Coalition for Fairness in Mental Illness 

Coverage

May 28, 2009 

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

U.S. Department of Labor 

Employee Benefits Security Administration 

Office of Health Plan Standards and Compliance Assistance 

Attention: MHPAEA Comments 

Room N-5653 

200 Constitution Avenue, NW 

Washington, DC 20210 

U.S. Department of Health and Human Services 

Centers for Medicare & Medicaid Services 

Attention: CMS-4137-NC 

P.O. Box 8017 

Baltimore, MD 21244-8010 

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 

Re: Interagency Request for Information Regarding the Paul Wellstone and Pete Domenici Mental Health 

Parity and Addiction Equity Act of 2008 

Dear Sir or Madame: 

The Coalition for Fairness in Mental Illness Coverage was formed over thirteen years ago to win equitable 

mental health coverage. The Coalition members include: American Hospital Association, American Medical 

Association, American Psychiatric Association, and American Psychological Association, Association for 

Behavioral Health and Wellness, Federation of American Hospitals, Mental Health America, National Alliance 

on Mental Illness and National Association of Psychiatric Health Systems. The organizations represent 

consumers, family members, health professionals, and health care systems and administrators. The Coalition 

was extensively involved in the negotiating and drafting of both the Senate bill and the final law and vigorously 

supported its final passage. 

We are responding to your request for information with a few specific comments that all of our nine 

organizations would like to call your attention to in the Paul Wellstone and Pete Domenici Mental Health Parity 

and Addiction Equity Act of 2008 (MHPAEA). Most, if not all, of our organizations are also submitting 

separate and more detailed comment letters to your agencies. 

Mental illness coverage. It’s time to be fair by treating it equally in health care. 

1000 Wilson Boulevard, Suite 1825, Arlington, VA 22209 
Issue 1: The Coalition seeks clarification on which group health plans and health insurance issuers are subject 

to comply with the MHPAEA. We feel that a review of the entities that the law applies to would be very 

helpful. There are two particular examples where we seek specific clarification – one is clarification that the 

law does not apply to Employee Assistance Programs and the other is clarification of whether or not it applies in 

a situation where there are three employers with twenty five employees each that join together to collectively 

purchase health coverage. 

Issue 2: MHPAEA requires that the financial requirements and treatment limitations applied to mental 

health/substance use benefits are “no more restrictive than the predominant” financial requirements and 

treatment limitations “applied to substantially all” medical/surgical benefits covered by a health plan (or 

coverage). 

We believe the parity standard of “no more restrictive than” means that the financial requirements or treatment 

limitations imposed on mental health or substance use benefits can be no greater than those applied to medical 

and surgical benefits. In other words, any financial requirement or treatment limitation imposed on the enrollee 

or participant for mental health or substance use benefits must be equal to or less than that applied to 

medical/surgical benefits. 

With regard to the term “substantially all,” the 1996 MHPA required that if a plan or coverage includes a 

lifetime or annual dollar limit on “substantially all” medical and surgical benefits, then it may impose either the 

same or a lesser limit on mental health benefits. The departments’ implementing rule (62 Fed. Reg. 66932 et 

seq., December 22, 1997) essentially defined “substantially all” to mean that if a plan or coverage includes a 

lifetime or annual dollar limit on at least two-thirds of all medical/surgical benefits, it may either impose the 

same or a lesser limit on mental health benefits. However, if a plan or coverage applies a different lifetime or 

annual dollar limit on different benefit categories of more than one-third of all medical/surgical benefits, it may 

impose a limit on mental health benefits equal to the weighted average of these different categories. 

As mentioned, the term “substantially all” is relatively easily applied to plan or coverage lifetime or annual 

dollar limits, where a plan or coverage generally has only one limit or a few limits. The term “predominant” has 

been included in the MHPAEA to address those financial requirements or treatment limitations for which there 

may be a number of limits or categories of coverage. The term “predominant” therefore has been included to 

indicate that the mental health or substance use benefit should be compared to the prevailing or most common 

financial requirement or treatment limitation imposed by the plan or coverage. 

Therefore, under MHPAEA the financial requirement or treatment limitation that is applied to “substantially all” 

the medical/surgical benefit shall be that requirement or limitation that is applied to the mental health/substance 

use benefit. Of course, a plan or coverage may apply a lesser requirement or limit, since the MHPAEA provides 

that such requirement or limit shall be “no more restrictive than” the limit imposed on medical and surgical 

benefits. 

The term “predominant” is an additional qualifier and meant to prevent mental health or substance use benefits 

financial requirements or treatment limitations from being compared to outliers in the medical/surgical benefit. 

For example, consider parity with regard to a limit on outpatient psychotherapy visits. To apply the MHPAEA 

standard, all outpatient medical/surgical visits of a plan should be considered. If there is no limit on 

substantially all outpatient medical/surgical visits, for example, then there shall be no limit on outpatient 

psychotherapy visits. However, if a plan has several types of outpatient medical/surgical visit limits (i.e. for 

primary physician, specialty, chiropractic, physical therapy, and various other services) so that no one (or a lack 

of a) limit represents substantially all of the limits on outpatient medical/surgical visits, then the predominant 

qualifier applies. This means that outpatient psychotherapy visits should be compared to the prevailing or most 
common outpatient medical/surgical visit limit. For most plans we assume that this would be the primary 

physician office visit. Therefore, if the plan does not impose a limit on primary physician office visits, then the 

plan shall not impose a limit on outpatient psychotherapy visits. 

In another example, consider parity with regard to a copayment requirement for outpatient psychotherapy visits. 

To apply the MHPAEA standard, all outpatient medical/surgical visits of a plan should be considered. If the 

copayment requirement for substantially all outpatient medical/surgical visits is $10, for example, then the 

copayment requirement for outpatient psychotherapy visits shall be $10. However, if a plan has several types of 

outpatient medical/surgical visit copayment requirements, so that no one copayment represents substantially all 

of the limit on outpatient medical/surgical visits, then the predominant qualifier applies. This means that 

outpatient psychotherapy visits should be compared to the prevailing or most common outpatient 

medical/surgical visit limit. For most plans, we assume that this would be the primary physician office visit. 

Therefore, if the plan imposes a $10 copayment for a primary physician office visit, then the plan shall impose a 

$10 copayment requirement for an outpatient psychotherapy visit. 

It is acceptable to us to compare inpatient-to-inpatient and outpatient-to-outpatient medical/surgical benefits 

with mental health/substance use benefits for purposes of applying the MHPAEA parity standard to financial 

requirements and treatment limitations in a plan or coverage. Within the inpatient and outpatient benefits 

provided by a plan, the MHPAEA parity standard is meant to address the subtleties that may be involved in the 

various financial requirements and treatment limitations applied to various categories of coverage. 

