American Journal of Law & Medicine

A Proposal for Comprehensive and Specific Essential Mental Health and Substance Use Disorder Benefits

CONTENT  I.    INTRODUCTION  II.   HISTORICALLY INFERIOR INSURANCE BENEFITS       FOR INDIVIDUALS WITH MENTAL ILLNESS       A. Inferior Public Health Program Benefits       B. Inferior Private Health Insurance Benefits  III.  FEDERAL MENTAL HEALTH PARITY AND MANDATORY       MENTAL HEALTH AND SUBSTANCE USE DISORDER       BENEFITS: LAWS, RECOMMENDATIONS, AND PROPOSALS       A. The Mental Health Parity Act of 1996       B. The Paul Wellstone and Pete Domenici Mental Health          Parity and Addiction Equity Act of 2008       C. The Affordable Care Act of 2010       D. The Institute of Medicine's Workshop and Consensus          Reports of 2011       E. The HHS Essential Health Benefits Bulletin of 2011  IV.   ANALYSIS AND PROPOSAL       A. Traditional Concerns Regarding the Relationship          Between Mental Health and Substance Use Disorder       B. Empirical Literature Addressing the Relationship Between          Mental Health and Substance Use Disorder Benefits and          Healthcare Costs       C. A Proposal for Comprehensive and Specific Essential          Mental Health and Substance Use Disorder Benefits          Benefits and Healthcare Costs 

I. INTRODUCTION

This Article analyzes the initial efforts of the Federal Department of Health and Human Services (HHS) to implement the essential mental health and substance use disorder services benefit required by section 1302(b)(1)(E) of the Affordable Care Act (ACA) (l) and proposes the adoption of a comprehensive and specific essential mental health and substance use disorder benefit set. At a minimum, the benefit set should cover medically necessary and evidence-based inpatient and outpatient mental healthcare services, inpatient substance abuse detoxification services, inpatient and outpatient substance abuse rehabilitation services, emergency mental healthcare services, prescription drugs for mental health conditions, participation in psychiatric disease management programs, and community-based mental healthcare services.

This Article builds on three previous articles that have proposed reforms of federal and state mental health parity laws and mandatory mental health and substance use disorder benefit laws. The first article in this series challenged the less comprehensive public and private health insurance benefits that historically have been available to individuals who have illnesses traditionally classified as mental and proposed changes to federal statutes and regulations governing Medicare, Medicaid, self-funded non-federal governmental health plans, small group health plans, large group health plans, and grandfathered health plans. (2) The first article proposed extending federal mental health parity law and mandatory mental health and substance use disorder benefits to all public healthcare program beneficiaries and private health plan members. (3) The second article in the series justified and proposed amendments to divergent state mental health parity laws and offered a uniform mental health parity law for consideration by state legislatures. (4) The third article provided additional support for my earlier proposal to extend federal mental health parity law and mandatory mental health and substance use disorder benefits to all public healthcare program beneficiaries and private health plan members. (5) The third article grounded such support in health-related doctrine outside the context of mental health insurance law (including disability discrimination law, civil rights and human rights law, health information confidentiality law, and child and adult health and welfare law) as well as international, national, state, and professional definitions of "health." (6) The third article also contextualized remaining mental health benefit disparities in terms of the centuries-old mind-body problem and the stigma that continues to be associated with mental illness. (7)

At the time these three articles were written, HHS has not yet attempted to implement the essential health benefits provision in section 1302 of ACA (the "EHB Provision"), which requires exchange-offered qualified health plans, non-exchange-offered individual health plans, non-exchange-offered small group health plans, Medicaid benchmark and benchmark-equivalent plans, and state basic health plans to cover at least ten general categories of health services. (8) The ten required categories of services include ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services (including behavioral health treatment), prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services and chronic disease management, and pediatric services (including oral and vision care) (collectively, the "EHB Package"). (9)

