3 HEALTH
M ENTAL H E AL T H

– H E AL T H I NSURANCE

– I MPAC T ON M ARYL AN D L AW OF THE P AUL W ELLSTONE AN D P ETE R D O M EN ICI M ENTAL H EALT H P AR I T Y A ND A DD I CT I ON E QUI T Y A CT OF 2008 ( “P AR I T Y A CT ”)

Febr uar y23, 2009

The H onor abl e Thom as M

. Mi ddl et on, C hai r m an Senat e Fi nance Com m i t t ee The H onor abl e Pet erA

. H

am m en, C hai r m an H ous e H eal t h and G over nm ent

O per at i ons C om m i t t ee C o n g re ss re c e n tly e n a c ted th e P a u l W e llsto n e a n d P e te D om eni ci M ent al H eal t h Par i t yand A ddi ct i on E qui t yA ctof 2008 ( t he “2008 Par i t yA ct ”) , w hi ch b u il d s upon t he pr ovi s i ons of an ear l i erfede r al l aw know n as t he M ent al H eal t h Par i t yA ctof 1996 ( t he “1996 Par i t yA ct ”)

. T oget her , t hos e l aw s ( col l ect i vel y , t he

“ f e d e ra l P a rityA c ts” ) e sta b lish v a rio u s r e q u ire m e n ts f o r c e rta in health p l ans t h a t o ffer m ental health b enef i t s and sub st ance a bu se b e n e f its. M a ry lan d sta tu tes g o v e rn in g h e a lth in su ra n c e a n d h e a lth m a in ten a n c e o r g a n iz a ti o n s ( “ H M O s ” ) m a n d a te c e r ta in m e n tal h e a lth benef i t s , butar e noti dent i cal t o t he fe der al Par i t yA ct s and i ncl ude c e rt a in lim ita tio n s
. Y ou have a s ked forou ropi ni on conce r ni ng t he r el at i on of f e d e r a l l a w, a s a me n d e d b yt h e 2 0 0 8 P a r i t yAc t , t o M a r y l a n d l a w, a n d sp e c if

ica llyh o w e a c h h e a lth in su ra n c e m a rk e t in th e S tate is affec t e d by t he r e c e nt fe de r a l l e gi s l a t i on
. I n pa r t i c ul a r , y ou ask aboutt he i m p ac tof t he 2008 Par i t yA cton A nnot at ed C ode of M ar y l and, I ns ur ance A r t i cl e ( “I N ”) , § 1 5- 802, w hi ch, among ot her t hi ngs , co nt ai ns s peci fi c cos t

- s har i ng r equi r ement s foroutpat i ent t r eatm entand s peci fi es a maxi m um copaym entform et hadone tr ea tm en t. Y o u also ask ab o u t th e im p a c t of the f ed era l l aw o n IN § 1 5 -84 0 , w h ich m an d ates c o v era g e o f m ed icall yn ec essa ry res i den t i al cri si s ser vices

. For t he r eas ons s etforth in thi s opi ni on, t he 2008 Par i t yA ct affects vari ou s segm ents of the health insur ance m arketas fol l ow s:4 [94 O p . A tt’ y 1. T he 200 8 Pari t y A ct do es no t affect M ary l and l aw as it appl i es t o i ndi vi dual non-group pol i ci es ors m al l gr oup pol i ci es ( defi ned as t hos e cove r i ng atl eas tt w o butnotm or e t han 50 e m p lo y e e s). T h e m a n d a tes a n d sp e c if ic lim itatio n s o u tli n e d in S tate l aw cont i nue t o appl y
. Sm al l empl o y ers thats el f- i ns ur e ar e not s ubj ectt o St at e l aw m andat e. 2

. T h e 2 0 0 8 P a rityA c t ap p lies to la rg e g ro u p h e a lth i ns ur ance pol i ci es and t o s el f- i ns ur ed l ar g e gr oup pl ans pr ovi ded t hroug h em ploy ers
. 3

. L a r g e g r o u p p o l i c i e s ( d e f i n e d a s a h e a l t h i n s ur ance p o l i c i e s c o v e r i n g m o r e t h a n 5 0 e m p l o ye e s ) a r e r e g u l a t e d b y a combi nat i on of St at e and fede r al l aw conce r ni ng m ent al heal t h and su b sta n c e a b u se b e n e f its. M a n d a tes in M a ry lan d law re m a in eff ect i ve. Pur s uantt o t he fede r al l aw , t hes e bene fi t s m us tbe off er ed w i t h fi nanci al l i m i t at i ons , cos ts har i ng r equi r ement s , and t r eatm ent l i m i t at i ons t hatar e no more r es t r i ct i ve t han t he r equi r em en t s and l i m i t at i ons t hatappl yt o t he “pred om i nant ” medi cal and s ur gi cal b e n e f its in th e p o licy

. M a ry lan d law is pr e e m p ted b yth e 2 0 0 8 P a rity A ctt o t he ext ent th at M ar y l and pr ovi s i ons w oul d al l ow m ent al h ea lth an d su b stan ce ab u se b en ef it s to b e d eli v ere d w ith m o re r es t r i ct i v e co v era ge r at es and ot hert r eatm entl i m i t at i ons
. I f t he poli cy o ffer s an out

- of- net w or k benef i tform edi cal and s ur gi cal se rv ice s, th e n th e p o licym u s t a ls o o f f e r a n o u t-o f

-n e tw o rk b e n e f

it f o r m e n ta l h e a lth a n d s u b s ta n c e a b u s e s e rv ic e s
. 4

. S elf-insu red h e a lth p lans o f p ri v ate e m p loy ers a re g e n e r a l l y n o t g o v e r n e d b y S t a t e l a w d u e t o p r e e mp t i o n o f S t a t e l a ws t hatr el at e t o empl o y ee be nefi tpl ans byt he Em pl oy ee Ret i r ement Inc o m e S ec u ri tyA ct (“E R IS A ”). A cc o rdin g ly, th e se p lans are go verned byfede ral l aw
. F or em ploy ers off eri ng l arge group plans, t he Par i t y A ct s , not St at e l aw , gover n m ent al heal th an d subst ance a b u se b e n e f

its. W h ile th e se lar g e g ro u p p lan s a re n o t r e q u ire d to offe rm ent al heal t h and s ubs t ance abus e bene fi t s , i f a pl an does cont ai n s uch bene fi t s , t he fi nanci al li m it at i ons , cos ts har i ng r equi r ement s and t r eatm ent l i m i t at i ons m aynotbe more r es t r i ct i ve th a n th e p r e d o m in a n t l im it a ti o n s o n th e m e d ic a l a n d s u r g ic a l b e n e f its i n t he pl an. A nd, if the pl an off er s an out

- of- net w or k benef i tfor m e d ica l an d su rg ica l se rv ice s, th e n th e p lan m u st also o f f e r a n o u tof-netw ork ben efi tfor m ental health an d sub st ance a bu se ser vices

