaries; and costs for MBHOs to repeatedly reconfigure computer systems and retrain staff. 

Constant readjustment of behavioral health benefits was not intended by MHPAEA. MHPAEA 

was aimed at eliminating discrimination and creating equivalency, not in creating annual disruption 

of benefit plan designs. We are confident that these anomalous results were also not the intention 

of the Departments. 

In addition to the instability of benefits, tying the calculations to a ―plan year‖ so that the calculation 

exercise must be conducted annually creates an unreasonable burden on plans given the complexity 

of conducting the analyses, particularly where multiple medical/surgical benefit designs must be 

examined to identify the permitted behavioral health financial requirements and treatment 

limitations. 

At minimum, we recommend that the IFR be modified to provide that the analyses required under 

paragraph (c)(3)(i) do not have to be repeated for any financial requirement or treatment limitation 

within a classification for so long as there are no plan design changes affecting the specific financial 

requirement or treatment limitation within the specific classification for either medical/surgical or 

behavioral health benefits, regardless of any shifts in costs from year to year. 
Magellan Behavioral Health IFR MHPAEA Comments 21

NONQUANTITATIVE TREATMENT LIMITATIONS

The Parity Standard for Nonquantitative Treatment Limitations Needs Clarification. 

The standard set out in the IFR for application of the parity requirements to nonquantitative 

treatment limitations is different than the standard set out in MHPAEA with regard to treatment 

limitations. The Departments did not have the authority to create a standard with respect to this 

supposed subset of treatment limitations that differs from the statutory standard for all treatment 

limitations. The statutory language requires plans to ensure that ―the treatment limitations 

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

predominant treatment limitations applied to substantially all medical and surgical benefits covered 

by the plan (or coverage) and there are no separate treatment limitations that are applicable only 

with respect to mental health or substance use disorder benefits.‖ 29 U.S.C.§1185a(a)(3). The 

general parity requirement set forth in paragraph (c)(2) of the IFR echoes the statute but goes on to 

indicate that the application of the requirement to nonquantitative treatment limitations is 

―addressed in paragraph (c)(4) of this section.‖ The rule set forth in paragraph (c)(4) establishes a 

totally new test for parity: ―A group health plan may not impose a nonquantitative treatment 

limitation with respect to mental health or substance use disorder benefits in any classification 

unless, under the terms of the plan as written and in operation, any processes, strategies, evidentiary 

standards, or other factors used in applying the nonquantitative treatment limitation to mental health 

or substance use disorder benefits in the classification are comparable to, and are applied no more 

stringently than, the processes, strategies, evidentiary standards, or other factors used in applying the 

limitation with respect to medical surgical/benefits in the classification, except to the extent that 

recognized clinically appropriate standards of care may permit a difference.‖ 

Clearly the Departments realized that the statutory standards of ―substantially all‖ and 

―predominant‖ would not work with the purported limitations listed as examples of nonquantitative 

treatment limitations in paragraph (c)(4). Rather than rethinking the inclusion of the nonquantitative 

treatment limitations concept, the Departments improperly created a new standard to accommodate 

this newly fashioned subcategory of treatment limitations. The Department‘s creation of a separate 

standard has resulted in considerable confusion: impacted plans are unsure whether in creating the 

new standard in paragraph (c)(4), the Departments intend plans to satisfy an additional standard, 

which must be met in addition to the ―substantially all‖ and ―predominant‖ standards -- or an 

alternative test for measuring ―substantially all‖ and ―predominant,‖ i.e., as a test parallel to the tests 

established in paragraph (c)(3) applicable to financial requirements and quantitative treatment 

limitations.

In addition to the confusion over the applicable test to apply to nonquantitative treatment 

limitations, compliance efforts will require plans (in coordination with MBHOs) to conduct 

intensive reviews, discussed in detail above on pages 15-17, all of their individual medical/surgical 

benefit offerings to determine whether, and how, nonquantitative treatment limitations are applied 

to medical/surgical benefits, and then whether, and how, such nonquantitative treatment limitations 

may be applied to the corresponding behavioral health benefits in each classification. This is not an 

optional exercise; by including items such as provider contracting and usual and customary rates in 

the list of ―non-quantitative treatment limitations,‖ the IFR forces all plans to perform a rigorous 

analysis on all of these areas - - there is no option to  ̳drop‘ these constructs since provider 

contracting, provider reimbursement, and so on are all integral parts of a health benefit plan. 

Magellan contracts with numerous employer-sponsored plans and numerous health insurers (each of 
Magellan Behavioral Health IFR MHPAEA Comments 22

which themselves contract with numerous employer-sponsored plans), and each such entity may 

offer numerous different benefit plan options to their plan members. To conduct the necessary 

review into how each of these various plans administer their medical/surgical business is extremely 

complex and prohibitively time-consuming. In addition, this review must take place with no real 

guidance on what constitutes a nonquantitative treatment limitation. There is so much variation 

between behavioral health benefits and medical/surgical benefits that a simple ―apples to apples‖

comparison cannot be made. 

We urge the Departments to reconsider their unwarranted creation of the subcategory of 

nonquantitative treatment limitations. In the alternative, if the Departments retain these new 

requirements in contravention of MHPAEA, we urge the Departments to consider permitting an 

approach other than a plan-to-plan comparison at the individual plan level for assessment of each of 

these ―limitations.‖ In addition to being prohibitively time-consuming and prohibitively expensive, 

this behemoth task is further complicated by the reluctance of medical benefit administrators to 

freely share proprietary information with a carve-out MBHO about such topics as provider

contracting and reimbursement methodology. An employer that contracts with several 

medical/surgical plans and an MBHO may find itself needing to forcefully coordinate this review 

among its various health benefit vendors and then determine its comfort with the resulting 

comparisons. This process is highly stressful, burdensome, and costly for employers. 

Medical Management is not a Treatment Limitation and should not be Subject to Parity as a

Nonquantitative Treatment Limitation.

