May, 28, 2009

 

Advocates for Human Potential (AHP), Inc., is pleased to submit the attached package of 

materials in response to the Request for Information regarding the Paul Wellstone and Pete 

Domenici Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008. AHP is a national 

technical assistance and consulting firm with expertise in private insurance markets and public 

mental health and substance abuse treatment. Our experience in both the private and public 

sectors gives us a unique vantage point from which to assess the impact MHPAEA will have on 

payers, health plans, providers, mental health consumers, and family members. The following 

documents are attached: 

• Our response to the Request for Information. We provide detailed answers to the specific 

questions included in the Federal Register notice of April 28, 2009. In particular, we outline 

the impact MHPAEA will have on policies, procedures, practices, and costs. We also raise 

questions and concerns designed to help guide development of the Act’s final regulations. 

• An Environmental Scan. We reviewed parity research, examined Federal and State 

experiences, and conducted key informant interviews with leaders in the private and public 

sectors. Representatives of the private and public sectors have varying viewpoints on the 

challenges and opportunities that come with implementation of MHPAEA. Nonetheless, 

private and public sector interests are multifaceted and overlap in numerous areas. Their 

perspectives are reflected in this document. 

• Two white papers. Each provides a situational analysis and highlights the impact of parity 

for two key stakeholder groups: 

o Mental Health and Addiction Providers’ Impact Statement & Call to Action outlines 

the impact of parity for behavioral health providers in four critical areas—policy, 

people, process, and information technology—across three organizational 

divisions—administration, clinical operations, and executive teams. 

o Health Plan & Healthcare Purchasers’ Strategic Guide to Implementation details the 

implementation issues payers can expect, particularly those new to mental health 

and substance use disorder treatment. It also offers a roadmap to help purchasers 

navigate the path to full implementation of MHPAEA.

We offer these documents to help Federal regulators in the Departments of Labor, Treasury, 

and Health and Human Services develop clear and precise regulatory guidance that will smooth 

the transition to full parity for all stakeholders. We are pleased to note that passage of MHPAEA 

signals growing recognition of the importance of mental health to overall health and wellbeing, 

and we welcome the opportunity to help promote equitable health care coverage for all 

Americans. Please feel free to contact us if we can help further in this important endeavor. 

Contact: Neal Shifman, President and CEO 

 Nshifman@ahpnet.com 

 Direct Line: 978-261-1414 
AHP Response to Request for Information ■ Behavioral Health Parity 

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

May 28, 2009 Page 1 of 9 

Request for Information Regarding the Paul Wellstone and Pete Domenici Mental 

Health Parity and Addiction Equity Act of 2008 

Submitted in response to a notice in the Federal Register, 74(80), April 28, 2009, 19155-19158 

Advocates for Human Potential, Inc., (AHP) is a national technical assistance, social research 

and consulting firm with extensive experience in private insurance markets and public mental 

health and substance abuse treatment. 

We offer the following response to the Request for Information regarding the Paul Wellstone and 

Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008. Our 

responses to the questions below represent the expertise of our senior consultants and subject 

matter experts, as well as thought leaders in both the private and public sectors. 

It is clear that representatives of the private and public sectors have varying viewpoints on the 

challenges and opportunities that come with the implementation of MHPAEA. Nonetheless, 

public and private sector interests are multifaceted and overlap in numerous areas. The 

environmental scan that accompanies our response addresses the nature of and intersections 

between public and private sector interests—both of which are important to consider as 

regulations are promulgated. We welcome further discussion and would be honored to 

participate in any fashion. 

A. Comments Regarding Economic Analysis, Paperwork Reduction Act, and Regulatory Flexibility 

Act 

i. What policies, procedures, or practices of group health plans and health insurance issuers may be 

impacted by MHPAEA? What direct or indirect costs would result? What direct or indirect benefits 

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

We believe that policies, procedures, and practices will vary by status of the plan relative to 

State-level parity statutes. Plans in States with existing, comprehensive parity will have fewer 

policies, procedures, and practices to modify. Conversely, plans operating in States with lesser 

coverage or third-party administrators serving ERISA groups with lesser coverage will have 

more changes to make. 

Policies, Procedures, and Practices 

MHPAEA will have immediate impact on policies, procedures, and practices noted below. 

Department Impact 

Compliance  Establish benefits and policies and file with State departments of insurance 

 Develop guidelines and regulations regarding patient protection 

Marketing  Communicate new policies to groups and subscribers (certificates of 

coverage, summary plan descriptions) 

Customer Service  Develop subscriber/consumer education and information for mail and 

telephone liaison 

Provider Contracting  Build greater access into provider networks at a time of significant provider 

shortage, particularly prescribers 

 Identify provider resources that address culture, language, gender, and 

special needs 
AHP Response to Request for Information ■ Behavioral Health Parity 

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

May 28, 2009 Page 2 of 9 

Department Impact 

 Develop contracts that reflect modified services based on interpretation of 

the Act and benefits/policies/services 

 Develop reimbursement schedules to reflect changes 

Provider Relations  Manage rollout with effective provider communications, e.g., developing 

responses to need for providers capable of addressing autism, ADHD, and 

serious emotional disturbances 

 Develop provider networks capable of addressing substance use disorders 

if currently covered at much lower levels 

Medical Management  Develop level-of-care (medical necessity review) guidelines based on new 

policies and guidelines for coverage of non-medically but clinically 

necessary services 

 Develop utilization management standard practices 

 Develop policies regarding utilization review 

 Develop standards and practices regarding case management, covered 

services, and the sharing of medical necessity criteria and rationale 

 Develop the guidelines and frameworks for States and insurers to develop 

protocols pertaining to evidence-based practices 

Claims Processing  Establish rules governing covered providers, covered services, service 

levels, duration, frequency, diagnosis, mixed-service claims, and financial 

limits 

 Reconfigure systems 

 Train claims staff 

 Clarify rules and processes related to deductibles 

Finance  Determine “predominant” levels of coverage that will enable the 

identification of a comparison benchmark for mental health/substance 

abuse benefits 

 Determine risk (conduct predictive modeling and actuarial studies) for 

pricing purposes, especially concerning greater levels of coverage for 

conditions such as substance use disorders that may have been covered to 

a far lesser degree prior to MHPAEA 

 Develop approach to allocation of such factors as psychotropic medication 

costs 

IT, Data Analysis, and 

Reporting 

 Reconfigure benefit structures according to new processes and plan 

rules/policies 

 Code new providers, service levels, diagnoses 

 Test systems and validate outcomes 

 Transition operations to new systems 

 Modify electronic data interchange (EDI) protocols to reflect changes 

among external partners 

 Manage for impact of ICD-10 

 Develop new analysis and reporting constructs concerning cost, quality, 

and access and manage any new business reporting requirements 

 Manage separate or integrated deductibles (single, integrated deductibles 

require claims accumulators) 

Carve-Out and Vendor 

Contracting 

 Address financial aspects of carve-out capitation or administrative fees as 

well as assignment of risk 

 Address deductible and claims accumulators across organizational 
AHP Response to Request for Information ■ Behavioral Health Parity 

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

May 28, 2009 Page 3 of 9 

Department Impact 

boundaries where Managed Behavioral Health Organization (MHBO) 

carve-out exists 

 Develop performance expectations and measures 

Costs 

Direct Costs 

Direct costs will reflect market share and the breadth and number of changes plans must make. 

However, a complete and more accurate assessment will take into account non-monetary costs 

and benefits as well as the potential expense of improper or inconsistent implementation. 

Predictions of the overall cost of parity have been drawn from earlier reports of compliance with 

State parity and the Federal Employee Health Benefits Program. These demonstrate a less than 2 

percent increase, including the cost of initial implementation. This figure will vary depending on 

the organization’s current approach to coverage for mental health and substance use disorders. 

Similarly, much will depend on whether or not there is an MBHO carve-out or carve-in vendor 

in place. 

Organizations that are more capable and “ready” today by virtue of expanded coverage or State 

law will experience lower costs. Plans that are starting with less “mature” or “ready” policies, 

procedures, practices, and infrastructure will initially have greater costs. Implementation costs 

will also be higher for plans that have not been able to accurately anticipate the scope of pending 

regulations. 

Direct costs of implementation will be absorbed largely in: 

Manpower dedicated to implementation project management, tactical planning meetings, 

implementation activities, and training 

Public and provider communications campaigns and marketing materials 

Medical management (utilization management), where changes may be required in level-ofcare guidelines and authorization systems 

Development of adequate capacity in provider networks 

Claims processing where reconfiguration of systems and business rules may be required; this 

may be problematic for plans with inflexible legacy systems 

To assess accurately the ongoing expense of providing parity benefits, we believe it will be 

important to establish guidelines around cost analysis. Plans that choose to use this opportunity 

to ascribe the costs of mental health and substance abuse services provided by emergency 

departments, primary care physicians, and pediatricians and/or that ascribe the cost of 

psychotropic medications to mental health/substance abuse benefits will produce inflated cost 

results. We believe that “before and after” cost reporting should be consistent with standards in 

place at present or be transparent in terms of calculating costs prior to and after MHPAEA. 

Indirect Costs 

Given the broad parameters of MHPAEA in its current form, plans may have an incentive to 

pursue the short-term cost savings gained by implementing parity according to the most limited 
AHP Response to Request for Information ■ Behavioral Health Parity 

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

May 28, 2009 Page 4 of 9 

and expedient definition. Although such choices may appear advantageous to purchasers in the 

short-term, the long-term economic impact will be born by both consumers and payers. Market 

forces ultimately will apply pressure on plans that don’t implement parity fully, resulting in reimplementation costs and long-term waste in the name of short-term savings. The failure to 

realize the potential benefits listed below would also represent significant opportunity costs to 

the relevant stakeholder groups. 

Elimination of behavioral health coverage

The potential consequences of dropping behavioral health coverage will impact both insurers and 

consumers. Increased costs will accrue for the insurer/employer as mental health issues manifest 

as medical (and more expensive) issues and are treated in expensive settings like the emergency 

department. Untreated behavioral health issues manifest in a variety of workplace costs to the 

employer, as well. Consumers with chronic medical conditions who lose access to behavioral 

health services may incur higher overall health costs and be more prone to absenteeism, 

presenteeism, and injury. 

An additional risk to coverage exists due to the nature of the cost exemption. Under the rules of 

the MHPAEA as written, it is conceivable that a consumer could lose and regain behavioral 

health coverage in alternating years. The administrative burden a cost exemption would impose 

on plans may be an adequate disincentive. If not, the cost to the consumer with behavioral health 

issues would be severe as their conditions and providers fluctuate between being covered and not 

being covered. 

Management of behavioral health networks

Depending on the manner in which provider networks are managed, there is a risk that 

behavioral health networks will be adversely affected by the availability of out-of-network 

coverage. Without adequate incentives providers may forgo participation in the network. 

Credentialing practices in the behavioral health field are inconsistent at present. Proper 

credentialing and monitoring of network providers is critical to ensure high quality care and costeffectiveness. Both subscribers and employers would bear the cost of inadequate provider 

monitoring. 

In addition, mental health and substance abuse treatment providers are at risk of being 

marginalized by primary care providers already accustomed to working within the confines of 

managed care. This could result in an increasing shift toward the use of medication and away 

from ancillary, effective and cost-effective treatments such as psychotherapy. Primary care and 

behavioral health care specialists should be encouraged to integrate their efforts and should be 

supported in doing so. Primary care providers need to be reimbursed appropriately for behavioral 

health screening, assessment, and referral. 

Benefits 

The benefits of a comprehensive and competent implementation of the MHPAEA will accrue to 

several stakeholder groups. Most of the benefits noted below are theoretical and rely entirely on 

the scope and success of MHPAEA implementation. 
AHP Response to Request for Information ■ Behavioral Health Parity 

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

May 28, 2009 Page 5 of 9 

Stakeholder Group Benefits 

Health Plan Staff/Personnel Health plan employees will benefit from a proper implementation effort that 

includes revised policies, procedures, workflow, forms, system 

reconfiguration, and modified job descriptions (where necessary). 

Thorough implementations include effective training, support, and 

supervision. Well-coordinated and executed policies, practices, and 

business processes produce greater efficiency and an improved overall 

employee/customer experience. 

Plan Subscribers and 

Families

Improved communication, coverage, and access can result in improved 

utilization of appropriate treatment resulting in improved clinical outcomes 

and quality of life. This is particularly true for people suffering from more 

complicated conditions. In some plans, individuals will benefit from 

assistance in the form of population management, disease management, 

and case management. 

Contracting/Participating 

Providers

Mental health, substance abuse, and primary care providers may benefit 

from the opportunity to expand services. Similarly, primary care providers 

and hospitals may benefit from making referrals to specialists, assuming 

there are adequate numbers of specialists. Behavioral health and primary 

care providers may benefit from integration and collaboration on medical 

home models. 

Employers Employers will benefit from improved overall health and functioning of staff 

that avail themselves of treatment services. When mental health and 

substance use disorders are treated properly, employers can expect 

reduced absenteeism, “presenteeism,” accidents, injuries, workplace 

violence, theft, and lower overall health care costs. Individuals with mental 

health and substance use disorders whose care is not coordinated have an 

increased number of claims, particularly if they have co-morbid conditions. 

Shareholders When people with mental health and substance use disorders are 

screened, diagnosed, and treated in a coordinated fashion, using evidencebased practices through effective episodes of care, other health care costs 

such as inappropriate prescription drug costs and inappropriate use of 

emergency rooms will be mitigated. These savings will accrue to agency 

shareholders. 

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? 

We are not aware of any unique costs and benefits for small entities subject to MHPAEA. 

Smaller plans tend to be community rated and do not have the cost of broad administrative and 

operational changes attributed to them. There are, however, costs associated with making 

changes to many different plan designs. Some plans offer a very wide range of choices due to 

market pressures for choice and options. Those plans will be required to make more plan 

document changes and file more plan policies with their State departments of insurance. 

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? 

While it varies depending on State law, the scope of the MHPAEA in 2008 is greater than the 

Mental Health Parity Act of 1996—particularly as it relates to substance use disorders. The 
AHP Response to Request for Information ■ Behavioral Health Parity 

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

May 28, 2009 Page 6 of 9 

reality is that the 2008 Act can result in greater utilization and longer episodes of care for 

substance use disorders and serious emotional disturbances. Paperwork burdens may include: 

Increased demand on customer service (calls and print materials) 

Changes to marketing materials (summary plan descriptions and certificates of coverage) 

Increased need for case management and related “paperwork,” including exchange of health 

information between plans and providers 

Increased claims handling and processing due to increased utilization 

Increased claims accumulation analysis in the event of a single deductible 

Increased utilization management (authorizations and referrals) 

Change in provider contracts and reimbursement schedules 

Change to level-of-care (medical necessity) guidelines, policies, and forms 

Change to member grievance and appeals processes 

The time involved is entirely variable and dependent on processes and systems in place as well 

as volume at each plan. 

B. Comments Regarding Regulatory Guidance 

1. The statute provides that the term ``financial requirement'' includes deductibles, copayments, 

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

limit. The statute further provides that the term ``treatment limitation'' includes limits on the frequency 

of treatment, number of visits, days of coverage, or other similar limits on the scope or duration of 

treatment. 

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

benefits? 

Yes, when they limit subscribers to “one episode per year” and “two episodes per 

lifetime,” for instance. This approach is often taken with substance use disorders and 

residential treatment. 

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

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

This varies tremendously. We recommend data be gathered from plans for this purpose. 

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

There can be and often are. 

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

Yes. 

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

clarifications would be helpful? 

We appreciate this question and the opportunity to provide some very important feedback. Our 

response reflects our own experience and the input we have received from stakeholder groups 

around the country. Explicit and detailed regulatory guidance can ensure that the MHPAEA is 

implemented in accord with the intent of the law. 

The Departments are urged to clarify the following: 
AHP Response to Request for Information ■ Behavioral Health Parity 

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

May 28, 2009 Page 7 of 9 

Dimension/Category Question/Concern 

Policy  How do the Departments envision “predominant” medical/surgical benefits 

being defined? Will there be direction provided to establish a comparison 

benefit in order to arrive at parity or will it be left to State and plan 

discretion? 

 Do the Departments anticipate any modifications to the Parity Act or the 

October regulations as a consequence of health care reform? 

 Will the conflict between the need for integrated care and the privacy 

standards of HIPAA and CFR 42 be addressed? 

 Will the Departments clarify whether someone enrolled in a plan subject to 

parity can also qualify for public benefits? 

Public Health/Social 

Service 

 Will court-ordered treatment be covered or left to State discretion? Please 

answer with respect to substance use disorders (following a DUI, for 

instance), post-suicide attempt, and anger management treatment following 

domestic violence episodes. 

 Will State hospital stays be a covered service or left to State discretion? 

 Will involuntary “holds” be covered? 

