Articles

Wellstone Legislation Finally Passes

By Denise Y. Tataryn, Attorney at Law

In the 1990s, the federal government, the state of Minnesota and most other states enacted mental health parity laws. Senator Paul Wellstone teamed up with Senator Pete Domenici (R-NM) to push the passage of a federal parity law. In 1996, a scaled-down version of the bill initially sponsored by Wellstone and Domenici was passed. That law, the Mental Health Parity Act of 1996, only prohibited the use of discriminatory lifetime and annual health plan expenditure limits for mental disorders, excluding addictive disorders. It was scheduled to sunset on September 30, 2007, although was extended several times. Minnesota was one of five states to have passed mental health legislation prior to the 1996 Act. The 1995 Minnesota legislature enacted a stronger law prohibiting state-regulated health plans that provide coverage for mental health or chemical dependency services from placing greater restrictions on behavioral health services than incomparable physical health services. Now most states have some type of mental health parity law. Effective January, 2001, the nation's largest health plan, the Federal Employee's Health Benefits Program, required full mental health parity for all disorders, covering approximately 9.5 million persons.

Senators Wellstone and Domenici continued to fight for broader protection. In 2001, they introduced the Mental Health Equitable Treatment Act of 2001 which mirrored the Federal Employee's Health Benefit Program parity benefit by proposing to expand existing law by addressing limits on deductibles, co-insurance, co-payments and other cost sharing and limitations on the total amount that may be paid with respect to benefits under the plan. Unfortunately, that legislation did not pass. It took an additional seven years to get new legislation passed. The new legislation passed last month, called the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, was due in large part to the tireless efforts of Republican Jim Ramstad. This new legislation, which was approved as part of the $700 billion financial bail out, prohibits group health plans that offer coverage for any mental health or substance-use conditions from imposing treatment limitations and financial requirements on those benefits that are stricter than other medical and surgical benefits. However, there is no requirement as to what conditions must be covered. The legislation requires that if a plan offers out-of-network benefits for medical or surgical care, it must also offer the same type of coverage for mental health and addiction treatment. There must also be parity in those services, meaning that cost sharing and deductibles have to be the same between the two out-of-network benefits. Unlike the 1996 Act, the new legislation extends the parity requirement to any substance-use disorder covered by a health plan. The legislation includes a cost exemption provision which allows health plans, whose costs under the parity requirements increase by more than two percent in the first year and by more than one percent in a subsequent year, to be exempt from the parity requirements for the following year.

The new legislation preserves strong state parity and consumer laws. State mental health parity laws will continue to help plans of employers with 50 or fewer employees and to the individual insurance market. For health plans of more than 51 employees, state mental health parity laws will not be preempted by the federal law as long as they provide broader protection. In addition to parity law requirements, Minnesota also prohibits the sale of policies that use a more restricted definition of "medical necessity" for mental health services than the professional standards of providers specializing in mental health treatment. Minnesota's law is limited to commercially-sold health insurance plans. As such, it does not apply to self-insured plans which are underwritten by employers. Self-insured plans will be governed by the federal parity law.

It is estimated that the new legislation will provide parity for 82 million Americans covered by self-insured plans and another 31 million in plans that are subject to state regulation.