1

 

May 28, 2009 

The Honorable Hilda L. Solis 

Secretary of the Department of Labor 

200 Constitution Avenue, NW

Washington, DC 20210 

The Honorable Kathleen Sebelius 

Secretary of the Department of Health and Human Services 

200 Independence Avenue, SW

Washington, DC 20201 

The Honorable Timothy Geithner 

Secretary of the Department of the Treasury 

1500 Pennsylvania Avenue, NW

Washington, DC 20220 

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

Mental Health Parity and Addiction Equity Act of 2008; Docket No. CMS-4140-

NC; [RIN 0938-AP65]; 74 Federal Register 19155 (April 28, 2009). 

Dear Secretaries Solis, Sebelius, and Geithner: 

The American Psychiatric Association (APA), the national medical specialty society 

representing more than 38,000 psychiatric physicians, appreciates the opportunity to 

submit these comments on the Departments of Labor, Health and Human Services, 

and the Treasury (The Departments) request for information (RFI) on the Paul 

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

(Sections 511 and 512 of PL 110-343, October 3, 2008) (MHPAEA08).1

 Enactment 

of the MHPAEA08 will improve coverage for over 113 million people, including 82 

million individuals covered by employer sponsored plans which were not subject to 

state regulations. The law will ensure that mental health or substance use disorder

coverage will now be treated the same as all other forms of healthcare coverage. 

 

1

 Pub. L. 110-343 
Background 

While the MHPAEA08 is a landmark piece of legislation, it is not the first legislation to 

address the inequities of coverage between mental health benefits and medical/surgical 

benefits. The Mental Health Parity Act of 1996 (MHPA96) required that there be parity 

in the aggregate lifetime and annual dollar limits for mental health benefits and medical 

and surgical benefits.2

 The MHPAEA08 goes beyond MHPA96 by including substance 

use disorder treatment and adds the following new requirements: 

(1) the financial requirements (including deductibles, copayments, 

coinsurance, and out-of-pocket expenses, but excluding aggregate 

lifetime limits and annual limits (which are subject to MHPA 1996’s

existing requirements)) applicable to such mental health or substance 

use disorder benefits are no more restrictive than the predominant 

financial requirements applied to substantially all medical and surgical 

benefits covered by the plan; 

(2) there are no separate cost-sharing requirements that are 

applicable only with respect to mental health or substance use disorder 

benefits; 

(3) the treatment limitations (including limits on the frequency of

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

the scope or duration of treatment) applicable to such mental health or 

substance use disorder benefits are no more restrictive than the 

predominant treatment limitations applied to substantially all medical 

and surgical benefits covered by the plan; and 

(4) there are no separate treatment limitations that are applicable 

only with respect to mental health or substance use disorder benefits. A 

financial limit or treatment limit is considered to be predominant under 

MHPAEA if it is the most common or frequent of such type of limit or

requirement.3

The MHPAEA08 also states that plans offering out-of-network benefits to beneficiaries 

for medical and surgical coverage, must also provide out-of-network coverage for 

treatment of mental illness or substance use disorders in a manner consistent with the 

other sections of the law. 

The MHPAEA08 picks up where the MHPA96 left off and closes many of the loopholes 

which led to continuing discriminatory practices by insurance companies to perpetuate the 

stigma associated with mental illness or substance use disorders and to deny coverage for 

those individuals who desperately need it. While we are very pleased that the legislation 

includes a requirement that the Government Accountability Office (GAO) conduct a study 

of the implementation of the law, we believe that there is a strong need for real-time 

monitoring of insurance coverage and management practices. Based on our members 

experience APA has concerns that some insurers may utilize overly aggressive 

management techniques in response to the statute and that careful oversight by the 

Departments, particularly DoL and HHS, is necessary. APA believes that this is within 

 

2

 74 Federal Register 19155, 19156. 3

 74 Fed. Reg. at 19156. 

2
the authority given to the Departments through the audit sections of the MHPAEA08 and 

the Departments should not hesitate to take advantage of this power when it is indicated 

the law’s intent is being circumvented. 

Comments Regarding Economic Analysis, Paperwork Reduction Act, and Regulatory 

Flexibility Act 

While there is no perfect model for comparison of cost analysis, the integration of parity 

in the FEHBP and several of the state laws requiring parity of mental health benefits can 

serve as examples of how the statute might affect costs. In general, it is well documented 

that imposing parity on a plan might increase costs somewhat, but that these costs tend to 

be less than expected and are often offset by tangible cost reductions through increased 

worker productivity, reduced absenteeism, and disability costs. 