. 5. E m pl oy er s t hatar e el i gi bl e t o s el f- i ns ur e underfede r al l a w, b u ti n s t e a d c h o o s e t o p u r c h a s e a s t a t e - r e g u l a t e d i n s u r a nce pol i cyfr om a ca r r i er , m us tpr ovi de ment al hea lt h and s ubs t anceG en. 3] 5
abus e s er vi ces pur s uantt o M ar y l and l aw
. For empl oy er s pur chas i ng a s m al l gr oup pol i cy , t he bene fi t s out l i ned i n M ar y l and l aw byt he M ar y l and H eal t h C ar e C om m i s s i on w i l l appl y
. In the l ar ge gr oup ma r k e t , t h e f

e d e r a l l a w wi l l p r e e mp ts o me p o r t i o n s o f M a r y l a n d l a w, ensuri ng t h a t these bene fi t s ar e off ered w i t h financial l i m i t at i on s, co st sha ri n g req u ir em en ts an d tr ea tm en t li m it ati o n s tha t are n o m o re r es t r i ct i ve t han t he pr edomi nantl i m i t at i o n s on t he medi cal and su rgica l ben ef

it s in the p o li cy
. If the p o li cy o ff ers a n o u t- o f-n etw o rk ben efi tfor m edical and surgi cal ser vices , t hen t he p oli cym ust al so offe ran out

- of- net w or k benef i tform ent al heal t h and sub stance a b u s e s e rv ic e s
. W i t h r es pect t o y our ques t i ons about t he i m pact o f th e 2 008 Par i ty A ct on spec i fi c s ect i ons of M ar y l and l aw , w e conc l ude t hat s om e pr ovi s i ons of I N §15- 802 and H eal t h- G ener al A r t i cl e ( “H G ”) §19- 703. 1 – i n par t i cul ar , cos ts har i ng r equi r em en ts f oroutpat i ent cover ag e, m i ni m um dayl i m i t s forpar t i al hos pi t al i zat i on, and m ax im u m co p ay m en ts fo r m etha d o n e m ainten an ce tr ea tm en t

– are pr eempt ed w i t h r es pectt o l ar ge gro u p p ol i ci es t o t he ext entt hat t hos e pr ovi s i ons w oul d r endercover age mor e r es t r i ct i ve t han cover age f

orphy s i cal i l l nes s es
. Sect i on 15- 840 of t he Insu ran ce A rt icl e (c o v era g e f

o r m ed icall yn ec essa ryreside n ti al cr i s i s s ervi ces) , how ever , i s not pr eempt ed. I n addi t i on, I N §15- 824 ( cover age f or ma i n t e n a n c e d r u g s ) , a n d I N §1 5

- 8 3 1 ( c o v e r a g e o f p r e s c r i pt i on dr ugs ) ar e notpr eempt ed.
F in a lly , y o u a sk e d w h e th e r “ c o rre c tiv e ” S tate leg isla tio n is nece s s ar yi n l i ghtof t he 2008 Par i t yA ct

. T o t he ext entt hatt he fede r al l aw pr eempt s St at e l aw , i tdoes s o byvi r t ue of the Supr emacy C l aus e i n A r t i cl e V I of t he U ni t ed St at es C ons t i t ut i on and t her e i s no l egal r equi r ement t o amend St at e l aw t o r ecogni ze t hatpr eempt i on. I
T h e F ed er a l P a rity A cts
A
. 1 9 9 6 P a rity A c t
M or e t han a de cade ago, C ongr es s enac t ed t he i ni t i al fede r al m ent al heal t h par i t yl aw , t he M ent al H eal t h Par i t yA ctof 1996. Pub. L

. 104- 204, T i t l e V I I , 1 1 0 S ta t

. 2944 ( 1996)

. B ym eans of v irtu a llyid e n tica l n e w se c tio n s a d d e d to b o th E R IS A a n d th e P u b lic H eal t h Ser vi ce A ct( “PH SA ”) , t he 1996 Par i t yA ctes t abl i s hed cer t ai n r equi r eme n ts f

orm ent al heal t h benef i t s offe r ed i n l ar ge6 [94 O p . A tt’ y

ERI SA §712, 29 U .S.C. §1185a; P HSA, §2705, 42 U.S.C. §300gg -5. 1 The followingyear , as par t o f th e Taxpayer Relief

Act of 1997, a

new provision was adde d to the Interna l Reven u e C ode to establish a tax pen al ty for group plans that failed to c omply with the provisions of the 1996 Parity

Act. SeePub. L . 105-34, §1531, 11 1 S t at. 788, 1080-83 (1997), codified at

26 U.S.C. §9812.
Pub . L . 1 04 -1 91 , 1 10 Stat. 1 93 6 (199 6). HI P AA wa s inte nd e d to 2 serve several purposes – protec ting health care coverag e for worke rs and their families during a

chang e or loss of e mp l o y m en t, setting national sta nd ard s f or e le ctr on ic hea lthc aretr ans a c tio ns , a nd mand atin gc e rt a in provisions for the sec urity and priva cy

o f health information. See88 Op ini on s o

f th eAttor

ne yGe ne ra l 20 5, 20 6- 7 ( 20 03 ); se eals o website of Centers for

Medica re a nd Medica id Services, <http: //www.cms.hhs.g ov /E du c atio nM ate ri a ls/> ; http: //www .c ms. hh s. g ov/H IPAA Ge nInf o/.
The orig in a

nd application of this pre emption standard a re somewhat 3 convoluted. In 1996, as par t of HIPAA, Congress adde d id en tical pree mption provis i o ns to Title XXVI Iof the Public Health Service Ac t and Ti tleVIIof

ERI SA whe n it e na c te d cert a in pr ov isi on s in e a c h o f t ho se statut es limit ing e x clusions for pre -existi ngconditions and mandating cer tain coverag e of mother s and new borns. Pub. L

. 104-191, §§101(a), 102(a) (1996). SeeMedill, HIPAA an d i t s Related Legislation: A New Ro lefor ER

IS A in the Re

gu lation of PrivateHe alt

h Ca rePlan s? , 65 Tenn. L . Rev. 485, 502-3 (1998) . Concurre ntly , the provisions of the 1996 Pari ty Ac t w e reinc lud e d in

the sametit le s o f E RI SA a nd thePub lic Hea lth Ser

vice Act and, acc ording ly , had the same pree mptive e ffecton state laws. Pub. L . 104-204, Title VI I , 110 Stat. 2944 (1996).
In r e fe re nc ingsp e c if

ic prov isi on s o f t

he tw o fe de ral Pari ty

Ac ts, thi s 4 op ini on wi ll cit e theprov isi on s a s th e y a pp e ar i n E RI SA. As e xpla ine d in n o t e 1 ab o v e, p ar al l el p ro v i s i o n s ap p ear i nth e P HS A, 4 2 U. S

. C

. § 3 0 0 gg5, and the Interna l Revenue Code, 26 U .S.C. §9812. gr oup heal t h plans p r ovi ded t hr ough empl oy er s
. I n conj unct i on 1
w i t h t he H eal t h I ns ur ance Por t abi l i t yand A ccou n t abi l i t yA ct (“ H IP A A ” ), p a ss e d th e sa m e y e a r, th e p ro v isio n s o f th e 1 9 9 6 P a rity 2 A ctpr eempt ed s t at e l aw s “to the ext entt hat[a] s t andar d or r equi r ement [of s t at e l aw ] pr event s t he appl i cat i on of a r equi r ement o f [ th e 1 9 9 6 P a ri ty A c t] .” 3
T he 1996 Par i t y A ct di d not r equi r e l ar ge gr oup pl ans t o offe r m ental health b enef

i t s. 29 U

. S

. C

. §1 18 5a(b )(1 ). H ow ever, t ho se 4 pl ans t hat chos e t o offe r m ent al heal t h benef i t s w er e pr ohi bi t ed fr om s et t i ng annual orl i fet i m e dol l arl i m i t s on m ent al heal t h benef i t s t hatG en. 3] 7