Diagnostic  Will there be a list of covered diagnoses “at a minimum” or will diagnoses 

be left to State discretion? 

 Are serious emotional disturbances covered by the MHPAEA? 

 Is autism covered or left to State discretion? 

 Is ADHD covered or left to State discretion? 

Service Level  Will the Departments mandate any evidence-based practices? 

 What kinds of services will constitute the “minimum” for substance use 

disorders treatment? Should plans be required to provide access and 

coverage for medical detoxification, inpatient treatment, residential, 

intensive outpatient programs, and recovery support services? 

 Should prevention services be mandated? 

 Will “devices” be covered? 

 Should there be a mandate to cover telemedicine and telehealth for people 

living in medically underserved areas? 

 Will neurological services be covered or left to State discretion? 

 Will case management be a covered service or left to State discretion? 

Health Care Providers  Will there be any access standards for providers and/or services? 

 What kinds of access should plans provide their members to qualified 

professionals and services such as child psychiatrists for serious emotional 

disturbances? 

Primary Care  Will primary care providers (PCPs) be permitted to provide more than one 

service/session per day in order to be reimbursed for the provision of 

integrated care? 

 With the advent of integrated care models and the existing prevalence of 

behavioral health services provided by PCPs, there may be a tendency for 

plans and payers to provide adequate access to PCPs and inadequate 

access to specialists. Will the Departments be providing any guidance to 

States/plans with respect to discriminating between care provided by a 

primary care physician and/or specialist (e.g., psychiatrist, psychologist, 

master’s level counselor)? 

Claims Processing &  Will the regulations mandate a single deductible for all health care services 
AHP Response to Request for Information ■ Behavioral Health Parity 

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

May 28, 2009 Page 8 of 9 

Dimension/Category Question/Concern 

Deductible or will plans be allowed to develop a separate deductible for mental health 

and substance use disorders? 

 How should “mixed claims” (involving medical and mental health/substance 

abuse services) from general hospitals and emergency rooms, for example, 

be handled by plans and MBHO vendors with exclusive risk arrangements? 

Reporting  Do the Departments envision mandates for health information/data 

concerning quality, cost, encounter, episode, clinical outcomes, access, 

and patient satisfaction? 

Technical Assistance 

and Research 

 Will the Departments be providing any technical assistance for States, 

plans, providers, and consumers? 

 Will the Departments be providing any kind of State/Federal law gap 

analysis? 

 What treatment interventions work most effectively with which specific 

population groups (age, gender, culture, SCS) 

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

plan (or coverage) with respect to mental health or substance use disorder benefits is currently made 

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

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

communication of this information? 

Standards vary from State to State and plan to plan but, for the most part, accrediting agencies 

and State regulations (concerning Member Rights and Responsibilities, for instance) provide 

consumers with the right to see level-of-care and medical necessity determination guidelines that 

form the basis for medical review and decision-making. 

Medical necessity determinations should be properly supported by qualified, licensed staff; 

URAC and NCQA accreditation; and scientifically validated, evidence-based guidelines and 

decision support systems. 

Failure to cover certain specialists, services, and levels of care for children with serious 

emotional disturbances and adults with serious mental illnesses and substance use disorders will 

result in people being undertreated at inappropriate levels of care by inappropriate providers. 

Plans that do not offer adequate services may inadvertently contribute to economic burdens and 

social ills such as incarceration, domestic violence, school drop-outs, unemployment and 

underemployment, homelessness, and suicide. 

This is an area where Federal and State guidance and oversight must be managed closely. 

Otherwise, the benefits of the Act will be lost and people who are seriously ill will continue to 

suffer from discrimination, poor quality of life, and unacceptable mortality rates. 

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

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

benefits is currently made available by the plan? To whom is this information currently made available 

and how is it made available? Are there industry standards or best practices with respect to this 

information and communication of this information? 

Member Rights and Responsibilities should govern this issue as well. 
AHP Response to Request for Information ■ Behavioral Health Parity 

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

May 28, 2009 Page 9 of 9 

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-ofnetwork coverage provided for medical and surgical benefits? 

In our experience, some but not all plans provide out-of-network coverage at lower rates of 

coverage. This is particularly true when there is a carve-out in place. Managed Behavioral Health 

Organizations often do not provide out-of-network coverage. The advent of out-of-network 

coverage will cause all plans to reexamine their policies and practices. 

Out-of-network coverage may have the unintended consequence of attracting providers to out-ofnetwork status. Some providers may find it more appealing to operate on an out-of-network 

basis, obviating participation in contract negotiations, data exchange, quality assurance 

initiatives, and some utilization management practices. Some providers may find this out-ofnetwork status financially rewarding but consumers will not. Consumers can expect greater outof-pocket costs associated with out-of-network coverage. 

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

notices be helpful to facilitate disclosure to Federal agencies, State agencies, and participants and 

beneficiaries regarding a plan's or issuer's election to implement the cost exemption? 

We recommend that the Departments provide guidance in the way costs are calculated to avoid 

an “apples to oranges” cost comparison. The greatest risk for this involves plans changing their 

cost reporting approach to now include emergency department, primary care physician, and 

pharmacy costs in the total mental health/substance abuse cost analysis. Most plans did not do so 

prior to MHPAEA and should be managed closely to discourage this practice unless they are 

doing so transparently. 

We also recommend adequate scrutiny and oversight of MBHO carve-out cost reporting where 

data most often reside in separate and distinct databases. These arrangements often feature a 

wide variety of administrative cost structures, risk arrangements, claims processing, and 

performance incentives, and they will require transparency and accountability. 
© May 2009 Page i 

490-B Boston Post Road

Sudbury, MA 01776-3365 

Phone: 978.443.0055

Fax: 978.443.4722

www.ahpnet.com 

Paul Wellstone and Pete Domenici 

Mental Health Parity and Addiction Equity Act of 

2008

An Environmental Scan of the Impact of Parity 

on the Public and Private Sectors 

Patrick Gauthier, Senior Consultant 

Kathryn Alexandrei, Senior Consultant 

Beth Fraster, Senior Program Associate 

Susan Milstrey Wells, Senior Writer 

Neal Shifman, President and CEO 

For more information: 

Neal Shifman, President and CEO 

Advocates for Human Potential, Inc. 

(978) 443-0055 

nshifman@ahpnet.com
An Environmental Scan of the Impact of Parity 

on the Public and Private Sectors

© May 2009 Page 1 

Background 

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

2008 (2009 Parity Act) signals the “beginning of a new era, with new challenges” (Shern, Beronio, and 

Harbin, 2009). Private and public stakeholders in the mental health community are preparing for this 

important transition, which is taking place in the context of an uncertain economy and national health

care reform. To inform the development of regulations governing the 2008 Parity Act, Advocates for 

Human Potential (AHP), Inc., has prepared the following environmental scan based on a review of 

research, Federal and State experiences with parity, and key informant interviews with leaders in the 

private and public sectors. AHP is a national technical assistance, social research, and consulting firm 

with expertise in private insurance markets and public mental health and substance abuse treatment. 

Preliminary Review of Available Data 

Background and History 

Historically, insurance coverage for mental illnesses and substance use disorders (collectively referred to 

as behavioral health conditions) has been much more restrictive than that for any other illnesses. 

Employer-sponsored health plans typically have imposed higher out-of-pocket costs and limited both 

annual and lifetime visits and lengths of stay for treatment of behavioral health conditions. Though 

mental health advocates have long argued for parity of coverage, philosophical and financial factors 

have contributed to an ongoing dichotomy: 

 Some prominent 17 century European philosophers—notably France’s Rene Descartes—viewed the 

“mind” as completely separate from the “body,” a belief that underlies much of Western medicine. 

As Shern et al. (2009) note, “These false distinctions discourage people from seeking help and 

encourage health care payers and plans to limit coverage.” 

 Mental illnesses were believed to be lifelong conditions with no hope for recovery. 

 Insurers and health plans believed that offering coverage for behavioral health conditions on par 

with that for other illnesses would drive up the cost of health care; early research confirmed their 

assumptions (see below). 

 Some opponents of parity argued that insurance regulation is a State, not a Federal, function. 

Likewise, several factors influenced a push for parity at both the State and Federal level: 

 A landmark 1999 report by the U.S. Surgeon General reported that people with mental illnesses can 

and do recover and that effective treatment is available (U.S. Department of Health and Human 

Services [HHS], 1999). 

 With research supporting differential coverage, mental health benefits shrank in relation to benefits 

for other conditions during the late 1980s and early 1990s (Barry, Frank, and McGuire, 2006). 

 Evaluations of parity at both the State and Federal level revealed little impact on overall health care 

costs (see below). 

 Research revealed that people with serious mental illnesses die, on average, 25 years earlier than 

the general population. They die from treatable medical conditions caused by modifiable risk 

factors, including smoking, obesity, substance abuse, and inadequate access to medical care (Parks, 

Svendsen, Singer, and Foti, 2006). 

Parity at the State level 

Most legislative action on parity has occurred at the State level. The majority of activity in the 1970s 

and 1980s related to substance use disorders, specifically alcoholism. The first parity statues requiring 

equal insurance coverage for mental and physical illnesses were enacted in 1991 in North Carolina and 

Texas. Today, 46 States have some type of insurance law that falls into one of the following three 
An Environmental Scan of the Impact of Parity 

on the Public and Private Sectors

© May 2009 2

categories (National Conference of State Legislatures [NCSL], 2009; Robinson, Connolly, Witter, and 

Magaña, 2007): 

 Mandated offering: Coverage that requires insurers to provide equal mental and physical health 

benefits if the insurers choose to offer coverage for behavioral health conditions. Mandated offering 

laws also may require that insured individuals have the option of coverage for behavioral health 

conditions, which they may accept or decline. 

 Mandated benefits: Coverage that requires insurance for specific behavioral health conditions. 

These laws are not considered full parity because they allow discrepancies in the level of benefits 

provided for behavioral health and other conditions. 

 Parity: Coverage that requires insurance for behavioral health conditions equal to insurance 

provided for physical health conditions. Some States, such as Vermont, provide coverage for all 

behavioral health conditions, including substance abuse. Others, such as California, limit coverage 

to serious mental illnesses and serious emotional disturbances. 

Beginning in the early part of this decade, some States began to restrict the scope of existing laws, 

reacting in part to concerns that required benefits were increasing health insurance costs. A number of 

States have more than one law pertaining to mental health insurance coverage. Still others have used 

the Mental Health Parity Act of 1996 (see below) as the basis for their laws. As a result, the National 

Conference of State Legislatures notes, “Parity is a patchwork of Federal and State legislation, with all 

the complications that such a structure implies” (Wood, 2005). 

Parity at the Federal level 

Two major developments mark the history of parity at the Federal level. The first relates to the Federal 

Employees Health Benefits (FEHB) Program, which first began offering parity in the late 1960s. 

However, in the mid 1970s, when more flexibility in benefit design was permitted, coverage for 

behavioral health conditions began to erode. From 1980 to 1997, the share of total claims accounted 

for by mental health and substance abuse claims declined from 7.8 percent to 1.9 percent, a trend that

mirrored behavioral health coverage in the larger health care market (HHS, 2004). 

A renewed call for parity by President Bill Clinton resulted in changes to the FEHB Program beginning in 

2001. Covered services include “clinically proven treatment” for mental illnesses and substance use 

conditions listed in the Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition (American 

Psychiatric Association, 1994). Providers are encouraged to manage the care process by developing 

treatment plans, applying medical necessity criteria, employing utilization management methods, and 

creating networks of providers, among other techniques. Parity benefits may be limited to in-network 

providers only (HHS, 2004). 

The second major development at the Federal level was passage in 1996 of the Mental Health Parity Act,

the first Federal parity legislation. Implemented in 1998, this legislation focused on only one aspect of 

the difference in mental health insurance coverage—catastrophic benefits. It prohibited using lifetime 

and annual limits on coverage for mental health care that were different from general medical care 

(HHS, 2004). 

Advocates felt the 1996 Parity Act was a first step in ending discriminatory insurance coverage, but they 

argued it did not go far enough. They noted that parity provisions did not apply to other forms of 

benefit limits, such as per-episode limits on length of stay or visits, copayments, or deductibles and that 

substance abuse was not covered by the legislation. The 2008 Parity Act attempts to correct some of 

the earlier legislation’s shortcomings. 

Research Findings 

There have been two significant waves of research into mental health parity. As Barry et al. (2006) note, 

studies conducted in the early and mid 1990s used actuarial estimates to determine the effect of prices 
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on demand for ambulatory mental health care. They produced widely disparate estimates, ranging from 

a 1 percent to an 11 percent increase in total premiums due to parity, with the Congressional Budget 

Office (CBO) estimating a 4 percent increase. 

The second generation of research in the late 1990s studied parity for mental health coverage in the 

context of managed care. These studies incorporated managed care effects into actuarial models using 

cost data from the FEHB, State parity experiences, the managed behavioral health care industry, and 

private employers. Barry et al. (2006) report, “After updating its estimation methods to incorporate 

managed care effects, the CBO scored comprehensive parity as raising group health insurance premiums 

by an average of 0.9 percent.” An increase of 1 percent or less as a result of implementing parity is a 

fairly consistent finding across the FEHB, State statutes, and private employers. Other findings include: 

 Few, if any, plans leave a program to avoid parity and employers do not drop coverage (HHS, 2004; 

Rosenbach et al., 2003; Sing, Hill, Smolkin, and Heiser, 1998). A recent survey by the Partnership for 

Workplace Mental Health (2009) found that the majority of employers surveyed do not plan to drop 

coverage for mental health or substance abuse treatment. 

 Access to and use of mental health and substance abuse services may increase consistent with longterm trends (HHS, 2004). 

 Health plans are likely to enter into carve-out arrangements to manage care (HHS, 2004). 

 Managed care controls costs; spending on mental health and substance abuse may fall under parity 

in plans not previously subject to managed care controls (Zuvekas, Regier, Rae, Rupp, and Narrow, 

2002; Varmus, 1998). 

 Managed care also may reduce access and use for some services and beneficiaries; parity increases 

offerings while managed care limits usage (Barry et al., 2006; Goldman et al., 2006; Wood, 2005; 

Rosenbach et al., 2003). 

 Costs do not shift from the public to the private sector (Sing and Hill, 2001). 

 Consumers’ out-of-pocket spending may decline substantially (for example, in Vermont, among 

people with serious mental disorders, the proportion of individuals spending more than $1,000 out 

of pocket annually was reduced by more than 50 percent) (HHS, 2004; Rosenbach et al., 2003). 

 Quality of mental health and substance abuse services is unchanged (HHS, 2004). 

 Parity in substance abuse treatment benefits may ease pressure on State budgets by reducing 

health, corrections, and welfare costs and increasing the number of people entering treatment 

(Gillo, Goplerud, and Williams, 2003). 

 Providers and consumers often are unaware of new parity regulations and their impact (HHS, 2004; 

Rosenbach et al., 2003; Lake, Sasser, Young, and Quinn, 2002). 

Lessons Learned 

Evaluations of parity at the State and Federal level reveal some important lessons for those who are 

implementing changes to comply with the 2008 Parity Act. As Lake et al. (2002) note about California’s 

experience, “The results highlight the regulatory complexity of what appears to be a relatively 

straightforward mandate to expand coverage for mental health services.” 

One of the primary conclusions was the need for better communication. In many cases, evaluators 

found limited knowledge of parity regulations among consumers, employers, and providers. In 

California, inadequate communication may have contributed to disruptions in care for consumers during 

a transition to managed behavioral health organizations by some health plans (Lake et al., 2002). 

Vermont stakeholders suggested the need to mount a proactive education campaign during the first 

year of parity implementation (Rosenbach et al., 2003). This may involve assigning a responsible party, 
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assessing information needs, choosing appropriate methods of communication, and determining when 

education efforts should take place (Lake et al., 2002). 

After passage of parity legislation in Oregon, the State Insurance Division held several trainings and

discussion groups to work on transition and implementation with consumer groups and other 

stakeholders. In addition, the Insurance Division hosted multi-stakeholder advisory meetings to seek 

input on the development of administrative rules to help implement the law (State of Oregon, 2009). 

California evaluators noted that communication among health plans, providers, and employers should 

include clarification of critical implementation issues. These include when and how referrals should be 

made for mental health services, which diagnoses are covered, and how cost-sharing and benefit limits 

should be applied to individuals with different diagnoses or at different stages of treatment (Lake et al., 

2002). 

Researchers and evaluators also expressed concerns about cost containment under managed care. 

Barry et al. (2006) note, “it is important to remember that under parity, the traditional incentives to 

avoid enrolling people with high expected costs remain at least as strong as in the past, while the 

mechanisms available to health plans for affecting selection have expanded with managed care.” They 

caution that expanding benefits under parity does not solve the problem of unmet need or ensure use 

of evidence-based practices in mental health care. As Shern et al. (2009) point out, development of 

regulations that ensure a meaningful range of evidence-based interventions, including psychosocial 

services, is a critical implementation task. 

Additional findings include: 

 In California, the implementation of “partial parity” for a limited set of serious mental illnesses and 

serious emotional disturbances created administrative challenges and caused confusion for some 

stakeholders (Lake et al., 2002). Evaluators cautioned that States need to weigh the potential 

administrative costs of covering limited diagnoses, versus the potentially increased health care costs

associated with expanding parity to all mental health diagnoses. 

 Also, in California, evaluators noted that stakeholders should attempt to identify strategies for 

addressing shortages in certain provider specialties or programs viewed as important for meeting 

increased service demand, such as child psychiatry and eating disorder programs (Lake et al., 2002). 

 An evaluation of parity for State employees in Ohio found that the impact of parity is likely to differ 

across health plans depending on the pre-parity benefits and the organization of the health plan 

(HHS, 2004). 

 Because all of the existing State parity and mandated coverage laws were written and applied prior 

to passage of the 2008 Parity Act, coordination and interpretation of how State and Federal laws 

combine or potentially conflict is an important task for 2009 (NCSL, 2009). 

Some specific implementation issues for 2009 are featured below in the responses to interviews we 

conducted with stakeholders in the private and public sectors. Though individuals and organizations 

have concerns about effective implementation of the 2008 Parity Act, they remain optimistic that the 

legislation signals increasing recognition of the fact that there is no health without mental health. 

Ongoing collaboration among key players, which was critical to passage of parity legislation, can aid its 

successful implementation (Dixon, 2009). 

In 2006, Barry et al. (2006) concluded, “Passage of comprehensive parity would allow policymakers, 

health care managers, and clinicians to shift attention away from benefit design and toward figuring out 

how to get effective treatment for people who would benefit.” In 2009, consumers, providers, payers, 

and advocates believe this time has arrived. 
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Interview Format and Key Stakeholders 

Due to the gracious participation of key stakeholders and thought leaders, AHP was able to collect 

information through the interview portion of the environmental scan that was both broad in scope and 

in many cases highly detailed. AHP interviewed 22 individuals from across the behavioral health field 

representing both public and private sectors. The intent was to gather and disseminate their 

understanding of the implications of parity and to assess whether or not parity would enhance access to 

behavioral health coverage and treatment in the United States, thus supporting the original authors’ 

intention in crafting the legislation. 

Participants included market leaders and thought leaders in the behavioral health field as well as subject 

matter experts and individuals responsible for the implementation of Parity within their own 

organizations. Private sector respondents collectively represent a cross –section of commercial payers

including Medicaid managed care plans, traditional insurance companies, managed behavioral health 

organizations, third-party administrators, and EAP administrators. Thought leaders from the public 

sector included Single State Authorities, leaders in professional organizations, advocates for and leaders 

of consumer groups. Their responses reflect national, regional and state-level perspectives.” 

Each interview lasted between 30-45 minutes. The format was composed of open-ended questions 

regarding the scope of implementation, resources required in the behavioral health system, perceived 

impacts on consumers, and the major challenges to implementing parity. 

Unlike a typical opinion survey that provides answer categories and counts responses, these 

questionnaires were designed to provide more in-depth, qualitative information. From the wealth of 

information gathered in this way, researchers at AHP conducted a “thematic analysis,” grouping answers

into topics and identifying how frequently respondents reported answers within those thematic 

categories. Because certain topics were addressed under multiple questions, responses were then 

organized according to the overarching issues of access, quality, and cost. The topics outlined below 

were those endorsed most frequently by respondents. 

While the information gathered in this portion of the document is by no means exhaustive, it does 

provide readers with a wide variety of perspectives and a valuable array of tactical as well as strategic 

considerations, lessons learned, and insights into successful implementation and compliance with the 

law. Of equal importance, it provides innovative solutions proposed by individuals with considerable 

first-hand experience. A synthesis of the input follows. 

Key Stakeholder Interviews 

Access 

Access is conventionally defined as the degree to which consumers can readily seek treatment services 

for their disorders and that adequate coverage and sufficient numbers and types of providers and 

services exist to meet their needs within acceptable timeframes. Access also refers to the availability of 

accurate information, advocacy, screening, diagnosis, treatment planning, and referrals. Access issues

concerning diversity, language, gender, faith, sexual orientation, or other sociocultural variables were 

not within the scope of this study. 

In general, public sector respondents tended toward cautionary feedback and did not appear to believe 

that parity will enhance access to services or make it easier for consumers to navigate the continuum of 

care. Because the legislation does not specify covered conditions or address the specifics of “medical

necessity,” these participants consider parity to be primarily a change in payment methodology. Of 

primary concern was whether commercial health plans, employers, and other purchasers would 

continue to offer behavioral health coverage in the absence of a mandate. They believe there is a 

legitimate risk of consumers losing access to coverage. Regarding access to information and records, the 
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public sector is also very sensitive to the unique privacy issues inherent in behavioral health care. Private 

sector responses concerning access emphasized adequate and high-quality provider networks and the 

shortage of several key types of providers. 

The themes most often mentioned regarding access include the following: 

Provider networks are insufficient. The vast majority of respondents stated that provider networks 

suffer from shortages in several practice/specialty areas, particularly child psychiatrists, child 

psychologists, primary care physicians with appropriate behavioral health training, and “prescribers” in 

general. There is a shared sense of concern for the aging of the behavioral health workforce and the 

tendency for new physicians to choose specialties as opposed to primary care. There is a risk that 

individuals with moderate behavioral health issues will receive inadequate treatment if primary care 

physicians (PCPs) have difficulty making referrals to behavioral health specialists. A second challenge is 

posed by out-of-network benefits and the risk that providers will opt to drop their network participation 

in favor of balance-billing out-of-network consumers at higher rates. The majority of respondents 

agreed that creating financial incentives such as enhancing reimbursement rates is one logical remedy 

to provider network and access concerns (notwithstanding medically underserved areas). Public sector 

respondents also note that numerous providers who are not conversant in the managed care system 

may be forced out of the field, further exacerbating the shortage. 

The human resources needed for implementation are in short supply. In addition to specialty 

providers required by networks, respondents believed that clinical resources such as psychiatrist 

medical directors, certified case managers, psych-certified RNs, and specialist support for PCPs are 

insufficient to meet the expanding role health plans need to play. Plans and payers require access to 

consultants and subject matter experts with experience in the areas of provider contracting, 

implementation, benefit design, and utilization/case management in order to provide operational 

expertise and training. 

Providing access to education for payers, providers, and consumers is considered key to implementing 

parity successfully and achieving access goals. The challenge of properly educating health plan 

members, providers, and other key stakeholders is viewed as one of the highest priorities. Plan 

members need to understand what their benefits are, what is covered, and how best to navigate the 

system of care and plan policies. Providers require a similar education in terms of plan benefits, rules, 

and policies. In addition, they need to understand how to work within a managed care system, market 

themselves to utilization and case managers as well as plan members, and navigate insurance company 

practices, including the utilization review and authorization process. Employers in particular need to be 

educated in terms of the real costs of providing parity. Employers and plans will also need to understand 

the differences between various approaches to managing parity, including behavioral health carve-outs,

carve-ins, and employee assistance program (EAP) gatekeeping. 

Communication between and within stakeholder groups and access to accurate information is crucial.

Respondents believe that regulatory agencies should develop a repository of frequently asked questions

(FAQs) for both payers and providers; operate a hotline to provide payers and providers with timely 

answers to implementation questions; and convene collaborative meetings with both payers and 

providers. Additionally, a number of respondents noted that plan members and providers should have 

easy access to a clear appeals process. 

Perceptions of mental health and substance use disorder treatment may be enhanced and improved. 

Participants note that parity is likely to reduce the stigma surrounding treatment, thereby opening the 

door to consumers who would not have sought help in the past. Several participants also reported that 

parity serves to elevate issues of behavioral health care, which is especially important given the current 

push for health care reform. 
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Parity will increase access for many consumers as restrictions on services are lifted, though risks and 

obstacles remain. While a majority of respondents view the nondiscriminatory nature of parity as cause 

for celebration and a significant gain for consumers, several added the caveat that realization of these 

benefits depends greatly upon implementation and regulatory guidance. Respondents also note there 

remain many barriers to treatment beyond the issue of coverage. 

The absence of a mandate invites the risk that employers will eliminate behavioral health benefits. 

While the public sector may see this as a more serious threat, a number of private sector respondents 

also see this as a valid concern that should be addressed by educating employers, their brokers, and 

plan administrators. 

All stakeholders require access to standardized medical necessity criteria. The private sector response 

calls for access to guidance and clarity regarding covered disorders, providers, and levels/types of 

service covered. Those from managed care backgrounds are fluent in accreditation requirements for

research-based level of care guidelines or patient placement criteria; they require specificity from 

regulators as to how and when to apply them. Public sector responses tend toward a desire to see the 

use of standards-based tools, oversight, and accountability. There is also a desire to address patient

placement criteria for substance abuse treatment in particular. The majority of respondents across 

sectors addressed the need to provide plan members and their providers with these criteria in a manner

consistent with the law. 

There is a need to provide access to an appropriate service mix or continuum of services and care 

providers. Responses in this area varied somewhat between public and private respondents though 

there was consensus on the need for a service mix commensurate with what regulators determine 

coverage should entail. While respondents from the public sector agree it would be a positive 

development if regulations required all appropriate types of service that support mental health and 

substance abuse treatment, respondents understand that parity is no guarantee of access to this extent.

Public sector respondents understand the unique and complex needs associated with substance use 

disorders, for example, and point to the need for community-based, recovery-focused, wraparound 

services. Their private sector counterparts do not disagree but believe it is prudent to await direction 

from Federal and State regulators concerning coverage prior to addressing continuum of care issues. 

The patient-centered medical home model and primary care physicians will enhance access. There was 

general consensus among private sector respondents that PCPs fulfill an important function in the 

behavioral health care system. There was also agreement that emerging medical home models may 

prove beneficial to the behavioral health needs of plan members, particularly those who require case 

management/care coordination services. 

Enhancements to information technology will facilitate improved access. Improved integration of data 

is needed to allow for the sharing of information across organizational boundaries. Use of personal 

health records and the development of health information exchanges will support this aim. 

Quality 

Throughout the interview process, themes related to quality were addressed by both public and private 

respondents repeatedly and thoroughly. Quality was viewed through a wide lens encompassing quality 

assurance in provider networks, quality in treatment planning, quality in authorizing medical necessity, 

and quality as indicated by consumer safety and outcomes. 

The most significant area of difference between public and private sector responses relating to quality 

center around the proposition that parity will accelerate the integration of primary care and behavioral 

health. The majority of participants from the public sector do not believe parity will have an impact on 

the integration of care. Several public sector respondents stated that health plans will tend toward 

behavioral health carve-outs, making integration difficult. One respondent noted that integration of 

substance abuse treatment in particular does not happen easily, nor is funding for treatment a 
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guarantee. In contrast, the majority of private sector respondents believe that integration is already

taking place; they state that parity will either accelerate this process or be a neutral factor. 

Participants cited the following quality-related themes most often: 

Regulations need to clarify service level expectations and address coverage of specific conditions. A 

majority of respondents from the private sector note the difficulty of designing a benefit to meet the

intent of such broad legislation and request specificity around covered conditions. This issue applies to 

coverage of disorders such as autism and ADHD. 

Established evidence-based practices should be identified and implemented. Respondents agree that 

best practices are vital to effective treatment and positive clinical outcomes at every level of care. The 

public sector is particularly interested in the establishment of scientifically validated medical necessity 

and patient placement criteria. 

Provider credentialing and monitoring must be improved and standardized to ensure quality care. A 

majority of private sector respondents recommend national standards for education, licensure, 

malpractice, and liability insurance, as well as health plan credentialing activities. 

Medical necessity criteria and level of care guidelines should be clearly defined and transparent. While 

plans can continue to manage care, participants note the parity law has yet to fully address how medical 

necessity is defined, what appeals processes are acceptable, and what types of medical necessity/level

of care guidelines are sufficient and valid. Respondents are hopeful that regulations will answer many of 

these questions. 

Quality will be enhanced through improved diagnostic capabilities and standardized tools. Public 

sector respondents in particular believe that the use of standardized and evidence-based tools to 

screen, diagnose and plan treatment is integral to ensure quality care and outcomes. Use of the 

American Society of Addiction Medicine (ASAM) patient placement criteria for substance use disorders 

is a prime example. 

Training and clinical support for primary care physicians should be emphasized. PCPs currently treat 

the vast majority of mild to moderate behavioral health care conditions in their clinics or offices and are 

likely to bear an increasing burden where behavioral health care provider networks are inadequate. 

Private sector responses note that PCPs require support in making appropriate diagnosis, referrals, and 

coordinating care. 

The treatment of serious mental illnesses in adults and serious emotional disturbances in children will 

pose unique challenges. The majority of respondents agreed that these types of illnesses have primarily 

been the purview of the public health and public school systems and will pose a challenge in some parts 

of the country depending on how regulations are interpreted and enforced. Some private sector 

participants reported that they believe this issue also represents a good opportunity to explore 

“blending” or “braiding” private and public sector benefits and services. 

The use of health information technology is necessary to manage quality assurance. Technology such 

as electronic medical records and health information exchanges are seen as central to meeting 

interoperability, data exchange, and integration goals, as well as to the efficient coordination of care. All 

of these objectives are perceived to be necessary to manage quality and achieve superior outcomes in 

the modern health care system. Organizations are likely to use case management systems that meet the 

needs of both medical/surgical and mental health/substance use conditions. As much as health 

information technology is viewed positively from all sides, public sector respondents remain very alert 

to the importance of privacy constraints, such as CFR 42, for individuals with mental health and 

substance use conditions. 
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Cost 

For the purposes of this environmental scan, cost refers to the myriad financial considerations imposed 

by the 2008 Parity Act and its implementation. Costs include the cost of services or claims costs, as well 

as the administrative costs borne by health plans and providers. Costs also include consumer and plan 

member premium and out-of-pocket costs, as well as premium costs borne by employers. 

While consumers, employers, health plans, and managed behavioral health organizations (MBHOs) have 

a vested interest in constraining costs, respondents from the private sector did not address this as 

frequently as might be expected. This may be because most plans and managed care organizations are 

familiar with the actual cost increases associated with State parity laws and many have studied reports 

published since 1996 demonstrating cost increases well within the 2 percent range. When the issue of 

general cost increases is noted, the focus is on ERISA employers, third party administrators, and MBHOs, 

entities our respondents agree will be impacted most. 

There is also general agreement among private sector respondents that out-of-pocket costs will 

decrease for plan members. Public sector responses indicate a serious and abiding concern that 

employers and their payers will eliminate behavioral health coverage entirely in order to avoid higher

expenses. Several respondents in the private sector echo their concern, with one individual predicting

parity will inadvertently increase the number of uninsured with each “up tick” in premium costs. A 

number of respondents note a pressing need for education and advocacy directed at payers who may 

otherwise be inclined to truncate coverage because they do not fully understand the actual cost models. 

Additional cost related considerations include: 

Clear guidance through the timely release of regulations is essential to efficient implementation, 

compliance, and cost controls. Respondents call for Federal guidance around the following: the 

definition of “predominant” benefits that form the basis for equity and parity; whether or not a separate 

deductible is allowed; and clarity concerning diagnosis, provider types, and levels of service covered by 

the law. Costs will be higher for plans that do not accurately estimate the content of forthcoming 

regulations and need to make adjustments in subsequent plan years. One participant notes that 

regulations should not be punitive while another states that a phasing in of penalties would be 

appropriate for plans acting in good faith and making every effort to comply. Some respondents express

doubt as to whether full compliance is possible within the given timeframe. 

Out-of-network benefits present payers with a challenge. Payers will bear the additional burden and 

expense of handling out-of-network providers and managing deductible accumulators. Many plans and 

carve-outs do not provide for out-of-network coverage and will be required to reconfigure claims 

processing systems accordingly. Out-of-network costs will be greater to the consumer, and 

reimbursement combined with balance billing may in fact create incentives for providers to abandon 

their in-network status. 

The decision to carve-in behavioral health benefits or carve-out to an MBHO will have a significant 

impact on cost. Responses are varied on this issue due to the disparate interests represented by 

participants. Several respondents strongly recommend a deeply integrated carve-in approach that they 

believe allows for holistic treatment of behavioral health and general health conditions. Their responses 

emphasized plans’ ability to coordinate care seamlessly within a single, multidisciplinary team under the 

same roof. A similar number of respondents are proponents of some form of carve-out, with one 

recommending that purchasers contract with large national managed care organizations that have the 

capability to very quickly manage the entire implementation. They also propose that well established 

and experienced MBHOs have proven they can manage claims accumulators. The challenge, many 

admitted, is that predictive models and pricing estimations are difficult in the first year with so many 

unanswered questions. 
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The administrative burden on providers will increase their costs. A large number of participants noted 

the need for process efficiency and automation in various areas including eligibility determination, 

patient registration, scheduling, service authorization, charting, and billing. 