Issue 3: The language in the cost exemption section of MHPAEA requires that “determinations as to increases 

in actual costs under a plan (or coverage) for purposes of this section shall be made and certified by a qualified 

and licensed actuary who is a member in good standing of the American Academy of Actuaries.” Actuaries are 

not licensed by state or federal agencies. Actuaries are certified through education and experience requirements 

for membership in the American Academy of Actuaries. We request that the departments clarify that the term 

“qualified and licensed” actuary means a member in good standing of the American Academy of Actuaries, and 

therefore is an individual qualified to provide the cost exemption determinations required by the new law. 

The Coalition also wants to reinforce that MHPAEA requires a group health plan seeking an exemption to have 

complied with the law for the first six months of the year involved and that an election of a cost exemption must 

be based on historical claims experience—retrospective data—and not on an analysis using only projections—

prospective data. We also agree that model notices would be helpful to facilitate disclosure to federal and state 

agencies and to health plan beneficiaries and participants regarding a plan or issuer election to implement the 

cost exemption. 

Issue 4: The Coalition worked hard to ensure that state mandate laws (where applicable) were not preempted by 

the MHPAEA and the upcoming regulations offer an important opportunity to provide guidance and clarity to 

the states regarding the preemption of and preservation of state laws that either mandate coverage of mental 

health and substance use disorders, set minimum standards for coverage of these disorders or require equitable 

coverage. 

It is important to note that the MHPAEA does NOT articulate a new or different standard for preemption of state 

law. Instead, the MHPAEA incorporates the standards in ERISA and the Public Health Service Act set forth by 

Congress in the Health Insurance Portability and Accountability Act of 1996 (HIPAA). This preemption 

standard serves to protect state law, and allows for federal displacement of state law only in cases where a state 

law “prevents the application” of federal law, in this case the equitable coverage standards in the MHPAEA. 

In the Coalition’s view, this would allow states to continue to enforce, and in the future develop, state laws 

requiring equitable coverage for mental health and substance use disorders relative to medical-surgical coverage. 
State laws that either require minimum coverage for mental health or substance abuse treatment, require 

coverage of specific mental health or substance use diagnoses or mandate inclusion of mental health and 

substance abuse disorders in group health plans, present a different set of issues. 

1) State Mandated Benefits Laws: These state laws appear not to be preempted because the MHPAEA 

does not contain a mandate to cover either mental health or substance use disorders. Continued 

enforcement of state mandated benefits in no way prevents the application of the equitable coverage 

requirements in MHPAEA. This includes state laws that define mental health benefits by listing 

specific diagnoses in statute. 

2) Minimum Benefit Requirements: These state laws will have to be reviewed on a case-by-case basis 

since some of them sanction specific numerical limits on inpatient days, outpatient visits or dollar 

coverage that apply mental health or substance abuse coverage, but not to medical-surgical coverage. 

This includes state laws that set a minimum standard for coverage, but do not obligate group health 

plans to offer any coverage above these minimum standards. In such cases, state laws are likely to 

“prevent the application” of the MHPAEA and would be preempted. 

The Coalition would recommend careful review of existing state laws and guidance to states outside of the 

regulatory process to ensure that states are able to continue to enforce requirements for mandated mental health 

or substance sue benefits that are beyond the scope of the MHPAEA and are not permitted to enforce laws that 

authorize limitations on coverage that do not apply to medical-surgical coverage. 

Thank you for the opportunity to respond to the RFI. If you have any questions about the Coalition’s comment 

letter please contact the Coalition Chair, Pamela Greenberg, President and CEO, Association for Behavioral 

Health and Wellness, at greenberg@abhw.org or (202) 756-7726. 

Sincerely, 

. 
1

Attachment 1

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

may be impacted by MHPAEA? What direct or indirect costs would result? What direct or 

indirect benefits would result? Which stakeholders will be impacted by such benefits and costs? 

The MHPAEA will impact a variety of policies, practices, and procedures for group health plans 

and health insurance issuers. Many of these impacts will also be felt both directly and indirectly 

by plan sponsors and participants. These impacts, and the associated costs and benefits, are best 

assessed in the course of reviewing what the MHPAEA does and does not address. 

(1) The MHPAEA does not contain a coverage mandate. The MHPAEA does not require plans 

or health insurance issuers to provide coverage for mental health or substance use disorder 

benefits. The law reserves to plans and health insurance issuers the right to define mental health 

and substance use disorder benefits as they deem appropriate (subject to other applicable federal 

and state laws). The control of the scope of the benefits offered or provided by the plan or health 

insurance issuer has historically been a part of the plan design process, combined with the 

integration of state mandated benefits, where applicable. It is not anticipated that the MHPAEA 

will change this particular process and therefore there should be little cost impact to plans or 

health insurance issuers arising from this element of plan design. The impact on practices and 

the cost implications of the MHPAEA are driven by the changes required by the MHPAEA to 

treatment limitations and financial requirements. 

(2) The MHPAEA does not affect existing plan terms and conditions. The MHPAEA clearly 

allows for the terms and conditions of the plan to be determined by the plan sponsors and health 

insurance issuers, provided that the defined boundaries of the MHPAEA with respect to 

treatment limitations and financial requirements are applied. Any interpretation that expands 

beyond the specific language of the MHPAEA to attempt to alter the plan and/or health 

insurance issuer’s ability to define the terms and conditions of the plan would have a critical and 

negative effect on the affordability of mental health and substance use disorder benefits under 

this law. 

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

requirements. The law requires that financial requirements for mental health or substance use 

disorder benefits be no more restrictive than the “predominant” financial requirements applied to 

“substantially all” medical and surgical benefits. However, traditionally within the two classes 

of benefits – medical and surgical benefits and mental health and substance use disorder benefits 

– the financial requirements, especially co-payments, are varied based on the level of care – 

inpatient or outpatient and whether or not the benefits are being obtained in-network or out-ofnetwork. Absent clarification of the “predominant” and “substantially all” language, which we 

address in more detail below in our response to B.2., it is difficult to establish the impact of the 

new parity standard for financial requirements. 

This issue is not limited solely to copayments but also effects the other “financial requirements” 

addressed under the MHPAEA, including coinsurance, deductibles and out-of-pocket expense. 

Due to some ambiguity in the language of the law we have seen contradictory interpretations of 

the statutory language which states that “there are no separate cost sharing requirements that are 

applicable only with respect to mental health or substance use disorder benefits” (Public Law 
2

110-343, Subtitle B, Section 512(a)(1)). We strongly believe that the language in the law is 

written to allow for plans and health insurance issuers to have the flexibility to apply either 

separate or shared (also called combined) financial requirements to mental health and substance 

use disorder benefits. In the event of a plan applying separate financial requirements for mental 

health or substance use disorder benefits those requirements must (a) not be applied only to 

mental health and substance use disorders – meaning the plan must have a similar financial 

requirement on the medical and surgical benefits and (b) the financial requirement must be no 

more restrictive for mental health or substance use disorder benefits than the similar financial 

requirement applied to the medical and surgical benefits. This will be discussed further in B.1. 

but we note it here because, as detailed below, a contrary interpretation engenders a very 

significant and negative cost impact to plans and plan participants. 