The illustrative list of nonquantitative treatment limitations includes ―Medical management 

standards limiting or excluding benefits based on medical necessity or medical appropriateness, or 

based on whether the treatment is experimental or investigative.‖ We would first counter the notion 

that medical management standards related to medical necessity and appropriateness are even 

―treatment limitations‖ at all. Medical necessity and appropriateness standards are not used to 

arbitrarily limit care or randomly deny benefits for services; rather, these strategies are utilized to 

ensure that proper care is being received by plan members in accordance with clinically appropriate 

standards. The IFR appears to conclude, based solely on anecdotal statements of patient advocates, 

that the benefit denial rate for behavioral health is exorbitantly high. The Departments have 

adopted a mistaken view that significant numbers of plan members are denied access to care as a 

result of medical management practices. To the contrary, our 2009 outpatient benefit denial rate for 

lack of medical necessity was less than one percent. Our overall 2008 and 2009 benefit denial rates 

for all levels of care, in-network and, to the extent required, out-of-network, for all reasons –

including, e.g., ineligible patient, non-covered benefit, non-covered provider, and exhaustion of 

benefits in addition to medical necessity -- were lower than 2 percent. We do not believe our denial 

rates are anomalous. These extremely low rates of benefit denials illustrate that utilization 

management is not a process that places barriers on access to care for plan members; instead, this is 

a process with important clinical benefits used to ensure that plan members are receiving 

appropriate, high quality care. What the denial rates do not reflect are the number of members 

guided to more appropriate care, the number of providers guided to furnish more appropriate care, 

and the sentinel effect on those providers who might otherwise provide inappropriate or 

unnecessary care. Proper care received early in the process is instrumental in preventing the need 

for higher levels of care for patients, which is less disruptive to their lives and less costly for the 

health plan. 
Magellan Behavioral Health IFR MHPAEA Comments 23

Preauthorization requirements for outpatient services are critical tools that ensure that plan 

members are receiving the type of behavioral healthcare services that they need from the most 

appropriate level of provider in the most clinically appropriate setting. In addition, concurrent 

review for higher levels of behavioral health care helps to ensure that members continue to need the 

level of services that they are receiving. The need to apply concurrent review for behavioral health 

treatment is a function of differences in payment methodology. Inpatient medical/surgical services 

are typically reimbursed in accordance with diagnosis-related groups (DRGs), where hospitals are 

paid a flat rate per case for inpatient hospital care to reward hospitals for their efficiency. Due to the 

variability in the treatment of behavioral conditions, behavioral health inpatient care is reimbursed 

on a fee for service rate with the rate paid for each day that the member is in the facility. 

Unfortunately, without concurrent review, some facilities will keep members in the facility when 

they no longer need inpatient treatment in order to continue receiving payment. To illustrate the 

value of utilization management in facilitating plan member access to appropriate care, we are setting 

forth several examples: 

A member called to request a referral to an outpatient provider for ―depression.‖

Discussion with our care manager revealed that the member had been experiencing 

extensive depressive symptoms for over 4 months with no let-up and the member‘s job was 

now at risk. Although the member wanted only ―talk therapy‖ with an outpatient therapist, 

our care manager was able to convince the member to obtain a medication evaluation as well 

due to the nature and duration of the symptoms. The care manager referred the member to 

an outpatient therapist and a psychiatrist for the medical evaluation. As a result of the 

evaluation, medication was prescribed; the member improved significantly with the 

combination of therapy and medication.

A 21 year old severely underweight (BMI of less than 20) member with unbalanced 

electrolytes, heart murmur, and a history of chest pains requested benefits authorization for a 

stay at an out-of-state residential treatment center for eating disorders. The member had not 

had a recent medical evaluation and had not even been seen by a medical doctor in the 

previous 3 months. The member insisted on traveling across the country to a ―fad‖ 

treatment facility advertised on TV. Our care manager reviewed the current clinical 

information with our medical director; both agreed that the member required a more intense 

level of care with 24 hour medical supervision closer to home. Our clinical team was not 

certain of the member‘s current medical condition or how medically stable the member was, 

and felt it important to have the member‘s medical condition thoroughly evaluated before 

the member went to an out-of-network residential facility that did not provide 24-hour 

medical care. We arranged for the member to obtain inpatient care at a network facility that 

specializes in eating disorders in the member‘s own community. 

A member diagnosed with Bipolar Disorder was admitted to an inpatient psychiatric facility 

during a manic episode but was not prescribed any medication during the first five days of 

the inpatient stay. Our care manager referred the case for a physician review; our Physician 

Advisor spoke with the attending physician, who agreed to prescribe mood-stabilizing 

medications. The member showed clear improvement within one day of initiating 

medication and was stabilized for discharge within a few more days.

A member received outpatient electro-convulsive therapy (―ECT‖) for several years on 

almost a weekly basis. Because the member‘s benefit plan had no outpatient pre-
Magellan Behavioral Health IFR MHPAEA Comments 24

authorization requirement, the member was able to keep going to the same out-of-network 

provider during this long time period and, as a result, received highly excessive amounts of 

ECT with no oversight, follow-up, or care coordination. This treatment cost the plan 

thousands of dollars in unnecessary charges and subjected the member to serious risks of 

harm from the excessive duration of the treatment. 

A 16 year old diagnosed with a serious case of anorexia was admitted to residential treatment 

at the same facility on two occasions but made very little progress and was unable to sustain 

weight gains after discharge. After several months of intensive outpatient treatment, the care 

manager recognized that the patient was unable to commit appropriately to the changes 

needed to make progress; the parents‘ household was fraught with domestic abuse issues and 

one parent also had an eating disorder. When the family requested a third admission to the 

same residential treatment facility, our clinical staff determined that the two previous failed 

stays indicated the need for a serious change in treatment venue and approach; the 

adolescent was admitted to inpatient treatment. Weekly case management and discussions 

between the treating doctor at the facility and our medical director focused on the significant 

parental issues that were affecting the patient. The parents were required to obtain couples 

counseling. After three months of ongoing treatment, the patient was discharged from 

inpatient care. Following the discharge, the patient was able to sustain the improvements 

through appropriate outpatient treatment and follow-up and no further hospitalizations have 

been required.