Case management is essential to manage costs associated with serious mental illnesses. There is 

general consensus that complex cases involving chronic conditions will benefit from case management 

services. The addition of case management may be new for some plans and employers and they will 

require education in order to understand medical cost-offset models and long-term financial 

implications. 

Plans need to be prepared for the financial ramifications of increased utilization. Many individuals will 

increasingly maintain their private coverage, which will eventually impact the numbers of adults with 

serious mental illnesses and children with serious emotional disturbances receiving treatment in the 

private sector. Several participants noted the need for new predictive models and are conducting 

actuarial analyses to anticipate both near and long-term costs, which may increase within 3 to 5 years. 

They attribute potential and unexpected increases in utilization to the long-term effects of member 

education, evolving social norms, and “population shifting” into private sector coverage and treatment. 

Implementation can involve costs associated with changes to provider contracts and reimbursement. 

Provider contracts are cited with some frequency and respondents believe that reimbursement levels 

may be impacted when the need arises to modify them and align them with parity regulations and new 

plan rules/benefits. The single most cited impact concerned PCPs and their ability to bill appropriately 

for mental health services involving more than one service in a given day. 

Claims accumulators will be necessary to manage a single deductible. In instances where regulations 

and plan policies involve a single deductible and out-of-pocket maximum, plans and their MBHO 

partners will require sophisticated claims accumulator exchanges that will enable claims generated for

medical as well as behavioral health services to be tracked simultaneously and risk assigned accordingly. 

This process is complicated when two organizations—the plan and its MBHO—are responsible for claims 

processing and handling claims that can involve “mixed” medical and mental health services and codes. 

Technology systems will need to be reconfigured to adjust to new plan rules and benefits. Health 

plans and payers of all kinds will be required to modify the configuration of claims processing systems, 

data warehouse and reporting systems, and claims accumulator systems. 

General 

Since parity must be implemented rapidly, numerous responses to the interview questions addressed 

strategic considerations, the release of regulations, and tactical implementation issues that transcend or 

fall outside cost, quality, and access categories. These comments merit mention as they are rich with 

insight and will have high utility for organizations charged with implementation, particularly those 

undertaking parity for the first time. 

Issues of compliance and regulatory guidance not mentioned elsewhere included: 

The provision of timely and consistent regulatory guidance is of primary importance to the private 

sector. Health plans will be obligated to design, publish, and file benefit plans with State departments of 

insurance well in advance of the release of regulations. A Web portal, telephone hotline, and a list of 

FAQs will greatly facilitate timely compliance. 

Regulations must incorporate meaningful provider input. Participants from both the public and private 

sectors note that behavioral health care providers and particularly substance abuse providers have 

historically been marginalized when it comes to the development of behavioral health policy. Payers of

all kinds are encouraged to include behavioral health providers, experts, and consumers in their 

planning and implementation. 
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Federal agencies may need to play an expanded role. The three departments responsible for parity can 

act as an arbiter to enhance public/private partnerships, convene a summit of stakeholder groups, 

provide education and advocacy for consumers and their families, provide direct oversight, and enforce

accountability. The Federal government can also assist stakeholders by continuing to involve behavioral 

health in the health care reform process, maintaining open communication. 

Other strategic considerations our respondents noted include the following: 

 Two respondents note significant interest in exploring public/private partnerships that “braid, 

blend,” and otherwise leverage the expertise and capacity of both sectors. Several States have 

begun innovative collaborative approaches, which may be helpful as health care reform models 

emerge. 

 The benefits and value of carve-in and carve-out approaches need to be understood by those who 

lack experience with either. 

 Committed leadership is believed to be essential to timely, comprehensive implementation. 

It is clear that Federal agencies have, in fact, begun to respond to concerns about implementation of the 

2008 Parity Act. The Center for Substance Abuse Treatment in the Substance Abuse and Mental Health 

Services Administration, U.S. Department of Health and Human Services, gathered a group of 12 leaders 

representing States, professional organizations, and advocates to discuss the impact that parity will have 

on access to substance abuse treatment. Many of the comments respondents made at that meeting 

reflect those in our environmental scan. This group noted in particular the need for Single State 

Agencies to work collaboratively with other State agencies—including Medicaid, insurance 

commissioners, and departments of labor—to help ensure a full continuum of services for individuals 

with substance use disorders. 
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insurance benefits. Psychiatric Services, 52(4), 437-440. 

Sing, M., Hill, S., Smolkin, S., & Heiser, N. (1998). The costs and effects of parity for mental health and 

substance abuse insurance benefits. Rockville, MD: Substance Abuse and Mental Health Services 

Administration. 

State of Oregon. (2009). 2009 review of coverage of mental or nervous conditions and chemical 

dependency in accordance with ORA 836-053-1405(8). Salem, OR: Department of Consumer and 

Business Services Insurance Division. 
An Environmental Scan of the Impact of Parity 

on the Public and Private Sectors

© May 2009 13

U.S. Department of Health and Human Services. (1999). Mental health: A report of the Surgeon General. 

Washington, DC: Author. 

U.S. Department of Health and Human Services. (2004). Evaluation of parity in the Federal Employees 

Health Benefits (FEHB) Program: Final report. Washington, DC: Author. 

Varmus, H.E. (1998). Parity in financing mental health services: Managed care’s effects on cost, access, 

and quality. An interim report to Congress by the National Advisory Mental Health Council. 

Rockville, MD: U.S. Department of Health and Human Services, National Institutes of Health, 

National Institute of Mental Health. 

Wood, E.P. (2005). Children and mental health parity. Washington, DC: National Conference of State 

Legislatures. Retrieved May 11, 2009, from 

http://www.ncsl.org/programs/health/pmmp05.htm 

Zuvekas, S.H., Regier, D.A., Rae, D.S., Rupp, S., & Narrow, W.E. (2002). The impacts of mental health 

parity and managed care in one large employer group. Health Affairs, 21(3), 148-159. 
Behavioral Health Parity: 

Mental Health and Addiction Providers 

Impact Statement & Call to Action 

Prepared By: Advocates for Human Potential 

DUNS: 19-505-7666 

Patrick Gauthier, Senior Consultant 

Carol Bianco, Director of Mental Health 

Neal Shifman, President and Chief Executive Officer

Contact: Neal A. Shifman 

President and Chief Executive Officer 

Tele: 978.443.0055 ext 414 

nshifman@ahpnet.com 

November 2008 
AHP White Paper ■ Behavioral Health Parity 

Menatl Health and Addition Providers Impact Statement & Call to Action 

© November 2008 Page i 

Table of Contents 

INTRODUCTION TO PARITY ..............................................................................................2

SITUATION ANALYSIS .........................................................................................................3

Implementing Parity .............................................................................................................3

Working in a Managed Behavioral Healthcare Environment ................................................3

Opportunity: Expanding Behavioral Healthcare ...................................................................4

Opportunity: Integration of Behavioral and Primary Healthcare ..........................................4

Impacts on Behavioral Health Providers ..............................................................................4

The Coverage Landscape: What to Expect............................................................................5

IMPACT STATEMENT 1: ADMINISTRATION...................................................................7

IMPACT STATEMENT 2: CLINICAL OPERATIONS ........................................................9

IMPACT STATEMENT 3: EXECUTIVE MANAGEMENT...............................................11

CALL TO ACTION................................................................................................................13

ABOUT AHP...........................................................................................................................15
AHP White Paper ■ Behavioral Health Parity 

Menatl Health and Addition Providers Impact Statement & Call to Action 

© November 2008 2

Introduction to Parity 

On October 3, 2008, the United States Congress passed the $700 billion Emergency Economic 

Stabilization Act, which included a few other pieces of legislation looking for safe passage. One of those 

was HR 1424 - the Paul Wellstone and Pete Domenici Mental Health and Addiction Equity Act of 2008 

(2008 Parity Act), more commonly and simply referred to as “Parity” since the 1990s. The passage of HR

1424 is one of the most important developments in the mental health and addictions treatment fields in

the past half century. 

Passage of this law is a triumph for all those who sustained the momentum for change in the face of 

often strong resistance: the Substance Abuse and Mental Health Services Administration (SAMHSA), the 

State Association of Addiction Services (SAAS), the National Council for Community Behavioral Health 

Care (NCCBH), many national and state provider and consumer organizations, Sen. Paul Wellstone (DMN.), Sen. Pete Domenici (R-NM), Sen. Edward Kennedy (D-Ma.), Sen. Christopher Dodd (D-CT), Rep., 

Patrick Kennedy (D-RI), Rep. Jim Ramstad (R-MN.), Rep. Marge Roukema (R-NJ), First Ladies Betty Ford 

and Rosalyn Carter, Tipper Gore, and many others over the years. Because of their efforts, the 2008 

Parity Act provides enhanced, equitable coverage for more than 110 million Americans. It also builds 

upon the success of Parity coverage President Bill Clinton extended to Federal Employees nearly a 

decade ago and the experience more than 40 states have had with their own versions of Parity. 

Ultimately, the Parity Act should put an end to discriminatory coverage of mental health and addictions 

treatment in the vast majority of health plans in America. 

Health plans that provide mental health or addiction treatment benefits now must provide the same 

financial terms, conditions, and requirements as well as treatment limitations for mental health and 

addictions as they do for other medical and surgical conditions. Here is a brief summary of the Act: 

 

 Mental health and addiction treatment cost-sharing, deductibles, co-pays, and other forms of 

co-insurance as well as annual limits and lifetime limits must be equal to those covering medical 

and surgical conditions. 

 Limitations on the scope of treatment and treatment frequency and duration cannot be more 

restrictive than those limiting medical conditions and care. 

 Where allowed for other conditions, out-of-network benefits for mental health and addictions 

treatment must be provided and must be equal to those provided for medical and surgical 

benefits. 

 State Parity laws are protected by the current HIPAA standard. Stronger state laws are not 

preempted by the Act. 

 Plans can continue to engage in healthcare utilization management (UM, UR, and other forms of 

review) and determine coverage on a case-by-case basis. They are, however, required to provide 

members, consumers, and providers with their medical necessity criteria and with reasons for 

benefits/coverage or claims denial. 
AHP White Paper ■ Behavioral Health Parity 

Menatl Health and Addition Providers Impact Statement & Call to Action 

© November 2008 3

 The Government Accountability Office (GAO) will study the manner in which plans comply with 

the Act on an annual basis in order to determine how coverage is defined, what diagnoses are 

covered, and how total costs are being calculated. 

 The Act exempts employers with fewer than 50 employees and plans whose total premium costs 

increase more than 2% in the first year or 1% in any subsequent year, subject to an annual 

application and review process. 

 Medicaid and Children’s Health Insurance Programs are affected by Parity; Medicare is not. 

Situation Analysis 

The 2008 Parity Act takes effect for the majority of plans on January 1, 2010. Some plans that are 

maintained by collective bargaining will be allowed to start later if their current contract term ends

later. This means that many hundreds of health plans – including those of self-insured employers – have 

just over a year to implement Parity. More than 113 million Americans will be affected, and more than 

80 million of those are covered by an ERISA plan where their employer is self-insured. 

More than 40 states have some form of mandated parity but only those whose coverage is weaker than 

the Parity Act will be required to address the discrepancy. This will be applicable especially to states and 

plans that currently offer very low levels of addictions treatment coverage. 

Implementing Parity 

Parity will be implemented by states, Medicaid agencies and Medicaid health plans, commercial 

(traditional) health plans, HMOs, and Managed Behavioral Health Organizations (MBHOs) around the 

country. However, consumers and providers will co-exist with those plans and benefits in many new 

ways. Preparing for parity will require a perspective that sees opportunity more than threat in the 

coming changes. Providers are in a position to: 

 Advocate for safe, high-quality, effective care 

 Advocate for access to providers in underserved areas 

 Use parity as an opportunity to accelerate the transformation of mental health system and 

implement recovery-oriented, trauma-informed, and culturally appropriate services 

 Advocate for consumer rights, education and the elimination of discrimination and stigma 

 Associate provider training for parity-associated changes with more general efforts to expand 

and develop the behavioral health workforce 

Working in a Managed Behavioral Healthcare Environment 

Providers who already have a strong presence and reputation among MBHOs likely will see their 

business opportunities expand naturally as a consequence of their position in the market. Providers who 

already know how to navigate a robust utilization management program will have the tools and 

processes in place to expand their business operations and serve more people. Providers who are new 

to managed care contracting, credentialing, policies, systems, and processes will be challenged to play 

by new rules and will need to ramp up now. 
AHP White Paper ■ Behavioral Health Parity 

Menatl Health and Addition Providers Impact Statement & Call to Action 

© November 2008 4

Opportunity: Expanding Behavioral Healthcare 

Parity can mean “business as usual” for behavioral healthcare providers or it can provide some measure

of opportunity. Managed care tools such as utilization management will make it difficult for anyone to

exploit benefits; however, some providers will see parity as an opportunity to expand their service 

areas, scopes of service, service integration, adoption of best and evidence-based practices, and 

investments in information technology. 

Opportunity: Integration of Behavioral and Primary Healthcare 

The push for the integration of behavioral healthcare and primary care likely will see more emphasis as a 

result of parity. The majority of mental health care already is provided by primary care (particularly

when the cost of psychotropic prescription drugs is factored) so enhanced benefits will lead to more –

not less – primary care involvement. This will present opportunities for co-location of behavioral and

primary health facilities, and accelerate the need to address cross-training challenges for both clinical 

and administrative services. 

As the Parity Act is implemented and its consequences are fully integrated, the behavioral health field 

also will have to address whether a separate, free-standing behavioral health system with its often 

segregated disciplines makes sense and, if so, in what roles the field not only can survive but thrive. 

Impacts on Behavioral Health Providers 

In the broadest sense, behavioral healthcare providers can expect the following impacts in their 

practices: 

1. Requirements to enter into agreements with MBHOs or other forms of managed care. 

2. Requirements to participate in more rigorous professional credentialing. 

3. Requirements to participate in utilization management (pre-certification or service and benefit 

authorization). 

4. Increased use of diagnostic and screening tools to substantiate diagnoses. 

5. Increased use of decision-support and treatment planning tools that help plan and track 

treatment across longer episodes of care. 

6. Expanded communication and collaboration with other healthcare providers such as primary 

care physicians. 

7. Requirements to demonstrate that care is consistent with evidence-based (scientificallyvalidated) best and promising practices. 

8. Incentives to take advantage of enhanced insurance coverage by developing new levels of 

services, new services for co-morbid or co-occurring disorders, expanded geographic coverage, 

and relationships with primary care clinics. 

9. Incentives to develop disease management programs and services for those with serious mental 

illness and various chronic conditions. 
AHP White Paper ■ Behavioral Health Parity 

Menatl Health and Addition Providers Impact Statement & Call to Action 

© November 2008 5

10. Incentives to ensure timely, accurate, and efficient health information. Consideration of 

electronic medical records systems for the purpose of care coordination, safety (especially in 

medications), and billing will come to the fore in practices that previously have only 

contemplated systems and technology adoption. 

11. Increased need for expanded billing capacity and revenue generation, bearing in mind that ICD-9 

is giving way to ICD-10 and that plans will differ in terms of what diagnoses are covered. For 

providers in some markets the result may be an array of coverage and contracts of even greater 

complexity than exists today. 

12. Increased need for data management that generates outcomes data and enables quality 

improvement and financial analysis. 

13. Increased collaboration with utilization management (usually Masters-level behavioral 

healthcare professionals) in treatment planning. 

14. Expanded awareness that new funding will stimulate competition for new resources. 

The Coverage Landscape: What to Expect 

It is likely that a slow shift will occur in the treatment options available to populations commonly 

associated with publicly-financed mental health and addictions treatment on the one hand, and those 

associated with commercial, employer-sponsored plans on the other. Currently, people with serious 

mental illnesses and/or addictions do not trend toward voluntary treatment through employer plans, 

largely because the coverage has been inadequate and the fear of stigma and employer retaliation is 

great. As a result, the majority of consumers have sought mental health care in primary care settings.

However, people with serious mental illnesses and addictions typically do not receive early and 

adequate treatment in primary care settings that are insured by discriminatory commercial, employerbased health plans. Sadly, many such consumers become un-employable and/or uninsured or 

underinsured, and then become Medicaid-eligible and reliant on treatment provided by the public 

sector. Due to disability or age, they may wind up covered by Medicare. Tragically, a third population

receives treatment through the criminal justice system – a reminder that the system truly has failed. 