An interpretation of the above statutory language that is contrary to the approach suggested in 

the previous paragraph would suggest that a plan must have combined cost-sharing requirements. 

This would have a wide-ranging impact, as many plans do not utilize this plan design. This is 

partly due to the fact that mental health and substance use disorder benefit administration and 

management is a highly specialized field and, as a result, many plans and health insurance 

issuers have chosen to directly contract with a specialized Managed Behavioral Healthcare 

Organization (MBHO) to administer the mental health and substance use disorder benefits under 

the plan (an arrangement commonly referred to as a “carve-out”). Thus, in cases where a carveout arrangement is utilized there would be at least two organizations involved in the single 

financial requirement approach – the plan administrator for medical and surgical benefits and the 

plan administrator, or carve-out vendor, for mental health or substance use disorder benefits. In 

order to administer combined cost-sharing requirements these two organizations will have to 

develop program interfaces which would allow communication and sharing of accurate, real 

time data (such as deductible information) in order to ensure accurate application of the benefit. 

This is an intensive administrative process with significant costs connected with establishing and 

maintaining these interfaces. A shared deductible in this context would require that the plan and 

its administrators build the necessary system interfaces to share and coordinate this data, and our 

member plans have indicated that these interfaces and exchanges could have a cost ranging from 

$420,000 - $750,000 for each interface required. The number of interfaces required will depend 

on the plan and number of different medical and surgical and mental health and substance use 

disorder benefits vendors used by the plan. However, for a typical health insurance issuer who 

needs to interface with 40-50 other plan administrators on behalf of its plan customers, our 

member plans have indicated that the cost could be as much as $17 million to $30 million per 

plan administrator. These costs would typically be passed to the plan sponsors and plan 

participants. 

 In addition to the costs mentioned above, this issue can have other direct impacts on the 

individual plan participant. The general assumption is that shared deductibles are less costly for 

the member since the cost of mental health and substance use disorder care and medical and 

surgical care are both applied toward the same deductible and out-of-pocket expense maximum. 

Theoretically this is true. However, studies of participants in plans with shared deductibles of >

$ 1,000 (which is increasingly common) show that access to services is negatively impacted.1

 In 

the mental health and substance use disorders arena the barrier of high first dollar cost is even 

greater. In mental health and substance use disorder coverage the pattern of service use 

(utilization) is much higher – mental health and substance use disorder treatment episodes 

average eight (8) visits while medical and surgical treatment episodes average three (3) visits per 

episode of care – and more frequent – mental health and substance use disorder treatment 
3

frequency averages one (1) to two (2) visits per week while medical and surgical treatment 

frequency averages one (1) visit per month. Thus, given the frequency and higher utilization for 

mental health and substance use disorder benefits, accumulation of costs is far quicker for 

participants accessing these benefits. Many studies have demonstrated the sensitivity of access 

and duration of treatment in mental health and substance use disorder treatment to alterations in 

the application of deductibles, copayments and out-of-pocket expense maximums.2

Having the ability to construct separate lower deductible and out-of-pocket expense maximums 

for plan participants faced with high medical and surgical expense deductibles and out-of-pocket 

expense maximums allows members to have less of a financial disincentive and barrier to 

accessing mental health and substance use disorder treatment which will ensure they receive 

necessary treatment when they need it. Plans have historically been unwilling to adjust the 

medical deductible to accommodate behavioral health needs since it is estimated that 

approximately 95% of plan participants only access the medical and surgical benefits. Absent 

the ability to have separate cost sharing requirements for mental health and substance use 

disorders that are no more restrictive than the similar requirements for medical and surgical 

benefits, purchasers are forced to utilize higher shared cost sharing with significant cost and 

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

treatment. We believe that this issue is one of vital importance and one which can have farreaching cost implications for all stakeholders. 

(4) The MHPAEA does require plans to significantly alter their administration of treatment 

limitations. The MHPAEA will remove or minimize treatment limitations such as annual 

outpatient visit limits, yearly inpatient day limits, yearly and lifetime episode limits, and annual 

cost limits, which are typically based on state law requirements that will be preempted by the 

MHPAEA. For example, some plans limit outpatient visits to 20 or 30 visits per year, and 

inpatient benefits to 30 inpatient days per year. Some plans allow for a limited number of 

substance use disorder treatment episodes such as 2 per year or per lifetime, and some have 

annual cost limits (such as $10,000 per year) for some or all services. The removal of these 

limits – which currently function as cost controls – will have significant impact on plans and the 

cost to plan participants. While not all benefit plans utilize such limits, and their removal may be 

an improvement for members currently subject to them, overall the removal of limits will 

increase the costs of the plan and benefit coverage for all plan participants. The magnitude of the 

cost impact related to the removal of benefit limits will vary from plan to plan and is not easily 

quantified. Several studies have been performed following the implementation of in-network 

parity at the state level and for federal employee health benefit plans that have previously 

implemented parity. These studies have demonstrated that the cost impact ranges from 0% 

increase to a trend increase that exceeds 4% of total cost.3

 The studies also clearly delineate that, 

with appropriate utilization and care management cost was consistently contained to less than a 

2% increase in total plan cost. 

(5) The MHPAEA does impact the Out of Network (OON) benefits which plans and health

insurance issuers offer. The requirement that plans must provide OON mental health and 

substance use disorder benefits if they provide OON medical and surgical benefits will now 

require plans and health insurance issuers to provide OON mental health and substance use 

disorder health benefits to some participants who did not previously have such a benefit. OON 

services are challenging to administer for plans and health insurance issuers because of the 

difficulties in controlling the quality of the services and in coordinating care. Unlike in-network 

providers who have a contractual relationship with the plan or health insurance issuer, OON 
4

providers have no incentive to cooperate with plans or health insurance issuers as far as quality 

assurance activities, outcomes improvement measures, case management initiatives, or care 

coordination efforts. Because OON services are more costly and harder to manage, it is expected 

that this provision of the MHPAEA will result in significantly higher costs for plans, health 

insurance issuers, plan administrators and plan participants. 

(6) Summary. The MHPAEA will impact plans and plan participants in a variety of areas 

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

expected higher costs for mental health and substance use disorder services due to the required 

changes in benefit design and to likely increased use of OON services. Indirect costs result from 

changes that arise from the MHPAEA such as the increased administrative burden to manage 

changes in financial requirements and likely increased utilization – without the counterweight of 

controls historically imposed as disincentives to inappropriate utilization of benefits, which will 

result in increases to plan costs and premiums for plan participants. 

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

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

for individual plan participants seeking services and treatment. Indirect benefits include the 

potential for enhanced function for an individual plan participant with mental health and 

substance use disorder problems, both at work and at home. These changes will positively 

impact all stakeholders (plan sponsors, plan administrators, health insurance issuers, plan 

participants and consumers) in terms of health benefits and costs. 

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

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

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

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

under State insurance laws or otherwise? 

