Healthcare Business News

Behavioral change

While an interim rule on mental health parity was met with mostly positive reviews, a coalition is suing saying the proper process wasn't followed in issuing the rule

By Jessica Zigmond
Posted: April 12, 2010 - 12:01 am ET

Typically a dry and tedious endeavor, the federal rulemaking process has gotten a little more interesting for mental health parity advocates in the past few weeks.

Advertisement | View Media Kit


Behavioral healthcare providers, managed-care organizations and associations are still interpreting the federal government's interim final rule for mental health parity legislation that became effective April 5 as they prepare for a public-comment deadline in early May.

The rules and regulations—issued by HHS and the Labor and Treasury departments on Feb. 2—apply to the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act, which Congress passed on Oct. 3, 2008. A hard-fought victory for behavioral health advocates, the law requires group health plans with 50 or more employees that provide medical-surgical coverage and mental health and substance-abuse coverage benefits to ensure that financial requirements and treatment limits for both are equal (Oct. 6, 2008, p. 6). Although the regulations went into effect last week they will apply to plan years beginning on or after July 1.

In early April—one month before the rule's public-comment deadline—the Coalition for Parity, a group of three managed behavioral healthcare organizations, sued HHS Secretary Kathleen Sebelius, Labor Secretary Hilda Solis, Treasury Secretary Timothy Geithner, and their respective Cabinet departments, for what they contend was the departments' failure to “engage in required notice and comment rulemaking” before the interim final rules were issued. At issue, the plaintiffs argue, is that the three departments failed to issue a proposed rule by Oct. 3, 2009 (the one-year anniversary of the bill's passage), choosing instead to issue an interim final rule.

“The coalition and its members advocated for and fully support the parity statute,” said Jeffrey Poston, a partner at Crowell & Moring in Washington and lawyer for the coalition, which consists of Magellan Health Services, ValueOptions and Beacon Health Strategies.

“The lawsuit is about due process. The coalition seeks only to participate in the rulemaking process and provide input to help fashion the best possible regulations and safeguard access to quality behavioral healthcare.”

According to the Feb. 2 Federal Register, proposed rulemaking “is not required when an agency, for good cause, finds that notice and public comment thereon are impracticable, unnecessary or contrary to the public interest.”

Meanwhile, providers, associations and insurers continue to pore over the interim final rule as they prepare to submit comments. For some, the response to the regulations was positive. “This particular regulation has been very thoughtfully crafted,” said Michele Gougeon, executive vice president and chief operating officer at 177-bed McLean Hospital in Belmont, Mass., which is affiliated with Harvard Medical School. Gougeon also said there was consistency in the structuring of the rule. “It's pretty clear what the legislation wants is real parity between mental and substance-abuse services and general medical services.”

According to a summary from the CMS, the act preserves the protections of the Mental Health Parity Act of 1996, which states that a group health plan may not impose annual or lifetime dollar limits on mental health and substance-use-disorder benefits that are less favorable than any limits imposed on medical-surgical benefits.

The new act, which applies to commercial health plans and Medicaid managed-care plans, also incorporates a number of changes to that 1996 law. These include stipulations that if a group health plan includes medical-surgical benefits and mental health benefits, the financial requirements, such as deductibles and copayments, and treatment limitations, such as the number of visits or days of coverage, that apply to mental health benefits cannot be more restrictive than the predominant financial requirements or treatment limitations that apply to substantially all medical-surgical benefits.

Also, mental health and substance-use-disorder benefits may not be subject to any separate cost-sharing requirements or treatment limitations that apply to these benefits if a group health plan includes both medical-surgical and mental health benefits, or medical-surgical and substance-use-disorder benefits. And if a plan provides for out-of-network medical-surgical benefits, it must provide out-of-network coverage for mental health and substance-use-disorder benefits.

In addition, the provisions in the regulation state that the parity requirements must be applied separately to six classifications of benefits. As the summary explains, the test that determines “substantially all” or “predominant” for parity requirements must be applied to restrictions and requirements in each of those classifications. “Additionally, although the regulation does not require plans to cover mental health/substance-use-disorder benefits, if they do, they must provide mental health/substance-use-disorder benefits in all classifications in which medical-surgical benefits are provided,” the summary said.

“Clearly the law is a very encouraging step in the right direction towards de-stigmatizing mental health,” said Joseph Schulman, executive director of Glen Oaks, N.Y.-based Zucker Hillside Hospital, which is affiliated with North Shore-Long Island Jewish Health System. With an average daily census of 208 inpatients, Zucker also has about 250,000 outpatient units of service each year, he said.