During the last year, HHS has taken initial steps to implement the EHB Provision. As discussed in more detail in Parts III.D and III.E, infra, HHS requested guidance from the Institute of Medicine (IOM) on the criteria and methods that should be used to determine and update the EHB Package. (10) In response, the IOM formed the Committee on Defining and Revising an Essential Health Benefits Package for Qualified Health Plans ("Committee"). (11) The Committee responded by providing opportunities for the public to comment on the EHB Package through two different venues, (12) including through a Web-distributed questionnaire relating to the EHB Package (13) and through public workshops held on January 13-14, 2011, in Washington, D.C., and on March 2, 2011, in Costa Mesa, California. (14) The speakers invited to these workshops included experts from federal and state government, employers, insurers, healthcare providers, consumers, and healthcare researchers. (15) On August 29, 2011, the Committee released a report entitled, Perspectives on Essential Health Benefits: Workshop Report ("Workshop Report"), which summarized the speaker presentations from the D.C. and Costa Mesa workshops but did not contain the Committee's own recommendations regarding the EHB Package. (16)

On October 7, 2011, the Committee released its own consensus report entitled, Essential Health Benefits: Balancing Coverage and Costs ("Consensus Report"). (17) In the Consensus Report, the Committee recommended that the Secretary of HHS ("Secretary") define the EHB Package to reflect the scope and design of health benefits offered by small employers. (18) The Committee also identified criteria for the content of the aggregate EHB Package and specific components of the EHB Package, (19) as well as four policy foundations that should guide the Secretary in determining the EHB Package, including economics, ethics, population-based health, and evidence-based practice. (20) Finally, the Committee made five specific sets of recommendations. The Committee first recommended that the Secretary establish a specific EHB Package benchmarked to a typical small employer plan, modified as necessary to reflect the ten ACA-required benefit categories, and guided by a national average premium target. (21) The Committee's second through fifth recommendations related to establishing a framework for obtaining and analyzing data necessary for monitoring and implementing the EHB Package, promoting state innovation, updating the EHB Package, and creating a National Benefits Advisory Council (NBAC). (22)

Following the release of the Consensus Report, HHS held an additional series of "listening sessions" with consumers, providers, employers, plans, state representatives, and other stakeholders in different cities across the United States. (23) On December 16, 2011, HHS released its Essential Health Benefits Bulletin ("EHB Bulletin"). (24) The EHB Bulletin provides information and solicits comments on a regulatory approach that HHS plans to propose to define the EHB Package. (25) In the EHB Bulletin, HHS explains its intent not to propose one comprehensive, specific benefit package for all health plans in the nation to follow. (26) Instead, HHS intends to leave the states broad discretion in defining the EHB Package by allowing each state to select a benchmark plan in that state. (27) The selected benchmark plan would serve as a reference plan, reflecting both the scope of services and any limits offered by a typical employer plan in that state. (28) HHS intends to allow health plans to make adjustments to the benchmarked benefits (including adjustments to the specific services covered and to any quantitative limits provided) and is considering allowing health plans to substitute services both within and across the ten ACA-required benefit categories. (29)

This Article analyzes the initial steps taken by HHS to implement the EHB Provision, (30) with a focus on the essential mental health and substance use disorder sub-provision codified at section 1302(b)(1)(E) of ACA (the "Mental Health Benefit Sub-Provision"). (31) Thus far, HHS understandably has focused on the ten ACA-required benefit categories as a whole and not just the Mental Health Benefit Sub-Provision. (32) In its Workshop Report, the Committee explained that "time constraints prohibited the [C]ommittee from hearing testimony related to each of the[] [ten ACA-required] categories in detail." (33) The scant attention received by mental health and substance use disorder benefits from HHS likely is a result of the time constraints faced by the Committee. Notwithstanding, the result is a tentative HHS plan that is timid with respect to the comprehensiveness and specificity of all benefits, including mental and substance use disorder benefits. This Article urges HHS to consider the possibility of long-term total healthcare cost returns on initial comprehensive mental health treatment investments. This Article also seeks to remedy the informational and research limitations in HHS's initial implementation of the EHB Provision.

This Article proceeds as follows: Part II examines the historically inferior public and private health insurance benefits available to individuals with illnesses traditionally classified as mental. Part III reviews the development, application, and limitations of relevant federal mental health insurance laws, recommendations, and proposals, including the Mental Health Parity Act of 1996, the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, the Affordable Care Act of 2010, the Workshop Report issued on August 29, 2011, the Consensus Report issued on October 7, 2011, and the EHB Bulletin issued on December 16, 2011. Part IV examines the current health plan cost literature that supports mental health parity and comprehensive mental health and substance use disorder benefits. Part IV also justifies and proposes the adoption of a comprehensive and specific essential mental health and substance use disorder services benefit.

