Mental Health Parity: A Great Opportunity
An opinion piece by
Stephen P. Melek, FSA, MAAA
Steve is a principal and consulting actuary with the Denver office of Milliman. Steve has advised HMOs, PPOs, managed care organizations, behavioral healthcare firms and associations, insurance companies, employers, hospitals, physician groups, PHOs, and state insurance companies. He currently serves on IHPM's Behavioral Health Workplace Center Advisory Board. More on Mr. Melek at the end of this article.
The Troubled Asset Relief Program (TARP) was not just a bailout of the banking system; it also contained an amendment that is bringing about major changes in the world of health insurance.
Who is Affected?
The new rules apply to any group health or self-insured plan covering more than 50 employees and require coverage of mental health and substance use disorders on par with medical and surgical benefits. This means that deductibles, copays, cost sharing, out-of-pocket limits, and treatment limits must be the same for any behavioral disorders that the plan or employer chooses to cover as they are for physical conditions.
Plans and employers can choose which disorders to cover; they are not required to cover the entire spectrum of illnesses identified by the American Psychiatric Association in the DSM-IV (Diagnostic and Statistical Manual of Mental Disorders). The rules will take effect during annual plan renewals beginning on or after October 3, 2009.
The law does include a cost-based exemption. If the new parity provisions raise the total costs of any group health plan by 2% or more in the first year (and 1% in following years), the plan can seek a one-year exemption. However, these cost increases are likely to be the exception rather than the rule.
An Opportunity for Effective Investment in Mental Health
Huge opportunities exist to continue to improve mental healthcare -- in both clinical and financial terms. Consider the following: