Assessing the Impact of Parity in the Large Group Employer-Sponsored Insurance Market: Final Report. 2. BACKGROUND


Efforts to ensure that individuals with BH conditions receive insurance benefits that are comparable to those with medical conditions have been unfolding over the course of the past two decades. Two federal parity laws have been passed that directly apply to large group health plans.

The Federal Parity Laws--1996 and 2008

In 1996, the first federal parity law was passed. This law, titled the Mental Health Parity Act, states that if a health plan included MH benefits in its coverage package, then the dollar limits on coverage for these benefits in a single year could not differ from the annual limits for medical/surgical benefits. This law also states that the lifetime limits could not be different for MH benefits compared with medical benefits.

Although the Mental Health Parity Act was an instrumental step forward in raising awareness and redressing inequities in insurance coverage for MH benefits, it was only a first step. This Act addressed only annual and lifetime limits, which still allowed insurance companies to impose other restrictions on MH coverage, such as covering only selected MH treatments or applying higher cost sharing for MH visits. Perhaps most important, this Act applied only to coverage for MH conditions and not for SUDs.

In 2008, MHPAEA was passed. This federal law greatly extended parity in coverage beyond what was included in the 1996 law. Large group insurance companies that cover MH and SUD services now must provide comparable coverage in six treatment categories: in-network inpatient, out-of-network inpatient, in-network outpatient, out-of-network outpatient, emergency care, and prescription drugs. These rules for comparability mean that insurance companies can no longer pick and choose which types of coverage to include. For example, because the 1996 law applied only to total lifetime limits in coverage, insurance plans still could refuse to cover more expensive types of inpatient MH services or limit the number of outpatient visits they would cover per year, as long as the total annual or lifetime limit for all other MH services combined was not different from the limit for medical/surgical care. With MHPAEA, large group insurers no longer can choose to cover only some types of MH/SUD treatments if comparable medical/surgical treatments are covered by the same plan. Operationally, MHPAEA requires comparability in three specific areas related to insurance coverage.

  • Financial Requirements (FRs): cost sharing (e.g., copayments and deductibles).

  • Quantitative Treatment Limits (QTLs): limits on the quantity of treatment covered (e.g., number of days or number of visits covered in a single year).

  • Non-Quantitative Treatment Limits (NQTLs): processes and procedures used to determine eligibility for insurance coverage (e.g., prior authorization requirements, determination of medical necessity).

Health plans are required by the law to consider all three of these areas, demonstrate compliance with MHPAEA, and monitor compliance over time.

Implementation of Parity

Although the two federal parity laws were passed at two discrete points in time, the actual implementation of parity occurred in a staged process. The passage of any law usually includes a period of time during which health plans and insurers can begin implementation, before being held fully accountable for specific components of its implementation.[2] Furthermore, federal laws often are replicated at the state level, typically with more extensive provisions than the federal law. Following passage of the Mental Health Parity Act, many states chose to implement expanded parity laws at the state level. Many of these state laws extended the parity provisions to include annual and lifetime limits for SUD treatment, as well as MH treatment. However, states varied widely in the extent of coverage for SUDs in these state laws. Some states such as Rhode Island, Maine, and Oregon extended parity to cover SUDs and transitioned over time from providing partial SUD parity to providing full parity.[3] Massachusetts offered full parity coverage for SUD treatment only if individuals had a co-occurring mental illness, and New Hampshire offered partial parity, which allowed for discrepancies between SUD coverage and medical/surgical coverage.

With the passage of MHPAEA, all states were held to the same standard, and parity for SUDs was included in the rule. However, this law also had a long period of development and transition during which time early adopters had ample opportunity to implement policies consistent with parity in advance of the final law.[4] The actual legislative process for MHPAEA unfolded as follows:

  • October 3, 2008--MHPAEA signed into law, effective for plan years beginning on or after October 3, 2009.

  • January 1, 2010--Date by which many insurers start their calendar plan years. Initial effective date for MHPAEA regulations.

  • February 2, 2010--U.S. Department of Health and Human Services (HHS) Interim Final Regulations issued, with binding implementation regulations, effective for plan years beginning on or after July 1, 2010.

  • January 1, 2011--Date by which many insurers start their calendar plan years. Effective date for compliance with the Interim Final Regulation in the large employer-sponsored insurance market.

  • November 13, 2013--Passage of the MHPAEA Final Regulations, effective for plan years beginning on or after July 1, 2014.

Because specific guidance was given in the Interim Final Regulations on how to calculate and document the comparison of limits and FRs, as well as detailed instructions on the requirements with respect to NQTLs, we treat January 2011 as the formal implementation date for MHPAEA. Because we expect that some companies were early adopters, we treat 2009-2010 as the interim period for implementation of MHPAEA.

What Is Already Known About the Impact of MHPAEA?