II. HISTORICALLY INFERIOR INSURANCE BENEFITS FOR INDIVIDUALS WITH MENTAL ILLNESS (34)

A. INFERIOR PUBLIC HEALTH PROGRAM BENEFITS

Public healthcare programs and private health insurers have long provided less comprehensive insurance benefits to individuals with mental illness in both the inpatient (35) and outpatient (36) settings. (37) The Medicare program, a public healthcare program funded and administered by the U.S. government, provides health insurance for individuals who are sixty-five years of age or older, individuals under the age of sixty-five who have certain disabilities, and individuals with end-stage renal disease regardless of age. (38) Both Medicare Part A, which provides hospital insurance benefits, (39) and Medicare Part B, which provides physician and other supplementary medical insurance benefits, (40) provide less comprehensive insurance benefits for beneficiaries with mental illness.

Medicare Part A restricts beneficiaries to a lifetime maximum of 190 inpatient days in a free-standing psychiatric hospital but places no lifetime maximum on the number of days a beneficiary may stay as an inpatient in a non-psychiatric hospital. (41) The federal government justifies the 190-day limitation as a cost-control measure. (42) Some Medicare beneficiaries with severe chronic mental illnesses, including chronic schizophrenia and affective disorders, would easily exceed 190 inpatient days over their lifetime without the limitation. (43) With the limitation, affected beneficiaries are limited to: (1) Medicare-covered outpatient mental healthcare, which may be insufficiently intense to treat an acute illness episode and may result in suicide or other poor outcomes; (2) Medicare-covered inpatient care provided in a non-psychiatric setting by clinicians who may lack the education, training, and experience necessary to treat complex psychiatric conditions; or (3) non-covered inpatient care provided in a psychiatric setting for which the beneficiary must pay entirely out of pocket. (44) Some beneficiaries who consider unsatisfactory the options of outpatient mental healthcare or inpatient care in a non-psychiatric setting may forgo mental healthcare entirely if they are unable to pay 100 percent of the costs of inpatient care provided in a psychiatric setting. (45)

In addition to the Medicare Part A limitation on inpatient care provided in a free-standing psychiatric hospital, Medicare Part B also provides less comprehensive outpatient mental health benefits than non-mental health benefits. (46) In particular, Medicare Part B currently imposes a forty percent beneficiary co-insurance (47) on most outpatient mental health services, including individual, family, and group psychotherapy services, instead of the twenty percent beneficiary co-insurance traditionally applied to non-mental health outpatient services. (48) Although Medicare will phase out the disparate co-insurances by the year 2014, Medicare beneficiaries who receive outpatient mental health services between the present and 2014 will be required to pay more out of pocket for outpatient mental health services compared to outpatient physical health services. (49)

The Medicaid Program, a public healthcare program jointly funded by the federal and state governments and administered by the states, provides healthcare to certain low-income individuals and families who fit into an eligibility group recognized by federal and state law. (50) Like the Medicare Program, the Medicaid Program also has limited support for individuals who require mental healthcare in certain inpatient psychiatric settings. For example, Medicaid does not cover inpatient mental healthcare provided to individuals age twenty-two through sixty-four in an institution for mental disease (IMD), (51) defined as a hospital, nursing facility, or other institution of more than sixteen beds that is primarily engaged in providing diagnosis, treatment, or care of persons with mental disease. (52) Medicaid also does not cover mental healthcare provided in small residential facilities, including halfway houses, adult residential foster homes, and crisis centers. (53) Due to these limitations, many Medicaid beneficiaries are limited to: (1) Medicaid-covered outpatient mental healthcare, which may be insufficiently intense to treat an acute illness episode and may result in suicide or other poor outcomes; (2) Medicaid-covered inpatient care provided in a facility other than an IMD or a small residential facility by clinicians who may lack the education, training, and experience necessary to treat complex psychiatric conditions; or (3) non-covered inpatient care provided in an IMD or small residential facility for which the beneficiary must pay entirely out of pocket. (54) Because Medicaid eligibility generally requires evidence of low income, (55) most Medicaid beneficiaries will not be able to pay 100% of the cost of treatment in an IMD or small residential facility. (56)