Th e 20 08 Pari ty

Ac t ame nd s th e prov isi on s o f E RI SA a nd thePHS A 5 that wer e enac ted by the 1996 Parity Act – i.e. , ERI SA, §7 12 , 29 U .S. C. §1185a, and PHSA, §2705, 42 U.S.C. §300g g -5. In addition, it amends the s e c t i o n o f th e Int e r

n a l R e v e nu e C o d e th at w a s a d d e d i n19 97 to enforce c ompliance with the menta l health benefits parity provisions – 26 U.S.C. §9812. The c hang es madeby

the 2008 Parity

Act apply

to plan year s beg inning on or

afte r Oc tober 3 , 2009. SeePub. L . 110-343, §512(e ). B e fo retha

t da te , th e Se c re tari e s o f L abo r, He a lthand Human Se rv ic e s, and the Tr e a sury are to iss ue re gulatio ns to ca rr y out th e ne w p ro vis ion s. Id. , § 5 1 2 (d ). Special rule s apply in connec tion with plans gove rned by collective ba

rg ainingagree ments. Id. w er e l ow ert han an ys uch dol l arl i m i t s form edi cal and s ur gi cal b e n e f its. 2 9 U .S .C . § 1 1 8 5 a ( a )(1 )-(2 ). In p a rticu lar , p lan s c o u ld i m pos e aggr egat e annua l and l i fet i m e l i m i t s s ubj ectt o t he fol l ow i ng r es t r ict i ons : ( 1) i f t he pl an di d noti m pos e l i m i t s on m edi cal and s ur gi cal benef

i t s , no s uch l i m i t s co u ld be i m pos ed on anym ent al heal t h benef

i t s ; and, ( 2) i f a pl an di d i m pos e l i m i t s on m edi cal and su rgica l benef

i t s , t he pl an had t o i m pos e ei t hert he s ame l i m i t s on m e n tal h e a lth b e n e f

its o r c o u ld n o t im p o se a lim it o n m e n tal h e a lth ben efi t s t hat w as l ess than t he li m i ton m edical and surgi cal ben efi t s. Id

. L ar ge gr oup pl ans coul d, how ever , i m pos e ot hercondi t i ons s uch as cos ts har i ng, l i m i t s on t he number of vi s i t s orday s of cover age, and dur at i on and s cope of m ent al heal t h ben ef

it s. 29 U .S .C . § 1 1 8 5 a (b )(2 ) (a s e n a c ted in 1 9 9 6 ). T h e 1 9 9 6 P a rityA c t d id notappl yt o a gr oup heal t h pl an of a “s m al l empl oy er ” – def i ned gener all y as an em pl oy erw i t h atl eas tt w o, butno m or e t han 50, e m p loy ees. 29 U

. S

. C

. §1 18 5a(c) (1)

. N or di d itapp l yi f its appl i cat i on t o a pl an w oul d r es ul ti n an i ncr eas e of 1% orm or e i n t he co st fo r suc h co v era g e. 29 U

. S

. C

. § 1 1 8 5 a(c )(2).
B
. 2008 P ar i t

y A ct
T he 2008 Par i tyA ctw as r ece nt l yenac t ed as par tof fe der al o m n ibu s leg isl ati o n
. P u b

. L

. 1 1 0 -34 3 , 1 2 2 S tat

. 3 7 6 5 , 3 8 8 1 (20 0 8 ). T he 2008 Par i t y A ct bui l ds upon t he ear l i er fede r al par i t yl aw , but 5 al t ers t he n at ure o f t he m ental health ben efi t s lar ge group plans m ust p ro v id e
. L ik e th e e a rlier law , the 2 0 0 8 P a rityA c t d o e s n o t m a n d a te8 [94 O p . A tt’ y

Whil e the Parity

Acts do not man d ate that larg e group plans off er 6 mental health service s, car riers ma y be re quired to provide suc h service s as part of their larg e group policies under the laws of a particul ars t at e. SeePart I I .A of this opinio n below conc erningsuch re quirements under Maryland law.
In r e fe rringto t

he20 08 Pari ty

Ac t, t his op ini on

us e s th e phra se 7 “mental he alth benef

its” to encompass both mental he alth benefi ts and “substanceuse disorder

benef its.” th a t la rg e g ro u p p la n s o f f e r m e n ta l h e a lth b e n e f

its

. If , h o w e v e r, a 6 pl an choos es t o offe r i t s m ember s m ent al heal t h benef i t s i n addi t i on t o m edi cal and s ur gi cal benef i ts, the 2008 P ar i t yA cts peci fi es t he m anneri n w hi ch thos e bene fi t s m us tbe cove r ed. I n addi t i on, t he 20 08 P ari t yA ct extends t he p ari t yprovis i on s t o “sub st ance u se di s or derbenef

i t s
. ”
D e fin iti o n o f B e n e fit s C o v e re d

b y th e P a rity A c ts
T he 2008 P arit yA ctdefi nes m ent al heal t h benef i t s and su b sta n c e u se d iso rd e r b e n e f its to m e a n , res p e c tiv e ly , b e n e f its w ith re sp e c t to se rv ice s fo r m e n tal h e a lth c o n d iti o n s an d b e n e f its w ith r es pect t o s er vi ces for s ubs t ance us e di s or der s , as defi ned undert he t e r ms o f t h e p l a n a n d i n a c c o r d a n c e wi t h F e d e r a l a n d St a t e l a w. T h u s, th e p h ra se “ su b sta n c e u s e d iso rd e r b e n e f its” p re su m a b ly den otes t he sam e t ypes of ben efi t s as the p hrase “subst ance a bu se b e n e f i t s ” i n S t a t e l a w. 7
P r ohi bi t i on agai ns tSpeci alC os t

- Shar i ng orTre atm ent Li m i t at i ons I n a new pr ovi s i on, t he 2008 Par i t yA ctr es t r i ct s el ement s of a heal t h pl an t hat w oul d i m pos e s epar at e cos t

- s har i ng and t r eatm ent li m it ati o n s fo r m en tal h ea lth b en ef it s. 2 9 U

. S

. C

. § 1 1 8 5 a(a )(3). In p a rticu lar , “f

in a n c ial re q u ire m e n ts” a p p lica b le t o m e n tal h e a lth b e n e fi t s m ayno tbe m ore r est ri ct i ve than t he “p redom i na n t” fi nanci al r equi r ement s appl i ed t o s ubs t ant i al l yal l of t he m edi cal and su rgica l b en ef

it s co v ere d b ythe p lan. 29 U

. S

. C

. § 1 1 8 5 a(a )(3)(A )(i ). “F in a ncial requi rem ents ” are defi ned t o incl ud e ded ucti bles , copaym ent s , coi ns ur ance , and out