Any interpretation of the IFR that results in unnecessary limitation or practical elimination of 

preauthorization requirements for behavioral health benefits will adversely affect the most 

vulnerable behavioral health patients because the tools employed to monitor their treatment and 

assess clinical appropriateness will be gone. The preauthorization process serves to alert us to 

seriously mentally ill members with diagnoses such as bipolar, schizophrenia and other psychotic 

disorders, and thereby enables us to initiate efforts to ensure they get appropriate care; eliminating 

the preauthorization requirement would allow these patients to slip out of our radar and would 

result in their under-utilization of behavioral health treatment. This is a group of patients who 

typically tend to underutilize services, resulting in emergency inpatient stays that would have been 

preventable by continuing outpatient care. With a preauthorization process in place, once an 

MBHO identifies members with these diagnoses, the members receive  ̳targeted case management‘ 

including intensive follow-up to ensure that they attend therapy and are compliant with their 

medication regimens. These measures are aimed at improving the patient‘s condition, providing the 

appropriate level of care, and avoiding the need for inpatient care, which is more disruptive to the 

patient‘s life in addition to being more costly. Without the preauthorization process, plans would 

have no way to identify those members prospectively in order to put these highly beneficial 

interventions in place.

Unlike medical/surgical treatment, there are few objective standards for behavioral health treatment. 

Behavioral health patients may continue treatment unnecessarily because of psychodynamic issues 

(e.g., dependence on the therapist), loneliness, personal development issues, and other reasons 

unrelated to medical necessity. For example, our care managers have encountered parents pressing 

for approval of benefits for residential treatment of their adolescent dependents in a distant state 

without regard to medical necessity in order to enable the parents to take a vacation or to protect the 

family from the antisocial adolescent‘s violence. Utilization management techniques can counter 

these types of inappropriate benefit use and ill-advised treatment services. In addition, behavioral 
Magellan Behavioral Health IFR MHPAEA Comments 25

health patients frequently have no idea of the appropriate care or how to measure progress in their 

treatment. Members and their families are frequently lured by seductive advertising on TV or the 

Internet to travel to resort-like settings in distant, attractive locations promising ―treatment‖ but 

providing minimal actual health care services. 

Oversight of the behavioral health treatment process is needed to prevent unnecessary care and 

other abuses of health benefit plans. Medical/surgical treatment follows its own course with a far 

lesser need for oversight; most patients do not seek repeated colonoscopies or chemotherapy unless 

there is a clear medical/surgical need. If the IFR limits the ability of plans to manage behavioral 

health benefits, more members are likely to receive unnecessary or inappropriate care, or obtain 

vacations at resort-like residential settings at the expense of their health benefit plans, and plans are 

likely to see skyrocketing claims costs, particularly given the removal of day and visit limits. To the 

extent that there is patient cost sharing in a plan, the inability of plans to limit inappropriate care will 

result in unnecessary financial costs to members as well. 

The Senate Committee Report indicates that MHPAEA was not meant to limit benefit management: 

―S. 558 does not prohibit group health plans from negotiating separate reimbursement or provider 

payment rates and service delivery systems, or managing the provision of mental benefits in order to 

provide medically necessary treatments under the plan.‖ (Sen. Rep. No. 110-53, 110th Cong., 1st 

Session (2007) at p. 3).

As we discuss above in our comments on the Departments‘ cost estimate, the preamble expounds at 

great length on the virtues of managed care, but then the IFR inexplicably takes away most of those 

same benefit management tools by including utilization review and medical management as 

nonquantitative treatment limitations. 

If the Departments choose to leave in place the nonquantitative treatment limitations, and especially,

inclusion of medical management as a nonquantitative treatment limitation, we urge the 

Departments to clarify this language. Many plans do not apply utilization management to their 

medical/surgical benefits or they apply concurrent review but not preauthorization. Because most 

medical/surgical outpatient care is delivered for conditions that are episodic, easily identifiable, have 

clear treatment methods, and have obvious evidence of completed recovery (e.g., a broken arm; 

strep throat; conjunctivitis, etc.), there is no need for preauthorization or other utilization 

management for such cases. This absence of preauthorization or other utilization review in some 

plans for medical/surgical benefits could lead to a conclusion that no preauthorization or utilization 

management for the plan‘s behavioral health benefits is permitted under the IFR. This result would 

be disastrous for both plans and plan members, because utilization management ensures appropriate 

clinical care in addition to controlling costs. We urge the Departments to clarify that clinically based 

utilization management processes are permitted under the ―except to the extent that recognized 

clinically appropriate standards of care may permit a difference‖ language in paragraph (c)(4),

whether or not any utilization management is applied to medical/surgical benefits. We believe that 

the exception language in paragraph (c)(4) is designed to permit plans to use utilization review and 

other medical management techniques for behavioral health benefits where there is recognized 

clinical support for those techniques -- as opposed to arbitrary, discriminatory techniques -- even if 

those same techniques are not used by the same plans to manage medical/surgical benefits in a 

particular classification. A number of our health plan and employer customers are seriously 

contemplating eliminating utilization management, at least for outpatient care, on the 

recommendation of their legal advisors and benefit consultants who have concluded that outpatient 
Magellan Behavioral Health IFR MHPAEA Comments 26

behavioral health utilization management can no longer be performed. Such benefit plan changes 

will result in the removal of all measures protecting plans from skyrocketing costs resulting from the 

elimination of day and visit limits on behavioral health benefits. Without some clarity in this 

language, litigation is almost a certainty, as some advocacy groups take issue with all management 

techniques utilized by plans to manage behavioral health benefits.

The Regulations should not Extend to Standards for Provider Admission to Participate in 

Networks.

Provider network standards are not treatment limitations.