B. INFERIOR PRIVATE HEALTH INSURANCE BENEFITS

Private health insurers also have a long history of providing less comprehensive insurance benefits to individuals with mental illness. (57) Traditionally, many private insurers did not cover mental illness. (58) Notwithstanding the efforts of mental health parity advocates, (59) neither the Federal Mental Health Parity Act of 1996 (MHPA) (60) nor the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) (61) discussed in Parts III.A and III.B, infra, required private insurers to offer insurance benefits for mental illness. (62) Before President Obama signed ACA into law and unless otherwise prohibited by state law, private health insurers were permitted to sell individual policies and group health plans that contained benefits for illnesses traditionally classified as physical, such as cancer and pregnancy, but that did not contain benefits for illnesses traditionally classified as mental, including major depression and bipolar disorder. (63) Under ACA, mental health and substance use disorder benefits must be part of the EHB Package offered in the exchange-offered qualified health plan setting, (64) the non-exchange individual health plan setting, the non-exchange small group health plan setting, the Medicaid benchmark and benchmark-equivalent plan setting, and the state basic health plan setting. (65) However, as discussed in more detail in Part III.C, infra, the EHB Package is not required to be provided by grandfathered health plans, large group health plans (at least until 2017, when ACA permits the exchanges to open to large employers), self-insured group health plans, or traditional Medicaid. (66) Even after the full implementation of healthcare reform, then, millions of insureds still will not have a federal legal right to a mandatory mental health and substance use disorder benefit. (67)

Prior to ACA, some health plans voluntarily included insurance benefits for mental illness; however, many of these plans imposed higher cost-sharing requirements and greater administrative restrictions on mental health coverage, including higher deductibles, co-payments, and co-insurance amounts for mental healthcare, as well as lower inpatient day and outpatient visit limitations and annual and lifetime spending caps for mental healthcare. (68) Although MHPAEA requires parity between physical health benefits and mental health benefits in terms of deductibles, co-payments, co-insurance, inpatient day limitations, and outpatient visit limitations, (69) as discussed below in Part III.B, MHPAEA initially regulated only large group health plans, not small group health plans. (70) As enacted, MHPAEA also did not apply to individual health insurance policies sold in the private market, the Medicare Program, Medicaid non-managed care plans, or any self-funded non-federal governmental group plan whose sponsor has opted out of MHPAEA. (71) Before ACA and unless otherwise prohibited by state law, many public healthcare programs and private health plans thus were permitted to contain disparate mental health benefits. (72) Although ACA broadened the application of MHPA, as expanded by MHPAEA, from just the large group health plan setting to the exchange-offered qualified health plan setting and the Medicaid benchmark and benchmark-equivalent plan setting, (73) some non-exchange plans continue to be exempt from MHPA as expanded by MHPAEA and ACA (collectively, "federal mental health parity law"). The Medicare Program and traditional fee-for-service Medicaid also continue to be exempt from federal mental health parity law, as are self-funded, non-federal governmental plans whose sponsors have opted out of federal mental health parity law. (74) Even after the full implementation of healthcare reform, then, many public healthcare program beneficiaries and some individuals with private health insurance still will not have a federal legal right to equal physical health and mental health insurance benefits. (75)

III. FEDERAL MENTAL HEALTH PARITY AND MANDATORY MENTAL HEALTH AND SUBSTANCE USE DISORDER BENEFITS: LAWS, RECOMMENDATIONS, AND PROPOSALS (76)

A. THE MENTAL HEALTH PARITY ACT OF 1996

In an attempt to remedy some of the historically inferior health insurance benefits available to individuals with mental illness, the federal government took its first step towards establishing mental health parity on September 26, 1996, when President Bill Clinton signed the Federal Mental Health Parity Act into law. (77) In terms of application, MHPA was very limited. As originally enacted, the statute only regulated insured and self-insured group health plans of large employers, defined as those employers that employ an average of fifty-one or more employees. (78) MHPA thus did not apply to the group health plans of small employers. (79) MHPA also did not apply to individual health plans, the Medicare Program, Medicaid non-managed care plans, or any self-funded, non-federal governmental plan whose sponsor opted out of MHPA. (80) Finally, MHPA contained an "increased cost" exemption for covered group health plans or health insurance coverage offered in connection with such plans if the application of MHPA resulted in an increase in the cost under the plan of at least one percent. (81) By November 1998, over two years following MHPA's enactment, only four plans across the United States had obtained exemptions due to cost increases of one percent or more. (82)

In terms of its substantive provisions, MHPA was neither a mandated offer nor a mandated benefit law; that is, nothing in MHPA required a covered large group health plan to actually offer or provide any mental health benefits. (83) As originally enacted, MHPA also was not a comprehensive parity law because it neither protected individuals with substance use disorders (84) nor required parity between physical and mental health benefits in terms of deductibles, co-payments, coinsurance, inpatient day limitations, or outpatient visit limitations. (85)

