By Rebecca Adams, CQ HealthBeat Associate Editor
November 8, 2013 -- The Obama administration last week issued its long-anticipated final rule on mental health coverage. The regulation largely pleased patient advocates, but some were disappointed that the rule does not spell out that Medicaid managed care plans must abide by the parity requirements.
Health and Human Services (HHS) Secretary Kathleen Sebelius, speaking late last week at a forum on mental health policy organized by former first lady Rosalynn Carter, touted the new rule and the role that the health overhaul will have in bringing new protections to people with mental health or substance abuse issues. The health care law (PL 111-148, PL 111-152) requires plans in the new marketplaces to provide mental health coverage in a similar fashion as coverage for physical needs.
"This is the largest expansion of behavioral health coverage in a generation," said Sebelius. The secretary said that in the past six months, two of her family members have had behavioral health crises. She and HHS officials did not elaborate.
The final rule clarifies several issues that had been vague or confusing in a February 2010 interim final rule.
The regulation released last week says that insurers cannot apply different standards for physical and behavioral health for intermediate care that is at a level between inpatient hospital care and outpatient care.
The rule also removes an exemption that was in the interim final rule that allowed insurance companies to set different standards for physical and mental health when an insurer found that a service was not "clinically appropriate." Federal officials said the exemption was confusing.
And the rule clarified the kind of information patients have are entitled to receive from insurers about their benefits. It also says patients have a right to internal and external appeals if an insurer denies a claim for care.
Congress passed the mental health protections in 2008 in a law (PL 110-343) that requires insurers to cover mental and physical health equally, if a plan includes mental health. Insurers are not supposed to set different co-pays or deductibles or treatment limits for mental health than for physical health services.
The rule will apply to people with private insurance, such as employer-sponsored coverage and the individual and small-business markets, including the new health care law marketplaces. The insurers would have to comply with the regulation starting on July 1, 2014. If an insurer's plan year renews later—such as on Jan. 1, 2015—then the changes would take effect then.
One thing that mental health advocates were disappointed in is that the rule will not apply to Medicaid managed care plans, although federal law and other federal guidance policies include those plans. Federal officials had previously released a guidance letter saying that those Medicaid health plans are supposed to comply with the parity protections. Federal officials told reporters on a recent call that the Centers for Medicare and Medicaid Services (CMS) will release additional guidance to states on that issue later.
"This is a major problem," said Director of Federal Legislative Advocacy for the National Alliance on Mental Illness Andrew Sperling. Other advocates felt reassured that future CMS policies would make sure that the plans comply. Medicaid is the largest payer in the country for behavioral health issues.
The way that the parity rule applies to Medicaid beneficiaries depends on what type of Medicaid coverage they are enrolled in and what state they live in.
People who will be signing up for Medicaid under the health law expansion of the program will be covered by the requirements. But if a recipient is in the traditional fee-for-service Medicaid that was already in place before the program was expanded, whether they get parity protections depends on where they live since each state has the power to decide what kind of state requirements to set.
Congressional Reactions Vary
Supporters of the administration cheered the announcement, while critics said the White House sat on it for too long.
Sen. Debbie Stabenow, a proponent of stronger protections for behavioral health, called the announcement "another step toward strengthening America's mental health services and making sure treatment is available for the thousands of Americans living with mental illness." The Michigan Democrat is pushing for action on a bill (S 264) she introduced with Missouri Republican Roy Blunt that would establish criteria for federally qualified community behavioral health centers and allow them to receive Medicaid payments for their services.
"These rules bring us closer to ensuring that we treat mental health the same as physical health, and individuals and their families who are struggling with mental health can get the care and support they need," Stabenow said in a statement.
But Rep. Tim Murphy said the wait for the final rule "reflects a typical dismissal of the health care needs of those seeking mental health services." The Pennsylvania Republican has pressed for the House to address mental health as chairman of the Energy and Commerce Oversight Subcommittee and is writing legislation expected to address treatment options, privacy laws and other issues.
"I am frustrated how mental health is continually put on the back burner," he said.
The administration took almost four years to sort through the approximately 5400 comments they got on the February 2010 interim rule. Patient advocates had hoped that the final rule would be in place earlier this year so that coverage in the new marketplaces that will kick in on Jan. 1 could reflect the changes.
Rule Answers Advocate Questions
Many other issues that the final rule resolves should satisfy patient advocates.
One is the question of whether health insurers can impose non-quantitative limits on services for mental health in ways that are different than those for physical health. Sebelius said that the policy will clarify coverage of intermediate care, such as partial hospitalization or intensive outpatient care for people with mental health issues, or outpatient substance abuse treatment. This intermediate care is sometimes needed after a patient has received inpatient hospital care.
"That's a very critical space for a lot of individuals on the road to recovery," Sebelius said at the Carter Center forum.
An administration official said late last week that limits that restrict patients to geographic areas or certain facilities will not be able to be more restrictive than those on patients for physical conditions. Patients seeking mental health treatment, for instance, will be able to get care out of state if they would be able to do so for a medical condition.
Health plans also will have to apply similar medical management tools to mental and physical health, said Sebelius. One major problem, said Paul Summergrad, president-elect of the American Psychiatric Association, is that insurers sometimes require physicians to get pre-authorization through time-consuming methods to hospitalize people with mental health issues even when those types of requirements are not in place for people with medical problems. Doctors may end up having to have a half-hour conversation on the phone with an insurance company representative in order to get approval for hospitalization, when the doctor would have only to send an electronic communication after a patient is already admitted for a physical problem. Summergrad is an internist and a psychiatrist.
A similar problem arises if behavioral health patients are required to try low-cost treatments or medications first to see if those would work before getting doctor-recommended care that is more expensive. The rule says that insurers can't have different standards for behavioral health than physical health.
The administration also will require insurers to provide patients with more information about coverage so that it is easy to make comparisons between mental health care and medical or surgical benefits, said Sebelius. One area that has been difficult for patients to analyze is whether insurers are using the same criteria for all kinds of care as to whether a service is medically necessary and eligible for coverage.
Some Cost Relief for Insurers
Federal officials recently said that the changes aren't expected to drive up premium costs significantly. If insurers' costs go up by 2 percent or more because of the regulation in the first year of implementation, then they can get a one-year exemption from parity requirements for the following year. In later years, it's easier to claim an exemption because insurers' costs only have to go up by 1 percent over a year.
Administration officials said that most large health care plans have complied with the 2008 law's provisions for quantifiable limits. For instance, most have gotten rid of higher cost-sharing for inpatient behavioral health care services in recent years. Many also have stopped charging different deductibles for mental health and substance use services.
But advocates said that the rule was a long-overdue relief. They said the rule was needed to clarify several issues that were tough to understand and enforce under the interim rules.
"We need to know what the rules are," said Summergrad in an interview. "Not knowing has made it much more difficult to hold insurers accountable when abuses of the system occur."