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

in our comments in section A.(i) above. While these costs are not unique these small groups are 

particularly vulnerable to the impact of “catastrophic cases” – meaning that one or two seriously 

ill members can have dramatic impact on the costs of the overall plan given its small size. This 

is as true for mental health and substance use disorders as it is for medical and surgical cases. 

The impact of the changes discussed above in A.(i) creates an enormous pressure on these small 

groups with respect to the temptation to exclude some mental health and substance use disorder 

benefits which are not limited by treatment limitations and financial requirements by simply 

providing no coverage for these conditions at all in an effort to control overall plan costs. 

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

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

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

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

order to keep costs down, small groups have tended to choose more restrictive policies – policies 

which have more treatment limitations and financial requirements for mental health and 

substance use disorders benefits such as annual outpatient visit limits, a 30-day annual inpatient 

benefit, or a lifetime episode cap for substance use disorder treatment. The ability of small 

groups to utilize such plan designs will be virtually eliminated under the MHPAEA since these 
5

plans typically do not have restrictions of the same type on substantially all of their medical and 

surgical benefits. The MHPAEA will also put increased pressure on costs for these small groups 

if they have members who need specialized mental health and substance use disorder needs. 

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

MHPA 1996, and, if so, what estimated hours and costs are associated with those additional 

burdens? 

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

of mental health and substance use disorder benefits than the MHPA of 1996. The MHPAEA 

will significantly increase the paperwork required for plan and health insurance issuers with 

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

Typical steps that are necessary for plans to become MHPAEA compliant will generate a 

significant level of paperwork for recordkeeping purposes. For example, in order to do the 

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

administrators must compare their medical and surgical benefit plan offerings against their 

mental health and substance use disorder health plan offerings. In most groups, this involves 

multiple medical and surgical benefit plans having to be compared against multiple mental health 

and substance use disorder benefit plans. The comparison process very often results in plan 

design changes and the creation of additional benefit plan offerings, all of which must be 

documented and communicated to stakeholders - the plan participants, the plan administrators, 

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

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

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

filings with governmental agencies. 

B. 1. The statute provides that the term "financial requirement" includes deductibles, 

copayments, coinsurance and out-of-pocket expenses, but excludes an aggregate lifetime limit 

and an annual limit. The statute further provides that the term "treatment limitation" 

includes limits on the frequency of treatment, number of visits, days of coverage, or other 

similar limits on the scope or duration of treatment.

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

benefits? 

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

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

The MHPAEA does not address or otherwise set forth any language with respect to “other 

financial requirements.” The definition of “financial requirements” does include reference to 

aggregate lifetime and annual limits which are addressed under the Mental Health Parity Act of 

1996. Outside of these defined “financial requirements” and aggregate lifetime and annual 

financial limits, there are no other financial requirements applied by plans that are addressed 

under the language of the MHPAEA. 

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

do, in some cases, apply other types of similar treatment limitations -- as that term is defined 
6

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

“limits on the frequency of treatment, number of visits, days of coverage, or other similar limits 

on the scope or duration of treatment.” Currently plans and health insurance issuers do frequently 

apply the types of treatment limitations specifically listed (e.g. number of visits or days of 

coverage) and will in some cases also apply “other similar limits on the scope or duration of 

treatment.” In answering this question, and considering proposed regulations, the “other” 

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

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

limitation for the purpose of the MHPAEA must have some temporal or durational aspect similar 

to the treatment limitations which the MHPAEA specifically lists such as number of visits or 

days of coverage. 

The only additional limit we would consider falling within this definition but not specifically 

listed currently by the MHPAEA is a limit on the number of episodes of treatment. For example, 

some plans and health insurance issuers limit the number of episodes of inpatient detoxification 

treatment available to a plan participant or insured to a certain number of episodes per lifetime. 

How do plans currently apply financial requirements or treatment limitations to (1) medical 

and surgical benefits and (2) mental health and substance abuse disorder benefits? 

Plans and health insurance issuers utilize financial requirements and treatment limitations both in 

medical and surgical benefits and mental health and substance use disorder benefits. There is 

wide variety in the use and application of financial requirements and treatment limitations 

applied by plans and health insurance issuers due to the demands of the marketplace and wide 

variety in plan designs utilized by plan sponsors and insurance purchasers in meeting their varied 

objectives in offering, promoting, sponsoring and providing benefit plans. 

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

In many cases yes but in other cases no. Currently most plans and health insurance issuers apply 

some form of financial requirements and treatment limitations (as those terms are defined by the 

MHPAEA) to both classes of benefits – medical and surgical benefits on the one hand and 

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

insurance issuers vary the application of financial requirements and treatment limitations 

between the two classes of benefits. In other cases, plans are already designed such that there is 

no disparity between the application of financial requirements and treatment limitations between 

the two classes of benefits. 

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

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

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

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

benefit were more generous than the medical and surgical benefit because the employer wanted 

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

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

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

requirements and treatment limitations within a class of benefits – meaning medical and surgical 
7

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

second “class of benefits”. Frequently plans and health insurance issuers will apply variances in 

benefit levels and in the application of financial requirements and treatment limitations on the 

basis of the level of care involved. Level of care refers to the “setting” of treatment. The most 

notable and predominant levels of care are inpatient care and outpatient care. 

In addition, in many cases plans and health insurance issuers often delineate a separation within 

each class of benefits between in-network benefits and out-of-network benefits and apply 

differing levels of financial requirements and treatment limitations to those sub-divisions within 

the class of benefits. 

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

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

may be 100% after payment by the plan participant of a $20 copayment. That same plan for outof-network benefits might only provide for out-of-network inpatient coverage of 60% with 40% 

coinsurance for the plan participant and for out-of-network outpatient coverage might only be 

50% after payment by a plan participant of the 50% coinsurance. Thus, plans typically vary 

coverage within a class of benefits based on in-network and out-of-network coverage and 

inpatient and outpatient levels of care. 

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

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

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

plan (or coverage)” with respect to similar coverage. In other words, the plan or health 

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

treatment limitations for mental health and substance use disorder benefits are aligned with the 

predominant financial requirements and treatment limitations on in-network inpatient treatment 

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

requirements and treatment limitations, etc. This presumption should be clearly articulated in the 

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

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

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

Overall, the MHPAEA provides clear, defined application of rules to ensure the objective of 

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

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

clarity regarding the application of parity within the bounds of the legislative language would be 

of assistance to all stakeholders. We believe clarification of the following items specifically 

discussed below is vital for all stakeholders. 

What specific clarifications would be helpful? 

 (a) Flexibility on Design of Financial Requirements: 

 

The application of parity to plan financial requirements, including deductibles and out of pocket 

expense maximums is a critical component of the MHPAEA. It is essential that, in 

implementing this key element of parity, plan sponsors have the flexibility to design plans with 
8

either combined (also referred to as “shared”) or separate deductibles and out-of-pocket expense 

maximums. A combined deductible or out-of-pocket expense limit would involve a 

single deductible or out-of-pocket expense maximum applicable to both the medical and surgical 

benefits and to the mental health and substance use disorder benefits. A separate deductible or 

out-of-pocket expense maximum would involve two parallel deductibles or out-of-pocket 

expense maximums, with one applicable to the medical and surgical benefits and one applicable 

to the mental health and substance use disorder benefits. Separate deductibles and out-of-pocket 

expense maximums would be designed to meet the parity standard established by the MHPAEA 

– namely that the financial requirements applicable to mental health and substance use disorder 

benefits be no more restrictive than those applicable to comparable medical and surgical 

benefits. 

