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AIS's Health Business Daily
Featured Story, July 22, 2010 New Mental Health ‘Safe Harbor’ Gives Health Plans Some Breathing Room Reprinted from HEALTH PLAN WEEK, the industry's leading source of business, financial and regulatory news of health plans, PPOs and POS plans. By Steve Davis, Managing Editor (sdavis@aishealth.com) Prompted by concerns raised during the public comment period, the Dept. of Labor, HHS and the IRS on July 1 announced an enforcement “safe harbor” for a provision of the mental health parity law that could require insurers to restructure financial requirements for outpatient services. The law, which went into effect for plan years beginning on or after July 1, 2010, applies to employer-sponsored health plans with more than 50 participants that offer mental health benefits.
Under interim final regulations of the Mental Health Parity and Addiction Equity Act, in order to apply any financial requirement (e.g., a copay) to mental health or substance-use-disorder benefits, a health plan must apply that same financial requirement to “substantially all” (i.e., at least two-thirds) of benefits on its medical/surgical side.
But that rule would force many health insurers to redesign their products because health insurers often require a copayment for outpatient office visits but might require coinsurance for other outpatient services, such as outpatient surgeries, explains Laurie Kirkwood, an employee benefits attorney at the law firm Alston & Bird. Until final rules are issued, the enforcement safe harbor will allow health plans to split their outpatient classifications (in-network and out-of-network) into two subclassifications: office visits and all other outpatient items and services. As long as copayments apply to at least two-thirds of the medical/surgical benefits in the office visit sub-classification, for example, then copayments can be charged for office visits for mental health and substance-use disorder benefits in the subclassification for mental health office visits. The same is true for coinsurance if coinsurance applies to at least two-thirds of the medical/surgical benefits in the non-office visit sub-classification of the outpatient/out-of-network (or outpatient/in-network) classification.
Kirkwood tells HPW that some of her health plan clients worried that a majority of their existing products would have failed to meet the law’s “substantially all” test in the outpatient classifications for purposes of charging copays or coinsurance.
Under the regulations, if an insurer projected that it would spend $1 million on in-network outpatient medical/surgical benefits for the year, then $670,000 of those plan dollars would need to go toward benefits to which a copay applies (i.e., two-thirds, or “substantially all”) if the insurer wanted to apply copays to its in-network outpatient mental health benefits, Kirkwood explains.
“At best, only one of those [copayments or coinsurance] will meet the two-thirds requirement,” Kirkwood explains. “And in many cases, neither copayments nor coinsurance will meet the threshold.” To comply with that rule, most health plans likely would have moved to a coinsurance structure for office visits, she adds. The enforcement safe harbor is in effect only until the final regulations are issued. While the final guidance could make the subclassifications permanent, no date has been set for the release.
The new safe harbor is included in the second edition of Complying With the Mental Health Parity and Addiction Equity Act, available soon from AIS. The book was written by Alston & Bird attorneys John Hickman and Laurie Kirkwood and provides insight into the law’s legal requirements, and offers hands-on guidance for making required but complicated benefit design decisions. For more information, click here, or call (800) 521-4323. |
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