In addition to utilization management standards, the illustrative listing of nonquantitative treatment 

limitations in subsection (c)(4)(ii) also targets another feature used by MBHOs, and behavioral 

health carve-outs in particular, and touted by the Departments in the preamble as beneficial for 

plans and members. In discussing the potential benefits associated with MHPAEA and the IFR, the 

Departments note that ―[t]hese vendors have specialized expertise in the treatment of mental and 

addictive disorders and organized specialty networks of providers. These vendors are known as 

behavioral health carve-outs. They use information technology, clinical algorithms and selective 

contracts to control spending on mental health and substance abuse treatment. There is an extensive 

literature that has examined the cost savings and impacts on quality of these organizations.‖ 75 Fed. 

Reg. 5422 (emphasis added). Notwithstanding this positive statement regarding the quality 

contributions of MBHOs, the Departments appear to believe that MBHOs arbitrarily limit their 

provider networks and thereby create barriers for plan member access to care; this is simply not true. 

Magellan and, we believe, other MBHOs strive to have provider networks that reflect adequate 

numbers of providers and accessibility in all relevant disciplines, in order to meet the wide array of 

treatment needs of plan members. Because network providers must meet our stringent standards 

for quality (e.g., education, experience, licensure, etc.), the use of network providers is beneficial to 

members from a quality perspective as well as benefiting the MBHO and the plan from a financial 

perspective. Without a robust network we would be forced to reimburse out-of-network providers 

at higher rates for providing these same services, without any of the quality assurance and oversight 

promoted by our credentialing process. 

Under the terms of the IFR, provider network admission standards may not be imposed with 

respect to behavioral health benefits in any classification unless the processes, strategies, evidentiary 

standards, or other factors used in applying such standards are comparable to, and applied no more 

stringently than, the processes, strategies, evidentiary standards, or other factors used in applying 

provider network admission standards with respect to medical/surgical benefits in the classification.3 

This inappropriately transforms what was intended to be a benefits parity law into a provider parity 

law. Aside from the obvious distortion of the intent of MHPAEA, there are several issues raised by 

this proposition.

The definition of ―treatment limitations‖ in MHPAEA reads: 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. As noted previously in these comments, in its 

definition of ―treatment limitations,‖ the IFR appends the novel and completely foreign concept of 

 

3 The exception for recognized clinically appropriate standards of care which permit a difference would be of no use for 

this particular example of a nonquantitative treatment limitation, as there is no ―standard of care‖ involved in admitting 

providers to a network.
Magellan Behavioral Health IFR MHPAEA Comments 27

 ̳nonquantitative treatment limitations‘ to the definition of ―treatment limitations‖ as somehow 

similar to frequency of treatment, number of visits, and days of coverage (all listed in the statutory 

definition) and somehow limiting the scope or duration of treatment. Even assuming, for the sake 

of discussion, that the Departments have authority under MHPAEA to create requirements with 

respect to nonquantitative treatment limitations, the inclusion of provider admission standards 

within the nonquantitative treatment limitation category is misguided. 

Treatment limitations under MHPAEA are all narrow limits that directly affect the quantity and 

intensity of treatment patients may receive. Provider network admission standards have no rational 

connection to the quantity and intensity of treatment. Provider network admission standards have 

no similarity to frequency of treatment, number of visits, days of coverage, or other similar limits. 

There is no way to reasonably construe that provider network admission standards are any kind of 

limit on the scope or duration of treatment. The standards used by MBHOs to decide provider 

admission to participate in their networks (including reimbursement rates) do not determine how 

many days per week or sessions per year a patient can go to therapy or be hospitalized in a 

psychiatric facility. The standards used by MBHOs to decide provider admission to participate in 

their networks, including reimbursement rates, do not affect, influence, or otherwise impact the 

ability of any member to receive treatment. Therefore, the standards used by MBHOs to decide 

provider admission to participate in their networks do not satisfy the statutory definition of 

―treatment limitations‖ and should be removed from paragraph(c)(4)(ii) of the IFR.

Credentialing of behavioral health providers promotes access to quality care. 

If the Departments ultimately choose to retain the concept of nonquantitative treatment limitations

and to retain provider network admission standards as a nonquantitative treatment limitation, the 

Departments should consider the implications of those decisions and provide needed additional 

guidance and clarification on what is expected of MHBOs in connection with network admission 

standards. Re-assessment of all behavioral health provider network arrangements, comparison to 

medical/surgical provider network creation and reimbursement procedures, and then attempted 

alignment or equalization will be confusing, complex, impractical, and may even create exposure to 

anti-trust scrutiny for MBHOs.

The standards used by MBHOs to decide provider network admission are designed to ensure that 

plan members have access to high quality services from qualified practitioners. In establishing a 

network of behavioral health providers, MBHOs guarantee that each provider in the network has 

sufficient credentials to provide the appropriate level of care to plan members who need behavioral 

health treatment. 

Access to care is an important consideration for every MBHO. MBHOs ensure that there are 

enough behavioral health providers at different licensure levels to serve each relevant geographic 

area they serve. Magellan and many of the other MBHOs are accredited by the National Committee 

on Quality Assurance (NCQA), an independent, nonprofit organization that assesses and reports on 

the quality of care delivered by managed care organizations, including MBHOs. NCQA 

accreditation requires MHBOs to create network density (i.e., number of providers per member) and 

access (i.e., distance between provider and members) standards. It is also standard practice for many 

employers and health plans to require specific access and density standards in their contracts with 

MBHOs. As recognized by the Departments in the IFR preamble, a strong behavioral health 

provider network that facilitates access to high quality, well coordinated, and cost effective care is 

one of the primary factors in the success of ―parity in a world dominated by behavioral health carve 
Magellan Behavioral Health IFR MHPAEA Comments 28

outs,‖ with ―increased utilization rates, reduced provider fees, reduced rates of hospitalization and 

fewer very long episodes of outpatient care. Intensive treatment was more closely aligned with 

higher levels of severity.‖ 75 Fed. Reg. 5422. Unfortunately, anecdotal statements seem to have led 

the Departments to believe that MBHOs engage in discriminatory and inequitable practices in 

establishing provider networks, when nothing could be further from the truth.

Magellan currently has contracts with approximately 72,000 behavioral health care providers across 

the nation. Our customers look to us to furnish their members who need behavioral health 

treatment with behavioral health practitioners and facilities well-qualified with the array of training 

and experience necessary to provide quality care in the specialized areas of mental illness and 

substance abuse. This is true for our health plan customers as well as employer customers. The 

health plans themselves often do not have the comfort level or expertise to create a vibrant and 

thorough behavioral health provider network. Provider admission to medical/surgical networks is 

relatively straightforward, because most if not all of the providers admitted to these networks are 

physicians who are all subject to similar training and licensure standards. Creating a network of 

behavioral healthcare providers, however, is far more complex. There are many different types of 

providers who can – and, in the case of certain state mandates, must – be included in behavioral 

healthcare networks. 

For example, while behavioral health provider networks naturally include psychiatrists (who are also 

MDs), they also include practitioners with doctorates or masters degrees in psychology or counseling 

and practitioners with masters degrees in social work as well as all sorts of family counselors, 

marriage counselors, and so on. The background, training and licensing standards for each of these 

provider types varies widely, both among the types and, when differing state requirements are 

considered, within each type. Our customers rely on our expertise to conduct the specialized 

credentialing required to assure that high quality behavioral health care is furnished to plan 

members. 

In addition to the credentialing process that takes place in connection with provider applications for 

network admission, MBHOs also perform crucial quality assurance and improvement activities with 

their network providers. For instance, Magellan works in concert with our providers to ensure that 

they develop evidence-based treatment plans that are appropriate to the specific needs of their 

patients. Throughout the course of treatment, we engage in concurrent peer-to-peer consultation 

with behavioral health professionals to ensure that plan members are receiving clinically indicated 

treatments in the least restrictive and most appropriate environment possible and that those services 

are delivered in a quality fashion to achieve successful and cost-effective outcomes. 

As we have described, the credentialing process for admission into a behavioral healthcare network 

is significantly more complicated than for a medical provider network. The IFR does not account 

for this complexity. Literal interpretation of the IFR could cause the behavioral healthcare network 

admission processes to be viewed as applying more stringent standards than those applied by 

medical provider networks, subjecting the affected plans to possible regulatory enforcement actions. 

The effect of attempts at equalization in provider credentialing would likely force MBHOs to 

operate at the least common denominator by watering down existing robust credentialing standards. 

This certainly would not be in the best interests of plan members and consumers. 

It is understandable that the Departments would have concerns about the impact that an inadequate 

behavioral health provider network would have on access to behavioral health care services. But, as 
Magellan Behavioral Health IFR MHPAEA Comments 29

noted above, in creating their provider networks, MBHOs ensure that all types of behavioral health 

providers are available and accessible within defined distances and that all network providers are 

properly credentialed and qualified to provide the services they render to plan members. 

Network adequacy is simply not a parity issue. If a network presents no artificially created barriers 

to access treatment, the manner in which MBHOs select behavioral health providers to join their 

networks is irrelevant to plan members -- the intended beneficiaries of MHPAEA; providers were 

not the intended beneficiaries. We strongly recommend that all references to provider admission 

standards be removed from the regulation.

The Regulations should not Extend to Standards for Provider Reimbursement Rates.

Network Providers

Paragraph (c)(4)(ii)(C) of the IFR specifies provider reimbursement rates as a component of 

provider network admission standards that must meet the parity requirements of the IFR. Provider 

reimbursement rates are not treatment limitations. Like most other MBHOs, Magellan generally 

reimburses network providers on a fee-for-service basis; capitated fees – which can create incentives 

for providers to limit care -- are rarely used for behavioral health care. Magellan uses a 

reimbursement methodology that we have developed over our many years in the behavioral health 

benefit management industry; this methodology includes adjustment of rates by geographic region 

and provider licensure status. Without explanation, the IFR calls into question our established 

practices for the reimbursement of behavioral health providers, both in-network and out-ofnetwork. The IFR inaccurately presupposes that there are standard rates that can easily be applied 

across all different types of care so that, for example, a network physician is reimbursed at 90% of 

the standard rates whereas an out-of-network physician is reimbursed at 50%. This is not how 

provider reimbursement works. At present, there is no generally accepted index on which provider 

networks can legally rely for reimbursement determinations. Because all medical/surgical and 

behavioral health benefit administrators use different sources of data and methodologies, there will 

be variations in rate determinations even before taking the differences between medical/surgical and 

behavioral health care into account.

Even assuming there could be a consistent base on which to determine reimbursement, the 

reimbursement model for medical/surgical care is very different from the model for behavioral 

health reimbursement because behavioral health networks include many different types of providers 

with highly variable education and training backgrounds, which necessitates multiple levels of 

contracting and reimbursement strategies. We reimburse for services based on the provider‘s level 

of education, specialization, licensure, and experience in addition to the type of the services 

provided. In the behavioral healthcare area, therefore, the determinations are much more complex. 

The two areas are simply not comparable.

