PHWP: Good Company Newsletter: An Employer’s Guide to the Mental Health Parity and Addiction Equity Act

July 30, 2009

An Employer’s Guide to the Mental Health Parity and Addiction Equity Act

By Ronald E. Bachman, FSA, MAAA and APA Practice Organization Staff

In 2008, Congress passed legislation that requires private health insurance plans to provide equal coverage for mental and physical health. The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (Wellstone-Domenici Parity Act) was passed with the intent to improve access to appropriate treatment for people suffering from mental health disorders and extend equal coverage to all aspects of health insurance plans. The act preserves existing state parity and consumer protection laws while extending protection of mental health services to those not protected by state laws. The Wellstone-Domenici Parity Act was designed to include mental health coverage for both in-network and out-of-network services. The law applies to groups with more than 50 employees and goes into effect January 1, 2010.

Mental Health Problems are Common and Often Untreated

More than 57 million Americans suffer from a mental health disorder, according to the National Institutes of Mental Health. A 2008 nationwide survey by Harris Interactive in conjunction with the American Psychological Association found that 25 percent of Americans do not have adequate access to mental health services and 44 percent either do not have mental health coverage or are not sure if they do. Additionally, a 2006 survey by the Substance Abuse and Mental Health Agency reports that 49 percent of U.S. adults with both serious psychological distress and a substance use disorder go without treatment.

The Wellstone-Domenici Parity Act will provide coverage for treatment of many psychological ailments and mental health disorders including depression, anxiety and panic disorders. It can also include treatment for trauma victims suffering from post traumatic stress disorder, teenage girls fighting to survive anorexia or bulimia, new mothers struggling with post-partum depression, children suffering from attention-deficit hyperactivity disorder and many people struggling with alcohol and substance use problems.

What Mental Health Parity Means for Employers

Mental health parity has been misunderstood for as long as it has been debated. For many years, opponents have expressed concerns about the cost of implementing parity laws. Those concerns have been called into question by years of experience showing the organizational benefits and improved health that result from recognizing the mind-body health connection and implementing parity in coverage for physical and mental health services.

Research shows that physical health is directly connected to emotional health and millions of Americans know that suffering from a mental health disorder can be as debilitating as any major physical health disorder. Passage of the Wellstone-Domenici Parity Act will lead the health care system in the United States to start treating the whole person, both mind and body.

Employers are well aware that employee health and well-being are critical to running a productive, profitable, successful business and addressing employees’ mental health needs is a key ingredient in achieving those business results. This guide outlines steps employers can take to optimize outcomes for employees and the organization, while implementing the changes required by the law.

Best Practices in Mental Health Parity Implementation

Mental health disorders cause more days of work loss and on-the-job impairment than many other chronic conditions such as diabetes, asthma and arthritis¹. Approximately 217 million days of work are lost annually due to productivity decline related to mental illness and substance abuse disorders, costing U.S. employers $17 billion each year². In total, estimates of the indirect costs associated with mental illness and substance abuse disorders range from a low of $79 billion per year to a high of $105 billion per year³ (both figures based on 1990 dollars).

To optimize the organizational value when implementing the Wellstone-Domenici Parity Act, health plans should review their benefits design and the various ways mental health services are accessed, delivered and paid for. Federal implementation guidelines for the Wellstone-Domenici Parity Act will not likely be available until the fall of 2009 and follow-up questions and answers will likely stretch into 2010.

The following material is offered as immediate help and support for employers wanting to implement best practice suggestions that are likely to meet any minimum federal standards for the Wellstone-Domenici Parity Act and provide the greatest contribution to creating a healthy workplace.