If one assumes that people with mental health disorders, including those with serious mental illnesses, 

will receive adequate and appropriate treatment without exhausting or losing their employer-sponsored 

coverage, it is conceivable that fewer people will be treated in the public behavioral health clinics, jails 

and penitentiaries. This shift is expected to be very slow, as evidenced by the relatively small changes 

and impacts that have resulted from the various forms of parity in place today. However slow it may be, 

in time parity may result in earlier and more comprehensive treatment and maintenance for people 

with insurance, obviating the need for some (if not all) of the publicly-funded care they otherwise would 

have received. 
AHP White Paper ■ Behavioral Health Parity 

Menatl Health and Addition Providers Impact Statement & Call to Action 

© November 2008 6

Impact Zones 

Behavioral health providers can expect four broad-based zones to be impacted by parity: Policy, People, 

Process, and Information Technology (IT). The four zones constitute the basic business infrastructure.

Policy is the broadest zone as it applies to everyone and 

everything within an organization, including its customers 

(consumers, members, providers, etc.). From the ground up, 

policy affects decisions regarding staffing, service offerings 

and products, strategy, authority, budgeting, training, and 

investments. Laws such as parity, State and Federal

regulations, as well as agreements between providers and 

plans are all examples of external policies that shape a 

behavioral healthcare organization. Policy and procedure 

manuals are examples of internal policies that govern the way 

things are done in an organization. 

People – the second zone – reflects leadership, staffing, human resources and personnel, hiring, 

recognition and retention, levels of professionalism, discipline, and areas of expertise as well as the 

manner in which an organization manages and supervises people. It also accounts for impacts felt by 

partners, providers, suppliers, and, most importantly, consumers. It includes communication among 

people, integration and teamwork, rights and responsibilities, and compliance with standards. Lastly, it 

involves specific qualifications, credentials, traits, experience, and education (including continuing

education) required of people in healthcare professions. 

Process – the third impact zone – refers to workflow and business processes. A process is a distinct 

series or sequence of steps or tasks that accomplish a core business or clinical objective. Workflow 

models or business process diagrams visually depict how a process begins, all of the people involved in 

accomplishing tasks, the tasks themselves, and the flow of work product from one person to another 

until the process is complete. Behavioral healthcare providers have a wide array of common core 

processes such as eligibility determination, assessment and treatment planning, appointment 

scheduling, and claiming or billing. Importantly, processes reflect policies and business rules and tell 

people what is expected of them. Significant change in policy results unequivocally in process change.

Similarly, changes in process for the sake of discovering and instituting efficiency or quality 

improvements need to be reflected in policy, human resource management, and any technology in play. 

Information Technology (IT) - the fourth zone – includes hardware (desktop PCs, modems, servers, 

routers, printers, scanners, cabling, etc.); networking (LAN, WAN, and other approaches); and software

(often referred to as information systems or IS). IT also refers to data management; that is, data formats 

(XML, HTML, JAVA, etc.), data entry, collection, storage, retrieval, sharing or exchange, analysis, quality 

assurance, security, back-up, interchange, and reporting. IT impacts include database utilization, 
AHP White Paper ■ Behavioral Health Parity 

Menatl Health and Addition Providers Impact Statement & Call to Action 

© November 2008 7

adoption of new technology, interface between systems and users, design of systems, as well as 

investments in systems, hardware, and training. IT impacts will be experienced in any existing systems

such as practice management and electronic medical records (EMR). Impacts also will be reflected in the 

desire to adopt new systems such as case management systems or tools such as data warehousing and 

business intelligence (BI) that help measure performance. 

The following pages examine the impact of Parity in the three core divisions of most provider 

organizations: administration, clinical operations, and executive teams, with consideration for how the 

impacts will manifest in each of the four zones described above. 

Impact Statement 1: Administration 

Behavioral health providers such as clinics, multi-specialty practices, acute facilities, residential 

treatment facilities, and psychiatric rehabilitation programs share some common challenges. By virtue of 

their size, complexity, staffing levels, and the sheer volume of work involved, they are particularly 

susceptible to major policy changes such as those engendered by parity. Many more people require 

training, many more processes are repeated hundreds of times per day, and many more system changes 

may be required to adapt to change. The following administrative areas may be affected by parity: 

Policy People Process Technology 

Eligibility and 

Benefit 

Determination

More people will be eligible 

for more treatment, and 

new consumers likely will 

seek services as a result of 

the expanded coverage. 

Front-end staff will review 

new benefits with more 

plans. Training and staffing 

levels likely will be affected. 

The eligibility determination 

process should be 

streamlined, leveraging 

Internet access to capture 

new benefit information. 

Providers should consider 

access to Web-based 

eligibility tools provided by 

most plans and review 

practice management 

system functionality to 

assess impact. 

Chart-Build 

and Records 

Management 

Plans may require more 

detailed records, including 

diagnostic information, 

assessment results, and 

outcomes measures. 

Policies may require 

treatment plans and 

evidence of best practices, 

such as person-centered 

plans or shared decisionmaking. 

Records and filing staff may 

be affected by new record 

formats and by decisions to 

transition to “paperless” 

offices. Clinicians will be 

affected by requirements for 

more detailed recordkeeping and documentation 

of best treatment practices. 

Since consumer and 

service mix as well as 

length of treatment 

episodes for more serious 

illnesses are subject to 

change, staff may be need 

better access to charts and 

sharing of health 

information across 

organizational boundaries. 

EMR systems will require 

significant attention to 

process analysis and 

improvement. 

Paper may give way to 

practice management 

systems (PMS) and PMS 

may give way to EMR 

systems. Some providers 

may be affected by a need 

for case management 

systems when caring for 

people with serious and 

complex needs in highly 

integrated care settings. 

Utilization 

Management 

(UM) 

Most people will belong to 

some form of MBHO. The 

majority will require 

“medically-necessary care” 

authorization and most 

plans will institute stricter 

Administrative personnel 

will require training in UM 

protocols if it is new for 

them. Staff will need to 

control authorization 

numbers to facilitate billing, 

The UM process may be 

expanded significantly for 

some providers and 

practices. The process 

should be efficient, involve 

as few steps as possible, 

UM is supported best by 

phone contact, fax, and 

secure Internet access to 

plans and UM departments. 

Also helpful are decision 

support tools and 
AHP White Paper ■ Behavioral Health Parity 

Menatl Health and Addition Providers Impact Statement & Call to Action 

© November 2008 8

Policy People Process Technology 

level of care guidelines. 

Most will require greater 

emphasis on diagnosis and 

many will require 

comprehensive case 

management. 

and understand how to 

collaborate efficiently with 

UM professionals. Common 

UM tools and phone 

numbers should be 

accessible. 

and have assurances of 

high integrity in order to 

avoid payment denials. The 

process can be enhanced 

by information systems, 

access to the Internet and 

decision support guidelines.

technology as well as 

electronic level of care and 

treatment planning tools 

commonly found in EMR 

systems. Systems must 

track authorization numbers 

for billing purposes. 

Billing 

Billing policies will be 

affected by the variety of 

service codes (CPT) that 

are covered and diagnosis 

code (DSM-IV and ICD-9 

and 10) requirements of 

various plans. Plans will 

place particular emphasis 

on paying for pre-authorized 

services. The law will 

change coverage, limits and 

financial arrangements 

providers have with many of 

those they serve. 

Billing staff will require 

additional planning and 

training to manage the 

variety of diagnoses and 

services that are or are not 

covered. Benefits will vary 

and billing will require 

authorization codes to a 

greater degree than 

providers use today. 

The billing process may 

change in terms of required 

information and clinical 

practices. If an organization 

or practice is growing, it 

may seek more efficient, 

timely and accurate billing 

practices in advance of 

parity. Electronic billing 

processes are highly 

encouraged. 

Electronic billing requires 

HIPAA-compliant billing 

software as is common in a 

practice management 

system. HIPAA requires 

electronic data interchange 

(EDI) standards and 

formats between systems. 

The decision to bill 

electronically will be 

affected by the wide array 

of plans that offer a variety 

of billing options. 

Contracting 

Many providers soon will 

find themselves part of 

special behavioral health 

networks for MBHOs and 

the populations they serve. 

Contracts will require 

compliance with UM, 

greater scrutiny in 

credentialing, and more 

standardized treatment 

plans and record keeping in 

some cases. Contracting 

also will involve accepting 

new consumer referrals and 

agreeing not to balance bill. 

Expect competition in some 

parts of the country to drive 

rates down. 

The proliferation of plans 

seeking behavioral health 

providers for their networks 

may require additional 

staffing among providers 

who want to be considered 

in-network wherever 

possible. Contracting will 

require subject matter 

expertise in reimbursement, 

usual and customary fees, 

capitation, service levels, 

and related codes. There 

may be opportunities to hire 

different types of 

professionals and to 

maintain different 

credentials. Continuing 

education may be affected 

as well if providers 

implement best practices. 

Contracting processes 

involve documented 

credentials (degree, license, 

DEA license, etc.) as well 

as proof of clinical 

supervision in some cases. 

An efficient process 

involves rapid response to 

inquiries from plans, ready 

access to documentation, 

and proof of professional 

insurance as well as better 

use of plan-specific provider 

hotlines and manuals. 

Making internal financial 

decisions regarding 

reimbursement prior to 

contracting is also helpful. 

Many providers will want to 

pursue database solutions 

to the challenge of keeping 

contracts and fee schedules 

current and accessible. 

Document management, 

knowledge management, 

and practice management 

systems can help resolve 

the issues that confound 

providers with many 

different contracts. 

Scheduling 

and Retention

Providing prompt 

assessments and engaging 

people in treatment will be 

more important than ever. 

Not only is this a best 

practice area that often 

needs closer attention, it will 

be a contract requirement of 

many plans. 

Scheduling and retaining 

existing consumers requires 

coordination between 

clinical and administrative 

staff. Retention may require 

training for both staff 

categories if people are 

going to be contacted by 

phone and encouraged to 

Good practice management 

and EMR systems can 

significantly improve 

scheduling; however, 

clinicians must keep 

schedules up-to-date and 

communicate regularly with 

front-end staff. Retention 

can be enhanced 

Practice management and 

EMR systems can enhance 

performance in these areas. 

However, front-end 

administrative staff and 

clinicians must have access 

to and use these systems 

effectively, which often 

involves training provided 
AHP White Paper ■ Behavioral Health Parity 

Menatl Health and Addition Providers Impact Statement & Call to Action 

© November 2008 9

Policy People Process Technology 

remain in treatment. considerably by instituting 

new processes designed to 

keep people engaged and 

compliant with treatment. 

by technology vendors. 

Measuring performance in 

this area may require a data 

warehouse and an 

analytical/reporting tool. 

Impact Statement 2: Clinical Operations 

The following clinical areas may be affected in organizations and practices. The full impact of parity will 

reflect, to some degree, an organization’s strategic plan, and those that want to expand service offerings 

or move into new geographic markets will need to consider the impact of those decisions on clinical 

operations versus the impacts that result from attempting to maintain business as usual. 

Policy People Process Technology 

Service Mix and 

Consumer Mix 

Parity may result in 

providers evaluating their 

particular markets for 

opportunities to expand 

geographically, offer new 

service levels, and/or to 

serve a new or more 

diverse consumer base. 

Partnerships with other 

providers, including primary 

care providers, may be 

expanded. 

Market expansion, new 

service levels, and new 

consumer mixes involve 

recruiting and training 

additional clinical and 

support staff, new positions 

for peer counselors and 

specialists, and training and 

education for existing 

clinicians. Some clients 

should not be mixed in the 

same treatment setting. 

Credentialing and 

qualification requirements 

for new services and 

populations may differ from 

those that currently exist. 

Opening new facilities and 

offering new service levels 

involve significant design 

and/or replication of 

business processes. For 

instance, service levels 

such as intensive outpatient 

or assertive community 

treatment programs involve 

clinical processes and 

operations that differ from 

conventional outpatient 

treatment. 

New facilities that obviously 

require new hardware and a 

new consumer/service mix 

may be a strong catalyst for 

pursuing an EMR system to 

track the multitude of 

treatment planning and 

decision support tools on 

the market. 

Screening, 

Assessment, and 

Diagnosis 

Many plans may require 

evidence of a screening, 

assessment, and/or 

diagnostic instrument and 

will certainly require a 

diagnosis. Integrated 

screening and assessment 

for co-occurring disorders 

will be a priority. 

Assessment policies should 

be recovery-oriented, 

trauma-informed, culturally 

appropriate, and strengthsbased. 

Information collected at 

initial screening may be 

determinative of level of 

care. Organizations may 

need to expand training and 

supervision for 

“gatekeepers” – the staff 

who conduct initial 

screening and intake. 

Providers are encouraged 

to identify and employ 

additional screening and 

diagnostic tools to support 

gatekeepers. 

Where survey tools are in 

use, the process may 

involve front-end 

administrative staff. These 

tools, however, should be 

reviewed by clinicians. 

Developing a thorough yet 

efficient assessment 

process will be crucial to 

effective treatment planning 

and a diagnosis will be 

absolutely essential for 

reimbursement. 

Many tools exist in paper 

form; however, providers 

are strongly encouraged to 

invest in tools that allow 

individuals to answer 

questions on a computer. 

Some clinicians will prefer 

to assist consumers with 

computer-based 

assessments. It is important 

to integrate screening and 

assessment data with 

clinical records. 
AHP White Paper ■ Behavioral Health Parity 

Menatl Health and Addition Providers Impact Statement & Call to Action 

© November 2008 10

Policy People Process Technology 

Level of Care 

Guidelines 

Plans will use guidelines of 

their own and will be 

required to share level of 

care and medical necessity 

guidelines with consumers 

and providers. Most 

provider manuals include 

these guidelines. Providers 

may be motivated to 

develop guidelines of their 

own and to adopt decision 

guidelines that are 

consistent with the majority 

of plans. 

There may be training 

issues for people who have 

not used level of care or 

decision support guidelines 

in the past. Application of 

these guidelines requires 

training and adequate nonbillable time. Determining 

level of care should be a 

collaborative process 

involving consumers and 

UM staff. 

Many decision support 

systems involve a process 

that moves the clinician 

through the level of care 

determination process. 

Without the help of a 

system, clinicians will need 

training and, in some cases, 

supervision as they 

navigate the determination 

process and make a 

decision. The process 

should include collaboration 

with consumers and involve 

review with UM 

professionals. 

Providers may opt to invest 

in decision support systems 

that accelerate the process 

and provide evidencebased justification for 

clinical decisions. 

Utilization 

Management 

(UM) 

Most care will require prior 

authorization. UM 

professionals will review 

each treatment plan for 

medical necessity and level 

of care guidelines. Plans 

will differ in terms of 

coverage and the list of 

diagnoses and conditions 

covered. 

Some clinicians will be very 

experienced in terms of 

navigating UM while others 

will be doing so for the first 

time. Clinicians may require 

some training and it is 

always beneficial to 

communicate regularly with 

UM staff. Some providers, 

by virtue of their volume, 

will decide to hire clinical 

staff for the purpose of UM. 

The process is much more 

efficient when it is designed 

around adequate 

documentation and data. 

UM can be slowed by 

missing information. Some 

providers struggle with the 

requirement to obtain 

authorization before 

providing services which 

results in most of the denied 

claims. Clinical operations 

must become more 

disciplined in this area. 

Some practice management 

and EMR systems can (and 

should be) be tailored to 

require a UM process 

and/or authorization 

number. The cost of denied 

claims can outweigh the 

cost of technology that 

supports this process. 

Some plans will enable 

electronic authorization so 

secure access to the 

Internet is also a must for 

clinicians. 

Treatment 

Planning and 

Clinical Practices

Parity will be consistent with 

other policies, regulations, 

and provider contracts that 

call for the use of best 

practices in treatment 

planning and clinical 

practice. Providers will be 

pressed to adopt policies of 

their own that reflect this 

trend and be able to 

demonstrate that they are 

practicing accordingly. 

Policies can encourage or 

require practices such as 

person-centered planning 

and shared decisionmaking. 

Treatment planning should 

focus on individual wellness 

and recovery while still 

addressing level-of-care 

criteria. Some clinicians will 

need training in specific 

treatment protocols, 

particularly for new services 

and populations. Expanded 

clinical supervision may be 

necessary and may require 

additional staffing. Consider 

trainers and consultants 

and refer to your trade 

group or association for 

guidance. Specialized TA is 

available. 

The treatment planning 

process varies by tool or 

approach in use. However, 

it builds upon the processes 

preceding it and can be 

streamlined by leveraging 

behavioral health EMR 

systems. Clinical practices 

in treatment vary 

considerably across all of 

the service levels and the 

wide variety of best 

practices. 