Adding another layer of confusion, MBHOs such as Magellan typically have more than one 

customer in each state, and each customer may have more than one medical/surgical benefit 

package. While reimbursement rates are not the same for each provider, Magellan‘s network 

reimbursement schedule anticipates paying the provider the one contracted rate specified in the 

schedule regardless of the medical/surgical plan in which the behavioral health patients they treat are 

enrolled. In this way, the provider knows exactly what he/she will be paid for services, regardless of 

the patient‘s medical/surgical plan, rather than having to face a variety of payment rates for the exact 

same services depending on the patient‘s medical/surgical benefits. If MBHOs are required to 
Magellan Behavioral Health IFR MHPAEA Comments 30

match their rates with the medical/surgical rates under each plan, they will have to replace their 

existing network rate structures with the medical/surgical rate methodology; behavioral health 

providers will have to agree to -- and keep track of -- different rates corresponding to each set of 

medical/surgical benefits for each plan instead of a single rate from the MBHO that is applicable to 

all plans. This problem would be exacerbated where an MBHO‘s customer utilizes rented provider 

networks for medical benefits; as noted above, one Magellan customer utilizes 60 rented networks to 

provide medical/surgical services. Moreover, provider contracts would require amendment with 

new reimbursement schedules whenever the MBHO contracts with a new customer. The behavioral 

health provider fee arrangements would have to correspond with the medical/surgical provider fee 

arrangements based on the particular medical/surgical provider networks for which the particular 

patients are eligible. This level of matching would necessitate additional eligibility programming and 

data capture to ensure that the MBHO claims system recognizes the particular medical/surgical 

provider network assigned to each plan member. To the extent that the IFR is interpreted to require 

substitution of medical/surgical fee arrangements for the current MBHO fee-for-service 

reimbursement structure, a huge corresponding burden would be imposed on behavioral health 

providers with regard to record-keeping and billing, not to mention confusion regarding what rate of 

reimbursement they would receive for any given service they render. 

Out-of-network providers

The IFR includes plan methods for determining usual, customary, and reasonable (UCR) charges as 

the fourth item on the illustrative list of nonquantitative treatment limitations in paragraph (c)(4)(ii). 

Under the terms of the IFR, then, UCR charges may not be imposed with respect to behavioral 

health benefits in any classification unless the processes, strategies, evidentiary standards, or other 

factors used in applying such UCR charges to behavioral health benefits in the classification are 

comparable to, and applied no more stringently than, the processes, strategies, evidentiary standards, 

or other factors used in applying UCR charges with respect to medical/surgical benefits in the 

classification.4 Again, as with provider network admission standards, this is an ―apples to oranges‖

comparison that is confusing and problematic.

Since one of the main tenets of establishing a network of providers is the commitment by each 

provider to accept a contracted rate, use of UCR charges for reimbursing providers occurs only in 

connection with out-of-network providers. Only when faced with reimbursing a provider who has 

not agreed to a predetermined, contracted rate must a plan resort to UCR charges. Calculation of 

UCR charges is challenging, as there is no single reliable national database or other resource for 

plans to utilize.5 As a result, plans use their own proprietary payment methods for determining 

UCR. While the reimbursement paid affects providers, the methodology for determining UCR has 

no bearing on plan member access to behavioral health treatment. Indeed, the very nature of outof-network benefits effects an expansion of access to treatment -- by permitting members to seek 

care by any behavioral health provider acting within the scope of an appropriate license for the 

 

4 As indicated in connection with network provider reimbursement, the exception for recognized clinically appropriate 

standards of care, which permit differences from medical/surgical practices, would be of no use for this particular 

example of a nonquantitative “treatment limitation,‖ as there is no ―standard of care‖ involved in reimbursing providers.

5 In the past, many companies used data from Ingenix, a unit of UnitedHealthcare, as a resource for determining UCR 

charges; however, allegations of fraud have tarnished the validity of the rates and information in the Ingenix database, 

and have called into question the practices of companies using Ingenix to reimburse providers. A non-profit alternative 

to Ingenix has been proposed, but is not yet operational.
Magellan Behavioral Health IFR MHPAEA Comments 31

service rendered, even if such provider has not met the rigorous quality and credentialing standards 

of the plan. 

In order for an MBHO to ensure the UCR charges used are comparable to, and applied no more 

stringently than, the UCR charges used for medical/surgical providers, the MBHO would have to 

obtain the proprietary UCR payment methodology of each corresponding medical/surgical benefit 

administrator. In addition to the reluctance of medical/surgical benefit administrators to share this 

proprietary information for competitive reasons, sharing of such information could create an 

appearance of impropriety and/or antitrust scrutiny, if such activities are viewed as collusion or 

price-fixing. So long as out-of-network benefits are available, where applicable, and provided in 

compliance with MHPAEA parity requirements, then the manner in which MBHOs determine UCR 

charges for non-contracted behavioral health providers is outside the scope of the IFR. 

OTHER COMMENTS

The IFR Appropriately Ties MHPAEA Disclosure Requirements to ERISA Disclosure 

Requirements.

We were pleased to see the requirements under paragraphs (d)(1) and (2) aligned with the existing 

ERISA requirements for disclosure of medical necessity criteria and denial rationale. As a carve-out 

to numerous health plans and employers that are subject to these ERISA requirements, our 

standards are already compliant with these ERISA requirements for all of our business. The vast 

majority of health plans and employers are already subject to the ERISA requirements. Utilizing 

these existing standards in the IFR eliminates any additional compliance activities in this area for 

most plans. 

Clarification of the Application of MHPAEA to Non-Traditional Plans is Needed.

Under paragraph (e)(1), a separate parity compliance analysis is required for each unique 

combination of all the medical/surgical and behavioral health benefit options for which an 

individual is simultaneously eligible and, further, all of the possible combinations together are 

considered a single group health plan for purposes of satisfying the IFR‘s parity requirements. As 

explained by the Departments in the preamble, the purpose of this provision is to prevent plan 

sponsors from evading the application of MHPAEA by establishing separate behavioral health 

plans. Magellan acknowledges the appropriateness of closing this possible loophole, but seeks 

clarification of the application of this anti-abuse provision to health reimbursement arrangements 

(HRAs) and other non-traditional group health plans that may evolve in the future.

An HRA is an unfunded medical reimbursement plan in which the employer reimburses medical 

expenditures up to a specified dollar amount of coverage. Funding of claims occurs on an as needed 

basis from the employer‘s general assets and reimbursements are tax-free to employees. In our 

experience, HRAs are typically paired with high deductible health plans (HDHPs) in order to take 

advantage of the lower premiums for HDHPs.