- of- pocket expens es
. 29 U

. S. C 0.G en. 3] 9

A g gr e g ate li f

e ti me li mi ts an d annu a l li mi ts ar e e xc lu d ed fr om the 8 definition of “f

inancial r equire ments”; re q uire mentsin

the 1996 Parity

Act conce rn i n g those limit s remain in the law

. See29 U.S.C. §1185a(a) (1)- (2). §1185a( a) ( 3 )( B ) ( i )

. A fi nanci al r equi r ement i s cons i der ed 8 “pr edomi nant ” i f i t i s t he m os t comm on or fr equent of s uch t ype of li m ito r req u ir em en t i n the p lan. 29 U

. S

. C

. § 1 1 8 5 a(a )(3)(B )(i i)

. Si m i l ar l y , a pl an ca nnoti m pos e s epar at e “tr ea tment l i m i t at i ons ” t hatar e appl i cabl e onl yt o m ent al heal th b enef i t s
. 29 U

. S

. C

. §1185a( a) ( 3) ( A ) ( i i )

. A “t r eatm entl i m i t at i on” i s defi ned as anyl i m i t“on t he fr equenc yof t r eatm ent , num berof vi s i t s , day s of cover age, orot hers i m i l arl i m i t s on t he s cope ordur at i on of t r eatm ent

. ” 29 U

. S. C

. §1185a( a) ( 3) ( B ) ( i i i )

. I n addi t i on, t r eatm ent l i m i t at i ons form en t al heal t h benef i t s m aynotbe more r es t r i ct i ve th a n th e p r e d o m in a n t trea tm e n t li m itatio n s a p p lied to su b sta n tially a l l o f t h e me d i c a l a n d s u r g i c a l b e n e f i t s c o v e r e d b ya p l a n
. 2 9 U. S

. C. § 1 1 8 5 a(a )(3)(A )(i i)

. B enefi t s w i t h R espectt o O ut- of- N etw ork P rovi ders
U nderanot her new pr ovi s i on, a pl an t hatpr ovi des cover age f or m ed ical or su rgica l ben ef it s p rov id ed b yo u t- o f-n etw o rk p rov iders m us tal s o pr ovi de cove r age f orm ent al heal t h benef

i t s pr ovi ded by o u t- o f-n etw o rk p rov iders. 29 U

. S

. C

. § 1 1 8 5 a(a )(5).
Sum m ar y of P ar i t y Provis i ons T hus , w hi l e t he fe der al Par i t yA ct s do notr equi r e t he i ncl us i on of m ental health b enef

i t s, i f a plan c ho oses to provide such b enef i t s, t heym us tbe del i ver ed t o t hos e cove r ed by t he pl an i n a mannert hat i s no m or e r estri ct i ve t han t he del i ver yof s ubs t ant i al l yal l of t he m edi cal and s ur gi cal ben ef it s pr ovi ded byt he pl an. T hi s i ncl udes par i t yi n deduct i bl es , cop aym ent s , coi ns ur ance , out

- of- pocket e x p e n s e s , tr e a tm e n t lim ita tio n s a n d o u t- o f -n e tw o rk c o v e ra g e
. D is cl os ur e of

I nf or m at i on T h e 2 0 0 8 P a rityA c t r e q u ire s a p lan to d isc lo se th e c riter ia it u se s to m a k e m e d ica l n e c e ss ityd e ter m in a tio n s w ith re sp e c t to m ent al heal t h benef

i t s
. 29 U

. S. C

. §1185a( a) ( 4)

. I n addi t i on, a pl an m u s t m a k e a v a ila b le th e re a s o n f o r a n yd e n ia l o f

s u c h b e n e f

its

. I d.1 0 [94 O p . A tt’ y

A 2 % i nc re a sein a c tual to ta l c os ts o f c ov e rag e wi th re sp e c t to 9 me dic a l and

surg ic a l ben e fi ts a

nd me ntal he a lthand

su bs tanc e us e disorder be nefits trig g ers the e x empt i o nin a plan’s f irst year under the 20 08 Pari ty Ac t; a 1% inc re a se trig g e rs the e xemp tio n in su bs e qu e nt ye ars
. 29 U. S.C. §1 18 5a (c )( 2) . T hede te rm inatio n o f theinc re a seof tot a l c os ts mus t bema deby

an a c tua ry , a nd thi s d e te rm inatio n c ann ot bema deuntil a plan ha s provided mental health benefits for at least six months. Id. A pla n th at invo ke s th is ex emp tio n mu st n oti fy thefe de ral g ov e rnme nt, app rop ri ate sta

tea g e nc ie s, and

thebe ne fi c iari e s o f t

hepla n. 29 U. S.C. §1 18 5a (c )( 2) (E ). Th e pla n’ s c omp lia

nc e wi th t he e xemp tio n p ro vis ion

is subject to a

udit by fede ral a

nd state ag encie s. 29 U.S.C. §1185a(c)( 2)(F ). T h e se d isc lo su re s a re to b e m a d e in a c c o rd a n c e w ith re g u latio n s to b e iss u e d u n d e r th e A c t.
Modi f i ed C os tE

xem pt i on T he 2008 Par i t yA ctal s o m odi fi ed t he cos texempt i on co n t a i n e d i n t h e p r i o r l a w. 2 9 U. S. C. § 1 1 8 5 a ( c ) ( 2 )

. I f t he appl i cat i on of t he fe der al Par i t yA ct s w ould resul ti n s peci fi ed p e rc e n tag e in c re a se s in p lan c o sts , a p la n th a t o f f e rs m e n tal h e a lth benef i t s m ay cl ai m an exempt i on fr om t he pr ovi s i ons of t he fe der al P arit yA cts fo r t h e f

o ll o w ing y ea r. Id

. T he cos texem p ti on i s not 9
m a n d a to ry ; a p lan m a ye lec t to c o n tin u e to c o m p ly w ith th e P a rity A ct regar dles s of t he am ou nt of i ncrease i n tot al cost s. P r eem pt i on of St at e Law
T h e 2 0 0 8 P a r i t y Ac td i d n o tma k e a n yc h a n g e s t o t h e HI P AA preem pti on provis i on t hat i s app l i cable t o t he 199 6 Pari t y A ct

. T hu s, onl ya St at e l aw t hat“pr event s t he appl i cat i on of a r equi r ement ” of t he fe der al par i t yl aw s i s pr eempt ed. St at e l aw s t hatdo not“pr event th e a p p lica tio n ” o f f

e d e ra l la w to in su ra n c e p lan s c o n tin u e in e f f e c t. A pr ovi s i on added byt he 2008 Par i t yA ctr equi r es t he Secr et ar yof L abort o pr ovi de gui dance conce r ni ng, among ot hert h ing s, t he o p e r a t i o n o f

t h e n e w l a w a n d i t s i mp a c to n S t a t e l a w. 2 9 U. S

. C. § 1 1 8 5 a(g ).
W e nextexami ne curr entM ar y l and l aw conce r ni ng m andat ed m ent al healt h b enef

i t s and t he i m pactof t he fe der al pr eempt i on p ro v isio n in lig h t o f

th e re q u ire m e n ts a d d e d b y th e 2 0 0 8 P a rityA c t.G en. 3] 11

Preemption under this provision of ERI SA is, of cour se, distinct from 10 the HIPAA pree mption provision under which the P ar i ty Acts pre empt some state laws. SeePart I .A of this opinion.
Pursuant to fede ral law, employers eng ag ed in commerc e or in any 11 industry or ac tivity

aff ectingcommerc e, or a

n employee organ ization or org anizations repre sentingemployees e ng ag ed in c o m m erc e or in a ny industry or activity aff

ecting commerc e, or both areelig ible to self-insure

. 29 U.S.C. §1003(a).
Gover nmental and cer

tain churc h-re lated plans are g enerally exempt 12 from E RI SA. Whe n f

ully ins ur e d, su c h p lans aresu bje c t to State insurancelaw mandates. Howe ver, e ven g overnme ntal plans that areselffu nd e d a nd e xemp t fr om ERI SA an d Stat e ins ur anc e re gulatio ns wi ll s til l be af fec ted b y the fe deral Parity