Contemporary EMR 

systems developed 

specifically for behavioral 

health providers will 

facilitate the treatment 

planning process and 

provide robust 

documentation. Decision 

support systems often can 

include treatment protocols 

to guide day-to-day clinical 

practices and decisions. 

Efficient use of the Internet 

can keep providers abreast 

of developments in the field.
AHP White Paper ■ Behavioral Health Parity 

Menatl Health and Addition Providers Impact Statement & Call to Action 

© November 2008 11

Policy People Process Technology 

Case 

Management 

Expanded coverage for 

people with serious mental 

illnesses will provide an 

opportunity to offer case 

management to more 

consumers. Case 

management is a 

sophisticated and complex 

field that may involve 

certification and licensure. 

Some plans provide 

coverage for case 

management services. 

Opportunities for using peer 

specialists in these roles 

should be explored. 

Providers who want to 

provide case management 

services will want either to 

hire qualified case 

managers or receive 

technical assistance and 

education for their existing 

clinical staff. Managing and 

coordinating the care of 

people with serious mental 

illnesses involves building 

collaborative relations with 

other professionals and 

services in the community. 

Case management also 

requires significant 

involvement of and 

communication with 

consumers and families. 

Case management involves 

the adoption of 

comprehensive processes 

and the management of a 

great deal of information. It 

involves numerous 

opportunities for transition 

and communication among 

people which increases the 

incidence of process error. 

Case management 

processes require constant 

attention to quality 

assurance and efficiency. 

Some behavioral health 

EMR systems facilitate case 

management while some 

vendors have developed 

very specialized case 

management systems. 

Systems can be tailored for 

specific populations such as 

children, people with cooccurring disorders, or 

those who are involved with 

the criminal justice system. 

Care 

Coordination 

Plans may encourage the 

practice of coordinating 

integrated care and, in fact, 

many plans around the 

country are pursuing the 

integration of primary care 

and behavioral healthcare. 

Managed care plans may 

apply level of care 

guidelines to assist with the 

determination of whether a 

particular consumer with comorbid and/or complex care 

needs to be seen by 

additional providers. 

Care coordination such as 

case management often 

involves training clinicians 

to work collaboratively with 

consumers to assess the 

need for additional services 

and to cultivate sufficient 

knowledge of a 

community’s resources to 

make and track referrals. 

Care coordination is a 

process that involves 

efficient handling of clinical 

information and community 

resources. Care 

coordination is successful 

when processes are 

thorough, follow 

conventional business rules 

in such areas as privacy, 

and involve accurate and 

timely exchange of critical 

information. The quality of 

care coordination can easily 

be compromised by a 

failure to follow through or 

to document appropriately. 

Care coordination is often 

supported by systems and 

technology that facilitate 

secure information 

exchange and care 

tracking. Care coordination 

is enabled by databases of 

community providers that 

allow consumers and 

providers to find 

appropriate, need-based 

resources. Similarly, UM 

and case management staff 

within a health plan can 

assist in making referrals 

and provide online access 

to provider databases. 

Impact Statement 3: Executive Management 

The Parity Act will produce two significant conditions in the marketplace. First, it will make treatment of 

mental health and addiction disorders a more attractive business opportunity. Second, it will lead to 

greater integration of services and providers, particularly among behavioral health and primary care 

providers. The net effect for behavioral health providers is increased competition. Competition can be

good for consumers but it introduces the need for change among established providers. Organizations 

will be pressed by market conditions to examine their strategic plans, to innovate, expand, improve 

quality and customer service, and begin pursuing vertical integration with other systems and providers

of care. This will be true not only for behavioral health and primary care providers, but also between
AHP White Paper ■ Behavioral Health Parity 

Menatl Health and Addition Providers Impact Statement & Call to Action 

© November 2008 12

mental health and addictions treatment providers. The next twelve months will allow every provider to 

consider their place in the market, their bottom line, and their vision. 

Policy People Process Technology 

Strategic 

Planning 

Parity offers unprecedented 

opportunities to review 

organizational visions, 

missions, goals, and 

policies. Decisions to offer 

services, provide greater 

access, and appeal to new 

markets and consumers will 

provide direction to staff 

and establish mandates for 

change. Parity offers an 

opportunity to strengthen 

commitments to personcentered, recovery-oriented 

services. 

Leadership teams can 

include the voices of 

consumers, clinical and 

administrative staff, and 

other community partners in 

making strategic decisions. 

Virtually every staff 

member, clinician, 

shareholder, stakeholder, 

contractor, supplier, and 

consumer will be impacted 

by decisions. 

A strategic planning 

process that includes the 

traditional SWOT 

(strengths, weaknesses, 

opportunities, and threats) 

and PEST (political, 

economic, social, and 

technological) analyses will 

provide a comprehensive 

window into what is 

possible. Organizations are 

encouraged to employ a 

process that builds upon 

core competencies. 

Providers will benefit from 

leveraging the Internet to 

research conditions in the 

behavioral healthcare 

market; by attending 

Webinars hosted by trade 

groups such as SAAS, 

NiTx, NCCBH, and 

NAADAC; and by 

contacting state 

professional associations, 

departments of behavioral 

health, Medicaid agencies, 

and Federal agencies like 

SAMHSA, NIDA, NIAAA, 

and NIMH to collect 

appropriate information. 

Human 

Resources 

Opportunities to consider 

additional staff resources 

will be generated by 

expanded business 

relations with managed care 

organizations as well as 

expansions into new 

markets and services for 

new populations. Parity will 

affect decisions about 

necessary qualifications, 

recruiting, hiring, training, 

and retention. 

Providers should offer 

leadership in times of 

economic uncertainty and 

change, such as those 

generated by the Parity Act. 

Staff should be involved in 

strategic decisions, and be 

able to position themselves 

for training and growth 

opportunities. Changes 

required of provider 

organizations and their 

people will be facilitated by 

regular communication and 

inclusiveness. 

At a process level, 

estimating staffing needs 

with a business plan and 

managing human 

resource/personnel 

processes will allow quick 

and effective responses to 

opportunities. Staffing is a 

challenge in rural and 

underserved areas and in 

places where language, 

gender, and cultural barriers 

exist. Recruiting people in 

recovery as staff may help 

to overcome these barriers. 

Developing a hiring process 

that addresses these issues 

will be an advantage. 

Meeting human resource 

needs can be facilitated by 

technology. Web-based 

recruiting tools and services 

attract candidates and 

human resource databases 

and systems enable very 

efficient and accurate data 

management. Providers 

also can invest in systems 

that manage professional 

credentials and simplify 

contracting with plans. 

Budget and 

Financial 

Management 

As plan policies change to 

comply with the Parity Act, 

so will such financial 

variables as reimbursement 

schedules. Contracting with 

MBHOs will be pervasive 

and will involve far more 

financial data management 

and significant changes in 

revenue generation. 

Providers that require 

professional guidance in the 

areas of business planning, 

financial planning, 

marketing, and contracting 

with managed care should 

identify resources as soon 

as possible. Senior people 

and executives in 

organizations can educate 

themselves by staying 

abreast of parity 

implementation, networking 

Decisions made regarding 

the business opportunities 

associated with parity will 

largely determine any 

process changes required 

in financial forecasting, 

business planning and 

budgeting. Planning 

processes should involve 

projections of many factors 

including competition and 

populations served. 

Involving health plans in 

There are many software 

tools that support business 

planning and budgeting. 

The degree of complexity in 

an organization will 

determine the tools that 

should be used in making 

projections and managing 

finances. Billing systems 

are easily the most 

important financial 

management tool in an 

organization’s arsenal and 
AHP White Paper ■ Behavioral Health Parity 

Menatl Health and Addition Providers Impact Statement & Call to Action 

© November 2008 13

Policy People Process Technology 

with peers, and meeting 

with local plans’ provider 

relations staffs. 

making projections is also 

an important step in the 

process. 

should be capable of 

managing many different 

fee schedules. Revenue 

generation and cash flow 

should be maximized 

through accurate and 

efficient systems prior to 

absorbing an increase in 

volume. 

Performance 

Management 

Plans will continue to 

require provider 

participation in initiatives to 

improve quality and clinical 

outcomes. 

The GAO will be reviewing 

the performance of parity on 

an annual basis so there 

will be increased pressure 

from payers to participate in 

value-based initiatives such 

as pay-for-performance. 

Providers need to institute 

their own quality assurance, 

quality improvement, clinical 

outcomes, consumer 

satisfaction, and other 

measures. While onerous 

and expensive at first, these 

data can help generate a 

competitive advantage. 

Performance management 

–including quality, 

outcomes, satisfaction, 

efficiency, and profit – can 

require significant cultural 

change and represent new 

concepts and practices for 

people at all levels. 

Performance should be 

linked to mission and vision, 

and staff should be included 

in discussions of these 

issues. Establish key 

performance indicators and 

encourage organizationwide involvement in 

measuring and tracking 

performance. Providers 

without expertise to identify 

and measure their own 

performance can include 

consultants in this effort 

and/or seek training from 

the leadership team, 

managers, and supervisors.

Measuring and managing 

performance is a reflection 

of core business processes 

and increases “visibility” into 

how an organization works 

and serves people. Properly 

measuring quality and 

outcomes requires 

implementing new 

processes, and virtually 

everything can be 

measured and improved if 

an organization is pursuing 

a comprehensive program. 

Therefore, it is important to 

approach performance 

measurement strategically 

and implement what is most 

urgent and important for 

immediate growth goals. 

Many technologies assist 

performance management, 

but selecting the 

appropriate one is a 

challenge for providers. The 

ability to analyze and report 

quality, outcomes, and 

satisfaction data is a 

function of the ability to 

collect data in a reliable 

database. Some EMR and 

practice management 

systems are equipped with 

reporting functions while 

others will require additional 

databases or “data 

warehouse” technology to 

integrate data from 

disparate systems and 

allow parsing and analysis. 

Reporting systems and 

Business Intelligence (BI) 

tools are an additional 

investment. Some IT tools 

can allow performance data 

sharing across 

organizational boundaries. 

Call to Action 

The behavioral healthcare field has advocated for fair and equal coverage and treatment on behalf of 

consumers for many years. Providers have had strong allies in Washington D.C. in the form of a handful

of Senators and Presidents. On October 3rd of this year, support for parity and equity was nearly 

unanimous. Beginning January 1, 2010, nearly all Americans will have access to coverage that finally 

eliminates many of the most common barriers to behavioral health treatment. The last of the obstacles 

and barriers may fall as a result of decisions made and actions taken by behavioral healthcare providers. 

Despite improved coverage, consumers will continue to face access issues. As a result, parity opens the 
AHP White Paper ■ Behavioral Health Parity 

Menatl Health and Addition Providers Impact Statement & Call to Action 

© November 2008 14

door to providers who want to expand into new, viable markets; offer expanded service levels; and 

reach new target populations. 

New levels of coverage will mean that more people eventually will seek services from qualified 

behavioral health professionals, and that they may be treated for longer time periods than was 

previously possible. Providers need to decide how many more consumers they want to attract, serve, 

and retain, as well as how they want to serve them.

Parity will entail more managed care and more integration between the behavioral health and 

primary care systems, as well as between the mental health and addictions treatment systems. 

Providers can act now to secure positions in relation to MBHOs, HMOs, and primary care providers in 

their communities. The result will be a stronger reputation for cooperation and an increase in 

opportunities to collaborate. 

Expansions in markets, services, and partnerships will necessitate changes in organizational 

structures, staffing levels, and infrastructures. Providers must begin having strategic discussions and 

acting to manage change at policy, staffing, process, and technology levels in their organizations. The 

implementation of changes at these levels is difficult to motivate and manage in the course of day-today business. Those who do not have adequate resources but recognize the opportunity for change 

need to consider the involvement of experts, peers, partners, and consultants in their planning and 

execution. 

Successful change involves accurate assessment of the current state of play and evaluation of 

resources and capabilities to manage change initiatives comprehensively. Provider organizations are 

encouraged to seek support in assessing where they stand today in relation to where they could be or 

where they envision being in one, three, and five years. Invest in technical assistance that will ensure 

effective adoption of best practices among clinical staff. Seek expert advice when designing and reengineering business processes and adopting health information technology. Much the same way 

consumers need the help of behavioral health professionals to assess their motivation and navigate 

stages of change, provider organizations benefit from the perspective, resources, and expertise of 

qualified professionals who can help them achieve their business goals and realize their visions. 
AHP White Paper ■ Behavioral Health Parity 

Menatl Health and Addition Providers Impact Statement & Call to Action 

© November 2008 15

About AHP 

Real World Solutions for Systems Change 

Advocates for Human Potential, Inc. (AHP), is a research and consulting firm that specializes in changing 

and improving the organizational systems that help individuals create full and productive lives. Founded 

in 1980, AHP’s comprehensive range of services helps clients identify and define challenges and 

potential solutions, engage stakeholders, design or modify programs and organizational practices, 

provide training, and develop new resources. AHP also conducts research on difficult issues, evaluates

programs and service system, and helps clients translate research into practice. 

Our services are organized in the following areas: research and evaluation; technical assistance and 

training; system and program development, including strategic planning and information management; 

and resource development and dissemination, in core content areas. Those areas include mental health 

policy and services, substance abuse treatment and prevention, co-occurring disorders, workforce 

development, electronic medical records, trauma, homelessness, housing, employment program 

development, domestic violence, and criminal justice. 

AHP provides extensive consultation to healthcare provider organizations; health plans; and Federal, 

state, local, and international governments. The company manages Federal contracts of all sizes for 

several U.S. agencies in the areas of mental health, substance abuse, co-occurring disorders, workforce 

development, homelessness, domestic violence, elder abuse, rural elder health, and performance 

review and improvement. These projects enhance understanding of critical issues, help agencies and 

their stakeholders improve performance, and provide the most current information to the field about 

effective programs and system development to better serve vulnerable populations. 

AHP’s passionate and committed staff members, many of whom are nationally recognized, are known 

for their intimate knowledge of “what happens on the streets” as well as in the offices of policymakers, 

and they are equally comfortable in both settings. The insights they bring to large national projects are 

informed by diverse experience in the field. AHP is especially known for connecting the dots across 

disciplines, service systems, funders, and populations to develop comprehensive real-world solutions 

that meet the needs of consumers and providers. 

The authors of this report together bring more than 75 years of experience helping to improve the 

performance of behavioral healthcare systems. 

Patrick Gauthier works with AHP’s eHealth and Organizational Development practice. He specializes in 

business process and workflow management, and has served in a variety of leadership positions in the 

healthcare, mental health, insurance, consulting, governmental, and nonprofit fields, as well as 

consulting with healthcare clients throughout the country. His expertise in operations is related to 

quality improvement, health utilization management, technology adoption, building healthcare provider 
AHP White Paper ■ Behavioral Health Parity 

Menatl Health and Addition Providers Impact Statement & Call to Action 

© November 2008 16

networks, reaching underserved populations, and building successful public-private partnerships. For 10 

years, he served as Chief Marketing Officer and Chief Operations Officer for a national insurer dedicated 

to mental health and addiction. He was responsible for nationwide crisis-call center operations, 

customer service, eligibility and enrollment, utilization management, case management, and provider 

contracting. Previously he served in management roles in adolescent residential treatment settings, 

acute psychiatric hospital settings, and a drug and alcohol detoxification center. 

Carol Bianco leads the Mental Health practice at AHP and has provided consultation and training to 

community-based organizations and state and local mental health departments throughout the states 

and territories. Her expertise includes mental health policy and financing, organizational development, 

supportive housing development and financing, supported employment, and job creation for people 

with disabilities. At AHP, she has directed several contracts for the Substance Abuse and Mental Health 

Services Administration (SAMHSA) that assist states and territories in implementing the 

recommendations of the President’s New Freedom Commission on Mental Health and provide 

resources and technical assistance to the mental health community regarding best practices to promote 

community integration for children and adults with mental disorders. Currently, she also serves as a 

Technical Assistance Consultant/Advisor for the SAMHSA Center for Mental Health Service’s Mental 

Health Transformation State Incentive Grant Program. She was formerly Director of Program 

Development for New York State’s largest provider of supportive housing and community psychiatric 

rehabilitation programs for adults with serious mental illnesses. 

Neal Shifman, AHP’s founder, President, and CEO, is a nationally and internationally known consultant 

and facilitator in service system redesign, with special expertise in mental health, substance abuse, 

criminal justice, and a variety of at-risk populations and their interface with social service systems. He 

was an early pioneer in the development of continuum of care designs for substance abuse prevention 

and treatment, was a founder and first president of the State Association of Addiction Services (SAAS), 

and has worked extensively with Federal and state systems on a large number of substance abuse and 

behavioral health projects. For the past 12 years he has led a number of strategic initiatives as well as 

planning and facilitative processes involving governments (both civil servants and political ministries), 

the judicial systems, non-government organizations, and the private sector. Examples of his work 

include the design of the substance abuse delivery system in St. Maarten; the coordination, 

development, and implementation of a WHO-sponsored Caribbean Initiative and subsequent 

conference on substance abuse; policy, facilitative, and writing support for United Nations Drug Control 

Program’s (UNDCP) International Drug Court Project; a three-year redesign of the criminal justice system 

in Bermuda known as Alternatives to Incarceration and a similar effort currently underway in St. 

