What Are Federal Mental Health Parity Protections And Are They Improving Access?

The COVID-19 pandemic exacerbated an already existent mental health crisis, laying bare deficits in behavioral health coverage even for insured people. US regulations intended to create parity, or equivalency in insurance benefits for both mental and physical health, have fallen far short of their promise, advocates say.

What is mental health parity?

In a given year, about 1 in 4 American adults experience a diagnosable mental disorder, such as clinical depression or obsessive-compulsive disorder, according to Johns Hopkins Medicine. While some use the terms "mental health" and "behavioral health" interchangeably, behavioral health is considered an even wider-reaching term that includes substance abuse disorders and behaviors that impact someone's mental or physical health, such as stress-related physical symptoms.

Mental health parity refers to the notion that people's mental health and substance use disorder (MH/SUD) conditions should receive equal insurance coverage and benefits as their physical health needs.

That doesn’t necessarily mean someone's health plan must offer mental health benefits, points out the National Alliance on Mental Health (NAMI). However, it does mean that a plan must treat mental health conditions, such as substance abuse disorders, the same way it treats physical health needs. For example, if a plan offers unlimited provider visits for a chronic condition like diabetes, they must offer that same level of coverage for depression or schizophrenia.

Landmark law protects mental health benefits

Before several key pieces of legislation were passed, insurance plans typically offered fewer MH/SUD benefits than physical health ones.

The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA) made substantial strides toward addressing that disparity, ensuring substance use disorders were included in the regulation. This 2008 federal law applied to some group insurance plans, depending upon plan size. Under the legislation, patients requiring MH/SUD healthcare should not shoulder additional costs, such as co-pays and different out-of-pocket maximums, than they would for necessary physical health needs.

ACA and states build on MHPAEA efforts

The 2010 Affordable Care Act (ACA) built on mental health parity effort, expanding the requirement to more health insurance plans, including smaller employer-sponsored plans as well as those purchased through the Health Insurance Marketplace. In addition, the ACA included MH/SUD as part of its essential health benefits required for plans in the individual and small group markets.

On a state level, there have been additional efforts to expand mental health protections and ensure compliance of these national laws. For example, California enacted its own law in 2021 that strengthened mental health parity with the goal of increasing access to these services.

Lawsuit underscores need for more action

Mental health advocates and experts are closely following the ongoing developments in a potentially groundbreaking class-action lawsuit involving United Behavioral Health (UBH). The allegations accuse the insurer of putting its own finances ahead of clinical decision making when it denied behavioral health claims not based on generally accepted standards of care, but on internally developed guidelines.  

The initial decision in 2019 favored the plaintiffs, directing UBH to reprocess more than 60,000 denied claims. The US 9th Circuit Court of Appeals reversed this decision in 2022 and recently issued a corrected, partial reversal in January 2023, noting UBH did have a financial conflict as it was “incentivized to keep benefit expenses down,” but the members did not have the right to have denied claims reprocessed.

While not a parity case directly, entities like the American Psychological Association and The Kennedy Forum believe the appeals decision is an example of how additional legislation is needed to support parity enforcement and help individuals access MH/SUD benefits. 

Mental health coverage disparities persist

Even as legislative moves have expanded access for millions of Americans, disparities in mental health coverage persist, points out NAMI. Foremost, the federal MHPAEA does not apply to all plans, including Medicare, certain state Medicaid, or short-term health plans. Enforcement can be spotty with the onus on consumers to file claims, the organization says.

The Psychiatric Times broke down how well individual states were living up to these parity goals, with many dismal grades. “While the MHPAEA codified the idea in federal and state law, its implementation has proved difficult,” notes the article, which describes growing disparities between mental and physical health. States such Illinois, made parity a priority and recently fined a large health plan for failing to meet federal and state parity network adequacy requirements.