As originally enacted, what MHPA did do was regulate lifetime and annual spending limits that covered group health plans applied to mental health benefits if such plans already offered both physical and mental health benefits. (86) More specifically, if a covered group health plan did not impose an aggregate lifetime or annual limit on substantially all physical health benefits, the plan was prohibited from imposing an aggregate lifetime or annual limit on offered mental health benefits. (87) If a covered group health plan did impose an aggregate lifetime or annual limit on substantially all physical health benefits, the plan was required to apply the applicable limit to both physical health and mental health benefits and not distinguish in the application of such limit between the two benefit sets; or, the plan was prohibited from imposing any aggregate lifetime or annual limit on mental health benefits that was less than the applicable lifetime or annual limit imposed on physical health benefits. (88) MHPA (and, as discussed in Part III.C, infra, ACA) thus would prohibit a covered group health plan from imposing a $20,000 annual cap or a $100,000 lifetime cap on mental healthcare if the plan had no annual or lifetime caps for physical healthcare or if the plan had higher caps, such as a $50,000 annual cap or a $500,000 lifetime cap, for physical healthcare.

B. THE PAUL WELLSTONE AND PETE DOMENICI MENTAL HEALTH PARITY AND ADDICTION EQUITY ACT OF 2008

Twelve years after President Clinton signed MHPA into law, President George W. Bush expanded federal mental health parity law by signing into law the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008. (89) In terms of application, MHPAEA also was very limited. As originally enacted, MHPAEA (like MHPA) only regulated insured and self-insured group health plans of large employers, defined as those employers that employ an average of fifty-one or more employees. (90) MHPAEA (like MHPA) thus did not apply to small group health plans, individual health plans, the Medicare Program, Medicaid non-managed care plans, or any self-funded, non-federal governmental plans whose sponsor opted out of MHPAEA. (91) In terms of its substantive provisions, MHPAEA also was neither a mandated offer nor a mandated benefit law; that is, nothing in MHPAEA required a covered group health plan to actually offer or provide any mental health benefits. (92) Like MHPA, MHPAEA also contained an "increased cost" exemption for covered group health plans and health insurance coverage offered in connection with such plans, but under MHPAEA the amount of the required cost increase increased, at least for the first year. (93) That is, a covered plan that could demonstrate a cost increase of at least two percent in the first plan year and one percent in each subsequent plan year of the actual total costs of coverage with respect to medical and surgical benefits and mental health and substance use disorder benefits would be eligible for an exemption from MHPAEA for such year. (94) MHPAEA required determinations of exemption-qualifying cost increases to be made and certified in writing by a qualified and licensed actuary who in good standing belongs to the American Academy of Actuaries. (95)

Notwithstanding these limitations and exemptions, MHPAEA built on MHPA by protecting individuals with substance use disorders (96) and by imposing comprehensive parity requirements on covered group health plans. In particular, MHPAEA required financial requirements (including deductibles, co-payments, coinsurance, and other out-of-pocket expenses) (97) and treatment limitations (including inpatient day and outpatient visit limitations) (98) that covered group health plans imposed on mental health and substance use disorder benefits to be no more restrictive than the predominant financial requirements and treatment limitations imposed on substantially all physical health benefits. (99) MHPAEA thus prohibited covered group health plans from imposing higher deductibles, co-payments, or co- insurances, or lower inpatient day and outpatient visit maximums, on individuals who were seeking care for conditions--such as bipolar disorder, schizophrenia, alcohol abuse, and drug abuse--compared to individuals who were seeking care for traditional physical conditions--such as pregnancy, cancer, and orthopedic injuries. On February 2, 2010, the Departments of Treasury, Labor, and HHS co-released an interim final rule implementing MHPAEA's requirements. (100) The interim final rule clarified in favor of patients with mental health conditions several questions that MHPA and MHPAEA had left open, including the question whether a covered group health plan could impose separately accumulating financial requirements or quantitative treatment limitations on mental health and substance use disorder benefits ("No"), (101) and the question whether a covered group health plan could impose a non-quantitative treatment limitation (including a medical necessity limitation or an experimental/investigative limitation) on mental health and substance use disorder benefits (also "No"). …

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