MHPA requires parity between annual and lifetime dollar limitations on medical/surgical benefits under a group health plan and mental health benefits under the plan. If a plan has no annual or lifetime dollar limits on a substantial portion of medical/surgical benefits, then the plan may not impose annual or lifetime limits on mental health benefits. If a plan has annual or lifetime limits on a substantial portion of medical/surgical benefits, then the plan must either extend that limit to include mental health benefits or impose an equal or greater limit on mental health benefits. Medical/surgical benefits and mental health benefits are as defined by the plan document, except that substance abuse benefits are not considered mental health benefits.
MHPA's effect is rather limited. It does not require a group health plan to provide any mental health benefits, nor does it impose parity on any other type of limitations which are commonly imposed on health benefits, such as limits on days of treatment or number of visits, patient co-pays and managed care criteria. Thus the effects of MHPA, in its present form, are avoidable through plan redesign. The proponents of mental health parity, will, of course, attempt to extend MHPA's coverage in future Congressional sessions.
The regulations provide as follows:
First, a plan which has annual or lifetime limits which apply to less than one third of the plan's medical/surgical benefits is not considered to have limits on a substantial portion of its benefits, and thus there can be no annual or lifetime limits on mental health benefits.
Second, a plan with annual or lifetime limits on at least two thirds of the plan's medical/surgical benefits must either include mental health benefits (if any) under the same limits or apply equal or greater separate limits to mental health benefits.
For the purpose of determining the one third and two thirds thresholds used in the two tests above, plans are to use the expected dollar amount of plan payments for medical/surgical benefits subject to the limits compared to all expected plan payments for medical/surgical benefits during the plan year.
Third, a plan which has one or more annual or lifetime limits which apply to one third or more but less than two thirds of all medical/surgical benefits under the plan, must either impose no annual or lifetime limits on mental health benefits or must impose a limit on mental health benefits which is no less than a weighted average of the limits on medical/surgical benefits. The limits on the various medical/surgical benefit limits are to be weighted according to expected plan payments for the benefits during the plan year, and for medical/surgical benefits for which the plan imposes no limits, the plan is to use the maximum dollar amount which it may be reasonably expected to incur.
Fourth, the MHPA is applied separately to separate benefit packages. Examples of separate benefit packages are HMO and insured coverages, and active employee and retiree coverages.
Finally, the regulations establish the rules for claiming the one percent increased cost exemption. This exemption may be claimed only by reference to data from a base period which is a period of at least six consecutive months beginning on the first day on which the plan first complies with MHPA, but no earlier than September 26, 1996. That is, if a plan was voluntarily amended to comply with MHPA before the MHPA required effective date, data from that period may nevertheless be used to claim the increased cost exemption.
The calculation of cost increases to a plan is made by reference to the plan's "incurred expenditures" which include actual claims incurred during the base period and reported within two months thereafter and the costs of administration of benefits during the base period. Incurred expenditures do not include premiums.
If a plan is in a rating pool, the calculation is made with respect to all expenditures of the pool, not merely the expenditures attributable to the plan.
If, according to a plan's calculations, the plan may claim the cost increase exemption, then it must notify the plan's participants and the Department of Labor including specific information listed in the regulation. The exemption becomes effective 30 days after the notice is sent to participants.
Once the cost increase exemption is properly claimed it remains effective until September 30, 2001, the date MHPA expires.
The regulations establish a moratorium on enforcement actions under MHPA for those attempting to comply in good faith until the earlier of the first day of the first plan year beginning after April, 1 1998, or January 1, 1999.