US government acknowledges “falling short”

A 2022 Congressional Report acknowledged what many beneficiaries were already experiencing: “The report’s findings clearly indicate that health plans and insurance companies are falling short of providing parity in mental health and substance-use disorder benefits, at a time when those benefits are needed like never before,” said US Secretary of Labor Marty Walsh. “The pandemic is having a negative impact on the mental health of people in the US and driving a rise in substance use.”

No changes in behavioral health utilization

Those sentiments are supported by the data: MHPAEA did not lead to changes in utilization or spending on outpatient behavioral health visits, say the authors of a study published in The Journal of Mental Health Policy and Economics. The authors attribute these findings to factors ranging from compliance challenges to increased consumer cost sharing.

As a result of these challenges, adequate coverage for behavioral health services “remains elusive,” notes a 2022 Kaiser Family Foundation briefing. Despite having insurance coverage, 36% of adults with moderate to severe symptoms of anxiety and depression did not receive care in 2019, according to a Kaiser Family Foundation survey.

Why aren't mental health parity protections working?

Earlier this year, Duke University researchers published a paper attempting to answer why the parity laws are faltering. The research, published in the Journal of Health Politics, Policy and Law, examined numerous factors that influenced the lack of enforcement in 4 states and created a patchwork of compliance.

“Within a state, enforcement of MHPAEA is influenced by insurance office relationships, legal interpretation, and political priorities,” the authors wrote. “These unique state factors present significant challenges to uniform enforcement.”

Challenges in determining mental health parity compliance

Even as the ACA has expanded health access, some changes have created unexpected challenges to determining these parity goals. The ACA ushered in a growth in plans with narrow provider networks or plans that offer less than 25% of the market's providers. These plans are typically less expensive but offer less high-cost provider options—with mental healthcare participation less than primary care providers. This lower participation may undermine federal parity law's ability to guarantee mental health access, points out a brief from the University of Pennsylvania's Leonard Davis Institute of Health Economics.

From the health plan perspective, identifying and demonstrating parity compliance can be a very complex and difficult task. While there have been recent efforts to better streamline the documentation process, it has been challenging to identify and determine whether some of a plan's more complex requirements are in compliance with the parity law.

Department of Labor ups its investigations

In 2022, the Department of Labor announced it had undertaken more mental health parity investigations than in previous fiscal years: “In short, this means more proactive enforcement than what plans and issuers have become accustomed to,” the agency noted.

An important new tool in that enforcement is the Consolidated Appropriations Act, a healthcare consumer protection measure which added additional enforcement resources. That law prohibits group plans from imposing less favorable conditions on their mental health benefits compared to physical health benefits, explains this piece in the National Law Review.

Looking farther upstream to encourage mental health parity compliance

Heightened enforcement efforts could dissuade any insurance company using specific practices to deny or delay MH/SUD coverage. These practices include everything from benefit exclusions to having inadequate behavioral health networks causing lengthy wait times, explain the authors of a paper in the Annals of Health Law and Life Sciences.   

But instead of focusing only on enforcement, the authors proposed other strategies. Stigma and false beliefs about mental health may create “an unexplored barrier to parity."  As long as misunderstandings about mental health and substance use disorders persist, progress toward parity will stumble. To that extent, they recommend anti-stigma work as a key step in accomplishing broader parity goals.

There have been some promising steps to address barriers to mental healthcare on the plan side, such as eliminating co-pays for behavioral health services all together. New Mexico's law that eliminates out-of-pocket behavioral health costs for plans the state oversees is a great example of approaches that expand access.

Advocating for oversight and enforcement

Efforts to strengthen mental health parity come at a critical time as the country emerges from the COVID-19 pandemic. As the mental health impacts of the pandemic linger, the country must do more to ensure parity and the access improvements that will come from it, say advocates like Dr. Brian D. Smedley of the American Psychological Association.  

Smedley has urged Congress to enact stronger federal oversight and enforcement: “We must do more to improve access to mental health treatment for those who need it.”

Look to RTI Health Advance

Let RTI Health Advance guide you through these and other challenges to mental health equity. At RTI Health Advance, we search for opportunities to enhance delivery of MH/SUD care across the care continuum. Contact us.