 

The MHPAEA states that plans must ensure that “there are no separate cost sharing requirements 

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

(emphasis added). The interpretation of this language is that a plan cannot have a financial 

requirement (deductible, copayment, coinsurance and out-of-pocket expense) for mental health 

and substance use disorders that it does not also have for medical and surgical benefits. That is, 

the plan cannot have a separate financial requirement that is applicable ONLY to mental health 

and substance use disorders if the plan does not also have a comparable financial requirement 

applicable to medical and surgical benefits. However, this provision of the MHPAEA does 

allow for separate and no more restrictive deductibles and out-of-pocket expense maximums. 

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

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

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

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

unless the law allowed for financial requirements that were separately applied to mental health 

and substance use disorder benefits because if separate requirements are not permitted then there 

is no basis or need to make requirements “no more restrictive”. 

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

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

prohibit any separate cost-sharing requirements. In addition, we note that the Federal Employee 

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

(also known as “carriers”) to implement the requirements of the MHPAEA and it states 

“expenses incurred for mental health or substance use disorders may be applied to the same 

medical and surgical deductibles and catastrophic limits or to separate deductibles and 

catastrophic limits so long as they are for the equivalent amounts.” In addition, this 

interpretation would be consistent with the existing parity law requirements under the MHPA of 

1996 which allows plans to apply annual and lifetime limits either by means of a combined 

aggregate limit for medical and surgical and mental health and substance use disorder benefits or 

through separate limits that are equivalent between medical and surgical benefits and mental 

health and substance use disorder benefits. 

For these reasons, ABHW strongly recommends that the regulations allow plan sponsors the 

flexibility to design or select plans (or coverage) which provide valuable mental health and 

substance use disorder benefits, in parity with medical and surgical benefits, using either 

combined or separate, but no more restrictive, financial requirements. This range of design 
9

options within the framework of the MHPAEA is essential to encouraging mental health and 

substance use disorder coverage and keeping such coverage affordable for all stakeholders. 

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

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

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

standard industry wide formats and coding. 

(b) Management of the Benefit: 

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

substance use disorder benefit, as is currently done. The MHPAEA amends the construction 

clause in Section 712(b) of ERISA which contains language which states “Nothing in this section 

shall be construed...” so that, after amendment, Section 712(b)(2) now reads as follows: 

“Nothing in this section shall be construed in the case of a group health plan (or heath insurance 

coverage offered in connection with such a plan) that provides mental health or substance use 

disorder benefits, as affecting the terms and conditions of the plan or coverage relating to such 

benefits under the plan or coverage, except as provided in subsection (a)” (emphasis added). 

This means that the only terms and conditions that the MHPAEA applies to are financial 

requirements, treatment limitations, out-of-network availability, and availability of plan 

information. The location of this provision in the law was purposeful and was specifically 

placed where it was so that the ability to manage the benefit falls outside of the scope of the 

parity requirement. This interpretation allows plans and health insurance issuers to continue 

managing mental health and substance use disorder benefits to keep costs down and ensure 

quality of care. Further, in recognition of the very real differences between the two classes of 

benefits, plans and health insurance issuers need not necessarily manage mental health and 

substance use disorder benefits in the same way as the medical and surgical benefits are 

managed. 

Management of the benefit is critical in keeping down the cost of the parity requirement, and the 

Congressional Budget Office (CBO) took into account the use of managed care arrangements in 

their analysis of the MHPAEA. Utilization management and utilization review are hallmarks of 

the managed care approach to health benefit plans. Without the ability to uniquely manage the 

mental health and substance use disorder benefit costs using other plan terms and conditions that 

are not addressed by the MHPAEA, costs will increase substantially over the estimates done by 

the CBO. (See our response to A(i) above for additional discussion on this issue). 

In addition, mental health and substance use disorder diagnoses and courses of treatment are not 

as clear and objectively defined as most medical and surgical diagnoses. Whereas medical and 

surgical services have numerous tests and lab analyses to diagnose an illness or condition and 

then determine the subsequent appropriate course of treatment and the successful resolution of 

the illness/condition, mental health and substance use disorder care does not always have similar 

concrete biological markers to illuminate the diagnosis and treatment planning process in such an 

objective fashion. Also, most medical and surgical episodes of care are short and treatment end 

points are specific. Treatment for a broken arm or an ear infection is clearly defined and both the 

patient and the provider know if the treatment worked. In contrast, mental health and substance 

use disorder treatment can continue for much longer periods of time and there aren’t always 

bright-line indicators for the termination of therapy. Unlike the predominant cases of 

substantially all medical and surgical treatment, there are no specific end points to some mental 
10

health and substance use disorder treatments and furthermore these treatments are variably 

defined by patient self-reporting of functionality or observable, though subjective, elimination of 

symptoms. As a result, mental health and substance use disorder treatment requires a different 

management strategy that is extremely case- and provider-specific and that infuses reviews 

against practice standards, outcomes management, concurrent and retrospective 

reviews/consultations during the course of the treatment and/or treatment record reviews to 

ensure the quality and efficacy of the treatment, most of which are not widely employed with 

respect to medical and surgical treatment. 

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

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

different management strategies for medical and surgical benefits as opposed to mental health 

and substance use disorder benefits. For example, the Department of Defense Tricare program 

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

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

number. Tricare does not uniformly apply the same requirements across medical and surgical 

services. Additionally the Office of Personnel Management (OPM) has recognized, in FEHBP’s 

implementation of the MHPAEA (FEHBP Program Carrier Letter No. 2009-08; April 20, 2009; 

page 5), that “plans may manage care through referrals, prior authorization, treatment plans, precertification of inpatient services, concurrent review, discharge planning, case management, 

retrospective review, and disease management programs.” 

Accordingly, we believe the regulations should clarify and reinforce that the MHPAEA does not 

require parity in all aspects of plan terms and conditions, just those elements specifically 

addressed in MHPAEA – namely financial requirements, treatment limitations, out-of-network 

coverage and availability of plan information. 

 (c) Definition Clarification: “Predominant” & “Substantially All”:

The MHPAEA requires that the financial requirements applicable to any mental health or 

substance use disorder benefits provided by the plan must be no more restrictive than the 

“predominant” financial requirements applied to “substantially all” medical and surgical benefits 

covered by the plan. The MHPAEA goes on to state that the “predominant” financial 

requirement means “the most common or frequent of such type" of financial requirement. 

Therefore, the MHPAEA could be interpreted to require that each type of financial requirement 

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

benefits can only be a single amount across the board, regardless of the mental health specialty 

or level of care involved. 

