How does the federal mental health parity law differ from similar state laws?

Dear Readers,

We recently received this comment from a reader, Karen F. Chambre:

"I am very interested in the mental health parity law. A law has already passed in California. A main problem is that some of the insurance companies have is they find loopholes and do not offer parity for parity diagnoses. Is this new law different?"

I've written about the mental health parity law a few times on this blog since the law includes eating disorders and has been a major focus of eating-disorder advocates. Here is an answer to Karen's question and an update on the legislation.  I found this good document on the Web site of the Mental Health Association in California, which explains the impact that the new federal legislation will have in California. The new law won't take effect until January 1, 2010. 

 A spokesperson for U.S. Rep. Patrick Kennedy's (D-RI) office offered these further explanations on how the new mental health parity law will close loopholes found in the existing 1996 law:

·         The current law merely prohibits health plans from offering lower annual or lifetime benefits for mental health coverage than for physical health coverage.  Most plans get around this requirement by imposing additional treatment limits or cost-sharing (higher co-pays) for mental health care, both of which are allowed. The legislation just passed closes this massive loophole by no longer allowing most health plans that cover mental health to require patients to pay, say, 50% coinsurance for mental health outpatient services when other outpatient services require only 20% in cost sharing. Nor does the new law allow health plans to cap psychiatric inpatient stays at 30 days if they allow unlimited stays for treatment of other conditions.

·         While many states have parity laws on the books, ERISA (non-governmental pension and benefit) plans are not covered under these laws. The new federal legislation brings ERISA plans into the fold, vastly increasing the number of Americans the law applies to.

·          State mental health parity laws that are less stringent than the new federal parity law will be overridden by the new law.

If you would like to read a good summary of the bill, which was pushed through as part of the federal government's notorious $700 billion bailout package, check out this page of the Bazelon Center for Mental Health Law's site.

Take care,

Nancy

 

Comments

[Stacy Armstrong]

Will this also apply in OH. We are currently beginning a second level of appeal with Aetna.

[nancy]

Hi Stacy,

Yes, all of the above changes would apply in Ohio since this is federal legislation that will override weaker state laws. However, the new mental health parity bill won't go into effect until January 2010.

Good luck with your appeal and let us know how it goes.
Take care,
Nancy

[Tracey]

I hope you can help as I cant seem to get an answer. My normal copay for mental health benefits was $20. Insurance co now says with new parity law it is same as "specialist" which is $50 for copay. My therapist was never considered a specialist prior to this law. The contracted rate for therapist is $65 a session so $45 copay is more than 50%. Is this legal? I thought this is why the parity law was put in place. Please help.

[Nancy Matsumoto]

Hi Tracey,
What you describe sounds exactly like the huge loophole that the spokesperson from Rep. Patrick Kennedy's office described. She said that the new legislation to close this loophole will not go into effect until January 2010, so I hope that your insurer will not be able to do this any more after that.

In the meantime, try contacting your local Congressional representative and as to discuss this issue with a staff person.

Good luck,
Nancy