Administration releases final parity rule

This initial overview focuses on significant provisions for practitioners.

On Nov. 8, 2013, the U.S. Departments of Health and Human Services, Labor and Treasury (“departments”) released the Final Rule implementing the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA). The Final Rule was published in the Federal Register on Nov. 13. 

This Final Rule replaces the Interim Final Rule (IFR) released more than three years ago. The Final Rule will become effective for group and individual insurance plans that begin on or after July 1, 2014. For most plans, which renew at the start of the calendar year, the effective date will be Jan. 1, 2015. Until the Final Rule becomes applicable, plans must continue to comply with the IFR parity provisions. Though the rule is called “Final,” the Departments plan to release further guidance on certain issues as noted below.

Below is the APA Practice Organization’s (APAPO) preliminary overview of the Final Rule. Our initial assessment is that the Final Rule clarifies and strengthens some important parity protections for mental health patients. Even so, the rule generally does not change (and fortunately does not weaken) the main parity provisions in, and interpretations of, the IFR that have been important to our members. 

The application of parity rules to real world problems is both complex and subject to very flexible analysis. Thus, the real effect of the Final Rule will not be known until it has been applied and enforced.

Notable provisions in the Final Rule

Provider reimbursement. The Final Rule affirms that reimbursement of providers is a parity concern. An IFR provision on network provider reimbursement has been central to APAPO’s rate cut advocacy. 

The departments provided further guidance on reimbursement that allows plans to consider a wide array of factors when determining provider rates for both mental health and medical/surgical services such as geography, service type, demand for services, experience/licensure of providers and Medicare reimbursement rates. These factors must be applied comparably, and no more stringently, to mental health reimbursement as they are applied to medical/surgical reimbursement. However, where the result is different levels of payment for mental health services compared to medical/surgical services, this does not necessarily mean that mental health reimbursement rates are not at parity. 

The departments indicated that additional guidance will be provided on this topic if questions continue. The APA Practice Organization (APAPO) will seek further clarity on this important issue because the guidance above remains very open to interpretation, and because the departments did not address many of the detailed reimbursement issues emphasized in APAPO’s April 2013 advocacy letter (PDF, 97KB) on the Final Rule.  APAPO remains concerned that if companies are allowed to target mental health for low provider reimbursement, this will undercut all other parity protections by limiting patient access to care.

New NQTL examples. The Final Rule added two new examples of non-quantitative treatment limitations, or NQTLs. (Quantitative treatment limitations can be expressed as a numerical limit directly applied to patients, for example, number of sessions allowed per year or dollar amount of copayments. By contrast, NQTLs limit care in other ways, such as through provider reimbursement, preauthorization requirements and other management of care.) 

One of the new examples clarifies that parity pertains to all restrictions applied by health plans such as “geographic location, facility type, and provider specialty.” At this time, it is unclear how the new NQTL examples will be implemented or may affect psychologists. The departments have indicated that they will continue to release guidance as needed. 

Clinical standard exception. The Final Rule eliminates an exception in the IFR that permitted health plans to justify differences in the application of NQTLs to medical/surgical and mental health benefits based on “clinically appropriate standards of care.” The Departments made this change in response to concerns that plans might abuse this exception.

Intermediate levels of care/Scope of services. The changes to the Final Rule clarify that parity applies to intermediate levels of care received in residential treatment or intensive outpatient settings. In other words, the rule applies to settings of care beyond traditional inpatient and outpatient settings. 

Transparency. The Final Rule clarifies that transparency is required by health plans in order to ensure compliance with the law. The departments indicate that in the event of an adverse benefit determination, health plans must provide the claimant with information on medical necessity criteria for both medical/surgical and mental health disorder benefits as well as the “processes, strategies, evidentiary standards, and other factors” used to apply an NQTL to medical/surgical and mental health disorder benefits. The Department of Labor released an FAQ on the Parity rule on Nov. 8, 2013, in which they request comments on what additional steps should be taken to ensure compliance with the Parity Final Rule through transparency. 

The APA Practice Organization has worked with state psychological associations in Minnesota and Massachusetts on transparency issues such as challenging a company’s attempt to withhold “proprietary” medical necessity guidelines and/or to limit disclosures narrowly. APAPO plans to submit comments by the Jan. 8, 2014, deadline and will give members tips on how to submit their own comments, which we encourage.

“We believe that the Final Rule continues groundbreaking provisions in the IFR that should protect mental health patients from a broad array of discriminatory practices” says APA Executive Director for Professional Practice Katherine C. Nordal, PhD. “We will strongly urge the Departments to enforce the rule in a way that gives mental health patients real access to care.”

APAPO will continue to analyze the Final Rule and additional Department guidance on the Rule and will provide additional information to members in the PracticeUpdate e-newsletter.