Confusion Over Mental Health Parity Denies Coverage for Chronic Conditions

In 2008, President Bush signed the Mental Health Parity and Addiction Equity Act (MHPAEA) (P.L. 110-343, secs. 511-12) into law. MHPAEA requires large employer-based health insurance plans to cover treatment for psychiatric illnesses and substance-abuse disorders in the same way that they cover treatment for diseases like cancer. Unfortunately, MHPAEA has fallen short of the parity ideal. Individuals with chronic or acute mental illness are finding that their insurance providers are declining to cover treatment, claiming that the treatments are not necessary.

Health insurers have difficulties covering mental illness. Regular medication for mental disease is within their usual skillset; they cover prescription mental health medication the same way they cover any other medication. The difficulties arise when an individual requires inpatient psychiatric care or several weekly meetings with a mental health care provider. Insurance executives say that the benefits of such treatment, particularly for a lengthy period, are unproven. Karen Ignagni, the CEO of America’s Health Insurance Plans, a trade association representing the nation’s health insurers, says that such treatments are “very different from the approach to a bypass procedure or a hip replacement,” because different individuals require different treatments. Long-term intensive treatments receive high scrutiny from insurers to ensure they are not “writing a blank check.”

Although MHPAEA became law five years ago, the federal government has still not issued final regulations for insurance companies under the Act. Interim final rules were published, but the comment period ended May 3, 2010. No final rules incorporating comments received have been published to date, though the Obama administration says it will draft them by the end of 2013.

For chronic mental illness, MHPAEA clearly states that insurers cannot set strict time limits on treatment; how to achieve parity is vague. Intensive outpatient treatments and potentially lengthy hospital stays are the most contentious areas. For example, if an insurer does not typically limit outpatient medical treatments, must it treat outpatient mental therapy sessions the same? What if the sessions continue for months or years? Insurance companies hope that the final rules will address these and other details.

In the meantime, people are finding that their insurance providers are declining to cover mental health treatments. A nationwide class-action suit was filed against insurer UnitedHealth Group. In one case, UnitedHealth sent a letter explaining the lack of coverage for twice-weekly therapy sessions, saying “the use of multiple weekly therapy sessions is limited to acute exacerbations of illnesses or in the context of a clinical urgent situation in order to prevent a higher level of care.” In the other case, UnitedHealth denied residential treatment coverage for a teenage dependent with severe depression. In its letter to the boy’s parents, UnitedHealth said stopping the treatment created only “limited risk” that the teenager would return to the hospital. Further, the letter cited the lack of an “expectation of further improvements in the shorter term,” as part of its decision-making process, which suggested that UnitedHealth would not pay for care that would not result in getting better. The lawsuits argue that UnitedHealth is treating mental diseases differently than other illnesses by requiring patients to improve from their treatment or otherwise demonstrate that without treatment they will worsen.

Adding to the problem is the Affordable Care Act (ACA) (P.L. 111-148)—mental health is one of ten “essential health benefits” that insurance providers are required to provide without regard to pre-existing conditions. The difficulties interpreting coverage requirements under MHPAEA for large employer-provided plans will now expand to individual and small business plans. Although mental health only accounts for 6 percent of health care spending, plans that participate in the Marketplace, where consumers will be able to compare monthly premium payments, are particularly concerned about what they consider an unknown cost.