Under the MHPAEA08, insurance plans that offer mental health and substance use 

disorder coverage would be required to change several common policies and procedures. 

These policies and procedures would include: cost-sharing policies, day and visit 

limitations, maximum out-of-pocket limits, and deductibles. It is very common for 

insurers to have separate requirements for mental health or substance use disorder benefits 

as compared to medical and surgical benefits and would be required under the statute to 

make them equivalent. These changes may result in both direct and indirect costs for 

insurers, employers, physicians and beneficiaries. However, these costs could be offset by 

a number of different changes. The MHPAEA08 allows insurers to continue to manage 

their benefit as they see fit, which in turn could control costs. Although employers may 

see an increase in the costs of providing such insurance, they will also likely see a rise in 

work productivity and a reduction in absenteeism as employees take advantage of newly 

available mental health or substance use disorder treatment benefits. In addition, ready 

access to continuous high quality mental health care will reduce disability costs as patients 

remain under the care of a professional and remain stabilized. Lastly, although insurance 

premiums may rise, employees will be able to take advantage of equal cost-sharing and 

likely lower out-of-pocket maximums. All of these effects can be appropriately balanced 

and result in a benefit for consumers with proper oversight and management. 

Physicians will likely see an increase in uncompensated time from additional requirements 

from the new management techniques. The health services research literature has 

documented the magnitude of the time burden (uncompensated time) on physicians to 

comply with the administrative requirements imposed by insurers. The literature has also 

demonstrated conclusively that parity implementation increases the use of utilization 

management protocol by insurers. There are definitive cost consequences for physicians 

which will be associated with the law’s implementation. We urge the Departments to

factor in these costs as part of their overall analysis. 

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For a comparison of costs, APA encourages the Departments to examine the example of 

mental health parity as implemented in the federal workforce health system. In 1999, 

under a directive from President William Clinton, the Office of Personnel Management 

(OPM) moved to ensure parity in the FEHBP for mental health and substance use 

disorders.4

 While the results from the parity implementation for FEHBP are pertinent, a 

key difference between the implementation of parity for FEHBP and the MHPAEA, is the 

fact that FEHBP only covered in-network benefits and did not require parity for out-ofnetwork benefits. However, given the large scale of the FEHBP, which covers 8.5 million 

enrollees including the federal workforce, retirees and spouses and dependents, this 

example is perhaps the most analogous to the current implementation scenario. 

During the implementation, OPM encouraged health plans to use managed care 

techniques to control expected cost increases associated with the expanded coverage.5

 A 

study performed by HHS in 2002 showed that the implementation of parity resulted in 

“little or no significant adverse effect on access, spending, or quality”6

 of services and 

care provided. An analysis of spending in nine large FEHBP plans revealed that the 

policy resulted in out-of-pocket spending decreases for beneficiaries in six of the nine 

programs.7

 While there was an overall increase in spending on mental health services 

over the years examined, it was commensurate with the growth for these services in nonFEHBP plans.8

 In fact, in seven of the nine plans examined, spending on behavioral 

health services actually declined.9

 

While the federal government took steps to ensure that FEHBP plans implemented parity 

for in-network services before the MHPAEA08 was passed, numerous states also passed 

parity laws which are more protective than the new federal standard. While 

implementation of full parity varies from state to state, the experiences are valuable 

examples of how to implement the current statute. Studies of the implementation of parity 

in Texas and North Carolina actually showed decreased costs for mental health 

beneficiaries between 30 and 50 percent when combined with managed care.10 In addition 

to these lower costs, the population able to access mental health care rose by one to two 

percent.11 In addition to the positive examples in Texas and North Carolina, Maryland has 

had success moving forward with their own parity law. Since mental health care was 

 

4

 Goldman, H., et al., Behavioral Health Insurance Parity for Federal Employees, N Engl J Med 2006;

354:1378-86 at 1379. 5

 Goldman at 1379. 6

 Sethi, R., Jee, J., Chimento, L., & Mauery, D.R. Designing Employer-Sponsored Mental Health Benefits. 

(2006) DHHS Pub. No. SMA-06-4177. Rockville, MD: Center for Mental Health Services, Substance 

Abuse and Mental Health Services Administration at page 24. (hereinafter Designing Employer-Sponsored

Mental Health Benefits). 7 Ibid at 24 (While the study showed decreases for six of the nine programs, only 5 of those decreases were 

statistically significant.). 8 Id. at 24. 9

 Id. at 24 (Of those seven, decreases were statistically significant in five of the programs.). 10 Id. at 24. See also Testimony of Darrel A. Regier, M.D., M.P.H., on “Insurance Coverage of Mental

Health Benefits” to the House Committee on Energy and Commerce, Subcommittee on Health; July 23, 

2002. 11 Designing Employer-Sponsored Mental Health Benefits at 24. 

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already offered through managed care, costs increased by less than 1 percent in 1994 

when the law was implemented.12 

While these state experiences reveal that costs rarely increase after the implementation of

mental health parity and result in better access to care for patients, the state statutes vary 

and may not be as broad as the MHPAEA08. A better example might be that of Vermont, 

which instituted the most comprehensive mental health parity law in 1998.13 In studies 

examining the impact of the law for the first two to three years, which went into effect at 

the same time as the MPHA96, it was demonstrated that parity decreased total spending 

for covered mental health services.14 Despite the breadth of the law, employers did not 

drop mental health coverage or switch to self-insured products as many had feared.15 

While there were concerns that lack of awareness of the statute complicated the 

implementation, consumers reported improved access to outpatient mental health services 

and total spending on mental health services decreased.16 Effective managed care was an 

important factor in controlling these costs, but this example shows that broad 

implementation of mental health parity can positively affect consumers and not be costly 

to employers and may well be cost neutral. 

The Congressional Budget Office (CBO) conducted a cost estimate of H.R. 1424 as 

ordered by the House Committee on Education and Labor17 and estimated that the statute 

would increase premiums for group health insurance plans by an average of 0.4%18 before 

accounting for any responses on the part of employers and insurers. CBO estimated that 

those responses would offset approximately 60% of the potential impact of the 

legislation.19 CBO estimated that the other 40% of the potential increases, which accounts 

for less than 0.2% of group health insurance premiums, would occur through higher 

spending for health insurance. Overall, CBO stated that the cost of the legislation would 

be $1.3 billion in 2008 (the first year of compliance) and would rise to $3.0 billion in 

2012.20 These increases will be mitigated by the cost savings in indirect costs, since 

mental illness and substance use disorders cost employers an estimated $80 to $100 billion

dollars in indirect costs annually. 

While there is no perfect way to assess exactly how the MHPAEA08 might impact costs 

for the government, physicians, employers and consumers, the examples set by the 

 

12 Id. at 24. 13 Id. at 24. For a full analysis of the implementation of the mental health parity law in Vermont, see

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

and Substance Abuse Parity Law. DHHS Pub. No. (SMA) 03-3822. Rockville, MD: Center for Mental 

Health Services, Substance Abuse and Mental Health Services Administration. (Available at: 

http://mentalhealth.samhsa.gov/publications/allpubs/sma03-3822/default.asp). 14 Designing Employer-Sponsored Mental Health Benefits at 25. 15 Id. at 25. 16 Id. at 25. 17 Cost Estimate for H.R. 1424: Paul Wellstone Mental Health and Addiction Equity Act of 2007 as ordered 

reported by the House Committee on Education and Labor on July 18, 2007, Congressional Budget Office, 

September 7, 2007. (hereinafter CBO Report) 18 Id. at 4. 

19 Id. at 4. 20 Id. at 7. 

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implementation of the MHPA96, states which have already imposed broader mental 

health parity laws, and the estimates from CBO provide a positive picture. In many of 

these cases, parity has been less costly for insurers and employers than expected and very 

beneficial for employees and their dependents. However, there is always the potential for 

overzealous management to minimize the benefits for patients. The APA urges the 

Departments to conduct outreach and careful oversight to ensure that the law is 

implemented as intended. 

Comments Regarding Regulatory Guidance 

Financial and Treatment Limitations

Recent data shows that nearly all workers who had health insurance were also provided

mental health benefits.21 However, for many of those individuals, this does not mean that 

they are afforded a mental health benefit that is comparable to their medical and surgical 

coverage. While most plans cover a wide range of services, such as inpatient treatment, 

outpatient treatment, and prescription drug benefits;22 financial requirements and 

treatment limitations are extremely common. As the Departments state in the RFI, 

financial requirements can include deductibles; cost sharing measures, such as 

copayments or coinsurance; and other out-of-pocket expenses. While financial 

requirements limitations vary from plan to plan, typically the out-of-pocket expenses for 

beneficiaries are higher for mental health services than for medical and surgical services. 

For a more complete picture of the prevalence of various requirements, limitations and 

discrepancies, APA would encourage the Departments to consult a database such as 

MEDSTAT and additional public and private databases that track coverage characteristics. 

Before the MHPAEA08, plans would frequently impose separate and even higher annual 

deductibles for mental health or substance use disorder treatment than for medical and 

surgical benefits. In the recently issued carrier letter for the FEHBP, OPM recognizes that 

plans are permitted to offer separate, but equal deductibles under the MHPAEA08. 

