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Guidance To Come on New Mental Health and Maternity Requirements for Group Health Plans

Summer 1997

Employers and insurance carriers anticipate that the U.S. Departments of Labor (DOL) and Health and Human Services (HHS) soon will issue guidance on the new mental health and maternity requirements that will affect group health plans beginning on January 1, 1998. In late June, the DOL and HHS requested public comments, by July 28, 1997, on issues relating to the new mental health and maternity rules. Hopefully, the two agencies will issue guidance responding to those comments in time to allow employers and insurers to redesign and revise their respective plans and policies for the fall enrollment season for plan years beginning on January 1, 1998.

Mental Health Parity Act of 1996.

The new mental health requirements are imposed by the Mental Health Parity Act of 1996 (MHPA), enacted on September 26, 1996, shortly after the Health Insurance Portability and Accountability Act of 1996 (HIPAA). MHPA amended the Public Health Service Act and the Employee Retirement Income Security Act of 1974 (ERISA) to provide for parity of certain mental health benefits with medical and surgical benefits under a group health plan in the application of aggregate dollar lifetime limits and annual dollar limits. A group health plan providing both medical and surgical benefits and mental health benefits may not impose an aggregate lifetime or annual dollar limit on mental health benefits if it does not impose such limits on substantially all of its medical and surgical benefits. If a group health plan does impose an annual or aggregate lifetime limit on medical and surgical benefits, it cannot impose any such limit on mental health benefits that is less than that on the medical and surgical benefits.

The MHPA does not require a group health plan, or any insurance coverage issued on such a plan, to provide any mental health benefits. Also, the MHPA cannot affect the terms and conditions (including deductibles, copayments, and other cost sharing measures; limits on numbers of visits or days of coverage; and requirements related to medical necessity) relating to the amount, duration, or scope of mental health benefits under group health plans or related insurance coverage, except to require parity in the imposition of annual and aggregate lifetime limits for mental health benefits. The mental health parity requirements do not apply to benefits for substance abuse or chemical dependency. For example, group health plans and related insurance policies may continue, after December 31, 1997, to impose different annual and aggregate lifetime limits on substance abuse or chemical dependency benefits than it does on other mental health benefits or medical and surgical benefits.

The mental health parity rules do not apply in the following situations: (1) small employers (generally 50 employees or less) are not subject to the new rules; and (2) the new rules do not apply to group health plans if they would cause a one percent or more increase in the cost of the plan or related insurance coverage. The mental health parity rules apply to plan years beginning on or after January 1, 1998. However, there is a sunset provision under which the requirements would not apply to benefits or services furnished on or after September 30, 2001.

Newborns' and Mothers' Health Protection Act of 1996. The Newborns' and Mothers' Health Protection Act of 1996 (NMHPA) also was enacted on September 26, 1996. It is intended to protect mothers and their newborn children by requiring group health plans, insurance companies, and health maintenance organizations (HMOs) that cover hospitalization for childbirth to provide at least a 48-hour hospital stay for the mother and the child after a normal delivery, and at least a 96-hour hospital stay after a cesarean section. The new maternity rules do not require group health plans, insurance companies, and HMOs to cover hospital stays of these durations unless they already provide coverage for hospital stays for childbirth. In addition, the NMHPA does not prevent a group health plan, insurance company, or HMO from imposing deductibles, coinsurance, or other cost-sharing measures for health benefits relating to hospital stays for childbirth as long as those measures are not greater than those imposed on any preceding portion of the stay.

Also, the NMHPA prohibits a group health plan, insurance company, or HMO from providing monetary payments or rebates to mothers to encourage them to accept hospital stays for childbirth that are shorter than the 48- or 96-hour minimums; prohibits penalizing or otherwise reducing or limiting the reimbursement of an attending provider because he or she cared for the mother or her newborn child in accordance with the new law; and prohibits providing incentives (monetary or otherwise) to attending providers to induce them to provide care to a mother or child in a manner inconsistent with the new law.

The new maternity requirements apply to group health plans and insurance carriers in the group market for plan years beginning on or after January 1, 1998. For insurance issuers in the individual market, the new rules apply to health insurance coverage offered, sold, issued, renewed, in effect, or operated in the individual market on or after January 1, 1998.

Document Review. Employers maintaining group health plans (whether insured or self-funded) should now review and revise their plan documents and summary plan descriptions to reflect the applicable requirements of HIPAA, MHPA, and NMHPA. The HIPAA requirements, set out in the statute itself and in interim rules that the IRS, DOL, and HHS issued last April 1, are effective for plan years beginning after June 30, 1997. The MHPA and NMHPA requirements apply on and after January 1, 1998. So, for example, a calendar year group health plan, and its SPD, should be revised by January 1, 1998, to reflect the applicable requirements of HIPAA, MHPA, and NMHPA. The HIPAA revisions can be made now, because the HIPAA regulations have been out since April. However, the MHPA and NMHPA revisions cannot be completed until the DOL and HHS issue regulations interpreting those statutes; if current predictions hold, those regulations will be out this fall, in time to amend calendar year plans and SPDs by January 1, 1998.

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