Additionally, that single financial requirement amount must be compared for parity purposes to 

the most common financial requirement (i.e., deductible, copayment, and coinsurance) from the 

entire scope of medical and surgical benefits of the plan combined, due to the use of the term 

“substantially all.” This single “across-the-board” method is not how financial requirements are 

currently applied to mental health or substance use disorder benefits (as discussed above in our 

response to B.1.) , and would necessitate a significant change to the current practices of plans. 

This approach fails to take into account the fact that plans apply varying dollar amounts within 

each type of financial requirement (i.e., deductible, copayment, and coinsurance) for medical and 

surgical benefits in order to reflect the medical specialty, level of care, and cost of care involved. 

The MHPAEA could be interpreted to prohibit the health plan from doing likewise for mental 
11

health or substance use disorder benefits, which is a radical departure from accepted plan design 

and administration practice and would create a striking and vast negative impact on health care 

costs for plans and plan participants. 

To illustrate this point using one type of financial requirement: medical and surgical benefits 

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

example, an office visit to the primary care physician (PCP) has a $15 copayment, a visit to a 

cardiologist has a specialty copayment of $35, a $100 copayment is applied to an emergency 

room visit, and a $250 copayment is assessed per admission for inpatient hospital care. Higher 

levels of care also typically have a coinsurance component to them. Similarly, health plans 

currently apply varying copayment amounts for mental health or substance use disorder benefits 

as well, depending on the type of service or level of care. However, the MHPAEA could be 

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

health or substance use disorder benefits, regardless of the type of service or level of care 

involved. Further, the language of the MHPAEA requires that the financial requirement amount 

must be compared to the “predominant” financial requirement for “substantially all” medical and 

surgical benefits. Without further guidance and clarification from the regulations, this could 

result in the plan being left to collect an inpatient psychiatric admission copayment of only $15 

and no co-insurance, since PCP visits are arguably the most “predominant” service utilized under 

medical and surgical benefits and therefore the copayment for PCP visits will be the 

“predominant” financial requirement. This result would increase health plan costs substantially 

and create significant disparity between medical and surgical benefits and mental health and 

substance use disorder benefits. 

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

do not believe that the intent of the MHPAEA was to eliminate the plan’s ability to impose 

varying copayment and coinsurance and deductible amounts based on the level of care provided. 

Similarly, the term “substantially all” requires clarification. 

We believe that the intent of the MHPAEA was for financial requirements applicable to mental 

health or substance use disorder benefits provided by the health plan to be no more restrictive 

than the “predominant” financial requirements applied to similar levels of care for the medical 

and surgical benefits covered by the plan. This interpretation permits each type of mental health 

or substance use disorder benefit to be compared to its medical and surgical benefit counterpart 

for purposes of determining the applicable financial requirement and ensuring compliance with 

the MHPAEA. 

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

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

similar outpatient medical and surgical benefits. Inpatient mental health or substance use 

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

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

This same methodology would apply to other levels of care as appropriate. Accordingly we urge 

you to clarify this matter in the final regulations in a manner that supports this intended 

interpretation and states that for purposes of parity compliance the “predominant” requirement be 

the most common or frequent type of such requirement with respect to the similar coverage 

within the class of benefits, e.g. comparing inpatient mental health and substance use disorder 

requirements to similar or comparable inpatient medical and surgical requirements. The term 
12

“substantially all” should likewise be defined with respect to similar coverage within the class of 

benefits.

(d) Definition Clarification: “Financial Requirements” & “Cost-Sharing 

Requirements”:

The MHPAEA requires, in Section 512(a) (1) that the “...financial requirements applicable to 

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

predominant financial requirements applied to substantially all medical and surgical benefits 

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

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

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

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

of “cost sharing requirements.” The language of the section, as currently written, cannot be 

fully and clearly interpreted and applied absent clarifying regulations specifically defining “costsharing requirements.” 

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

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

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

sharing requirements” is complimentary to the existing defined term “financial requirements” 

since there does not appear to be anything identified as a cost sharing requirement that is not 

already listed in the definition of “financial requirement” provided in the MHPAEA. 

Accordingly, the regulations should clarify that the term “cost sharing requirements” should be 

defined in a manner complimentary to the definition of “financial requirements”, that is as 

follows: “The term ‘cost sharing requirement’ includes deductibles, copayments, coinsurance 

and out-of-pocket expense requirements.” 

 (e) Definition Clarification: “Treatment Limitation”: 

The definition of the term “treatment limitation” contains unduly open-ended and ambiguous 

language. In contrast to the definition of “financial requirement” which lists those specific plan 

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

definition of “treatment limitation” contains the vague and unclear phrase “or other similar limits 

on the scope or duration of treatment.” 

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

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

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

build in terms of providing a clear unambiguous definition of those plan design elements which 

constitute “treatment limitations” which must comply with the parity requirements of the 

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

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

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

the purpose of the MHPAEA must have some temporal or durational aspect similar to the 

specific enumerated treatment limitations which the MHPAEA specifically lists in the definition 

of “treatment limitation,” such as number of visits or days of treatment. 
13

The regulations should clarify that the term “other similar limits on the scope or duration of 

treatment” includes only those elements of a plan design which limit the treatment in terms of 

time, frequency or duration. As previously stated, the only addition we can think of that would 

be a “similar limit on the scope or duration of treatment" is episodes of treatment and we suggest 

that this category be added to the list of treatment limitations. 

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

support inclusion of, items such as evidence based treatments as being a “similar limit on the 

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

on the number of visits or days of coverage. Also, plans and health insurance issuers do not 

require coverage of all evidence-based treatments for medical and surgical benefits. This is 

another provision that could result in increased costs if the language of the MHPAEA is 

interpreted to go against the clear intent of the law and require coverage of all evidence-based 

treatments. 

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

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

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

that would be a “similar limit on the scope or duration of treatment" is episodes of treatment. 

 (f) Implementation & Enforcement:

MHPAEA stipulates that regulations will be promulgated by October 3, 2009; however, the 

guidance contained within such regulations will not be timely enough for many plans with an 

implementation date of January 1, 2010. Most plans and health insurance issuers make plan 

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

as well as the enrollment and implementation processes can occur efficiently and seamlessly. For 

example, it is common for plans to finalize plan decisions as early as 6 to 8 months prior to the 

beginning of the plan year. Realistically, regulations promulgated even now, let alone by 

October 3, 2009, will be too late to provide guidance for plans (particularly those with a January 

1, 2010 compliance effective date) to incorporate into plan designs and plan disclosure materials 

necessary for plan participants to make informed plan enrollment choices. 

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

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

being able to review and implement the upcoming regulations at the time of filing the benefit 

plan, then the plan should be exempt from any enforcement action and monetary penalties if it is 

later determined that the plan is not fully compliant with the parity law based on the regulations. 