However, OPM states that they “strong encourage FEHB plans to offer combined 

deductibles and catastrophic limits which include expenses for both medical and surgical 

and mental health and substance use disorder services.”23 OPM is also asking that plans 

that decide not to have a combined deductible to provide “a reasonable explanation and 

justification” for the choice.24 APA would ask the Departments to encourage plans to 

move to system where they have a combined deductible for all covered healthcare costs. 

 

21 Kaiser Family Foundation and Health Research & Educational Trust, Employer Health Benefits: 2008 

Annual Survey, Henry J. Kaiser Family Foundation, Menlo Park, California, and Health Research & Educational 

Trust, Chicago, Illinois at page 141. (Available at http://ehbs.kff.org/pdf/7790.pdf) (Hereinafter 2008

Kaiser/HRET Employer Health Benefits Survey). 22 Designing Employer-Sponsored Mental Health Benefits at 40. 23 FEHB Program Carrier Letter: Letter 2009-08, Insurance Services Program, U.S. Office of Personnel 

Management, April 20, 2009 at page 5 (Available at http://www.opm.gov/carrier/carrier_letters/2009/2009-

08.pdf) 24 Id. 

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Additionally, plans typically impose higher cost sharing measures on mental health 

services. In 1997, the median in-network cost sharing was a $15 copayment or a 20% 

coinsurance for inpatient services and a $20 copayment or 20% coinsurance for 

intermediate services.25 While plans vary, the cost sharing is generally lower on the 

medical and surgical benefit for similar services. Also, some insurers will structure their 

cost sharing in a tiered manner whereby patients would pay less for initial visits and more 

as treatment continues or the tiers are designed to encourage use of less costly services, 

which may or may not be the best form of treatment for a particular patient.26 

In addition to many of the financial requirements that are imposed on the mental illness 

and/or substance use disorders plans also impose treatment limitations that are not applied 

to medical-surgical benefits. These treatment limitations often include visit and day 

limits, coverage for only certain diagnoses or treatments, and limited reimbursement for 

physicians. Only 18% of covered employees had coverage for unlimited outpatient visits 

and 22% had coverage for unlimited inpatient days for mental illness.27 While there is 

some variation across plans, the most common treatment limitations are 20 outpatient 

visits and 30 inpatient days annually.28 These types of limitations are very popular; 

however they are not that effective in controlling costs and serve only to limit the type of 

treatments that patients can receive.29 On the other hand, these same limitations do not 

exist on the medical and surgical side of the benefit. 

While most insurers currently apply the direct limitations on treatment for mental illness 

and/or substance use disorders noted above, they also apply less straightforward methods 

of limiting the types and duration of such treatments that are covered for patients. APA 

has concerns that, after the implementation of parity, insurers will employ less visible 

means of restricting access to treatment for mental illness and/or substance use disorders, 

that will perpetuate the discriminatory coverage schemes that the MHPAEA08 sought to 

eliminate. We think that certain forms of aggressive benefit management can become de 

facto treatment limitations and should be prohibited under the law. 

For example, many insurance companies will use reimbursement to physicians as a 

method of limiting the type of services that a patient can receive. It is not uncommon for 

an insurer to only reimburse psychiatrists for a narrow range of Current Procedural 

Terminology (CPT) codes which are specific to psychiatric care. However, there are a 

number of codes, particularly the “Evaluation and Management (E&M)” codes, which the 

insurer will reimburse to all other physicians. These E&M codes cover physician services 

that are essential to the care of patients, including coordinating care management, talking 

with patients’ families, and discussing treatment options. As healthcare moves to a 

system where physicians are encouraged to spend time coordinating care of their patients, 

especially those with multiple chronic illnesses, this type of policy can become a serious 

 

25 Designing Employer-Sponsored Mental Health Benefits at 45. 26 Id. at 45-46. 27 2008 Kaiser/HRET Employer Health Benefits Survey at 141. 28 Designing Employer-Sponsored Mental Health Benefits at 43. 

29 Id. 

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limitation on the type of care a patient receives and on who is administering this care. 

This practice seems particularly discriminatory since CPT codes are open for all qualified 

physicians under Medicare and similar reimbursement restrictions are rare to nonexistent 

for any other medical specialty. APA would encourage the Departments to instruct 

insurers that limiting physician reimbursement to certain codes in an unequal manner is a 

violation of the MHPAEA08 and will not be permitted. 