Acts. SeePart I I .C of this opini on and note 18 below. II

R el at i on of

t he P ari t y A ct s t o M aryl and L aw A. Appli c ati on o

f State Law to H

ealth I ns ur anc e Poli c i e s and Se l f

-I ns ur e d Plans M ar y l and l aw r egul at es heal t h i ns ur ance pol i ci es i s s ued by i ns ur ance carr i er s i n t he i ndi vi dual , s m al l gr oup, and l ar ge group m ar ket s
. I n E R I SA , C ongr es s pr eempt ed s t at e l aw s “i ns ofaras t hey m a yn o w o r h e re a f

te r r e la te to a n ye m p lo y e e b e n e f it p la n ....” ER I SA , §5 14 ( a ) , 29 U

. S. C. §1 14 4( a )

. Thus , a s a r e s ul tof ER I SA 10 pr eempt i on, fede r al l aw and not St at e l aw , gover ns a hea l t h pl an of an empl oy ert hati s el i gi bl e t o s el f- i ns ur e and does s o. 11 12
E l i gi bi l i t yt o s el f- i nsu re i s nota r equi r ement t o do s o, and an empl oy erm ayi ns t ead c hoos e t o provi de hea l t h benef i t s by pur chasi ng a hea l t h i ns ur ance pr oduct

. St at e l aw r egar di ng in s u ra n c e is n o t p re e m p te d b yE R IS A

. See K e n tu c k y A ss ’n o f H e a lth pP l an s, Inc. v. M ill er, 5 3 8 U .S . 3 2 9 (2 0 0 3 ); Met ropo l i t an L i f e Ins. C o . v. Ma ss a c h u se tts , 4 7 1 U. S. 7 2 4 ( 1 9 8 5 )

. I f a n e mpl oy er p u r c h a s e s a h e a l t h i n s u r a n c e p r o d u c tf r o m a n i n s u r a n c e c o m p a n y, t he bene fi t s pr ovi ded b yt hati ns ur ance pr oductar e r egul at ed by M a ryla n d la w
.1 2 [94 O p . A tt’ y

With respe ct to small gr o up emp l o y ers that c hoose to purcha se an 13 ins ur anc e prod

uc t, S tatelaw mand ate s spe c if ic be ne fi ts. Th os e be ne fi ts, c a lle d th e Com

pr e he ns iveStand ard

He a lthB e nefit P lan, arese t f or th i n regulations adopted by

the Mary land Health Care Commissi on. SeeIN §15-1207; HG §19-108. Se eals o COMAR 31.11.06. B
. Mandated Mental Heal th B enef i t s under Mar

yl and L aw T w o par al l el M ar y l and s t atut es appl i cabl e t o heal t h i ns ur ance pol i ci es cont ai n par i t ypr ov isi ons r el at ed t o m ent al heal t h and su b sta n c e u se d iso rd e r be n e f its, th e latte r ca teg o ryg e n e ra lly des cr i bed i n St at e l aw as t r eatm ent fordr ug and al cohol abus e. O ne sta tu te s e ts f

o rth re q u ire m e n ts f

o r lar g e g ro u p a n d in d iv id u a l h e a lth i n s u ra n c e p o lic ie s
. See I N §1 5

- 8 0 2

. Th e o t h e ra p p l i e s i d e n t i cal s ta n d a rd s to H M O s
. See H G §19- 703. 1.
U nl ike t he fe der al Par i t yA ct s , M ar y l and l aw m andat es t hat h e a lth in su ra n c e p o licie s co n tain sp e c if ic b e n e f its f o r m e n tal h e a lth se rv ice s. T h e M a ry lan d sta tu tes sta rt f ro m th e p re m ise th a t a 13 pol i cyunl aw ful lydi s cr i m i nat es agai ns ti ndi vi dual s “w i t h a ment al i l l ness, em oti on al dis order, or d rug abu se d i sorder , or alcoho l abu se di s or derbyfai l i ng t o pr ovi de bene fi t s fort he di agnos i s and t r eatm ent of t hes e i l l nes s es under t he same t er m s and condi t i ons t hat appl yundert he pol i cy or cont r actfort he di agnos i s and t r eatm entof p h y sic a l il ln e ss e s.” IN § 1 5 -8 0 2 ( c ); see al so H G §19- 703. 1( b) ( 1) ( s i m i l arl anguage w i t h r es pectt o H M O s )

. T he s t atut es t hen def i ne a s etof pr act i ces t hatdo notcons t i t ut e s uch di s cr i m i nat ion, t hus lim itin g th e b re a d th o f

th e m a n d a te

. I n par t i cul ar , t he s t atut es pr ovi de that a pol i cydoes not dis cri m i nate i f i tprovides atl eastt he fo l l ow i ng ben efi t s:

i np ati ent be n e

fit s – undert he pol i cy , t he t ot al num berof day s for w hi ch benef i t s ar e pr ovi ded and the ter m s a n d c o n d it io n s o f b e n e f its a re a t lea st e q u a l to th o s e p ro v id e d f

o r p h y s ic a l illn e s s e s
.G en. 3] 13

T h e s t atut es def

ine “pa rtial hospitaliz ation” as “ the provision of 14 medically direc ted intensive or inter mediate s h o rt-ter

m treatment”for a period o f m o re than four , but less than 24, hours per day . I N §15- 802(a) (5); HG §19- 703.1(a) (5).
O f f ic e v is it s to a

p hy s ic ia nf o r me d ic ati o nma

n a g e me nt a

r e not 15 counted a g ainst the number of visits required to be co v er ed

. I N §15- 802(f) (1); HG §19- 703.1(e)

. Also, copay

ments for mental health or substance a buse bene fits are 16 to b ea c tua

ri a lly e qu ivale nt t o c oin sura

nc e re qu ir e me nts un de r t

hestatut e or, if ther e is no coinsuranc e require ment, no greater than c opay ments for treatment for a physical illness. SeeI N §15- 8 0 2 (e )(4) ; HG §19- 703.1(c) (6).

p a rtia l h o sp ita liza tio n b e n e fit s – the p o li cy co v ers 14 at l eas t 60 day s under t he s ame t er m s and condi t i ons t hat a p p ly to b e n e f

its f o r p h y s ic a l illn e s s e s
. out pat i ent cove r age – the poli cyprovides ben e f its forcover ed expens es , aft ert he appl i cabl e deduc t i bl e, at a r at e atl eas tequal t o 80% fort he first fiv e vi s i t s per c a len d a r y e a r o r 1 2 -m o n th p e rio d ; 6 5 % f o r th e six th t hroug h 30 vis i t s; and 50 % for anysubsequ ent vi si t s.