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

MHPAEA should not be required to be implemented in mid-year but should be deferred until the 

next plan year. Otherwise, changes to the plan would be onerous, costly, and confusing for plan 

participants; furthermore, state regulatory agencies responsible for review and approval of health 

insurance coverage do not have the capacity to rapidly re-review and approve plans in mid-year. 

This would be similar to allowances made in the effective date, implementation and enforcement 

of other federal regulations such as the privacy regulations promulgated under the Health 

Insurance Portability & Accountability Act (HIPAA). 
14

 (g) Guidance on Preemption of State Laws:

We would request that the regulations provide clarification with respect to the relationship 

between state and federal laws with regard to parity. There are state-specific mandates regarding 

the treatment of mental health and substance use disorder problems (e.g., state mandates 

regarding length of stay and dollar caps) and it is not clear how these mandates relate to the 

federal parity law and whether such provisions may or may not be preempted by the MHPAEA. 

We do know that the intent of the parity law was to not preempt state coverage mandates. 

Specifically we would request: (1) further clarification and definition of the pre-emption 

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

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

interactions with the MHPAEA. 

 (h) Application of the MHPAEA to Particular Types of Plans:

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

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

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

apply to Medicaid Managed Care plans. 

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

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

coverage. 

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

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

(EAPs) and we request confirmation of this. The MHPAEA applies to group health plans (or 

health insurance coverage offered in connection with such plans) that provide both medical and 

surgical benefits and mental health or substance use disorder benefits. EAPs do not provide 

medical and surgical benefits and therefore we do not believe that the law applies to them. 

Furthermore, EAPs are most often sold as separate plans and are intended to provide short-term 

mental health and substance use disorder benefits for assessment and evaluation leading to 

appropriate referrals for treatment when necessary. 

3. What information, if any, regarding the criteria for medical necessity determinations made 

under the plan (or coverage) with respect to mental health or substance use disorder benefits 

is currently made available by the plan? 

Criteria for medical necessity determinations are currently made available to plan participants, 

beneficiaries and contracting providers upon request and, in some cases, as a matter of routine 

disclosure without the need for a request by the participant, beneficiary and contracting provider. 

The information disclosed may range, depending on the circumstances, from the specific criteria 

relevant to a plan participant or beneficiary’s particular specific request for benefits to a broad 

disclosure to a contracted provider of a plan of the complete set of medical necessity criteria for 

all benefits under the plan (in order to facilitate communication and understanding of plan and 
15

health insurance carrier protocols with respect to utilization review and care management 

processes). 

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

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

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

disclosure requirements for plan and health issuer benefit plan information including medical 

necessity criteria information. This transparency and the prior development of federal and state 

law disclosure requirements as well as accreditation standards have driven plans and health 

insurance issuers to make the disclosure of medical necessity criteria utilized by plans and health 

insurance coverage purchased by such plans as a routine function of the business of 

administering plan benefits. We fully support the need for such transparency and disclosures. 

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

information in accordance with existing law and current best practices and operating procedures 

prevalent in the health care industry as noted above. For example, existing federal regulations 

under ERISA require that a plan (including insurance coverage purchased in connection with a 

plan) provide the plan’s medical necessity criteria in the event that such criteria are utilized in the 

review and determination of a claim for benefits under the plan by a claimant – who can be a 

participant, beneficiary or contracted provider among others. The relevant provisions are 

included in the Department of Labor's claims procedure regulations at 29 CFR 2560.503-1 et 

seq. Specifically, the regulations require that a plan provide a participant, beneficiary or 

representative (often the provider) with both the specific provision of a plan relied upon in a 

benefit determination (see 29 CFR 2560.503-1(g)(1)(ii)) as well as requiring disclosure of any 

internal rule, guideline, protocol or similar criterion (see 29 CFR 2560.503-1(g)(1)(v)(A)). Thus 

plans and issuers have routinely provided to participants, beneficiaries and contracted providers 

the criteria utilized in making benefit determinations under the plan or insurance coverage. 

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

both the narrow context of a utilization review denial of a request for benefits (similar to the 

federal ERISA requirement noted above) or in a broader context related to disclosure of plan 

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

medical necessity criteria used in making a specific determination by a plan or health insurance 

issuer directly or through their utilization review agent (see 28 TAC 10.102(c)(3)). With respect 

to broad disclosure, California law, for example, requires disclosure of medical necessity criteria 

utilized by an insurer to the public upon request (see Calif. Ins. Code 10123.135(f)(2)(E)). 

Currently health insurance carriers (including both insurers and managed care entities such as 

health maintenance organizations) who are accredited by organizations such as the National 

Committee on Quality Assurance (NCQA) or URAC (which is also known as the American 

Accreditation HealthCare Commission, Inc.) are also subject to this requirement as a matter of 

accrediting standards. Specifically, NCQA standards UM 2 and UM 7A require the disclosure 

of medical necessity criteria to participants and beneficiaries (UM 7A) and practitioners (UM 2). 

URAC standard HUM 4 also addresses a disclosure requirement for utilization management 

requirements and procedures including medical necessity criteria. 
16

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

As discussed both below and in the response to the first part of Question 3, above, this 

information is currently provided to those individual specified in federal and state law as well as 

by accreditation requirements. 

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

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

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

the MHPAEA requires that the criteria be disclosed “in accordance with regulations to any 

current or potential participant, beneficiary, or contracting provider upon request.” (29 U.S.C. 

1185a as amended by the MHPAEA). 

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

disclosures be made in “accordance with regulations.” The language of the MHPAEA does not 

specify which regulations but as noted above, there are both federal and state disclosure 

requirements codified in existing regulations under ERISA and state law which are already in 

force and in practice by plans and health insurance issuers. 

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

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

concise language to codify what and to whom such disclosures must be made. This establishes a 

consistent “floor” of disclosure requirements that has already developed in practice due to 

existing state and federal regulations. 

These existing regulations specify plan administrators and health insurance issuers must make 

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

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

specifically noting that providers can be authorized representatives of claimants. (See 29 CFR 

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

whom plans and health issuers must provide disclosure of medical criteria – from the narrower 

requirement to notify and disclose to the beneficiary and the provider in Texas law to the broader 

member of the “public” requirement of California law (both of which are noted above). The 

MHPAEA requirement in this regard is clear – the disclosure must be provided to any current or 

potential participants, beneficiaries and contracted providers. 

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

communication of this information? 

Yes. The industry standards and best practices are an outgrowth of the combined market-driven 

need for transparency and existing federal, state and accreditation requirements for disclosure. 

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

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

insurance issuer has licensed, from a third-party, medical necessity criteria which are not the 

property of the plan or health insurance issuer. In the ordinary course of business, a plan or 

health insurance issuer may not further disclose or distribute such criteria without potentially 

infringing upon the intellectual property rights of the third-party who owns the criteria and/or 
17

violating the terms or provisions of a licensing agreement for the medical necessity criteria 

obtained from the third-party. 

