A Message from the Chair

Chairman's Report - Summer 2010

Barely noticed in October 2008, amid the clamor of the Presidential campaign and a nationwide financial crisis, Congress passed and President Bush signed the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA) (P.L. 110-343), legislation long awaited by the mental health community.

The law was quietly tucked into the $700 billion Emergency Economic Stabilization Act of 2008 in Division C, Title V, Subtitle B, Section 511, just a small corner of the legislation which created TARP, the "bailout" package for the nation's financial system. However, for those of us centrally concerned about the quarter of America's adult population who experience mental illness each year, or the almost half who suffer from these disorders during a lifetime, it is a major achievement.

For almost four decades, mental health advocates have fought to ensure that mental health benefits in health insurance plans are equivalent to medical and surgical benefits. This has not been an easy road for many reasons. The public and many medical professionals have questioned the biological and medical origins of mental health disorders. Following this lead, health insurance companies have often failed to cover mental health disorders in their plans or, when they did, they did not offer benefits equal to their medical and surgical benefits. In addition, according to the Congressional Research Service (CRS), insurers were reluctant to provide parity coverage because they believed that "mental disorders are difficult to diagnose, and that mental health care is expensive and often ineffective."

Scientific evidence showing the linkage between the brain and biology, new effective therapies, the untiring work of advocates for the mentally ill, and, quite frankly, the personal and family experiences of key legislators who had to face up close the crushing impact of mental health and substance abuse disorders spurred legislative efforts to address this imbalance.

In the 1970s, individual states began to attack the insurance inequity problem. They were joined at the federal level in 1996 with the passage of the Mental Health Parity Act (MHPA). This law prohibited annual and lifetime dollar limits on mental health coverage which were more restrictive than those imposed on medical and surgical coverage. This was a good first step, but there were many more facets to the parity imbalance left for the 2008 act.

Among many positive changes, the new MHPAEA expands the definition of mental health to include substance abuse disorders. Significantly, as detailed in the Interim Final Rule (IFR) regulations scheduled for implementation on July 1, 2010, it increases substantially the number of benefit requirements in health plans that must be made equivalent for medical, surgical, and mental health disorders. These stipulations include those governing annual and lifetime coverage limits, deductibles, copayments, out-of-pocket limits, out-of-network coverage, covered
inpatient days and outpatient visits, and managed care practices such as prior authorization and utilization review. Importantly, too, the new law allows state laws which provide stronger parity provisions than the federal legislation to remain in effect.

The MHPAEA is a landmark law. The National Alliance on Mental Illness (NAMI) stated, "mental illness treatment [is] no longer being subject to 2nd class status in our health care system." But NAMI, the American Psychiatric Association, and other mental health advocates well know that final victory has not been achieved.

The MHPAEA applies to group health plans for employers with 51 or more employees, Medicaid managed care plans, the State Children's Health Insurance Program (SCHIP), non-federal governmental plans, and federal employees health benefits plans, potentially about 150 million people in all. However, it does not apply to plans of small companies, individual plans, and Medicare. The law allows insurers to determine which mental illnesses they will cover. Also, determining parity of treatments, such as the use of psychotherapy which has no exact equivalent for non-mental health diseases, may prove problematic. And, critically, the new law does not require that plans provide benefits for mental health and substance use disorders, only that these benefits be on par with medical and surgical benefits if the plan covers them. Moreover, the proposed implementation regulations, which are favorable for parity, are being challenged by insurance companies and employer groups who object to the rules specifying a single integrated deductible for mental health, medical, and surgical diseases and to selected provisions guiding how insurers manage mental health benefits.

Nonetheless, the MHPAEA of 2008 is a big step to guaranteeing that insurance coverage for mental health disorders is on par with coverage for medical and surgical illnesses. Here, in the Department, we will continue to monitor the implementation of the MHPAEA to make sure that it meets the needs of those who need care for mental health and substance abuse disorders, and we will press for further change as needed.

Dwight L. Evans, MD
Ruth Meltzer Professor and Chair
Professor of Psychiatry, Medicine and Neuroscience

Contact information:
305 Blockley Hall
423 Guardian Drive
Philadelphia, PA 19104
Office: 215-662-2818
Fax: 215-662-6911
Email: dlevans@mail.med.upenn.edu