1. Equalize benefit structures per Wellstone-Domenici Parity Act requirements – Equalize all financial requirements and treatment limitations for mental health with medical and surgical benefit designs.
2. Assure adequate access to a full range of settings for patient care – For mental health benefits this includes hospitalization, partial hospitalization, residential care and outpatient services.
3. Eliminate office visit limits and/or hospital day limits on mental health services – The Wellstone-Domenici Parity Act does not allow restrictions on mental health treatments to be more limited than those restrictions applied to substantially all other medical/surgical benefits. Most health plans do not have annual or other limits on the number of office visits for medical care. This would mean that mental health office visits must be the same.
4. Use common deductibles and maximum out-of-pocket cost-sharing – Use a common deductible and common maximum out-of-pocket cost sharing features in health plan designs. That is, use a single deductible where all cost-sharing is applied whether or not the covered claim is for mental health or a medical/surgical claim.
5. Equalize coinsurance – For plans using a coinsurance benefit design, the predominant coinsurance percentage covered by the plan should apply to mental health claims. In the past, some plans paid 80% coinsurance on medical/surgical claims and 50% for mental health. Under this example, to comply with the Wellstone-Domenici Parity Act, the 80% coinsurance would also apply to mental health claims.
6. Equalize office copayments – For plans with copayments, the psychotherapy office visit copayment should be the same as the predominant office visit copayment under the plan. In general, this is likely to be the same as that applied to primary care physicians.
7. Improve coordination between disease management programs, general medical care and mental health services – Employers should require their disease management vendors, as part of their regular practice, to periodically screen all patients enrolled in their respective programs for common behavioral health conditions, and coordinate care with other providers as indicated.
8. Encourage preventive mental health care and early intervention – Remove stigma and encourage plan members to seek mental health support for high stress and depression. Prevention and early intervention can help avoid more costly services that result from untreated conditions.
9. Address the high-risk of comorbidities – Primary care physicians and other health providers under the plan should be alert to and screen for depression and other common mental health conditions among individuals with chronic medical illnesses. Patients left untreated for depression are often less able to maintain adherence with medications and other recommended treatments.
10. Refer to mental health providers – Primary care physicians are often the first to identify depression and other mental health conditions in their patients. Referrals from primary care to mental health providers should be encouraged to effectively diagnose a patient’s condition and improve patient care.
11. Encourage collaborative care – Use a collaborative care model to address the needs of patients with mental illnesses who are also receiving primary care services. Collaboration on care and treatments by all providers should follow accepted professional standards.
12. Assure equal in-network and out-of-network access – Patients in need of mental health services should have access to quality providers when seeking either in-network or out-of-network services.
13. Equalize benefits for out-of-network mental health services – Out-of-network mental health benefits cannot have more restrictive financial requirements than medical/surgical benefits. If out-of-network medical/surgical benefits are provided, out-of-network mental health benefits must be provided on an equal cost-sharing basis.
14. Review mental health services annually – Review mental health services each year and make plan changes to reflect new treatments and procedures that should be added to the plan’s benefit design.
15. Don’t look for loopholes – The value of providing mental health coverage is now well established and the Wellstone-Domenici Parity Act states clearly that there are to be “no separate cost sharing requirements that are applicable only with respect to mental health or substance use disorder benefits.”

During the past few years employers have focused on general health quality and benefit design improvements to better engage plan members. Many organizations now understand that employee health and organizational performance are inextricably linked and recognize the importance of mental health in the overall well-being of their workforce. Now is the time to engage and treat the whole person – mind and body – in a comprehensive approach to creating healthy, high-performing organizations.

Click here to read the accompanying Wellstone-Domenici Parity Act FAQ.

Click here to download this guide and the FAQ article as a PDF.

Click here for information you can share with your employees.

Click here to view a slide show about the new mental health parity law.

Click here to listen to an interview about the mental health parity law with Ron Bachman on the Good Company Podcast.

Footnotes

¹ Kessler RC. Greenberg PE. Mickelson KD. Meneades LM. Wang PS. The effects of chronic medical conditions on work loss and work cutback. Journal of Occupational and Environmental Medicine. 2001; 43(3): 218-225.

² Hertz RP, Baker CL. The impact of mental disorders on work. Pfizer Outcomes Research. Publication No P0002981. Pfizer; 2002.

³ U.S. Department of Health and Human Services. Mental Health: A Report of the Surgeon General – Executive Summary. Rockville, MD: U.S. Department of Health and Human Services, Substance Abuse and Mental Health Services Administration, Center for Mental Health Services, National Institutes of Health, National Institute of Mental Health; 1999.