Other examples of management techniques that morph into de facto treatment limitations 

include the use of prior authorization as a barrier to care and other perquisites to accessing 

care. While many insurers use prior authorization as a legitimate benefit management 

tool, it can also be used as a roadblock for patients seeking certain treatment. It increases 

the amount of time and effort required by both the physician and the patient to access the 

appropriate treatment and can be used solely to discourage use of these services. When 

benefit management protocols are used in this manner, they become, in effect, treatment 

limitations and APA would object to the use of prior authorization to access mental health 

care or substance use disorder treatment where there is no such similar requirement on the 

medical and surgical benefit. 

In addition to requiring prior authorization, some benefits require that a patient access the 

employer’s employee assistance programs (EAP) before they are able to seek mental 

health care through the mental health benefit. As mentioned above, APA would 

strenuously object to application of this type of restriction, since it functions as a treatment 

limitation and there is no analogous restriction for accessing the medical and surgical 

benefit. Given the possibility that plans may use the parity requirements to simply shift 

treatment limitations to more opaque methods, such as the use of differential 

reimbursement for physicians, prior authorization and similar barriers, APA urges the 

Departments to monitor for this activity and instruct the GAO to consider these scenarios 

when conducting their review of plan adherence. 

In sum, benefits for psychiatric services should be indistinguishable from benefits for 

other medical services. This applies to financial limits, co-payments and particularly to 

utilization review. Utilization review for psychiatric services should be indistinguishable 

from utilization review for all other medical services with respect to timing (when it is

required), intensity, and denial rates. 

Clarifications 

APA appreciates that the Departments are seeking input on what areas of the law might 

require greater clarification. While the law is relatively straightforward, the 

implementation of it may not be. We have identified several areas which clarification and 

guidance from the Departments would be welcome. 

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Predominant Limits

APA believes that the terms in the statute which state that a financial requirement or 

treatment limitation can be “no more restrictive than the predominant 

requirements/limitations which are applied to substantially all”30 medical and surgical 

benefits needs definitional certainty through regulation. For the regulations under the 

MHPA96, the Departments previously held that they would employ a “one-third/twothirds” test in defining the “predominant” limitation. The regulations state that plans that 

did not impose aggregate or lifetime limits on less than one-third of the medical and 

surgical benefits could not impose a similar limit on the mental health benefit.31 

Similarly, if the plan does impose aggregate or lifetime limits on the medical and surgical 

benefit, the mental health benefit can be no more restrictive than the features which apply 

to two thirds of the medical and surgical limits.32 APA believes that this is a clear and 

logical standard which has been held by the Departments since the enactment of the 

MHPA96 and we would recommend the Departments to apply the same standard here. 

Also, to ensure that there is a fair and accurate determination of the predominant 

limitation, we would ask that the Departments state that plans should compare the 

predominant limits within categories. For example, the plan should compare the 

predominant limitation for inpatient services on the medical and surgical benefit to the 

limitation for inpatient services on the mental health, and likewise, outpatient services

should be compared to outpatient services. The Departments should clarify, as OPM did 

in the 2009 FEHB Program Carrier Letter, that it is inappropriate to equate limitations on 

treatment for mental illness or substance use disorders to limitations for other therapy 

services such as speech, physical or occupational therapy.33 As with prior regulations, we 

would greatly appreciate it if the Departments would provide examples and further 

guidance on how to apply this standard in the forthcoming rules. We anticipate that state 

insurance commissioners will set additional guidance for the plans, but a clear statement 

from the Departments is necessary in this area. We urge the Departments to carefully 

review how states with parity laws have in fact operationalized equivalency respecting 

financial requirements and treatment limitations for mental health and substance use 

disorders. 

In addition to further guidance about the standard for determining what the “predominant 

limitation” of a plan is, APA believes that the statutory language of the MHPAEA08 is 

clear that the term “no more restrictive than” means that the mental health benefit must be 

equal to or better than the predominant limitation for the medical and surgical benefit. 

Therefore if a plan determines that predominant limitation on the medical and surgical 

benefit is actually more restrictive than the limitation on the mental health benefit, they do 

 

30 Pub. L. 110-343 (October 3, 2008) 31 62 Federal Register 66931, 66935 (December 22, 1997). 32 62 Fed. Reg. at 66935. 33 FEHB Program Carrier Letter at 5. 

9
not need to adjust the benefits to be equal. Plans which offer very generous mental health 

benefits should not be penalized and required to lower the mental health coverage that

they provide for their beneficiaries. APA urges the Departments to make a clear statement 

in the final regulations to eliminate any possible confusion. 