To date, a number of research studies have been conducted on the impact of MHPAEA on MH/SUD benefits and delivery of services. These studies can be separated into two types. The first type examines the actual changes in benefits and terms of coverage for MH/SUD services before and after MHPAEA was passed. The second type examines the impact these changes had on specific outcomes of the policy change on service delivery, such as shifts in use of MH/SUD services and amount of spending on these services by insurers.

Research on Changes in Benefits and Coverage

In general, most studies have found that parity laws, including MHPAEA, have a strong impact on QTLs, with most plans substantially reducing or eliminating treatment limits. Thalmayer and colleagues studied Optum large group plans and found that almost all plans dropped their annual visit or annual day limits following parity.[5] Horgan and colleagues reported that annual limits specific to BH care were virtually eliminated between 2009 and 2010 in large commercial plans.[6] Despite concerns that MHPAEA might lead plans to drop MH/SUD coverage rather than redress possible parity violations, these authors also found that the percentage of plans offering BH coverage was unchanged during this time period. In fact, approximately 80 percent of commercial health plans reported an increase in the size of their BH provider network following parity.

Parity laws also have been found to shift FRs for MH/SUDs to a level that is comparable to those for medical/surgical treatment. Horgan and colleagues found that copayments for both behavioral and general medical services increased slightly.[7] Other early analyses of group health plans governed by the Employee Retirement Income Security Act and health insurance offered through group health plans reported that most FRs that did not meet the MHPAEA standard declined significantly in 2011.[8] Despite these improvements, this report found that a substantial minority of health plans still imposed some types of financial limitations that were inconsistent with MHPAEA, particularly higher copayments and coinsurance rates for in-network outpatient services compared with comparable medical/surgical treatments. Another study found that the impact of MHPAEA on FRs for MH coverage in one large health plan was nuanced. Friedman and colleagues examined the impact of MHPAEA on cost sharing for both inpatient and outpatient services, comparing plans that offer different combinations of in-network and out-of-network benefits.[9] They found that MHPAEA was associated with overall higher intermediate care copayments but lower outpatient copayments for services provided in-network.

Documenting the impact of MHPAEA on NQTLs is more difficult, because this information usually is not publicly accessible and is by definition difficult to quantify. There is some indication that NQTLs still were being applied in a manner inconsistent with MHPAEA following implementation of the law. For example, in 2010, nearly three in ten health plans used more stringent precertification and utilization management controls for MH/SUD than for medical/surgical conditions.[10] However, Horgan and colleagues found that prior authorization requirements for specialty medical and BH outpatient services declined between 2009 and 2010, although the proportion of plans reporting strict continuing review requirements increased slightly.[11]

Shifts in Behavioral Health Service Use and Spending

The impact of the parity law on service utilization and spending is still an ongoing debate, because measuring the impact of the law on outcomes requires enough time following implementation to measure the effects. Given that pre-MHPAEA, most individuals used BH below the pre-parity limits, the impact of MHPAEA on average was expected to be minimal, with the greatest impacts seen only for the highest utilizers.[12] Initial evaluations of the impact of MHPAEA on commercial insurance coverage provide evidence of progress implementing parity, including an increase in utilization of BH services as well as an expansion of coverage.[13, 14] One study reported that the parity law was associated with 4.6 additional MH or functional therapy visits for children with autism spectrum disorder.[15] Busch and colleagues found that as a result of parity out-of-pocket costs declined by a significant dollar amount for bipolar disorder, adjustment disorder, and major depression diagnosis.[16] In another study, Busch and colleagues found that MHPAEA had little impact on SUD utilization but a minor impact on SUD treatment spending with an increase of $9.99 per health plan enrollee.[17] Given that the MHPAEA Interim Rule was only effective for many plans starting in 2011, it is only recently that we have had enough years of information post-parity to fully assess the impact of MHPAEA on long-term outcomes in the large employer-sponsored insurance market.

Parity and Substance Use Disorder Treatment

Given that the 2008 parity law expands parity to include SUD treatment--in contrast to the original 1996 law, which applied only to MH conditions--it is important to examine the impact of parity separately for MH and SUD. There are many ways that a lack of parity in insurance coverage for SUD treatment could affect individuals in need of treatment.[18] Even when QTLs and FRs are fully addressed, lack of parity in NQTLs may be a particular concern for those with an SUD. For example, prior authorization requirements can add a barrier for patients in SUD treatment that can be especially detrimental for individuals in early stages of recovery who require immediate engagement in treatment to avoid risk of relapse. So-called fail first policies require that beneficiaries try certain types of (often less costly) treatment and demonstrate that it does not work, before being approved for another type of treatment. These policies interfere with a comprehensive approach to BH treatment in which, for example, psychosocial and medical treatments combined may be necessary to support recovery. Treatment plan requirements also can be a hindrance to patients trying to receive care, especially when it is required that treatment plans be fully in place before addiction treatment is started. By extending parity to SUDs and ensuring that NQTLs are included explicitly in the comparability requirements for parity, MHPAEA has the opportunity to greatly affect coverage of SUD treatment.

