Behavioral Health Parity: Coverage and Treatment Developments

Federal Law

The Mental Health Parity Act of 1996 (MHPA) barred large group health plans from imposing annual or lifetime dollar limits on mental health benefits in a stricter manner than any similar limits imposed on medical and surgical benefits.¹ The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) largely superseded MHPA, preserving it while simultaneously adding new protections.² MHPAEA extended the parity requirements to include SUDs.³ What followed from the two laws was that mental health or substance use disorders (MH/SUD) could not have less favorable benefit limitations imposed on them than medical and surgical benefits.

MHPAEA also provided that if a group health plan or health insurance coverage included medical and surgical benefits as well as MH/SUD benefits, the financial requirements and treatment limitations that apply to the MH/SUD benefits must be no more restrictive than limitations that apply to substantially all medical and surgical benefits.⁴ Further, MH/SUD benefits could not be subject to any cost-sharing requirements or treatment limitations that were limited only to said MH/SUD benefits.⁵ If the plan or coverage provides for out-of-network medical and surgical benefits, it must additionally provide for out-of-network MH/SUD benefits.⁶ Lastly, medical necessity standards and reasons for the denial of MH/SUD benefits need to be disclosed upon request.⁷

MHPAEA, as well as the underlying MHPA, is not without issue. The most significant concern is that these laws do not require group health plans to provide MH/SUD benefits, but merely ensures that, if provided, they are to be no more limited than medical and surgical benefits.⁸ This potential gap in coverage for mental health can best be visualized by both the out-of-pocket spending of adults with mental illnesses, and those with serious mental illnesses not receiving any mental health treatment. One fifth (20.6 percent) of Americans reported having any mental illness in 2019, and as of June 2020, 36.5 percent of adults in the United States reported symptoms of anxiety or depressive disorder. ⁹ Across all states, the average out-of-pocket spending for those with mental illness who were enrolled in large employer health plans is more than double the average out-of-pocket spending for adult enrollees without mental illness.¹⁰ In 2019, only 44.8 percent of U.S. adults with any mental illness received treatment, and of those with a significant mental illness, 34.5 percent received no mental health treatment at all.¹¹ Further, of adults in 2019 who had both an SUD and any mental illness, 48.6 percent received either substance use treatment or mental health services in the past year,¹² 38.7 percent received only mental health services, and a mere 7.8 percent received both.¹³ For those adults with an SUD and a significant mental illness,  66.6 percent received either substance use treatment or mental health services, of which 52.0 percent received only mental health services, 1.9 percent received only substance use treatment, and 12.7 percent received treatment for both.¹⁴

Disparity in Network Use and Provider Reimbursement

Many states have adopted additional parity laws that go beyond the scope of MHPAEA. Despite this, adults in 2017 were 5.2 times more likely to utilize behavioral inpatient facilities out-of-network than they were to use out-of-network medical and surgical inpatient facilities.¹⁵ A visit to a behavioral healthcare office for a child was 10.1 times more likely to be to an out-of-network provider than a primary care office visit.¹⁶ Similarly, for 11 states in that same year, reimbursement rates for primary care office visits were more than 50 percent higher than reimbursement rates for behavioral office visits, and another 13 states had reimbursement rates for primary care office visits that were between 30 and 49 percent higher than reimbursement rates for behavioral office visits.¹⁷ Reimbursement parity by itself does not achieve equal access to in-network care.

Spending by State

State expenditures fail to fill the gap, and mental health spending varies dramatically by state. According to data compiled from the Substance Abuse and Mental Health Services Administration (SAMHSA) in 2019, Florida spent the least annually per capita on mental health, with $36.05 per capita, whereas Maine, the state with the highest per capita spending, spent $362.75 per capita.¹⁸ These dramatic differences are followed by an equally wide range in the percentage of population served by these expenditures. Maine serves 5.13 percent of its population, the highest percentage in the country. In contrast, Florida covers 1.17 percent of its population, and Massachusetts covers the smallest percentage of its population at a meager 0.48 percent.¹⁹ While the variance by state can be quite high, when broken down by region, the prevalence of any mental illness is more equivalent. Per SAMHSA, the population of the Northeast constituted 19.7 percent of those with any mental illness, 22.1 percent in the Midwest, 19.2 percent in the South, and 22.1 percent in the West. ²⁰

Benefits of Increasing Coverage

It would be in the interest of insurers to cover mental health services more broadly, as mental health disorders, of any level of severity, increase spending on other medical conditions. Direct spending on mental health disorders has been estimated to be roughly six percent of total U.S. healthcare spending.²¹ However, mental illness has been associated with a variety of disease risk factors, such as obesity, low physical activity, and smoking.²² Further, the presence of a mental illness can worsen the management of other chronic medical conditions, which has the potential to cause more adverse health outcomes and greater use of healthcare services, including emergency department usage, hospitalizations, and ultimately more expensive interventions.²³ The presence of a significant mental illness, as well as other common mental health disorders, was associated with a significant increase in spending for medical conditions not associated with mental health. For example, direct Medicare spending on mental health services was 4.2 percent of total healthcare spending, while an additional 8.5 percent of total Medicare spending is on non–mental health conditions among beneficiaries with mental health disorders.²⁴