In order to comply with existing federal and state disclosure requirements currently plans and 

health insurance issuers provide disclosure of a summary of the criteria as well as the source of 

the criteria without providing the actual medical necessity criteria so that they can comply with 

disclosure requirements but not be placed in violation of intellectual property rights or licensing 

agreement restrictions. This practice is necessary to meet disclosure requirements without 

violation of other legal requirements with respect to the content and ownership of these criteria. 

We believe this practice satisfies the MHPAEA requirement that a plan administrator or health 

insurance issuer “make available” the information and any regulations promulgated with respect 

to this requirement of the MHPAEA should reflect this practice as meeting the disclosure 

requirements for the medical necessity criteria under the MHPAEA language. 

4. What information, if any, regarding the reasons for any denial under the plan (or coverage) 

of reimbursement or payment for services with respect to mental health or substance use 

disorder benefits is currently made available by the plan? 

Currently, pursuant to federal and state laws as well as accreditation standards, plans and health 

insurance issuers MUST provide the specific reason for any denial of a claim for benefits under 

the plan – including a denial of reimbursement or payment for services with respect to mental 

health or substance use disorder benefits. 

The provisions of the MHPAEA require that: “The reason for any denial under the plan (or 

coverage) of reimbursement or payment for services with respect to mental health or substance 

use disorder benefits in the case of any participant or beneficiary shall, upon request or as 

otherwise required, be made available by the plan administrator (or the health insurance issuer 

offering such coverage) to the participant or beneficiary in accordance with regulations.” Plans 

and health insurance issuers currently comply with this and other, broader disclosure 

requirements under the existing federal ERISA claims regulations and state laws and 

accreditation standards which in many cases apply more broadly to any claim for benefits as 

opposed to simply requests for reimbursement or payment for services as specified in the 

MHPAEA. 

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

The information is typically made available to the individual, or their authorized representative, 

as well as the provider involved in the claim for benefits or payment. For example, the ERISA 

claims regulations require that the notification to a claimant – which may include a plan 

participant or beneficiary – be a written notice of a claim determination and must include the 

specific reason or reasons for an adverse determination. (See 29 CFR 2560.503-1(g)(1)(i)). 

In addition, there are state laws related to claims and utilization management which contain 

similar requirements. For example, Alabama law requires the issuance of a written notice issued 

to a provider for a retroactive denial of a claim, including the specific reason for the denial. (See 

Code of Ala. Sec. 27-1-17 (g)). This is one example among several different state laws which 

apply to claim and benefit denial notices to patients, beneficiaries and providers. 
18

In addition, both NCQA and URAC accreditation standards explicitly require disclosure of the 

specific reason for a denial of benefits in writing to the patient and provider. NCQA utilization 

management standard UM 7 C with respect to notices of denials requires that the accredited 

organization provide to members and members’ treating provider a written notice of denial 

which contains the “specific reasons for the denial, in easily understandable language.” (See 

NCQA 2008 Utilization Management Standards). URAC also requires that the written 

notification of a non-certification decision include the principal reasons for the determination and 

requires that the principal reason must not be non-specific and be provided to the patient and 

attending physician or other ordering provider or facility rendering the services at issue. (See 

URAC Health Utilization Management Standards Version 6.0 – Standard HUM – 22). 

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

communication of this information? 

As noted above, the current industry standards and best practices are defined by federal and state 

law requirements as well as accreditation standards. The MHPAEA merely clarifies that these 

general practices and standards MUST be applied to any denial of reimbursement or payment for 

services with respect to mental health or substance use disorder benefits. 

Again, as with the medical necessity criteria disclosure requirements discussed in question B3 

above, we presume Congress did not intend to disrupt or disturb existing specific disclosure 

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

concise language to codify what and to whom such disclosures must be made. This establishes a 

consistent “floor” of disclosure requirements that has already developed in practice due to 

existing state and federal regulations. We believe these practices satisfy the MHPAEA 

requirement that a plan administrator or health insurance issuer “make available” the specific 

reason for a denial of reimbursement or payment for services and any regulations promulgated 

with respect to this requirement of the MHPAEA should reflect that these practices meet the 

disclosure requirements under the MHPAEA for the specific rationale for denial of any 

reimbursement or payment of services. 

5. To gather more information on the scope of out-of-network coverage, the Departments are 

interested in finding out whether plans currently provide out-of-network coverage for mental 

health and substance use disorder benefits. If so, how is such coverage the same as or 

different than out-of-network coverage provided for medical and surgical benefits? 

Plans and health insurance issuers currently vary in the offering of out-of-network benefits for 

treatment of mental health and substance use disorders. Typically, the coverage for out-ofnetwork benefits varies between the two classes of benefits – medical and surgical benefits on 

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

Plans and health insurance issuers classify and apply financial requirements and treatment 

limitations which are applicable to mental health and substance use disorder benefits in the same 

fashion as they do for in-network benefits. That is, plans vary coverage within the context of 

out-of-network benefits based on the type of coverage in terms of dividing inpatient and 

outpatient benefits. 
19

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

requirements of the MHPAEA will focus on the “predominant” financial requirements and 

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

plan (or coverage)” with respect to similar coverage (see discussion in response to B.1 and B.2. 

above) meaning the plan or health insurance issuer will ensure that for out-of-network benefits, 

just as with in-network benefits, inpatient coverage financial requirements and treatment 

limitations for mental health and substance use disorder would be aligned with the predominant 

financial requirements and treatment limitations on inpatient treatment for medical and surgical 

benefits and likewise for outpatient coverage financial requirements and treatment limitations. 

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

In the case that a plan chooses to seek a cost exemption there needs to be additional guidance on: 

what the process is for filing an exemption, what forms and data are needed, what actuarial 

certification and other information must be documented and filed, and what the standards are for 

the review and response to such filings. 

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

and participants and beneficiaries regarding a plan's or issuer's election to implement the cost 

exemption? 

 Yes, we believe that model notices provided by the agencies would be helpful. 

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

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

2 The Commonwealth Fund Biennial Health Survey 2005; LoSasso, A.T., & Lyons, J.S. (2002). The effects of copayments 

on substance abuse treatment expenditures and treatment reoccurrence. Psychiatric Services, 53(12), 1605-1611; Ringel, 

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

groups: Results from Healthcare for Communities. The Journal of Mental Health Policy and Economics, 4, 141-150; Sethi, 

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

Services publication. 

3

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

25(3), 623-634; Branstrom, R.B., & Sturm, R. (2002). An early case study of the effects of California’s mental health parity 

legislation. Psychiatric Services, 53(10), 1215; Goldman, H.H., Frank, R.G., Burnam, A., et al (2006). Behavioral health 

insurance parity for federal employees. New England Journal of Medicine, 354(13), 1378-1386; Melek, S.P., Pyenson, B.S., 

& Fitch, K.V. An actuarial analysis of the impact of HR 1424: “The Paul Wellstone Mental Health and Addiction Equity 

Act of 2007.” Milliman, Inc. July 5, 2007; Rosenbach, M., Lake, T., Young, C., et al (2003). Effects of the Vermont Mental 

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