t h 15
IN § 1 5 -8 0 2 (d ); H G § 1 9 -7 0 3 .1 (b )(2 ). T h e m a n d a te a p p lies o n lyto ex p en ses fo r co n d it ion s that are tr ea table an d fo r tr ea tm en ts that are m edi cal l ynece ssar y
. I N §15- 802( e) ( 1) ; H G §19- 703. 1( c) ( 1)

. T he m ent al heal t h and s ubs t ance abus e bene fi t s ar e t o be pr ovi ded as one s eto f benef

i t s undert he s ame t er m s and condi t i ons as benef i t s for p h y sical i ll n esse s an d m ay b e p rov ided thro u g h a m an ag ed ca re sy stem

. IN § 1 5 -80 2 (e)(2); H G § 1 9 -70 3

. 1 (c)(2)-(4).
T h e M a ry lan d sta tu tes a lso g e n e ra llyre q u ire p a r it y in c o stsh a rin g re q u ire m e n ts. In p a rticu lar , a p o licy m a y n o t h a v e se p a ra te l i fet i m e maxi m um s , deduct i bl es , coi ns ur ance amount s , orout

- ofpocketl i m i t s forbenef i t s r el at ed t o m en t al heal t h and s ubs t ance abus e t r eatm entbenef

i t s , compar ed t o t he l i m i t s forbenef i t s r el at ed to p h y sical illn esse s. IN § 1 5 -80 2 (e)(3); H G § 1 9 -70 3

. 1 (c)(5). 16 H o wev e r , t h e r e i s a n e x c e p t i o n t o t h i s r u l e f o rt h e c o i n s u r ance r equ ir ement s es t abl i s hed foroutpat i entt r eatm entr el at ed t o m ent al h e a lth o r s u b s ta n c e a b u s e b e n e f its

. See I N §15- 802( d) ( 3) ; H G §19- 703. 1( b) ( 2) ( i i i )

. T her e i s al s o a s peci fi c l i m i t at i on i n t he s t atut e on copaym ent s form et hadone m ai nt enanc e t r eatm ent – t hey m aynotbe1 4 [94 O p . A tt’ y

The lawdoes not apply

to residents o f nurs i n g homes, and the la w 17 does not apply

to the first presc ription or chang e in a p re s cr i p t i o n for a maintenanc e drug . The drug mu st be presc ribed by an authorized presc riber. I

N §15-824(c ) and ( d)(2)

. m or e t han 50% o f the dai l ycos t

. I N §15- 802( e) ( 4) ( i i ) ; H G §19- 7 0 3 .1 (c )( 6 )( ii)

. Sever al pr ovi s i ons i n t he Ins ur ance A r t i cl e m andat e par t i cul ar typ e s o f c o v e ra g e f

o r h e a lth in su ra n c e p o licie s a n d H M O c o n tra c ts t hat ar e i ssued or deli vered i n t he Stat e. In part i cular , ben efi t s m ust b e p rov ided fo r m ed icall yn ec essa ryreside n ti al crisi s serv ices. IN § 1 5 -84 0 (c). S u ch serv ices are de fin ed as m en tal h ea lth an d su p p o rt s er vi ces pr ovi ded i n a com m uni t y - bas ed r es i dent i al s et t i ng t o an i ndi vi dual w i t h a ment al i l l nes s i n an ef for tt o pr eventors hor t en a p s y c h ia tr ic in p a tie n t a d m is s io n . IN § 1 5 -8 4 0 (a ).
B enef i t s m us t al s o be pr ovi ded t o al l ow an i ns ur ed orenr ol l ee to re c e iv e u p to a 9 0 -d a ysu p p lyo f m a in ten a n c e d ru g s in a sin g le d isp e n sin g
. IN § 1 5 -8 2 4 (d )(1 ). S im ilarl y, p o licie s s u b jec t to 17 M ar y l and l aw m us t est abl i s h and i m pl ement a pr ocedur e byw hi ch a mem berm ayr ec eive a pr es cr i pt i on dr ug t hati s noton t he p re sc rip tio n d ru g f

o rm u lar y . C o v e ra g e f

o r n o n -f o rm u la r y d ru g s is re q u ire d w h e n , in th e ju d g m e n t o f a n a u th o riz e d p re sc rib e r, th e re is no equi val ent dr ug avai l abl e on t he for m ul ar yort he equi val entdr ug has been i neff

ect i ve orpr oduced a n adver s e condi t i on orhar m t o t he m e m b e r. I N § 1 5 -8 3 1 (c ) a n d (d ).
C
. P re e mp tive E

ffe c t o f Fe de ra l P a rity A c ts
A s not ed above , t he P ar i t y A ct s appl y onl y t o l ar ge gr oup pl ans and po l i ci es offered thr ou gh em ploy ers
. I ndi vi dualM

ar ket
T h e in d iv id u a l m a rk e t is n o t af f e c ted b yth e f

e d e ra l P a rity A ct s ; t hus , cur r entM ar y l and l aw o u tl ini ng t he r equi r ed ment al heal t h and s ubs t ance abus e benefi t s i n t he i ndi vi dual m ar ket , al ong w ith a n y allo w a b le lim itatio n s in th is c o v e ra g e , co n tin u e s to a p p ly to in d iv id u a l p o lic ie s w ith o u t c h a n g e
.G en. 3] 15

As noted above, some larg e group plans, such as th e s el f- funded 18 pla ns in t heStateEm

plo ye e and

Re tir e e He a lth and

Wel fa reB e ne fi ts Pr ogra m, a reno t su bje c t to State ins ur anc e law or to E RI SA. Th e sepla ns , howeve r, are subjec t t o th e Public Health ServiceAct. Gove rnmental larg e group plans must comply with the provisions of the PHSA, including the provisions found in the fede ral Parity Acts, unless the plan make s an elec tion to be excluded. See42 U.S.C. §300gg -21(b) (2). Sm al lG r oup M

ar ket
M ar y l and l aw gener al l ydefi nes a s m al l gr oup empl oy er as one t hatempl oy s at l eas t t w o but not m or e t han 50 empl oy ees
. I N §15- 1 2 0 3 (b)

. B ecause the federal P ari t yA ct s do n ot appl yt o “ sm a ll e m p lo y e rs ” (d e f

in e d i n s im ila r t e rm s to M a ryla n d la w ), s ee 29 U

. S. C

. §1185a( c) ( 1) , t heydo notaff ectt he s m al l gr oup m ar ket

. T he m a n d a tes o f

M a ry lan d law , as w e ll as its lim itatio n s, c o n tin u e to app l yt o em ploy ers w ho pu rchase sm al l group po l i ci es. Large G r oup Mar ket
T he fede r al Par i t y A ct s do, how ever , appl y t o t he l ar ge gr oup m a r k e t – i

. e. , p l a n s wi t h mor e t h a n 5 0 e mpl o y e e s

– r e g a r d l e s s of w h e th e r th e p lan is a lar g e g ro u p in su ra n c e p o licyre g u late d b yS tate law o r a se lf

