Friday, May 28, 2010

What you can learn in a briefing . . .

OKaaay, so Thursday I attended a briefing on the Mental Health Parity legislation – the law enacted in 2008, for which "interim final regulations" were published in February 2010.

The moderator explained that to comply with the law, insurers and self-funded plan sponsors must first compare how their plans reimburse for expenses other than mental health treatment. That's so they'll know what to do to achieve "parity". Parity: "The quality or state of being equal or equivalent" (Merriam-Webster) Simple everyday concept any school child will grasp.

Stick around, we’re not finished.

Turns out the legislation defines the required parity standard that insurers and self-insured plan sponsors must use. Mental health expenses must be reimbursed using the predominant cost-sharing method in the plan being tested. And the law helpfully defines "predominant" as the method used for two-thirds of the reimbursements in the plan. Say there’s a deductible and then the plan pays 90%. Mental health expenses must be reimbursed at the same 90% after the same deductible.

Uhhh, now where you going? We're still not finished.

See, most group plans, aren’t that simple. The large majority of privately-insured people are enrolled in group plans. Most group plans use a variety of cost-sharing techniques. In fact, it's estimated (the moderator said) that a very large number include deductibles, AND copays, AND coinsurance in a variety of ways. An office visit or a prescription for example might be reimbursed at 100% after a $20 copay. Hospital outpatient expenses might be subject to a deductible, and then paid at 80%. Inpatient expenses might be paid at 90% after a per-confinement copay, or after a deductible - or without either a copay or a deductible. And so it goes. It turns out that there are a great many plans in which most (or even all) expenses are subject to one or another form of cost-sharing and yet NONE constitute 2/3 of the reimbursements. In other words, for these plans there is no "predominant" cost-sharing method.

Well, so what, you might well ask?

Well, so this: the law further requires that, if there is no predominant cost-sharing method, the plan must reimburse mental health expenses at 100%. So in these common group plan design types, "parity" does not mean "being equal or equivalent." Instead it means that mental health benefits must be reimbursed BETTER than most other types of expenses.

Yet another chapter in the ongoing saga of "The law is a ass."
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