Managing mental health disorders can improve the quality of care and decrease spending across a range of conditions for patients with mental illness. One 2017 study projected that an estimated $37.6 - 67.8 billion annually could be saved with better integration of mental and behavioral health treatments with medical treatments.²⁵ A greater integration of primary care and mental health care could serve as a critical catalyst for this reduction in spending. This issue has apparently been noticed at the federal level. In fact, a bill was introduced into Congress on May 20, 2019 to amend the Employee Retirement Income Security Act of 1974 to, among other things, strengthen parity in mental health and SUD benefits.²⁶

Conclusion

The expansion of mental and behavioral health services can only serve to improve access to those same services. Those in need of these services are currently underserved and must pay more for these necessary services than for other health issues. This lack of access and prohibitive upfront expense can lead to more severe problems, both mental and physical, down the road for the untreated. The increase in the severity of problems leads to an even greater expense, both for the suffering individual and the covering insurance payor.  An increase in parity will prove to be both a short-term and long-term benefit.

1. The Mental Health Parity and Addiction Equity Act (MHPAEA), CMS.gov, https://www.cms.gov/CCIIO/Programs-and-Initiatives/Other-Insurance-Protections/mhpaea_factsheet (last visited Sept. 14, 2020).
2. Id.; see also H.R. 1424, 110th Cong. (2008) (amending 29 U.S.C. 1185a, § 712 (Employee Retirement Income Security Act); 42 U.S.C. 300gg–5, § 2705 (Public Health Service Act); and I.R.C. § 9812 (Internal Revenue Code)).
3. Id.
4. Id.
5. CMS.gov, supra n.1.
6. Id.
7. Id.
8. Id.
9. Center for Behavioral Health Statistics and Quality, Results from the 2019 National Survey on Drug Use and Health: Detailed tables, 1645, (Sept. 11, 2020), Substance Abuse and Mental Health Services Administration, https://www.samhsa.gov/data/.
10. Kaiser Family Foundation, Mental Health and Substance Use State Fact Sheets, KFF, (July 10, 2020), https://www.kff.org/statedata/mental-health-and-substance-use-state-fact-sheets/.
11. Center for Behavioral Health Statistics and Quality, Key substance use and mental health indicators in the United States: Results from the 2019 National Survey on Drug Use and Health (HHS Publication No. PEP20-07-01-001, NSDUH Series H-55), 63, (Sept. 11, 2020), Substance Abuse and Mental Health Services Administration,  https://www.samhsa.gov/data/.
12. Id. at 67.
13. Id.
14. Id. at 68.
15. Davenport, S., Gray, T.J., & Melek, S., Addiction and mental health vs. physical health: Widening disparities in network use and provider reimbursement, 6, (Nov. 20, 2019), Milliman Research Report, https://www.milliman.com/en/insight/addiction-and-mental-health-vs-physical-health-widening-disparities-in-network-use-and-p.
16. Id. at 7.
17. Id. at 6-7.
18. National Rehabs Directory, Mental Health Spending By State Across the US, (May 16, 2019), American Addiction Centers, https://www.rehabs.com/explore/mental-health-spending-by-state-across-the-us/.
19. Id.
20. Center for Behavioral Health Statistics and Quality, supra n. 9.
21. Figueroa, J.F., Phelan, J., Orav, E.J., Patel, V,  & Jha A.K., Association of Mental Health Disorders With Health Care Spending in the Medicare Population, JAMA Netw Open, 2, (Mar. 19, 2020), 3(3):e201210, doi:10.1001/jamanetworkopen.2020.1210, https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2762948.
22. Id. at 9.
23. Id. at 2.
24. Id. at 6.
25. Davenport, S., Matthews, K., Melek, S.P., Norris, D.T., Paulus, J., & Weaver, A., Potential economic impact of integrated medical behavioral healthcare, Milliman Research Report, 4, (Jan. 2018), https://www.milliman.com/en/insight/potential-economic-impact-of-integrated-medical-behavioral-healthcare-updated-projections.
26. Parity Enforcement Act of 2019, H.R. 2848, 116th Cong. The bill has been referred to committee. 

About the Authors

Chris Kutner co-leads Rivkin Radler’s Health Services Practice Group specializing in mergers and acquisitions, managed care contracting and disputes, and professional disciplinary matters. He received his law degree from St. John’s University School of Law and his MBA from the Frank Zarb School of Business at Hofstra University.  He may be reached at [email protected].

Joseph P. DiBella is an associate in the Health Services Practice Group at Rivkin Radler LLP. He assists a variety of clients with transactional and regulatory work, including business formation, joint ventures, employment matters, mergers and acquisitions, and compliance with Stark Law, the Anti-Kickback Statute, False Claims Act, HIPAA, and other healthcare laws and regulations. Before joining Rivkin Radler, Mr. DiBella worked at a small firm in Washington, D.C. focused on transportation law. Prior to that, he worked at a Long Island firm focused on education law. He served as the Articles Editor for the Journal of Energy and Environmental Law at George Washington University Law School. His bar admission is expected Spring 2021.  He may be reached at [email protected].