Government News
 DOI: 10.1176/appi.pn.2013.12a12
Final Rule Clarifies Regulations for Parity Law
Psychiatric News
Volume 48 Number 23 page 1-1


The final rule offers critical guidance on the status of intermediate-care benefits, transparency and disclosure of criteria by health plans, and provider reimbursement.

Abstract Teaser

Five years after passage of the Mental Health Parity and Addiction Equity Act, the federal government at last released a long-awaited final rule to provide regulatory guidance for implementing the landmark law.

The final rule, issued just one day after a Senate Judiciary subcommittee hearing into the delay, clarifies several important concerns that APA and other mental health advocacy groups have had about the law.

Anchor for JumpAnchor for Jump

To standing ovations, former member of Congress Patrick Kennedy gives an impassioned speech on the rights of people with mental illness and the importance of parity at the APA Assembly meeting last month in Washingon, D.C.

David Hathcox

At that hearing, former member of Congress Patrick Kennedy, one of the sponsors of the 2008 law, told committee members that despite an interim final rule that was issued in 2010, weak and inconsistent application, insurance company manipulation of the regulations, and outstanding issues the rule did not address have negated the substantial strides made in providing treatment equity for those suffering from mental illness or addiction.

Chief among the issues clarified by the final rule is the status of intermediate levels of care—such as intensive outpatient, partial hospitalization, and residential care—and issues around transparency and disclosure by health plans of medical necessity criteria they use in determining coverage of services.

The final rule spells out that the law was never intended to exclude intermediate levels of care. And plan participants or those acting on their behalf will now be able to request a copy of relevant documents used by the health plan to determine whether it will pay a claim. And the Obama administration has also used the final rule to invite comments from advocacy groups and the public on how to improve accountability and transparency.

“APA is pleased to see the emphasis in the final rule on transparency on the part of health plans as well as the request by the Department of Health and Human Services and the Department of the Treasury for further input on what steps, if any, should be taken to assure accountability under the parity rules,” said APA CEO and Medical Director Saul Levin, M.D., M.P.A.

The final rule is effective for plan years beginning on or after July 1, 2014. In practice, the bulk of plan years end December 31, so the effective date for most insured will be January 1, 2015.

The rule is a critical step toward eliminating barriers that people with mental and substance use disorders have typically faced. As with every regulatory rule, “final” is actually just a beginning—there will be disagreements over how to interpret the language, and APA will continue to analyze the rule and will be working with other mental health advocacy groups to ensure compliance with the law.


“People with mental illness have long faced discrimination in health care through unjust and often illegal barriers to care,” said APA President Jeffrey Lieberman, M.D., in response to the release of the rule. “The final rule provides a crucial step forward to ensure that consumers receive the benefits they deserve and are entitled to under the law. In addition to providing equal benefits for mental illness as physical illness, I am hopeful that there will be strong monitoring and enforcement at both the state and federal levels.

“People with mental and substance use disorders have long suffered and fought hard for treatment coverage commensurate to that for medical and surgical care,” Lieberman continued. “Despite passage of the 2008 legislation, many insurance companies have manipulated its intent and purpose through vague medical-necessity standards, lengthy approval procedures, bureaucratic delays in service requests, and complicated appeals processes. These maneuvers have unfairly denied patients the care they need, have paid for, and are due.

“As we review the final rule, we look forward to a new chapter in mental health care that delivers on the promise of the parity law. APA will remain vigilant and continue working toward full equity for people with mental illnesses and substance use disorders.”


Since the interim final rule was established in 2009, APA has focused on four core areas in which some insurance providers have acted improperly: scope of service; nonquantitative treatment limits; disclosure and transparency; and parity in Medicaid managed care, Children’s Health Insurance Program (CHIP), and alternative benefit plans.

The final rule clarified the scope-of-service issue by stating that the six classifications of benefit schemes (inpatient in and out of network, outpatient in and out of network, emergency care, and prescription drugs) were never intended to exclude intermediate levels of care (intensive outpatient, partial hospitalization, residential care). And although neither the interim final rule nor the final rule mandates specific services required to be offered by plans under the six-classification scheme, the final rule clarifies that plans must assign intermediate services in the mental health/substance use area to the same classification that plans or issuers assign to intermediate levels of services for medical/surgical conditions.

For example, if a plan or issuer classifies care in skilled nursing facilities or rehabilitation hospitals as an inpatient benefit, then the plan or issuer must likewise treat any covered care in residential treatment facilities for mental health or substance use disorders as an inpatient benefit. In addition, if a plan or issuer treats home health care as an outpatient benefit, then any covered intensive outpatient mental health or substance use disorder services and partial hospitalization must be considered outpatient benefits as well.

Nonquantitative treatment limits (NQTLs) refer to restrictions a health plan may use to substantially limit treatment beyond limits on such quantifiable restrictions as inpatient hospital stays or lifetime dollar limits on care; NQTLs can include, for instance, certain kinds of managed care and utilization review practices. The law stipulates that health plan policies for general medical care and mental health and substance abuse treatment must be comparable with regard to how they apply NQTLs.

But unclear in the law was whether provider reimbursement rates would constitute a form of NQTL. Last month’s final rule confirms that they do. The preamble clarifies that plans and issuers can look at an array of factors in determining provider payment rates such as service type, geographic market, demand for services, supply of providers, provider practice size, Medicare rates, training, experience, and licensure of providers, but the rule reconfirms that these factors must be applied comparably and no more stringently on MH/SUD providers.

Moreover, under the final rule, parity requirements for NQTLs are expanded to include restrictions on geographic location, facility type, provider specialty, and other criteria that limit the scope or duration of benefits for services (including access to intermediate levels of care). The net effect of this is that plans will no longer be able to require patients to go to an MH/SUD facility in their own state if the plan allows plan members to go out of state for other medical services.

Especially critical to enforcing the law is regulatory guidance requiring health plans to disclose their medical-necessity criteria in how they apply NQTLs. Disclosure requirements in the final rule will require plans to provide written documentation within 30 days of how their processes, strategies, evidentiary standards, and other factors used to apply an NQTL were imposed on both medical/surgical and MH/SUD benefits.

Also at issue has been how the parity law applies to Medicaid managed care, CHIP, and alternative benefit plans. Even though the final rule states that the parity law applies to Medicaid managed care organizations, CHIP, and alternative benefit plans (that is, Medicaid expansion plans under the Affordable Care Act), the final rule itself does not apply. The Parity Implementation Coalition, on APA’s behalf, will be requesting that a Medicaid guidance be issued within 180 days. ■

APA members can access the final rule and APA’s initial analysis of the rule on APA’s website at http://www.psychiatry.org/parity.

Anchor for JumpAnchor for Jump

To standing ovations, former member of Congress Patrick Kennedy gives an impassioned speech on the rights of people with mental illness and the importance of parity at the APA Assembly meeting last month in Washingon, D.C.

David Hathcox

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