Because HRAs are considered group health plans under ERISA, paragraph (e)(1) would require that 

HRAs be combined with other medical/surgical benefits and behavioral health benefits (e.g., the 

HDHP) for purposes of analyzing the financial requirements and treatment limitations permissible 

with respect to the behavioral health benefits to which HRA plan members would be eligible. That 
Magellan Behavioral Health IFR MHPAEA Comments 32

requirement does not pose unique problems for HRAs that cover both medical and behavioral 

health conditions; the analysis would simply include both the HRA and the HDHP in the review 

and proceed in the same manner as for a traditional plan. 

However, some employers offer HRAs that are limited to medical benefits (while HRAs could also 

be limited to just behavioral health or another variation, the concern here is in connection with 

medical/surgical-only HRAs). A medical/surgical-only HRA would fund first-dollar coverage for 

medical expenses, up to a specified limit at which point the employee is responsible for satisfying a 

deductible before coverage under the HDHP (covering both medical and behavioral health) kicks in. 

Behavioral health benefits would be subject to the same deductible and coverage under the HDHP 

but would not have the advantage of the HRA reimbursements. For example:

HRA Shared single 

deductible

HDHP

Medical/surgical $1,000 paid by 

employer at 

100%

$1,000 paid by 

employee

90% paid by plan;

10% by employee

Behavioral 

health

-- 90% paid by plan; 

10% by employee

Combined review of the two plans might suggest that the medical/surgical-only HRA must be 

changed by extending coverage to behavioral health. However, the Departments have expressed the 

view that where a plan covers medical/surgical benefits and behavioral health benefits and the 

behavioral health benefits satisfy the requirements under MHPAEA, an employer‘s provision of 

additional benefits over and above the group health plan, e.g., an employee assistance program

(EAP), does not have to be taken into account in determining compliance. We request clarification 

whether the same logic applies to a medical/surgical-only HRA that supplements an otherwise 

parity-compliant HDHP or whether such a pre-deductible HRA must now cover both 

medical/surgical and behavioral health treatment. 

The Language Deeming all Combinations of Benefits to be a Single Group Health Plan 

should be Modified or Deleted.

Paragraph (e)(1) provides that all combinations of medical/surgical and behavioral health benefits 

are ―considered to be a single group health plan‖ for purposes of parity. Although we do not 

believe it to be the Departments‘ intent, it can be argued that this transforms the anti-abuse 

provision that requires separate analysis of each combination of medical/surgical and behavioral 

benefits for which an employee is simultaneously eligible into an analysis simply of the entire 

universe of benefits provided to employees. 

For an employer with multiple group health plans, the implication of this rule appears to be that 

behavioral benefits for all employees must correspond to the medical/surgical benefits that are most 

favorable to employees, including employees enrolled in medical plans other than the plan with the 

most favorable benefits. Members in plans with less generous medical/surgical benefits would 

receive richer behavioral health benefits, undoubtedly resulting in higher premium costs. Such 
Magellan Behavioral Health IFR MHPAEA Comments 33

results go far beyond the simple and basic parity mandate between medical/surgical and behavioral 

health benefits intended by Congress in enacting the MHPAEA. MHPAEA is aimed at eliminating 

discrimination, not at compelling employers to provide the highest possible behavioral benefit. 

While most employers have historically preferred to standardize behavioral health benefits regardless 

of the medical/surgical benefit offerings, some may now choose to differentiate by plan in order to 

mitigate the cost impact of parity. The single plan language appears to deprive employers of the 

option to offer varying behavioral benefits that are matched on a plan-by-plan basis to medical 

benefits.

While we appreciate the Departments‘ anti-abuse concern, we believe that purpose is adequately 

advanced by the first part of the sentence requiring that all benefits to which an individual would be 

eligible be combined for parity analysis; the purpose of the additional language deeming all such 

combinations to be one plan is not clear. The Departments did not articulate a purpose for the 

language. Given the potential restriction of options to make each plan option internally consistent, 

we recommend that the phrase ―all such combinations are considered for purposes of this section to 

be a single group health plan‖ be stricken from paragraph (e)(1). 

Clarification of the Application of MHPAEA to Wellness Programs is Needed.

The IFR has a potential chilling effect on the continued emergence of innovative 

wellness/prevention programs that are a valuable tool in tackling America‘s skyrocketing health 

costs. The inclusion of 100% employer-paid wellness benefits in the universe of medical/surgical 

benefits upon which the substantially all test is calculated under paragraph (c)(3)(i)(A) skews the 

outcome of the calculation. Employers will be less willing to establish new wellness benefits – and 

may drop existing medical wellness benefits or impair their effectiveness by attaching patient cost 

sharing or other limits – when their continued ability to require patient cost share for behavioral 

health benefits is jeopardized by the absence of patient cost share in connection with medical 

wellness benefits. While inclusion of 100% employer-paid medical wellness benefits in the 

(c)(3)(i)(A) calculations may end up depriving plan members of valuable wellness benefits, exclusion 

of such benefits from the calculation is unlikely to have an adverse effect on behavioral health 

coverage because few plans would consider eliminating patient cost sharing on medical benefits just 

to avoid parity requirements. 

In addition, the application of MHPAEA to behavioral health wellness programs, such as tobacco 

cessation programs (which undeniably provide benefits in connection with a diagnosis covered 

under the DSM), would dictate transformative changes to the wellness programs. Most wellness 

programs offer short-term interventions, such as education, screening, counseling; the standard 

limits on wellness programs are unlikely to be consistent with limits applied to substantially all 

medical benefits. Without limits, many employers are likely to drop the behavioral health wellness 

benefits rather than establish new unlimited behavioral health benefits. We have received feedback 

from several customers indicating that they have been advised to drop their wellness programs 

because of the IFR. We believe that the reasoning that makes parity inapplicable to EAPs applies 

with equal strength to behavioral health wellness programs. Like an EAP, a behavioral health 

wellness program comprises an employer‘s provision of additional benefits over and above the 

group health plan. We suggest that so long as the group health plan covers behavioral health and 

the behavioral health benefits satisfy the parity tests, parity requirements should not apply to 

behavioral health wellness programs that supplement those behavioral health benefits. 
Magellan Behavioral Health IFR MHPAEA Comments 34

We request that the Departments reconsider the inclusion of medical wellness benefits in the 

calculations under paragraph 3)(i)(A). We also request clarification whether benefits under a 

behavioral health wellness program that supplements an otherwise parity-compliant group health 

plan must be in parity with medical/surgical benefits. 