Maarten; and numerous strategic planning, program design, and needs assessments for NGOs ranging 

from HIV/AIDS, to child and adolescent services, women and violence, substance abuse prevention and 

treatment, labor and training, and welfare and social services. 

AHP has primary offices in Sudbury, MA (near Boston); Albany, NY; and Germantown, MD (near 

Washington, D.C.) and staff located nationwide.
AHP White Paper ■ Behavioral Health Parity 

Menatl Health and Addition Providers Impact Statement & Call to Action 

© November 2008 17

 
AHP White Paper ■ Behavioral Health Parity 

Health Plan & Healthcare 

 Purchaser’s Strategic & Tactical Guide to Implementation

© May 2009 1 

. 

Behavioral Health Parity: 

Health Plan & Healthcare 

 Purchaser’s Strategic & Tactical 

Guide to Implementation

Prepared By: Advocates for Human Potential 

DUNS: 19-505-7666 

Patrick Gauthier, Senior Consultant 

Carol Bianco, Director of Mental Health 

Neal Shifman, President and Chief Executive Officer

Contact: Neal A. Shifman 

President and Chief Executive Officer 

Tele: 978.443.0055 ext 414 

nshifman@ahpnet.com 

May 2009 
AHP White Paper ■ Behavioral Health Parity 

Health Plan & Healthcare 

 Purchaser’s Strategic & Tactical Guide to Implementation

© May 2009 1 

Table of Contents

THE 2008 PARITY ACT...................................................................................................................................... 3 

SITUATION ANALYSIS ...................................................................................................................................... 6 

IMPLEMENTATION........................................................................................................................................... 8 

IMPLEMENTATION OUTLINE ....................................................................................................................... 10 

NEXT STEPS...................................................................................................................................................... 13 

ABOUT THE AUTHORS................................................................................................................................... 15
AHP White Paper ■ Behavioral Health Parity 

Health Plan & Healthcare 

 Purchaser’s Strategic & Tactical Guide to Implementation

© May 2009 31 

Purpose 

The passage of the Paul Wellstone and Pete Domenici Mental Health Parity and Addictions Equity Act 

(MHPAEA) late in 2008 will continue to give rise to much change in the coverage of mental health and 

substance use disorders among health plans. The outcome of a successful implementation for 

consumers and their families will be equitable coverage for the treatment of their disorders and 

improved quality of life. Implementation will be a rigorous and involved process for health plans but 

important benefits accrue to them as well. Primarily, properly screened, diagnosed, and treated mental

health and substance use disorders relieve financial pressures on health plans that result from comorbidity, repeated attempts at inappropriate treatment, and misuse of the emergency room for 

mental health concerns. Advocates for Human Potential, Inc. (AHP) hopes that this paper, as well as the 

others in the series, will help you prepare to implement the 2008 Parity Act, which goes into effect on 

January 1, 2010. 

Hundreds of payers – including self-insured employers – have fewer than six months to bring themselves

into line with the Parity Act. As regulations are not expected to be released until October 2009, 

implementation will be rapid. 

This paper will introduce and summarize the Mental Health Parity and Addiction Equity Act of 2008, 

providing an overview of issues that are particularly salient for healthcare providers. It will then present 

a situation analysis of state by state parity regulations and explain many of the implementation issues 

payers can expect, particularly those new to mental health (MH) and substance use disorder (SUD) 

treatment. Finally, it will offer a roadmap, an implementation outline, and next steps to assist 

healthcare purchasers in navigating the path to full implementation of the requirements of the Parity 

Act. 

Throughout the paper you will see lessons learned set off from the main text. By sharing the experiences 

of those who have already implemented parity regulations, we hope that you can gain insight into the 

challenges and solutions that lay ahead. The Implementation Outline is a practical guide to 

implementation activities and tasks that you can begin using immediately. 

This paper is not intended to establish a rationale for expanding coverage; this has been accomplished

through the Act and the research supporting it. The purpose of this paper is to provide information and 

assistance to those tasked with this implementation. 

The 2008 Parity Act 

On October 3, 2008, the United States Congress passed the Paul Wellstone and Pete Domenici Mental 

Health Parity and Addiction Equity Act of 2008. The passage of the Parity Act is one of the most 

important developments in the mental health (MH) and substance use disorders (SUDs) treatment fields 

in the past half century. The Parity Act provides enhanced, equitable coverage for more than 110 million 

Americans (including more than 80 million individuals covered by Employee Retirement Income Security 

Act [ERISA] plans) and ends differential coverage of MH and SUDs treatment for this population. 

The Act takes effect for the majority of plans on January 1, 2010 and regulations are scheduled for 

issuance in October 2009. It builds upon the success of parity coverage President Bill Clinton extended 

to Federal employees and the experience more than 40 states have had with their own versions of 

parity coverage. With some exceptions, health plans that provide mental health or addiction treatment 

benefits now must provide the same financial terms, conditions, requirements, and treatment 
AHP White Paper ■ Behavioral Health Parity 

Health Plan & Healthcare 

 Purchaser’s Strategic & Tactical Guide to Implementation

© May 2009 41 

It is not enough to maintain long lists of 

MH and SUD providers. To be of real 

value, the providers must be at their 

published addresses, accepting new 

patients, and providing the services 

described in your provider manual. 

Perform random sample calls to audit the 

list and determine the value it truly 

represents for you and your subscribers. 

limitations for mental health and addictions as they do in providing “predominant” coverage for medical 

and surgical conditions. 

Critical provisions of the Act include the following: 

 Cost-Sharing and Limitations — Mental health and addiction treatment cost-sharing, deductibles, 

co-pays, and other forms of co-insurance as well as annual limits and lifetime limits must be equal to

“predominant” coverage for “substantially all” of the covered medical and surgical conditions. In 

addition, limitations on the scope of treatment and treatment frequency and duration cannot be 

more restrictive than those limiting other medical conditions and care. 

 Conditions/Diagnoses Covered —The Federal government appears to be leaving decisions about 

which conditions to cover to states, payers, and employers. Several approaches have been taken 

over the past decade for covering various mental illnesses. 

 Parties Responsible for Implementation — The Act will be implemented by states, Medicaid 

agencies and Medicaid managed care plans, 

employer-based plans, third-party administrators 

(TPAs), managed care organizations, and managed 

behavioral health organizations (MBHOs). 

 Covered Services and Providers — Payers and 

employers will need to decide (subject to 

stipulations in the October 2009 Federal 

regulations) which MH and SUD services, levels of 

care, and providers will be covered. 

 Treatment Plans and Best Practices — The treatment of people with mental illnesses and/or 

substance use disorders is most cost effective, as measured in positive clinical and quality of life 

outcomes, when scientifically validated practices are employed in a comprehensive treatment plan. 

Ongoing research is consistently providing new and reliable evidence concerning such practices, and 

payers are encouraged to stay abreast of their costs and benefits for specific populations in the 

same way that they review pharmaceutical, medical, and surgical advances. 

 Out-of-Network Benefits — Where allowed for other conditions, out-of-network benefits for 

mental health and addictions treatment must be provided and must be equal to those provided for 

other medical and surgical benefits. 

 Utilization Management (UM) and Level of Care Guidelines — Plans can continue to engage in 

healthcare UM, as well as utilization review and other types of assessments, and determine 

coverage on a case-by-case basis. Plans are required to provide members, consumers, and providers 

with their medical necessity criteria and reasons for benefits/coverage or claims denial. 

 Compliance — The Department of Labor, Health and Human Services, and the Treasury will almost 

certainly be responsible for enforcement of the Act. These departments are expected to produce 

guidelines and regulations later this year. 

 General Exemptions — More than 40 states have some form of mandated mental health and/or 

addiction treatment parity and those whose coverage is more limited than that provided by the Act 

will be required to address the discrepancy. The lack of parity for addiction services will be the 

biggest gap for approximately 30 states to fill. A list of states and their status appears on page 5. 

 Employer Exemptions — The Act exempts employers with fewer than 50 employees and plans 

whose total premium costs increase more than two percent in the first year or one percent in any 

subsequent year, subject to an annual application and review process. 

 Medicaid and Medicare — Medicaid managed care plans are affected by the Act; Medicare is not. 
AHP White Paper ■ Behavioral Health Parity 

Health Plan & Healthcare 

 Purchaser’s Strategic & Tactical Guide to Implementation

© May 2009 51 

Payers are strongly encouraged to conduct peer reviews 

to better understand how level of care decisions are made 

and to require rigorous documentation. This will help 

avoid problems such as the shifting of medical costs to the 

medical plan by MBHOs that make inappropriate coverage 

decisions and referrals. Level of care guidelines and 

decision support tools are available from software 

developers with expertise in these areas. Seek support 

from UM vendors and MBHOs that can demonstrate 

superior quality, member satisfaction ratings, and up-todate evidence-based level of care guidelines, process, and 

tools. 

Most mental health emergencies occur after hours. If you’re 

considering in-sourcing tasks that are now a function of your 

MBHO partner, plan to have mental health professionals 

available to answer calls 24/7/365. One payer overlooked this 

only to have a subscriber commit suicide after their answering 

service referred him to an urgent care clinic that had closed 

hours before he arrived at their doorstep. After-hours crisis 

call center operators can be contracted to perform this service 

at a low cost. 

Implications for Health Plans 

The Parity Act will affect health plans’ basic business infrastructure in four distinct dimensions or zones: 

policy, process, people, and information technology (IT). As planning and implementation progresses 

within health plans, each zone should inform the others in 

an interdependent fashion and all will require review and 

possible adjustments and offer areas for development. 

Figure 1. Interrelationship of Basic Business Zones 

Zone 1: Policy — This is the first and 

broadest area requiring review. Policy interpretation will help guide plan design and coverage decisionmaking as well as member and provider communications concerning benefits, policies, and plan rules. 

Payers are encouraged to consult with experts (policy experts, brokers, and consultants) as well as state 

Department of Insurance officials for any early interpretation of the Act. In-house legal counsel also can 

be very helpful in beginning to interpret the Act. Policy and legal interpretation will be considerably 

easier following the issuance of Federal guidelines and regulations later in the year. Until then, however, 

payers will have to do their best to study state regulations and base their approach on the most likely 

path forward, given other states’ experiences with parity. 

Zone 2: Process — Operational workflow 

and business processes must be reviewed 

to ensure that policy changes are 

implemented efficiently and to be certain 

that the desired impacts are optimized for 

plan members as well as staff. Particular 

attention should be paid to core processes 

such as marketing, enrollment, customer 

service, utilization and medical 

management, provider contracting, claims 

processing, and quality improvement. For 

example, deductibles represent a 

tremendous opportunity for this kind of 

business process management. Many plans will have to decide how they will calculate deductible(s) if 

and when coverage and benefits are managed in a carve-out scenario that includes MH/SUD claims 

processing outsourced to the MBHO.

Zone 3: People — The implementation of the Act will require review of staffing levels, training, 

performance standards, and evaluation. It will also require thoughtful communication to promote 

provider integration and collaboration, and to ensure that plan members understand their rights and 

responsibilities under parity. In addition, the Act will influence relationships with partners, providers, 

suppliers, and, most importantly, consumers. For example, payers will need to consider coverage for 
AHP White Paper ■ Behavioral Health Parity 

Health Plan & Healthcare 

 Purchaser’s Strategic & Tactical Guide to Implementation

© May 2009 61 

expanded levels and types of service for SUD treatment. Some payers currently offer medical 

detoxification and outpatient counseling for SUDs and will want to explore the addition of residential, 

partial, and intensive outpatient levels of care in the near future. 

Zone 4: IT — This zone includes hardware, networking, software, and data management. The Act will 

likely affect database configuration, new system requirements and procurement, and the potential for 

interface between systems in order to support new policies and processes. Decision-support systems, 

for example, may be required if a payer desires to manage MH and SUD treatment internally. 

Information exchange between payers and their MBHO partners is especially pertinent to authorizing 

treatment plans and claims processing. 

Situation Analysis 

In order to understand the changes that will be effected by implementation of parity regulations, we 

must first survey where states currently stand with regard to parity. 

The following chart illustrates each state’s parity status. However, until Federal Parity Act regulations 

become available, it will be difficult to precisely determine what will be required of payers in each state. 

Plans in states with mandates or limited versions of parity will have more to change and implement than 

states considered to have the “best” coverage. 

Chart 1. State Parity Status 

State Status State Status State Status State Status 

Connecticut Best California Limited New Jersey Limited Michigan Mandate 

Maryland Best Colorado Limited New York Limited Pennsylvania Mandate 

Minnesota Best Delaware Limited Ohio Limited Alaska Mandate 

Vermont Best Hawaii Limited Oklahoma Limited Georgia Mandate 

Oregon Best Illinois Limited S. Carolina Limited Mississippi Mandate 

Indiana Good Iowa Limited S. Dakota Limited Wisconsin Mandate 

Kentucky Good Louisiana Limited Tennessee Limited D.C. Mandate 

Maine Good Massachusetts Limited Texas Limited Kansas Mandate

N. Mexico Good Missouri Limited Utah Limited N. Dakota Mandate

N. Carolina Good Montana Limited Virginia Limited Wyoming None 

Washington Good Nebraska Limited W. Virginia Limited Idaho State 

employees 

only

Arizona Limited Nevada Limited Alabama Mandate 

Arkansas Limited N. Hampshire Limited Florida Mandate

Source: Mental Health America, July 2008 

Best = Best parity and comprehensive equity (covers MH and SA, no exemptions) 

Good = Good parity coverage (few exceptions or limitations) 

Limited = Mostly applicable to specific populations such as serious mental illness SMI (listing 7-10 “biologicallybased” disorders such as psychosis and bi-polar disorder) and can exclude SUDs. Often exempts employers with 50 

or fewer employees 
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Credentialing providers is absolutely 

essential to being a good steward of 

coverage and care. Many tragic stories 

underscore the need for primary source 

verification of education, licensure, 

insurance, and other credentials. One 

payer failed to comprehensively validate 

its providers’ credentials only to discover 

that children in one particular treatment 

program were camping with provider staff 

and exchanging their medication for staff 

favors. 

Children suffering from SEDs require services more 

commonly associated with schools, juvenile justice 

programs, and other social service agencies. They 

also require specially trained child psychiatrists and 

psychologists to make appropriate diagnoses and 

manage complex treatment plans and medications. 

Some also require special services such as nonhospital residential care for short periods. 

Mandate = State-mandated levels of coverage or benefit expressed in terms of financial limits and/or treatment 

constraints. Mandated coverage is often inconsistent with Parity. 

The current status of state-specific parity will have a bearing on the gap between what fully insured,

commercial plans are doing today and what they will

need to do in order to comply with new Federal parity 

regulations. TPAs administering benefits on behalf of selfinsured ERISA groups and employers may have the 

greatest “distance to travel” in terms of closing the gap 

between where they are today and where they will likely 

need to be a year from now.

While many states already have pieces of parity enacted, 

other states will have a long way to go to reach full 

implementation. Beyond changes in regulations, the Act’s 

impacts will be felt in the subtle shift of populations and 

costs, most likely in the areas of: 

Public to Private Sector — Experts anticipate a slow but steady shift in covered populations and costs 

as people with serious mental illness— and SUDs are increasingly treated through employer health 

plans. However slow this shift may be, the Parity Act is expected to transfer some measure of 

responsibility for coverage, treatment, and cost from the public to the private sector. 

To address this shift, payers will increasingly consider tactics such as: coordinated case management,

medical home models, decision-support systems, and specialty networks of care that include 

community-based sub-clinical systems of support. These require considerable planning and policy and 

procedure modifications, especially in contracting, reimbursement rules, medical management, and 

member services. 

Integration of Behavioral and Primary Healthcare — The Parity Act will accelerate the need for 

integrated primary and behavioral healthcare. Research shows that outcomes improve when medical 

management and psychosocial therapies are provided in a single setting. 

Implementing the law will present opportunities for: 

 Bi-directional co-location of behavioral and 

primary health providers, thereby increasing the 

likelihood that behavioral services, including 

medication management, will be easier for 

clients to access; research indicates that this will 

result in improved outcomes. However, colocation may also accelerate the need to address 

cross-training issues for providers. 

 Reshaping reimbursement for primary care providers who provide mental healthcare. These 

individuals provide the majority of mental health treatments and often are the frontline screeners 

for care. However, their reimbursement is frequently limited to a specific number of treatments per 

day. 

