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Beyond Parity in Mental Health Coverage

By Kaitlynn Milvert

Mental health “parity” laws require insurers to provide the same level of mental health benefits as they do medical or surgical benefits.

These laws have made important strides toward reducing restrictions in an area of historically limited and inconsistent coverage. But this comparative approach also creates complexities and gaps, which reveal the need to move beyond “parity” in addressing mental health coverage restrictions.

Recent state legislative developments show a way forward. These developments build on parity laws to codify baseline requirements for coverage of “medically necessary” treatment, designed to ensure that necessary coverage is not improperly denied under overly restrictive standards for evaluating mental health care claims.

The Limitations of Parity

The Mental Health Parity and Addiction Equity Act has existed in some form at the federal level since 1996, though subsequent legislation has expanded the scope and application of its requirements.

The movement for passing these important federal protections found its roots in ideas of anti-discrimination. Advocates for parity laws aptly argued that patients should not have less access to coverage because they seek mental health care, rather than physical health treatment.

The parity framework has proven beneficial in removing some of the most overt disparities in mental health coverage restrictions. Parity laws have pushed insurers to make important changes, such as removing annual caps on the number of visits for mental health care or higher cost-sharing obligations for mental health treatment.

However, the parity framework has proven less adept at rooting out more subtle forms of disparities in mental health coverage restrictions. It requires a comparative analysis of the mental health benefits and medical or surgical coverage that an insurer provides — which do not always lend themselves to a neat or easy comparison. Non-quantitative treatment limitations (NQTLs) are a prime example.

Common types of NQTLs include preauthorization requirements, utilization review policies, and medical necessity standards. Because they are not defined in discrete, quantitative terms, these types of limitations are difficult to identify and evaluate for compliance with parity requirements.

Even with recent efforts at the federal level to improve transparency, guidance, and enforcement surrounding NQTLs, these important federal shifts do not eliminate the fundamental difficulties of assessing parity.

Despite the normative appeal of parity and the anti-discrimination approach that underpins it, the parity framework relies on a complex and technical comparative analysis of benefits. It falls short in failing to provide clear standards for evaluating and addressing insurers’ restrictions on mental health coverage.

State-Level Developments

State parity laws have attempted to fill in some of the gaps in the federal parity framework and to pave new ways forward in addressing mental health coverage gaps. Recent state-level efforts aim to provide clearer parameters for cabining insurers’ restrictions on mental health coverage.

Two states — California and Illinois — have recently passed legislation to not just require parity, but also set baseline standards for what insurers are required to cover in the area of mental health and substance use disorder treatment.

The state laws make two important moves. First, they require insurers to cover “medically necessary” mental health care. Second, they codify “generally accepted standards” that insurers must use in making medical necessity determinations.

California led the way in 2020 by passing Senate Bill 855. The bill’s findings recognized the important gap that the parity framework otherwise leaves open: “needed mental health and addiction coverage can be denied through overly restrictive medical necessity determinations.”

This past legislative session, Illinois passed similar legislation that will go into effect in 2022. The Generally Accepted Standards of Behavioral Health Care Act of 2021 mirrors the California bill, spelling out in statute requirements to follow clinically accepted standards of care in evaluating claims for mental health treatment.

These recent efforts to enact generally accepted standards of care legislation serve as a promising model for other states in taking steps to move beyond parity in addressing overly restrictive and medically inappropriate limitations on coverage.

While ensuring equitable access to mental health care remains a broader challenge, closing gaps in coverage can be a meaningful move to reduce, at least, coverage-related barriers to accessing necessary care.

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