Applicability of MHPAEA08 to Some Smaller Employers

APA would urge the Departments to offer a clear statement of exactly to whom the law 

applies. While the statutory language exempts employers with 50 or fewer employees, 

there are a number of other options for which the application of the law is not quite as 

clear. For example, if there are three main employers, each with 25 employees who 

decide to pool their risk and resources to purchase health insurance, are they above the 50 

employee threshold? Or, if an employer with 30 employees also extends lifetime 

healthcare for 30 retirees? In addition to these examples, there have been questions raised 

about whether the law applies to student health plans, frequently offered by colleges, 

universities and graduate programs. While the answers to many of these questions may 

already exist elsewhere in statute and regulation, providing guidance and information to 

plans who may be concerned about whether or not they must comply in the regulations 

would be greatly appreciated. Additionally, to clear up any confusion, APA would ask 

that the Departments issue a clear statement that Medicaid managed care plans fall under 

the purview of the law and must comply. 

Employee Assistance Programs

Another area of concern is whether Employee Assistance Programs (EAPs) and wellness 

programs fall under the scope of the law. These programs are increasingly popular among 

employers as a benefit for their employees, but currently most also offer mental health 

coverage. Since EAP and wellness programs often provide some counseling and ‘mental 

health’ services, there is considerable confusion as to whether EAPs fall under the 

MHPAEA08. However, since these types of plans also often offer additional assistance 

programs (e.g. financial planning and conflict resolution) and do not offer a medical or 

surgical benefit, among other reasons, we do not believe that EAPs should be considered 

group health plans. APA understands that DoL has issued some advisory letters to 

employers as to whether specific EAPs should be covered by ERISA and therefore would 

be subject to the requirements in MHPAEA08, but that these letters have been issued on 

an ad hoc basis. APA encourages the Departments, particularly DoL, to issue clear 

parameters defining when an EAP would fall under the requirements of the statute and 

when they would not. It would also be helpful for the Departments to articulate whether it 

is permissible under the MHPAEA08 for an employer to offer a medical and surgical 

health benefit and an EAP, but not provide mental health or substance use disorder 

coverage. 

10
Medicaid Managed Care

While it is clear that the requirements of the MHPAEA08 apply to managed care under 

Medicaid (MMC), there are many complex issues as to how MMC plans to comply with 

the Act’s requirements due in large part to the various kinds of management the states 

have established. In as much as nearly two-thirds of Medicaid enrollees are in MMC 

plans, it is critical that the Departments provide authoritative guidance on this issue. 

Indirect and Direct Coverage

As the Departments are aware, the majority of treatment for psychiatric disorders occurs 

outside the specialty sector for mental health services. More than 80% of patients with 

mental health or substance use disorders are treated in the general medical sector. So, for 

example, individuals are often treated for depression by primary care physicians with 

medications whose primary FDA-approved indication is for depression. This can and 

often occurs outside an individual’s specific coverage for mental health conditions. It 

would be inappropriate for a plan to choose not to directly provide coverage for mental 

health conditions, but to allow indirect coverage for the type of scenario described above. 

This would be a circumvention of the MHPAEA08s requirements. In our view, indirect 

coverage under such circumstances is equivalent to offering direct coverage. We strongly 

recommend that the Departments address this issue to clarify that indirect coverage is the 

same as direct coverage and that the Act’s requirements apply. 

Preemption 

Since the passage of the MHPA96, the majority of states have enacted their own mental 

health parity statutes.34 Some of these statutes include mandates to cover mental health or 

substance use disorders, while others simply require parity of benefits. There is a great 

deal of variation among state laws and few of the state statutes are as sweeping as the 

MHPAEA08. The codified MHPAEA08 amends the Public Health Service Act which 

states that the law “shall not be construed to supersede any provision of State law which 

establishes, implements, or continues in effect any standard or requirement solely relating 

to health insurance issuers in connection with group health insurance coverage except to 

the extent that such standard or requirement prevents the application of a requirement of 

 

34 As of December of 2008, 42 states have enacted legislation parity laws with varying approaches to 

prohibit discrimination in insurance and managed care coverage of mental illnesses: Alabama, Alaska, 

Arkansas, California, Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, 

Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, 

Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, 

Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, 

Virginia, Washington, and West Virginia. 

11
this part.”35 Therefore, while the language is clear that it will only preempt state laws that

are more restrictive than the federal law, the application of this standard could become 

extremely complex in practice. APA believes that implementation of the federal law, 

given current state laws, may well cause preemption concerns pending the issuance of 

regulations. 

Given the wide variation in state parity statutes, we anticipate that state insurance 

commissioners and attorneys general will be responsible for ensuring state compliance. 

