Boca Benefits Consulting Group Inc.

[Below Excepted from Recent Carrier Communication]

On October 3, 2008, President Bush signed into law H.R. 1424 – an economic stabilization, energy, and tax extenders package – that included the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008.

The new law amends the Employee Retirement Income Security Act (ERISA), the Public Health Service Act (PHSA), and the Internal Revenue Code (IRC) to prohibit group health plans that provide mental health or substance use disorder benefits from establishing more restrictive financial requirements (e.g., deductibles and co-payments) or treatment limitations (day/visit limits) for mental health or substance use disorder services than those established for medical and surgical benefits.

The legislation does not require group health plans to offer mental health or substance use disorder benefits. Rather, it establishes parity requirements between medical/surgical benefits and mental health or substance use disorder benefits for group health plans that provide mental health or substance use disorder benefits.

Scope:  Applies to group health plans that provide both medical/surgical benefits and mental health or substance use disorder benefits. Small employers (50 or fewer employees) are exempt from the requirements in this law.

Parity Requirements: Requires parity with respect to both treatment limitations and financial requirements.

• General requirements. Prohibits plans from applying specific financial requirements or treatment limitations to mental health or substance use disorder benefits that are more restrictive than the predominant (most common or frequent) financial requirements or treatment limitations applied to substantially all medical and surgical benefits. Prohibits separate cost-sharing requirements or treatment limitations applicable only to mental health or substance use disorder benefits.
• Financial requirements are defined to include deductibles, copayments, coinsurance or limits on out-of-pocket expenses.  Current federal parity requirements for annual and lifetime limits for mental health services continue to apply.
• Treatment limitations include limits on frequency of treatment, number of visits, days of coverage, or other similar limit on the scope or duration of treatment. 

Definition of Mental Health Benefits: Provides for mental health benefits and substance use disorder benefits to be defined under the terms of the plan and in accordance with applicable state and federal law. 

Medical Management: Plans may be able to utilize medical management practices since the bill states that nothing shall be construed as affecting the terms and conditions of the plan or coverage to the extent that the plan terms and conditions do not conflict with the new parity requirements, but the bill does not specify if medical management practices may vary between medical and surgical benefits and mental health and substance use disorder benefits.  Plans are required to disclose the criteria used for medical necessity determinations, upon request.  The law also requires plans to make available the reason for any denials of reimbursement for such services to participants or beneficiaries, upon request or as otherwise required.  

Out-of-Network Coverage: Plans are required to provide out-of-network coverage of mental health or substance use services in a manner consistent with the parity requirements, if out-of-network coverage is provided for medical and surgical benefits. It is expected that plans will be allowed to manage out-of-network mental health and substance use disorder benefits in a manner consistent with how in-network mental health and substance use disorder benefits may be managed, but the interpretation of this rule is not entirely clear and is likely to be subject to significant scrutiny during the rulemaking process.  

Cost Exemption: The bill includes a cost exemption for employers that experience an increase in claim costs of at least 2% in the first plan year and 1% in subsequent years.  The plan must be in place for the first 6 months of the plan year and the increased costs must be certified by a qualified actuary. 

Relation to State Laws:  Retains current law “HIPAA floor” standard, meaning that federal parity requirements are the “floor”, but state laws may apply to insured plans so long as they do not prevent the application of the federal law.   Florida’s current mental health and substance abuse treatment coverage laws are not as comprehensive as this federal law, so large group plans, whether fully-insured or self-funded, will be required to comply with the federal law. 

Effective date: Plan years beginning on or after one year from the date of enactment unless the plan is collectively bargained, then the effective date is the later of 1/1/09 or the termination date of the collective bargain agreement excluding any extensions.

[Below Excepted from Recent Carrier Communication]

On October 9, 2008, President Bush signed into law H.R. 2851, “Michelle’s Law,” which requires group and individual health plans to continue to cover otherwise eligible dependent children who take a medical leave of absence from a postsecondary educational institution (e.g., a college, university, or vocational school) due to a serious illness or injury.

Key Provisions

The bill applies to both group and individual coverage and amends ERISA, the Public Health Service Act, and the Internal Revenue Code with substantially similar provisions:

• “Dependent child” includes a dependent child who was enrolled in the plan or coverage on the basis of being a student at a postsecondary educational institution immediately before the first day of a medically necessary leave of absence.
• “Medically necessary leave of absence” triggers continued coverage for the dependent child and is defined as a leave of absence – or any other change in enrollment – that begins while a dependent child is suffering from a serious illness or injury that causes the child to lose their student status for purposes of coverage under the plan.
• Physician certification. The bill requires that health plans and insurers receive certification by the dependent child’s treating physician that the dependent child is suffering from a serious illness or injury and that the leave of absence is medically necessary.
• No change in benefits. Dependent children on a medically necessary leave of absence are entitled to receive plan benefits, and if the plan changes, these dependents are entitled to receive benefits as provided by the amended plan until their coverage ends.
• Duration of leave of absence. Dependent children on a leave of absence must be covered until the earlier of one year from the first day of the leave of absence or the date on which the coverage otherwise would terminate.
• Notice. Health plans and insurers must include a description of the requirements for continued coverage during medically necessary leaves of absence with any notice about required certifications of student’s eligibility status.
• Effective Date. Plan years beginning on or after one year from the date of enactment.