Achieving Mental Health Parity

Freida Hopkins Outlaw, Patricia K. Bradley and Marie Davis-Williams

“Of all the forms of inequality, injustice in health [mental health] is the most shocking and the most inhuman.”

—Martin Luther King, Jr., at the Second National Convention of the Medical Community for Human Rights, Chicago, March 25, 1966

The fight for mental health parity has been long, protracted, and marked by many challenges, disappointments, and victories. Mental health parity refers to the equivalence of coverage for mental health treatment and clinical visits to medical and surgical benefits within an insurance plan (Peters, 2006). Historically, many insurance plans have legally placed limits on services for patients with mental health and/or substance abuse diagnoses, while requiring the patients to pay more out-of-pocket costs for selected services that are not required to be paid by patients who have medical conditions such as diabetes, asthma, or heart disease (Harvard Mental Health Letter [HMHL], 2009). Insurers and employers have been guarded about offering mental health and substance abuse coverage as they believe that these mental disorders are untreatable or are too expensive to treat (Barry, 2006). This disparity has had grave implications for those persons with mental health and substance abuse health care needs, such as late or missed diagnosis, inadequate care, or not seeking treatment for financial or social stigmatizing reasons. These behaviors may result in severe mental illness or suicide. The number of individuals, families, and society as a whole impacted by this disparity is substantial. It has been estimated that annually 54 million Americans experience a mental health disorder at a cost of $100 billion. This includes the cost of care as well as lost productivity (Marth, 2009).

This chapter will describe the historical struggle to achieve mental health and substance abuse parity, gaps in the parity law, and challenges of implementing the law at both state and national levels.

Historical Struggle to Achieve Mental Health Parity

Since the early 1970s, mental health advocates have been working in conjunction with federal legislators to secure the passage of mental health parity legislation (United States Department of Health and Human Services [USDHHS], 1999). Senators Paul Wellstone (D-WI) and Pete Domenici (R-NM) led the initial effort to achieve mental health parity. They spearheaded legislation in the U. S. Senate, as an amendment to a larger bill that required insurers to provide parity for mental health and physical health benefits. However, the U.S. House of Representatives, based on negative feedback from insurers, forced the parity language out of the final bill (Levinson & Druss, 2000).

Wellstone and Domenici’s efforts in 1996 were not entirely thwarted as the senators were able to insert “partial parity” language that prevented insurance plans from being able to pay less to treat mental health disorders compared with what they paid to treat physical health conditions. Predictably, as a cost-containing measure, insurance companies found a loophole that weakened the parity law by limiting the number of days an individual could be covered for mental health treatment outpatient visits or days in the hospital (Levinson & Druss, 2000).

This first incremental step toward mental health parity was taken by the passage of the Mental Health Parity Act (MHPA) of 1996, which went into effect on January 1, 1998. The MHPA applied to two types of coverage—large group self-funded health plans and large group fully-insured group health plans. Although the passage of this 1996 Act was met with celebration, it was clear that further steps were needed to obtain more equitable coverage of mental health and addiction services.

One of the flaws of the 1996 Mental Health Parity Act was that it did not contain a substance abuse benefit, a fact that ignored that approximately 50% of individuals with a severe mental disorder have substance abuse issues as well as 37% of alcohol abusers and 53% of drug abusers have at least one serious mental illness (JAMA, 2009). Researchers have determined that when only one of the co-occurring disorders (mental illness or substance abuse disorder) is treated, both disorders usually get worse. In addition to the tremendous suffering that the individual with an untreated or poorly treated co-occurring disorder and their family experience, these individuals also use the most costly services, such as emergency rooms and inpatient facilities, and have the worse clinical outcomes (New Freedom Commission on Mental Health [NFCMH], 2003).

Committed to the belief that individuals need mental health equality in order to have comprehensive health care coverage, Senators Wellstone and Domenici were joined in 2001 in the House of Representatives by Patrick Kennedy (D-RI) and Jim Ramstad (R-MN) to try to pass a full and expanded mental health parity bill. Tragically, in 2002 as the broader bill was gathering support, Senator Wellstone was killed in an airplane crash. His son David continued to lobby after his death. Those efforts resulted in 2008 of passage of a more expansive parity bill, the Wellstone and Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPA 2008) that included a substance abuse benefit. Also, in 2008, Congress passed the Medicare Improvements for Patients Act, which supplements the mental health parity laws for Medicare recipients in every state except Idaho and Wyoming (HMHL, 2009).

Meaning of Parity for Mental Health and Addiction Treatment

The MHPA of 2008 affects large employers, Medicaid managed care plans, and State Children’s Health Insurance Program (SCHIP) plans (HMHL, 2009). Specifically, it amends the Mental Health Parity Act (MHPA) of 1996 by stipulating businesses with 51 or more employees, who offer a health insurance plan with mental health and substance abuse coverage, offer these benefits at the same level as what is offered in their medical and surgical coverage. It means that deductibles, co-payments, out-of-pocket expenses, outpatient visits, inpatient stays, and treatment limits must be the same for mental health and substance abuse treatment as they are for medical and surgical services (Melek, 2009).

In the 2008 MHPA, no requirement as to what conditions must be covered are imposed, but whatever is covered must be at parity with medical coverage. Benefits offered to out-of-network coverage will be extended so that a plan must offer out-of-network coverage for mental health and addiction services if it does so for medical/surgical services. The new law also preserves state parity and consumer laws. This legislation puts in place an oversight mechanism to determine if insurers are discriminating against certain conditions. It allows a cost-based exemption if the insurer can prove that parity raised their total plan costs by more than 2% or more in the first year after enactment (Melek, 2009).