Since the MHPAEA08 was passed and in the absence of guidance from the federal 

government, several states that have parity laws have issued opinion letters about how 

their laws wrap around the federal law. We would refer the Departments to these letters, 

particularly to that of Maryland,36 as a model for how states should proceed in how to 

evaluate their own laws. Specifically, we also would request that The Departments issue a 

letter to the state insurance commissioners to issue advice and guidance on how to 

evaluate the possibility of any conflicts. This clear direction from the Departments would 

alleviate a great deal of confusion and possible undue conflicts which will impede and 

delay the implementation of the law. 

Medical Necessity and Denials

The MHPAEA08 contains a statutory requirement that “the criteria for medical necessity 

determinations made under the plan with respect to mental health or substance use 

disorder benefits [...] shall be made available by the plan administrator.”

37 The law also

states that “[t]he reason for any denial under the plan”38 also be made available to the 

provider or beneficiary. APA is pleased that this requirement is contained within the 

statutory information and also that the Departments are inquiring as to the current practice 

with regard to medical necessity and denials. 

APA has concerns that insurers use an opaque and complex formula for determining 

medical necessity for mental health and substance use disorder treatment. Over half the 

states have a statutory definition of “medical necessity” currently in effect, which serves 

to enhance patient protections.39 Many health insurance plans do indeed publish their 

stated medical necessity criteria on their plan’s website or distribute the information to the 

plan participants. Much of the same information is frequently contained in the provider 

“handbooks” or “manuals” given to physicians and other healthcare providers who 

participate in the plan. However, this information is not usually the whole universe of the 

plan’s medical necessity criteria. Much of the actual data and information used to 

 

35 42 United States Code §300gg-23(a)(1). 36 See Impact on Maryland Law of the Paul Wellstone and Peter Domenici Mental Health Parity and 

Addiction Equity Act of 2008 (“Parity Act”) February 23, 2009 (available at: 

http://www.oag.state.md.us/Opinions/2009/94oag3.pdf). 37 Section 512(a)(1)(4) of Pub. L. 110-343. 38 Section 512(4). 39 Buckley IV, J.F., Prysby, N.D., State by State Guide to Managed Care Law, 2009 Edition, Aspen 

Publishers, 2009 at §5.02.

12
determine necessity and issue denials is deemed proprietary and therefore confidential by 

insurers. APA objects to this practice and would encourage the Departments to issue 

strong regulations addressing the need for greater transparency in the process. 

We understand the right of companies to maintain confidentiality with regard to their 

proprietary information, but we also have serious concerns about the use of this 

confidentiality as a shield to circumvent the law. As an example, 44 states have enacted 

procedures for independent external review processes for coverage denials.40 These 

review processes vary among states, but can often be initiated by the insured party or their 

designee or the physician acting on the insured’s behalf.41 APA would recommend that 

the Departments enact or require a similar external independent review process. This 

could be accomplished at the federal level or through a delegation of authority to the state 

insurance commissioners. 

National accreditation organizations such as the Utilization Review Accreditation 

Commission (URAC) provide an industry standard for the process of communicating 

reasons for denial. Despite these national standards, physician providers experience rigid 

and aggressive utilization review sometimes related to particular reviewers. This can 

selectively limit access to mental health and substance abuse services. There needs to be 

prompt and accessible appeals that can be initiated by the provider of services, not just by 

the patient. Reviews must be done by physicians subject to the oversight of state 

physician licensing agencies. Appeals should be done by physicians certified in the 

specialty area related to the treatment under review. The reviewer must be familiar with 

the service network in the patient’s area. Should providing physicians be subject to 

unprofessional treatment by physician reviewers, they should be able to report this 

behavior to state licensing agencies.

Out of Network Treatment

One feature of the MHPAEA08 which APA considers extremely important is the 

extension of parity to out-of-network (OON) services. Approximately 70 percent of 

consumers with employer sponsored health insurance have the option of access to OON 

services, frequently subject to increased cost sharing as compared to in-network 

coverage.42 Patient choice is extremely important to the physician-patient relationship, 

particularly with respect to mental health and substance use disorder treatment where 

instability and change can be very detrimental to a patient’s care. During the 

implementation of parity in the FEHBP, OPM did allow plans to offer higher cost sharing 

 

40 Id. at §5.03. 41 Id. 42 See Testimony of Nancy H. Nielsen, M.D., Ph.D. before the Senate Committee on Commerce, Science

and Transportation on “Deceptive Health Insurance Industry Practices - Are Consumers Getting What They 

Paid For?,” March 26, 2009. (Available at: 

http://commerce.senate.gov/public/_files/NielsonTestimonyonDeceptiveHealthInsurancePractices32609.pdf

). 

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and day and visit limits for OON options.43 Before implementation of parity, the plans did 

not distinguish between in-network and out-of-network mental health benefits, but after 

implementation, studies showed that the out-of-network benefit mirrored the pre-parity innetwork benefit.44 While all of the plans in the FEHBP complied with the in-network 

parity requirements, none of the plans extended parity to the OON benefit.45 Recent 

studies have shown that adequacy of in-network participation and access to out-ofnetwork services is extremely important to the health of the patients.46 Therefore, APA is 

extremely pleased that the law extends parity to these services, as it would likely not occur 

in the absence of a federal requirement. 

There is also concern that differential reimbursement to physicians could affect the 

adequacy of an insurer’s network. While insurance companies typically have higher cost 

sharing measures when patients go out-of-network to encourage in-network visits, this 

practice could go too far. If reimbursement is drastically lower for out-of-network 

physicians, the out-of-pocket burden on the patient could be unaffected by post-parity 

implementation. This could have the adverse effect of forcing patients to see in-network 

providers, as opposed to merely a deterrent. APA regards these measures as a veiled 

attempt to circumvent the MHPAEA08 and would ask the Departments to inquire about 

the reimbursement practices of insurers as a part of the GAO study. 

Cost Exemption

Like the MHPA96, the MHPAEA08 contains an exemption process for employers who 

experience a significant increase in costs through the implementation of parity. Few 

employers opted to go through the cost exemption process under the earlier law and APA 

does not anticipate that costs will increase dramatically to extent that many employers will 

need to undergo the process. However, APA believes that guidance about the cost 

exemption would be very helpful and would encourage the Departments to publish such 

guidance. 

There are a few areas of the cost exemption that APA urges the Departments to include in 

any guidance that is put forth. We would expect a clear restatement of the statutory 

language indicating that the cost exemption is retrospective, meaning that any employer 

who wishes to file of the exemption must comply with the MHPAEA08 for at least one 

year. Also, while the statute states that the determination of increases in actual costs must 

be performed by a “qualified and licensed actuary who is a member in good standing with 

 

43 U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and 

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

December 2004, at 47. (Available at: http://aspe.hhs.gov/daltcp/reports/parity.pdf) (Hereinafter Evaluation 

of Parity in the FEHB Program). 44 Id. 45 Evaluation of Parity in the FEHB Program at 203. 46 Regier, D., et al., Parity and the Use of Out-of-Network Mental Health Benefits in the FEHB Program, 

Health Affairs 27, no. 1 (2008): w70-w83 (published online 18 December 2007; 10.1377/hlthaff.27.1.w70). 

14
the American Academy of Actuaries.”

47, in practice, an actuary who is a member in good 

standing of the American Academy of Actuaries (AAA) is considered to be “certified” as 

opposed to “licensed” by AAA. A clarification from the Departments in the forthcoming 

regulations on this matter would eliminate any possible confusion that could arise from

the conflicting terminology. 

Additionally, as with the regulations issued after implementation of the 1996 law, 

examples of how companies are required to collect data regarding the cost exemption 

would be very helpful. APA would greatly appreciate any model notices the Departments 

could provide to ease disclosure of the plans which have elected to file for the cost 

exemption. We would encourage the Departments to take vigorous action in this area to 

ensure transparency and disclosure throughout this process. 

Conclusion 

Passage and enactment of the MHPAEA08 is the culmination of a decade-long effort to 

increase the protections of the MHPA96 and ensure that the discriminatory insurance 

schemes for mental health and substance use disorder treatment are eliminated. The law 

will have wide-reaching positive health effects and hopefully begin to erase the stigma of 

seeking treatment for mental illness. APA greatly appreciates the efforts of the 

Departments to try to gather as much information as possible to create clear and effective 

regulations. We believe that implementation will go smoothly with the proper guidance 

and oversight from the federal government. APA also believes that cost increases will be

minimal and vastly outweighed by the benefits afforded by appropriate access to mental 

health care. We are happy to serve as a resource whenever the Departments may need it 

and would be pleased to offer any additional information should it be requested. 

Thank you for your consideration of these comments on this request for information. We

look forward to working with you in the future to develop and implement any policy 

change. If you have any further questions, please contact Nicholas Meyers, Director, 

Department of Government Relations, at nmeyers@psych.org or Jennifer Tassler, Deputy 

Director, Regulatory Affairs, at jtassler@psych.org or at (703) 907-7800. 

Sincerely, 

James H. Scully Jr., MD 

CEO and Medical Director 

 

47 Section 512(a)(3)(B) of Pub. L. 110-343. 

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