Another provision that many providers noted is that the regulation distinguishes between quantitative treatment limitations, which are numerical with regard to visit limits and day limits, and nonquantitative treatment limitations, which include medical management, step therapy and pre-authorization. The significance here is that group health plans cannot impose a nonquantitative treatment limitation to mental health or substance-use-disorder benefits in any of those six classifications unless those limitations are comparable to—and applied no more stringently—than what is applied in medical-surgical benefits.

Greater access, greater volume

Bob Nykamp, the COO of Pine Rest Christian Mental Health Services, a behavioral health system based in Grand Rapids, Mich., said he has seen a difference in patient volume since the bill passed. “I know our outpatient program is up about 10% over last year, and our inpatient volume is up about 5% over last year,” said Nykamp, who also serves as treasurer for the National Association of Psychiatric Health Systems, a Washington-based organization that represents integrated health systems, hospitals, behavioral health units in hospitals, community health centers, residential treatment centers, youth services organizations and group practices.

“I can't attribute that directly to parity, but I can give you details,” Nykamp added. “Several insurance companies are not requiring pre-authorization for behavioral healthcare. Before, they'd have to call an 800 number to get pre-authorized,” he said, referring to patients. “But if they don't require it for medical, they can't for mental. So people are finding access to care quickly.”

In addition, Nykamp said Blue Cross and Blue Shield of Michigan used to require 50% copayments, but has reduced that figure to 20%, the same amount it requires for medical-surgical benefits. Pine Rest has more than 200 clinicians in 25 locations and has about 215,000 outpatient visits per year, according to Nykamp, who said Pine Rest has 170 beds and an average daily census of 145 inpatients. As he explained, Pine Rest has “established good partnerships” with payers, who approached the system to learn how their plans would change when it looked as if parity legislation would become law.

Pine Rest's increase in outpatient visits is in line with what healthcare analyst Frank Morgan said he expects for the behavioral segment from the 2008 parity law.

“I think that it's very difficult to quantify, but it's fair to say it will be a good tailwind for the industry,” said Morgan, a managing director at RBC Capital Markets in Nashville who covers behavioral health providers Psychiatric Solutions and Universal Health Services. “When you combine mental health parity and health reform, both those things will bode well for the long-term prospect,” Morgan said, adding that these changes might be seen first on the outpatient side.

And statistics show a need for mental health services in the U.S. The National Institute of Mental Health reports that about 26.2% of Americans 18 and older, or about one in four adults, suffer from a diagnosable mental disorder in a given year. Applying that to 2004 estimate numbers released by the U.S. Census Bureau, this translates to about 57.7 million people, the NIMH said. According to the National Alliance on Mental Illness, or NAMI, one in 17 Americans, or about 6%, live with a serious mental illness.

Andrew Sperling, the director of federal legislative advocacy for the NAMI, said the group was “very pleased” with the regulation, which he said brought clarity to the statute, especially with regard to scope of services—those six classifications—and the requirement for a unified deductible for medical-surgical and mental health coverage.

The single-deductible issue is a concern, however, for some managed-care companies and was mentioned in the complaint filed by the Coalition for Parity. The interim final rule “also requires plans to implement a single deductible for behavioral and physical health benefits, a requirement found nowhere in the statute,” according to the complaint, which said the single deductible requirement will “result in unnecessary administrative burdens leading to corresponding cost increases.”

Pending litigation prohibited the plaintiffs from commenting specifically on the lawsuit, but Magellan and ValueOptions each provided separate written statements about parity.

“While we wholeheartedly support parity, we have a real concern that these regulations would mandate the same protocols for the treatment of a person with a sensitive mental illness as someone seeing a podiatrist or dermatologist,” according to the statement from ValueOptions. “Flexibility should be built into the treatment levels for each individual, based on the caregiver's in-person assessment. The rigidity of these rules just won't allow for that.”

For its part, Magellan Health Services said there is much at stake in how the law is implemented in regulation. “That's why we believe these new regulations should have been subject to formal public comment by key stakeholders” before they were adopted.

Sperling of the NAMI and Mark Covall, president and CEO of the NAPHS, both said the lawsuit serves only to hinder the implementation phase of the law.

“NAMI's view is it's without merit, and it's alarming that groups we worked with to get this passed are trying to undermine the regulatory process,” Sperling said.

Regardless of the lawsuit's outcome, providers, insurers and lobbyists still face the approaching May 3 deadline for public comment. Even then, however, questions will linger.

“We feel they have done a very good job in outlining the mental health parity statute,” Covall said. “For our members, there are still a lot of things that are not 100% answered,” he added. “Until that final rule, there will be some uncertainty.”



Switch to the new Modern Healthcare Daily News app

For the best experience of on your iPad, switch to the new Modern Healthcare app — it's optimized for your device but there is no need to download.