-in su re d p lan

. H o w e v e r, M a ry lan d ’s m a n d a te th a t a 18 l arge gro u p po l i cyprovide m ental health an d sub st ance a bu se ben efi t s does no t“preven tt he ap pli cat i on of” t he fe deral P ari t yA ct s; th e re f o re , th e m a n d a te itse lf is n o t p re e m p ted a n d re m a in s in e f f e c t. ( A s not ed above , t he mandat es do notappl yt o s el f- i ns ur ed pl ans as a r es ul t of a s epar at e fede r al pr eempt i on pr ovi s i on under E R IS A ). T o t he ext entt hatM ar y l and l aw al l ow s cer t ai n pr act i ces t hatpr ovi de a reduced l evel of ben efi t s for m ental health an d sub st ance a bu se benef i t s compar ed t o m edi cal and s ur gi cal benef i t s , t hos e pr ovi s i ons pr eventt he appl i cat i on o f t he Par i t yA ctas t o l ar ge gr oup pol i ci es and ar e pr eempt ed.
W h a t p o rtio n s o f

M a ry lan d law a re p re e m p te d b yth e P a rity A ct s ? M ar y l and l aw al l ow s carr i er s t o pl ace l i m i t at i ons on m ent al health b enef

i t s t hat m ayno tbe p l aced o n benef i t s for ph y si cal i l l ness i n s ever al ar eas
. For exampl e, car r i er s ar e notr equi r ed t o cover m or e t han 60 day s of par t i al hos pi t al i zat i on form ent al i l l nes s under t he same condi t i ons for w hi ch t hey cover par t i al hos pi t al i zat i on for p h y s ic a l i l l n e s s
. See IN § 1 5 -80 2 (d)(2 ); H G § 1 9 -70 3

. 1 (b)(2 )(i i)

. M a ry lan d law d o e s n o t co n sid e r it d isc rim in a to ryf o r c a r r ie r s to rei m bu r s e c ov e r e d e xp e ns e s for ou tpati ent coverage o f m ental i l l ness1 6 [94 O p . A tt’ y

I f the Parity

Acts do not apply

as a result of the cost e x emption, see 19 Part I .B . &fo otn ote9 a

bo ve , th e n the State mand ate s pr e suma bly re ma in a pp lic a blewi th re sp e c t to larg e gro up he a lthins ur anc e po lic ie s. at gr adual l y decr eas i ng l evel s
. For exampl e, a ca r r i erm aypay80% of cover ed expens es for t he fi r s t fi ve out pat i ent vi s i t s i n a ca l endar y ear, t hen pay on l y65 % of the cov ered exp enses for t he six th t hr ough t he t hi r t i et h vi s i t

. I N §15- 802( d) ( 3) ( i ) and ( i i ) and H G §19- 703. 1( b ) ( 2 ) ( i i i )

. Ca r r i e r s ma ya l s o c h a r g e a c o p a y me n tf or m e t h a d o n e m a i n t e n a n c e t r e a t m e n tt h a ti s u p t o f i f t yp e r c e n t( 5 0 %) o f th e d ail yco st of

the trea tm en t. IN §1 5 -802( e) ( 4) ( i i ) ; H G §19- 7 0 3 .1 (c )( 6 )( ii)

. U nl es s t he t ypes of fi n anci al and t r eatm entl i m i t at i ons i n a pol i cyal l ow ed byM ar y l and l aw form ent al heal t h and s ubs t ance a b u se b e n e f

its a re n o m o re re stric tiv e th a n th e “ p re d o m in a n t” fi nanc i a l a n d t r e a t me n tl i mi t a t i o n s a p p l i e d t o a l l me d i c a l a nd su rg ica l b e n e f

its b y a c a rrie r, th e se lim itatio n s o n m e n tal h e a lth benef i t s al l ow ed byM ar y l and l aw “pr eventt he appl i cat i on” of the Par i t yA ct s as t o l ar ge gr oup pol i ci es and ar e pr eempt ed. 19
Som e of M ar y l and’s m andat ed bene fi t s t hatr el at e t o m ent al heal t h and s ubs t ance abus e bene fi t s d o n o t pr eventt he appl i cat i on of t he Par i t y A ct ; t her efor e, t hes e pr ovi s i ons ar e notpr eempt ed. For exampl e, as noted above, I N §15- 840 m andat es cover age f or m e d ica llyn e c e ss a ryre sid e n tial c r is is s e rv ice s. In m a n d a tin g th is cover age, t he s t atut e does nots peci fyan y al l ow abl e fi nanci al r equi r ement s , cos ts har i ng r equi r ement s or t r eatm entl i m i t at i ons t hat di ffe rfr om t hos e form edi cal and s ur gi cal benef i t s
. A s s uch, t he M ary l and l aw do es n o tpreven tt he ap pli cat i on of the P ari t yA ct s, a n d th e m a n d a te to p ro v id e re sid e n tial c risis se rv ice s re m a in s in tac t. It is im p o rta n t to n o te, h o w e v e r , th a t to th e e x ten t th a t a h e a lth i ns ur ance carr i er ’ s l ar ge group pol i cy i s cur r ent l yi m pos i ng fi nanci al l i m i t at i ons , cos ts har i ng r equi r ement s , or t r eatm entl i m i t at i ons w hen p ro v id in g re sid e n tial c risis se rv ice s, th e c a rrie r is n o lo n g e r a b le to i m pos e su ch l i m i t at i ons orr equi r ement s i n a l ar ge gr oup pol i cy u n d e r th e P a rityA c t.
S im ilarly , M a ry lan d law o u tli n e s s p e c if ic r e q u ire m e n ts r egar di ng cover age of

m ai nt enanc e med i cat i ons and pr es cr i pt i on m edi cat i ons i n l ar ge gr oup p o li ci es t hatcont ai n pr es cr i pt i on dr ug b e n e f i t s
. See I N §§15- 824, 15- 831. W hi l e t hes e s ect i ons do not m e n tio n m e n tal h e a lth a n d su b sta n c e a b u se b e n e f its sp e c if ica lly , to t h e e x t e n t t h a t t r e a t me n t f o r e i t h e r o f t h e s e c o n d i t i o n s i nvol vesG en. 3] 17

m edi cat i ons , t hes e pr ovi s i ons appl yt o m ent al heal t h and s ubs t ance a b u se tre a tm e n t. N e ith e r o f th e se se c tio n s s e ts f

o rth a n ysp e c if

ic al l ow abl e l i m i t at i ons on cover age of m ed icat i ons as t hatcover age rel at es t o m ental health o r s ub st ance a bu se treat m ent. T hu s, appl i cat i on of t hes e sec t i ons does notpr eventt he appl i cat i on of t he P a rity A c t a n d M a ry lan d law is no t p re e m p ted

. H o w e v e r, a s w ith t he mandat e forr es i dent i al cr i s i s s er vi ces , i f a l ar ge gr oup pol i cy cont ai ns fi nanci al l i m i t at i ons , cos ts har i ng r equi r eme n t s o rtr e a t m ent lim itatio n s w ith re g a rd to p re sc rip tio n m e d ica tio n s fo r m e n tal h e a lth o r sub stan ce ab u se t rea tm en t that are n o t b eing im p o sed w ith reg ard t o m edi cal or s ur gi cal cover age, s uch l i m i t at i ons w i l l be pr ohi bi t ed b yth e 2 0 0 8 P a ri ty A c t.
F i n a l l y , M a r y l a nd l a w d o e s n o ta l l o w s e p a r a t e l i f e t i me m a x im u m s f

o r p h y sic a l il ln e ss a n d ill n e ss e s re late d to m e n tal h e a lth o r s u b s ta n c e a b u s e
. See I N §15- 802( e) ( 3) ( i ) and H G §19- 703. 1( c) (5) ( i )

. T hes e l aw s do notpr eventt he appl i cat i on of t he P a ri ty A c t; th e re f

o re , th e s e p ro v is io n s a re n o t p re e m p te d

.