The Wellstone-Domenici Act of 2008 became law on January 1, 2010. Interim final rules are scheduled to become effective on April 5, 2010, with comments from the public due on or before May 3, 2010. These new federal rules providing mental health parity are effective for insurance plans whose renewal date begins on or after July 1, 2010, and cover 82 million individuals in self-insured employer health plans that are not governed by state parity laws and an additional 31 million employees in plans that are subject to state regulations (HMHL, 2009).

Gaps in the Mental Health Parity Law

Clearly the Mental Health Parity bill represents a step forward; however there are gaps that need to be addressed. For instance, the bill does not mandate mental health and substance abuse coverage, and services that are provided through most commercial plans do not include the recovery-based services for persons with severe and persistent mental illnesses. Recovery is defined by the New Freedom Commission on Mental Health (NFCMH, 2003) as the “process in which people [with serious mental illnesses] are able to live, work, learn, and participate fully in their communities” (p. 5). Recovery-based services in mental health treatment include those that encompass self-direction and empowerment; are holistic and strength-based; provide peer support; and develop responsibility and hope. For example, researchers have noted that individuals with serious emotional illnesses, who have hope, usually linked with peer and family support, have higher rates of remission and recovery from their illness symptoms (SAMHSA, 2006).

Recovery-based services such as supportive housing and supported employment are not usually covered by the Medicaid program or commercial insurances as many of these services do not meet “medical necessity criteria.” As a result, there is limited payment for services identified as essential for the treatment of the person’s illness, injury, or condition. Medical necessity criteria often exclude anything deemed experimental or not yet proven. Ford (2000) suggests that the short-term challenge for advocates of mental health parity is to obtain the most acceptable and expansive definitions of medical necessity from third-party payers. The long-term challenge will be to develop a system that pays for the greatest number of high-quality evidence-based services for the greatest number of people in need, regardless of diagnosis.

State Level Implementation

Understanding and navigating the provisions of the Wellstone-Domenici MHPA at state and federal levels can be challenging for patients and providers (HMHL, 2009). As of 2010, 34 states have enacted some mental health parity provisions. Wide variances exist, with some states such as Connecticut, Indiana, Kentucky, and Maryland following the federal laws and others such as South Carolina, West Virginia, and North Carolina limiting the benefit expansion to specific mental illnesses. Less comprehensive state laws will be replaced by the new federal law, and more comprehensive state laws will remain intact (HMHL, 2009). Garfield (2009) found in her research about the process of transformational policy change in four states that, in the end, states are primarily influenced by their own problems and the resources available to them, and are only guided by national efforts if they are congruent with their particular state’s idiosyncrasies.

It is interesting to note that most insurers were concerned with the passage of parity legislation as they feared that health care costs would rise at an unsustainable rate. In fact, this has not been the case; health care costs have not increased significantly. For example, Pacula and Sturm (2000) found that those states that passed parity legislation did not experience a significant increase in the use of mental health services. According to Barry and colleagues (2006), the Congressional Budget Office is projecting a mere 0.4% on average increase in cost in total premiums after accounting for the offsetting impact of behavioral responses by health plans, employers, and workers. The authors also pointed out from a review of relevant research that parity implemented in the context of managed care would have little impact on mental health spending and would increase risk protection.

Mental health parity legislation may ameliorate many of the negative economic conditions for the states by increasing the work productivity of employees who need but have not been able to receive mental health and substance abuse services. As a result of the passage of the mental health and substance abuse parity law, effective and adequate treatment can be accessed, which will enable employees to remain in the workforce.

Challenges in Implementing the Law

As insurers prepare to provide mental health and addiction services, they would be wise to implement those services that have been found to be evidence-based. The Institute of Medicine (IOM, 2001) defines evidence-based medicine as the integration of best researched evidence and clinical expertise with patient values. States can advance evidence-based practices by using dissemination and demonstration projects and create public-private partnerships to guide this implementation (NFCMH, 2003).

The “Bringing Science to Service” initiative is intended to make approaches that are supported by research widely available to patients and families (Isett et al., 2007). The first group of disseminated evidenced-based practices that support and enhance recovery-based psychiatric rehabilitation included assertive community treatment, supported employment, illness management and recovery, integrated treatment for co-occurring mental illness and substance abuse, family psychoeducation, and medication management. While by no means an exhaustive list of evidence-based practices, these represent those practices that the Center for Medicare and Medicaid Services (CMS) believes have undergone rigorous research and study and have proven outcomes.

Challenges for the Future

In addition to the challenges of defining medical necessity and obtaining coverage for recovery-based services, a major challenge for the future involves having an adequate mental health workforce to provide care for the increased numbers of individuals with access to services. Mental health and addiction services struggle in most states to have a network of providers that are accessible and culturally and linguistically competent. The question remains about how network adequacy will be developed to meet the increased demand for services (Huckshorn, 2007; IOM, 2003).

The Institute of Medicine (IOM, 2001) addressed the issues of redesigning the health care system to be more inclusive of people with mental health issues and then followed up with a 2005 report on quality care for people with mental health and substance use problems (IOM, 2005). Both IOM reports are consistent with the New Freedom Commission on Mental Health report’s identification of ways to transform the mental health system (NFCMH, 2003). This call to action requires clinicians to provide consumer- and family-driven services and to increase the consumers’ coping and recovery. States will need to develop diversified, fully integrated continuums of care by expanding their own services, contracting with other health care organizations, affiliating with area providers, and including community and families.