Mental health parity law not prompting many employers to drop coverage

But some health plans contain prior authorization requirements and new conditions regarding acuity of care in an effort to reduce costs.

By Doug Trapp — Posted Oct. 19, 2010

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More than two years have passed since President George W. Bush signed the Mental Health Parity and Addiction Equity Act of 2008, but it will not be in full effect until early 2011 as health plans begin their new enrollment years.

Early indications, however, are that relatively few employers are dropping mental health coverage in response to the law's mandate, a concern of some of the bill's opponents.

Large companies -- those with 200 or more workers -- were less likely than smaller companies to have dropped coverage in 2010: Only 2% did so, compared with 7% of small employers, according to the 2010 Employer Health Benefits Survey that the Kaiser Family Foundation and the Health Research & Educational Trust released in September. Also, 75% of large firms eliminated mental health coverage limits, while 61% of smaller employers did so.

The law requires companies that offer mental health benefits to restrict them no further than they do physical health coverage. It applies to plans that renew after July 1, 2010, according to an interim final rule issued in January by the Depts. of Health and Human Services, Labor and Treasury. The departments have not issued a final regulation. Bush signed the act into law on Oct. 3, 2008.

However, some health plans are trying to cut mental health benefit costs, said Sam Muszynski, director of the American Psychiatric Assn.'s office of health care systems and financing. "We're seeing a lot of plans establish a variety of new treatment requirements that we don't think square with the new parity law." These include prior authorization requirements and new conditions regarding acuity of care.

Employers and health plans still are trying to determine standards for equitability between mental and physical health benefits, said David Shern, PhD, president and CEO of Mental Health America, a nonprofit based in Alexandria, Va. A few years probably will pass before regulators, insurers, employers and others begin to agree on what the law allows and prohibits, Muszynski said.

But Muszynski believes the 2010 mental health coverage trends will continue. Many large employers were at or close to providing equal mental and physical health benefits.

"We don't expect there to be a lot of dropping [of coverage]," he said.

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