“Blended” Systems of Care — Parity presents opportunities to blend private and public sector 

approaches. The public SUD treatment system has evolved to include “recovery support services” or 

“wrap-around services” which will need to be factored into private health plans as viable and important 

adjuncts to medical detoxification, rehabilitation, and intensive outpatient treatment. During the past 30 

years, researchers have found that many clinical services are less effective on a stand-alone basis than 
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Effective, timely, and accurate communications 

to subscribers and plan members is critical. 

One plan failed to notify its subscribers, 

members, and providers of a change in MBHO 

vendors and patients and providers were in 

limbo for weeks. Providers that continued 

serving patients after the transition had to go 

through a difficult grievance process to 

recapture monies owed them. The episode 

disrupted hundreds of therapeutic 

relationships and tarnished the reputations of 

several corporations. 

they are when paired with these sub-clinical, community-based recovery support services. For example, 

recovering alcoholics or individuals suffering from schizophrenia are more successful in adhering to their 

treatment plans if they are provided with community-based services such as transportation to and from 

treatment. 

The need for blended systems of care becomes even more apparent when considering children with 

severe emotional disturbances (SEDs). State laws often require that these children be provided with an

array of services and this responsibility is usually taken on by the public schools and the public mental 

health system. Payers that are newly required to meet these children’s needs must consider how care 

can best be provided. 

Chronic Illness Models of Care — Payers will be confronted with the complex and pervasive treatment 

needs of their members who suffer from SUDs and serious mental illnesses (SMIs). These are serious, 

chronic conditions and require different types and levels of care over longer periods of time. Relapses 

are to be expected and treatment outcomes will vary depending upon complications such as comorbidity. Payers and providers are encouraged to address collaborative treatment planning needs, 

especially where co-morbidity is concerned, in order to deliver high quality, cost-effective, and medically 

sound care. Data suggests that medical conditions (e.g., diabetes, obesity, heart disease, and chronic

obstructive pulmonary disease) are complicated by mental illness as much as mental illness is 

complicated by other medical conditions. The expectation that the “whole” person will be treated may 

truly be coming of age and saving plans money over the long-run. 

Carve-Outs and Carve-Ins — Payers and employers who currently have their MH and SUD benefits 

managed by an MBHO will likely continue to do so; however, they will need to ensure that their vendor 

is compliant with the Act, particularly as it relates to disclosing guidelines for levels of care and for 

equity between medical utilization management practices for primary care and for MH and SUD 

treatments. Payers who do not currently have their 

MH and SUD benefits managed by an MBHO vendor 

will want to explore that option as well as the option 

of a carve-in. The latter involves contracting with and 

integrating MH/SUD experts, case managers, and 

reviewers with existing medical management teams 

and departments. 

Population Management — Health plans and 

purchasers will want to consider population 

management programs that address disease 

prevention and management throughout an entire 

population. By developing programs that address 

needs at any point along the disease continuum, 

payers can expect improved rates of early identification and treatment. This approach – including 

strategies such as early and periodic screening, patient education, self-care, and support for family 

members – is linked with lower overall healthcare costs. 

 Implementation 

During the planning process, health plans and purchasers are encouraged to consider both the 

functional and tactical dimensions of implementation: 
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Payers may contemplate excluding all but 

the seven to ten “biologically-based” 

disorders expecting that they will be better 

able to manage risk, provider services, and 

costs. However, some providers may shift 

patients into covered conditions to provide 

them with better care. In addition, patients 

whose diagnoses are not covered may use 

services that cost much more over time (e.g. 

emergency room visits). 

Functional Implementation – This will require health plans and purchasers to assess the Act’s impact 

throughout their organizations. All departments or functional areas will be involved to some measure in 

implementing the Act. Organizations should meet early to begin outlining how the Act will impact: 

1. Legal Interpretation of the Act and related regulations 

2. Plan policies and benefit design 

3. Covered diagnoses, providers, and services 

4. Benefit carve-out to an MBHO 

5. Provider networks and incentives 

6. Level of care guidelines, decision support protocols, 

and member communications 

7. Fiscal impact and data analysis 

Payers also have to consider the Act’s implications across 

other functional areas. These include possibly managing a single deductible and out-of-pocket 

maximum, customer service, existing disease and case management programs, and medical and 

utilization management. Other functional areas are subrogation and coordination of benefits, marketing

and managing multiple plan designs and lines of business across states, prevention initiatives, and 

business partnerships. 

Tactical Implementation – Parity requires a great deal of tactical planning and execution. Interdepartmental, multi-disciplinary teams within payer organizations are encouraged to consider their 

entire change management arsenal. Tactical approaches to implementation should include:

1. Assessment of current benefits and legal review 

2. Strategic planning 

3. Business process and workflow reengineering with particular attention to gap analysis and 

employee training 

4. Expert consultation 

5. Business process outsourcing options 

6. Implementation oversight and project management 

7. Data management strategy (system reconfiguration and reporting) 

A Roadmap for Implementation provides general steps within each of the four zones that can be 

implemented and supplemented. Payers have much to learn from the implementation of other parity 

laws. Vermont implemented a comprehensive form of parity that will likely be a model for national 

dissemination in 2010. Similarly, the Federal Employees Health Benefits Plan (FEHBP) provided hundreds

of plan administrators serving millions of enrollees the opportunity to implement parity at the beginning 

of the decade and to begin measuring its actual impact on costs and overall quality of care. Minnesota, 

Maryland, Connecticut, and Oregon have implemented parity while containing costs. 

Figure 2. Comprehensive Roadmap for Healthcare Purchasers 
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Implementation Outline 
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Moving from a road map to actually “where the rubber meets the road”, the following is an 

Implementation Outline that can be used as a guide in navigating the implementation process. Using 

the model described earlier in this paper we have divided the areas of business infrastructure into four 

zones and have provided steps for implementation for each zone. By using this same model in our other

white paper: Mental Health and Addiction Providers Impact Statement & Call to Action, we were able to 

highlight steps providers can take as Parity rolls out. We used the same format in our discussion of 

payers/purchases, and encourage the reader to compare and contrast the steps of implementation to 

better collaborate and anticipate the needs of partnering organizations. Please avail yourself to these 

high level project management tools. 

Impact Zone 1 – Steps plans can take with respect to statutory compliance, policies, and plan rules. 

Policy 

Plan seeks guidance from State Insurance Commissioner and/or Federal regulators with respect to 

regulations and policy direction. 

Plan establishes its rules concerning benefits, limitations, restrictions, out-of-pocket expenses as 

well as covered diagnoses, provider types and services. Plan considers how new rules apply to 

primary care and hospital settings. 

Plan develops marketing, communications, certificates of coverage, and Summary Plan 

Descriptions to reflect new rules and policies. Plan also develops provider communications 

strategy for mental health, substance abuse, and primary care providers. 

Plan addresses need for 24/7/365 hotline. Plan addresses MBHO contracts and modifies 

administration, governance, risk sharing, performance standards, and guarantees. 

Plan conducts claims cost analysis and establishes consistent methodology for comparing 

premium impacts year over year. Various research and analysis models can be established. 

Plan explores and defines any risk sharing, pay-for-performance, and other incentives with 

providers. Plan considers addition of prevention and self-care providers. 

Impact Zone 2 – Steps plans can take to establish new and modify existing processes and workflow to 

properly implement policies and rules. 
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Process 

Validate policies and plan rules with regulatory agencies. This may be a particular challenge if the 

regulations are not published on or prior to October 3, 2009, when they are expected. 

Determine the impact of plan rules, covered diagnoses, provider types, and services on core 

processes and any out-sourced processes. Examples include impacts on Provider Contracting and 

Marketing. It is recommended that a Parity Project Manager be assigned for the duration of the 

implementation. In addition, some plans may benefit from conducting proof of concept 

simulations that estimate utilization patterns and cost impacts. 

Evaluate the opportunity for adoption and reimbursement of services and providers that enable 

care for the chronically SMI and SED children. Approaches include primary care and behavioral 

health integration, collaborative care, patient-centered medical home care and case management. 

Evaluate Level of Care Guidelines where MH and SA are concerned, assess staffing levels, medical 

management practices, and decision support. 

Modify core business processes and workflow to accommodate changes in policy, coverage, 

guidelines, and providers. Review and modify policies and procedures as well as any templates or 

forms involved in workflow. Communicate need for any information system reconfiguration 

requirements to IT personnel, analysts, and developers. 

Communicate and disseminate clear plan policies and other pertinent documentation to all 

providers and members throughout the entire implementation process. 

Impact Zone 3 – Impacts of change on personnel, suppliers, providers, and plan members. Many of the 

impacts will also be absorbed and managed at the level of organization. 

People 

Define organizational mission, goals, and objectives concerning compliance and coverage. 

Establish clear Key Performance Indicators as early as possible. 

Establish necessary relationships and begin contract negotiations with out-source vendors such as 

24-hour call centers, utilization review, and specialty provider networks. Clarify performance 

expectations, standards, and incentives for performance guarantees. 

Determine impact of new processes on staffing levels, qualification requirements, and conduct 

any necessary training. 

Conduct outreach with consumer groups such as your local chapter of NAMI, employers’ health 

coalitions, and provider associations to identify issues early and develop plans of action to resolve 

concerns effectively. 

Address culture, language, gender, and special needs (among SMI and SED, especially). Develop 

communication and feedback loops between parties. 

Develop appropriate agreements with facilities, community-based services (including any public 

sector providers), substance abuse providers, and others. Address need for competitive, 

discounted rates early in the process. 

Impact Zone 4 – Impacts on enterprise-wide information technology and systems. 
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Technology 

Immediately evaluate IT and data management needs associated with new policies. 

Conduct IT assessment, system/vendor evaluations, and selection relative to any new applications 

required by plan to manage policies. Prepare and deploy implementation plans. Consider claims 

accumulators, decision support systems, case management systems, and personal health records 

systems, for example. 

Reconfigure systems, tables, data warehouse, and reporting tools based on new requirements and 

codes (HCPCS, CPT, ICD-9, DSM-IV, HBAI, etc.) 

Reconfigure systems to accommodate new processes, workflow, forms, and templates. 

Reconfigure based on new provider type, service and benefit parameters and requirements. 

Conduct stakeholder focus groups to explore health IT options such as personal health records, 

online patient and family education, portals, disease registries, and telemedicine (telepsychiatry) 

Establish “Data Liquidity” targets and mechanisms to facilitate research, quality 

assurance/improvement, access, outcomes, satisfaction, and cost analysis/reporting. 

Next Steps 

Beginning January 1, 2010, nearly all Americans will have access to coverage that finally eliminates many 

of the most common barriers to behavioral health treatment. This will have a lasting impact on and 

ramifications extending into all facets of the healthcare field. While the full consequences of enactment 

of the MHPAEA cannot be anticipated, a few outcomes are to be expected and the natural question is 

what can we do in order to be successful? 

 New levels of coverage will mean that more people will eventually seek services from qualified 

behavioral health professionals over longer courses of time (longer episodes of care). Plans should 

consult best practices to establish the service and provider mix they want to offer in order to 

produce positive outcomes at a reasonable price. 

 Parity can entail: changes in managed care; integration between the behavioral health and primary 

care systems; and some degree of integration between mental health and addictions treatment 

providers. Plans can act now to secure agreements with MBHOs, specialty networks, and providers 

in their communities that can meet special needs. The result will be stronger reputations for 

cooperation and increased opportunities to collaborate. 

 Enhancements to coverage and expanded services may necessitate changes to organizational 

structure, staffing levels, and infrastructure. Payers should begin strategic discussions and change 

management at the policy, staffing, process and technology levels. The implementation of change 

at these levels is difficult to motivate and manage in the course of day-to-day business. Those who 

do not have adequate resources but recognize the opportunity for change need to consider the 

involvement of experts, peers, partners, and consultants. Infrastructure and staffing change may be 

important in UM, customer service, and provider contracting. 

 Successful change involves accurate assessment of the current state of operations as well as an 

evaluation of internal resources and capabilities to manage change over time. Payers are 

encouraged to:
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The advent of full Federal Parity is an opportunity for a comprehensive and thoughtful 

implementation. Anyone who has endured an incomplete implementation in the past and had to 

deal with the negative consequences and re-work will attest to the need to get it right the first time. 

 Seek support in assessing where they stand today in relation to where they could be or 

where they envision being in 1, 3, and 5 years. 

 Invest in technical assistance that will ensure effective adoption of best practices. 

 Seek expert advice when designing and re-engineering business processes and adopting 

health information technology. 
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About the Authors 

AHP 

Real-World Solutions for Systems Change 

Advocates for Human Potential (AHP), Inc., is a research and consulting firm that enhances and improves 

organizational systems so individuals may have fuller and more productive lives. Since its founding in

1980, AHP has worked with clients including healthcare provider organizations, health plans, and all 

levels of government. The company manages contracts of all sizes in the areas of mental health, 

substance abuse, co-occurring disorders, workforce development, homelessness, domestic violence, 

elder abuse, rural elder health, and performance review and improvement. 

AHP’s passionate and committed staff members, many of whom are nationally recognized, are known 

for their intimate knowledge of “what happens on the streets” as well as well as in the offices of 

policymakers, and they are equally comfortable in both settings. The insights they bring to projects are 

informed by diverse experience in the field. AHP is especially known for connecting the dots across 

disciplines, service systems, funders and populations to develop comprehensive real-world solutions 

that meet the needs of consumers and providers. The company has a nationwide network of staff and 

offices in Sudbury, MA (near Boston); Albany, NY; and Germantown, MD (near Washington, D.C.). 

The authors of this report together bring more than 75 years experience helping to improve the 

performance of behavioral healthcare systems. 

Patrick Gauthier is a senior consultant working with AHP’s eHealth and Organizational Development 

practice. He specializes in mental health service system design and in financing, strategic planning and 

business process management. Mr. Gauthier has served in a variety of leadership positions in the 

healthcare, mental health, health insurance, MBHO and EAP, consulting, governmental and nonprofit 

fields. His expertise in operations is related to quality improvement, health utilization management, 

technology adoption, building specialty provider networks, reaching underserved populations, and 

creating successful public-private partnerships with private, employer-based, state and county MH/SA 

systems. For 10 years, he served as Chief Marketing Officer and Chief Operations Officer for a national 

insurer dedicated to mental health and addiction. He was responsible for nationwide crisis-call center

operations, customer service, eligibility and enrollment, utilization management, case management, and

provider contracting. Early in his 20-year career he served in management roles in adolescent residential 

treatment and family preservation programs, and in acute psychiatric hospital and drug and alcohol 

treatment settings. 

Carol Bianco leads the Mental Health practice at AHP and has provided consultation and training to 

community-based organizations and state and local mental health departments throughout the states 

and territories. Her expertise includes mental health policy and financing, organizational development, 

supportive housing development and financing, supported employment, and job creation for people 

with disabilities. 

At AHP, Ms. Bianco has directed several contracts for the Substance Abuse and Mental Health Services 

Administration (SAMHSA) that assist states and territories in implementing the recommendations of the 

President’s New Freedom Commission on Mental Health. In addition, she leads teams providing 

resources and technical assistance to the mental health community regarding best practices to promote 

community integration for children and adults with mental disorders. Currently, she also serves as a 

Technical Assistance Consultant/Advisor for the SAMHSA Center for Mental Health Service’s Mental 

Health Transformation State Incentive Grant Program. Ms. Bianco formerly was the director of program 
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development for New York State’s largest provider of supportive housing and community psychiatric 

rehabilitation programs for adults with serious mental illnesses. 

Neal Shifman, AHP’s founder and CEO, is a nationally and internationally known consultant and 

facilitator in service system redesign, with special expertise in mental health, substance abuse, criminal 

justice issues. His work enhancing the interface between at-risk populations and social service systems 

has received accolades from multiple state agencies. 

Mr. Shifman was an early pioneer in the development of continuum of care designs for substance abuse 

prevention and treatment, was a founder and first president of the State Association of Addiction 

Services (SAAS), and has worked extensively with federal and state systems on a large number of 

substance abuse and behavioral health projects. For the past 12 years he has led a number of strategic

initiatives involving government agencies, nongovernment organizations, and the private sector. 

Examples of his work include the design of the substance abuse delivery system in St. Maarten; the 

coordination, development, and implementation of a Caribbean Initiative and subsequent conference 

on substance abuse sponsored by the World Health Organization; and policy, facilitative and writing 

support for United Nations Drug Control Program’s International Drug Court Project. He also conducted 

a 3-year redesign of the criminal justice system in Bermuda known as Alternatives to Incarceration and is 

engaged in a similar effort underway in St. Maarten. In addition, Mr. Shifman has led numerous strategic 

planning, program design, and needs assessments for nongovernment organizations focused on 

HIV/AIDS treatment, child and adolescent services, support for women facing violence, substance abuse 

prevention and treatment, labor and training, and welfare and social services.