The Compliance Date should be Deferred to Allow Time Commensurate with the 

Complexity of Activities Required by the IFR.

The changes made by the MHPAEA statute are generally effective for plan years beginning after 

October 3, 2009. In Section 512(d) of MHPAEA, Congress instructed the Departments to issue 

regulations ―[n]o later than 1 year after the date of enactment of this Act.‖ The Departments, 

however, failed to issue final regulations by the October 3, 2009 deadline. Irrespective of that 

deadline, MHPAEA itself went into effect on that same one-year anniversary date. Since October 3, 

2009, in the absence of regulatory guidance, plans have made good faith efforts to comply with the 

statute. On April 28, 2009, six months after the passage of MHPAEA, the Departments published a 

―request for information‖ in the Federal Register. 74 Fed. Reg. 19,155 (April 28, 2009). The request 

for information was a four-page document seeking general information pertaining to the clinical and 

financial effects of implementing the statute. The request did not set forth or even hint at the 

language of any proposed regulation. On February 2, 2010, four months after their statutory 

deadline, the Departments issued the IFR. Even though it took the Departments 16 months to 

promulgate the IFR, they issued this rule with an applicability date of July 1, 2010 for plan years that 

begin or renew on or after that date. This provided plans with July 1 plan years only five months to 

review the IFR, attempt to resolve ambiguities, make IT changes, conduct meetings between 

behavioral health and medical/surgical plans if these are not integrated, redesign benefit plans, revise 

and re-file plan documents, and address all the other details necessary for compliance. Many states 

require advance notice to members and providers if changes are made that impact the benefit 

structure or provider contracts. For example, New Jersey requires 60 days prior notice of material 

changes to provider contracts. Given all of these factors, this five month timeframe is woefully 

inadequate. 

The Departments appear to be under the impression that most plans will not renew until January 1, 

2011 and therefore they will have longer to work on compliance. While this is true, it appears that 

most health insurance companies have at least some plans that renew July 1. In fact, July 1 is the 

second most popular plan renewal date after January 1. If a health plan has even one customer with 

this renewal date, and it appears that more than half of our health plan customers do, then the health 

plan – and its carve-out MBHO -- needs to be prepared to comply by the July 1 date. Because of 

uncertainty about the meaning and implications of the IFR and the complexity of the required 

analyses and other compliance steps, as of the date of these comments, few, if any, of our health 

plan or employer customers have made decisions regarding new benefit plan designs for the plan 

year starting July 1; that leaves very little time for any required state filings; revision of employee 

communications; enrollment; reconfiguration of claims systems; and retraining of staff, as necessary. 

We urge you to delay the applicability date of these regulations until at least January 1, 2011. 

Allowing only 5 months for these complex compliance activities is insufficient and unreasonable. 

While the IFR notes that good faith compliance efforts will be taken into account,

6

it is also noted 

 

6 Because the statutory MHPAEA provisions are self-implementing and are generally effective for plan years beginning after October 

3, 2009, many commenters asked for a good faith compliance period from Departmental enforcement until plans (and health 

insurance issuers) have time to implement changes consistent with these regulations. For purposes of enforcement, the Departments 

will take into account good-faith efforts to comply with a reasonable interpretation of the statutory MHPAEA requirements with 
Magellan Behavioral Health IFR MHPAEA Comments 35

that the Departments‘ acceptance of good faith efforts does not prevent participants or beneficiaries 

from bringing a private action. The compliance date should be remedied to permit adequate time to

thoughtfully and thoroughly address necessary plan changes without risk of litigation. 

The compliance date should be further extended if the Departments make any changes in the status 

of the regulation. We believe that that the Departments violated the Administrative Procedure Act 

(APA), 5 U.S.C. § 553, by failing to engage in notice and comment rulemaking, resulting in severely 

flawed regulations, and we therefore urge the Departments to rescind the IFR and promulgate 

proposed regulations in order to permit feedback from the MBHO and provider communities prior 

to formulating final regulations. If this should occur, we urge the Departments to permit at least a 

period of one year from issuance of final regulations for compliance given the complexity of the 

required changes and the state law filing requirements that must also be met. 

Thank You for Considering Our Comments

Thank you for the opportunity to present our concerns regarding this important regulation. We 

urge you to follow your legal obligations under the APA, withdraw the IFR, issue new proposed 

regulations based upon the comments submitted on the IFR, and then carefully consider the 

comments received in response to the proposed regulation before promulgating a final regulation.

We also ask that you allow for at least a one year time period for compliance from the effective date 

of the final regulations to allow adequate time to make changes to benefit structures, obtain state 

regulatory approval where required, and to make necessary information technology changes. 

In the alternative, if you elect not to withdraw the IFR, we believe the unnecessary complexity and 

burdensomeness, as well as the unintended consequences, of the IFR can be cured by:

Withdrawing the provisions that exceed the clear language and legislative history of 

MHPAEA;

Refraining in your formulating new proposed regulations from further inappropriate 

rulemaking in excess of your authority;

Substituting the measure of reasonableness on the part of plans and their insurers for the 

overly prescriptive, plan to plan matching approach adopted in the IFR; and

Extending the compliance date until at least January 1, 2011.

If you have any questions about our comments, I can be reached at (860) 507-1973.

Sincerely,

Anthony M. Kotin, MD

Chief Medical Officer

Magellan Health Services

 

respect to a violation that occurs before the applicability date of paragraph (i) of these regulations. However, this does not prevent 

participants or beneficiaries from bringing a private action. 75 FR 5419.