III
C oncl usi on I n s um m ar y , anySt at e l aw t hat appl i es t o l ar ge gr oup pol i ci es a n d th a t “p re v e n ts th e a p p lic a tio n ” o f th e f e d e ra l P a rityA c ts is pr eempt ed byfede r al l aw
. T he r es ul t i ng i m pactof pr eempt i on by t he fe deral P ari t yA ct s i s as fol l ow s:

• I ndi vi dual pol i ci es and pol i ci es not pr ovi ded t hough an e m p lo y e r a re n o t a f

f e c ted b y th e P a rityA c ts. A n yS tate m a n d a tes a n d lim itatio n s th a t ap p lyre m a in in e f f e c t.

• S e lf -in su re d p lan s o f

p riv a te e m p lo y e rs a re n o t su b jec t to M a r y l a nd l a w du e t o f

e de r a l pr e e mpt i on un de rER I SA and ar e governed s ol el ybyfede r al l aw
. Sm al l gr oup plans ar e speci fi cal l yexem pted from t he P ari t yA ct s; t hus , t he Par i t y A cts d o notappl yt o empl oy er s t hat choos e t o s el f- i ns ur e a s m al l gr oup pl an. I f an e m pl oy er is e lig ib le to se lf

-in su re , b u t ele c ts to p u rc h a s e a sm a ll g ro u p h e a lt h in s u r a n c e p r o d u c t, th e m a n d a te s a n d sp e c if ic lim ita tio n s o u tlin e d in S ta te la w a p p ly.1 8 [94 O p . A tt’ y

• T he P ari t yA ct s applyt o sel f -in sured l arge group plans; h o w e v e r, th e m a n d a tes in M a r y lan d law d o n o t ap p lyto s uch pl ans
. E m pl oy er s t hatchoose t o s el f- i ns ur e and offe ra l ar ge gr oup pl an do nothave t o offe rm ent al heal t h and s ubs t ance abus e bene fi t s ; how ever , i f a pl an do es co ntai n such ben efi t s, t he financial l i m i t at i on s, cost s har i ng r equi r ement s and t r eatm entl i m it ati ons m aynot be more r es t r i ct i ve t han t he pr edo m ina ntl i m i t at i ons on t he medi cal and s ur gi cal benef i t s i n t he pl an. A nd, i f t he pl an o ff er s an out

- of- net w or k benef i tform edi cal and s ur gi cal s er vi ces , t hen t he pl an m us t al s o offe r an out

- ofnetw ork be n efi tfor m ental health an d sub st ance a bu se ser vices

.

• L a r g e g r o u p h e a l t h i n s u r a n c e p o l i c i e s a r e g o v e r n e d b y a c o m b in a tio n o f

S tate a n d f

e d e ra l law . M a n d a tes in M ar y l and l aw conce r ni ng m ent al heal t h and subs t ance abus e bene fi t s r emai n appl i ca b le t o t hos e pol i ci es , but any p ro v i si on s i n S t at e l aw t hat al l ow fi nan ci al , cost s har i ng and t r eatm entl i m i t at i ons m or e r es t r i ct i ve t han t hos e for m edi cal and s ur gi cal benef i t s ar e pr eempt ed by t he 2008 Par i t yA ct

. T hus , pr ovi s i ons i n M ar y l and l aw al l ow i ng t hes e bene fi t s t o be del i ver ed w i t h cos ts har i ng r equi r ement s foroutpat i entcover age, m i ni m u m day l i m i t s forpar t i al hos pi t al i zat i o n , and maxi m um co p ay m en ts f

o r m etha d o n e m ainten an ce tr ea tm en t are pr eempt ed t o t he ext ent t hat t heyar e more r es t r i ct i ve t han t he equi val ent r equi r ement s w i t h r es pectt o phy s i cal ill n e s s e s . If

th e p o licyo f

f e rs a n o u t-o f

-n e tw o rk b e n e f

it for m edical and surgi c a l servi ces, t he p oli cym ust al so offe ran out

- of- net w or k b en efi tform ent al heal t h and s u b s ta n c e a b u s e s e rv ic e s
.

• If a n e m p lo y e r is e lig ib le to se lf -in su re , b u t ele c ts to pur chas e a l ar ge gr oup i ns ur ance pr oduct , St at e mandat es appl y u n le s s pr eempt ed byt he fe der al Par i t yA ct s as out l i ned above

.

• Pr ovi s i ons i n M ar y l and l aw m andat i ng cover age f or m edi cal l ynec essa ryreside n ti al crisi s serv ices, an d s ett i ng s peci fi c r equi r ement s r el at ed t o t he cove rage of m ai nt ena n ce dr ugs and pr es cr i pt i on dr ugs ar e not p ree m p ted b ythe P arit yA cts. H o w ev er, if ca rri ers a re p lac in g a n ylim itatio n s in th e ir lar g e g ro u p h e a lth i ns ur ance pol i ci es r egar di ng t hes e s er vi ces, s uchG en. 3] 19
l i m i t at i on s w i l l no l on ger be all ow ed u nles s t hey are al so t he pre dom i nant l i m i t at i ons i n t he pol i cyform edi cal and surgi cal ben efi t s. Fi nal l y , y ou al s o as ked w het her“corr ect i ve” St at e l egi s l at i on i s nece s s ar y in l i ghtof t he 2008 Par i t yA ct

. T o t he ext entt hatt he fede r al l aw pr eempt s St at e l aw , i t does s o byvi r t ue of the Supr emacy C l aus e i n A r t i cl e V I of t he U ni t ed St at es C ons t i t ut i on and t her e i s no l egal r equi r ement t o amend St at e l aw t o r ecogni ze t hatpr eempt i on. I f t he G ener al A s s embl y w i s hes t o amend M ar y l and l aw t o r ecogni ze t he ar eas of fe der al pr eempt i on, w e w oul d be happy t o as s i s t i n t hat eff or t. In dr aft i ng amendm ent s t o M ar y l and s t atut es fort hat purpos e, i tw oul d be appr opr i at e t o t ake into accountt he gui dance t hatt he S ecr et ar y of Labor i s t o pr ovi de s t at es pur s uantt o t he 2008 P a ri ty A c t.
D ougl as F. G ans l er A t t or ney G ener al
E l l en L. K uhn A s s is ta n t At tor ney G ener al
R o b e rt N . M c D o n a ld O pi ni ons and A dvi ce