One challenge in understanding the impact of MHPAEA on SUD treatment is that the timeline for the opioid crisis roughly corresponds to the timeline for MHPAEA implementation. Little research has been done to understand the impact of MHPAEA on utilization of and spending on specific types of SUD treatment at a national level. A 2013 American Society of Addiction Medicine (ASAM) report on medication-assisted treatment (MAT) and parity suggested that some insurance plans still had policies in place that violated MHPAEA regulations. Here, the Treatment Research Institute surveyed insurance plans in the ten largest states. The authors found that restrictions such as prior authorization, quantity limitations, step therapy, duration limits, and network requirements were limiting access to medications for those particular individuals.[19, 20] However, one unpublished pilot study analyzed the total number of buprenorphine prescriptions from 2010 to 2014, comparing the states that did not have prior parity laws compared with states that did as a control.[21] States that did not have prior parity laws had a noticeable increase in the number of prescriptions compared with the control states, suggesting that MHPAEA implementation could have expanded MAT access.

Parity and In-Network Versus Out-of-Network Treatment

Another advance of the 2008 parity law was to require insurers to apply parity regulations to out-of-network outpatient visits and inpatient visits. Without explicitly requiring that out-of-network MH and SUD benefits were comparable to out-of-network medical/surgical benefits, there were concerns that insurance companies could create so-called "phantom networks" that would not be subject to parity protections.[22, 23] A study by Kyanko and colleagues indicated that out-of-network provider use is more likely in MH care compared with general health care providers, with approximately 18 percent of individuals having contact with at least one out-of-network MH provider.[24]

Research on the impact of parity on in-network and out-of-network service utilization and spending has found opposite effects for MH and SUD services. McGinty and colleagues used claims from large self-insured employers to assess the impact of MHPAEA on both in-network and out-of-network services for SUD services and found that the parity law was associated with an 8.7 percent increase in out-of-network inpatient SUD services use and a 4.3 percent increase in the use of outpatient SUD services compared with what would have been expected without parity.[25] Other studies have found that MHPAEA increased the average total spending on out-of-network SUD services and the average number of out-of-network SUD visits.[26] However, Busch and colleagues recently examined trends from 2007 to 2012 and found that, although parity was associated with a one-time increase in number of visits per month and total spending per month among out-of-network MH service users in 2010, this trend attenuated in 2011-2012.[27] These authors concluded that overall MHPAEA led to a contraction in out-of-network MH service utilization. The reasons for this opposite directionality of effects across in-network and out-of-network treatment for MH and SUD is not immediately clear. It is important to track these trends over more years and to examine whether the opioid crisis was a driver of SUD out-of-network spending, independent of parity impacts. We examine both of these issues in this study.

Expanding Previous Understanding About the Impact of Parity

Research on the actual outcomes of MHPAEA is limited. Although we know that many health plans have shifted their coverage patterns, particularly eliminating QTLs, only recently has there been enough time following the law's implementation to look at longer-term impacts of these changes on actual service delivery and spending. This work advances the field by: (1) examining a broad range of outcomes potentially impacted by parity; (2) highlighting the impact of parity on particular population groups; and (3) incorporating several methodological advances.

  1. Outcomes of Parity. We consider a broad set of outcome variables to comprehensively assess the impact of parity on outpatient insurer spending, any use (access), frequency of use (utilization), and costs for MH and SUD; enrollee out-of-pocket spending and costs for outpatient MH and SUD treatment; and outpatient out-of-network utilization and spending for MH and SUD.

  2. Population Groups. We stratify analyses according to specific population subgroups to better understand how parity affects individuals with an MH condition versus an SUD, including stratifying the SUD group into opioid use disorder (OUD) and non-OUD disorders, examining the population of high BH service utilizers (upper 95 percentile), and examining outcomes for those with a serious mental illness (SMI) or OUD diagnosis.

  3. Methodological Advances. We incorporate a number of methodological advances including adding more years of data both pre-parity and post-parity in order to observe the long-term trends and analyzing a transition period from 2009 to 2010 to better assess changes over the course of the parity implementation process.

Taken together, the analyses reported here allowed us to test our hypotheses that parity will increase outpatient service utilization and spending, both at the average and for those with greater BH needs who are more likely to be affected by the elimination of quantitative limits. In addition, to the degree that MHPAEA increased coinsurance rates, lowered out-of-pocket payments, or improved coverage in other ways (e.g., network adequacy), we also hypothesized an impact on access and reimbursement levels. Our time series design using many years of data allowed us to make causal implications that our findings are attributed to the parity law. This design increased our confidence that our findings are not the result of outside trends (e.g., general changes in the health care environment unrelated to MHPAEA). In particular, we examine separately the outcomes related to OUDs and to other non-opioid-related SUDs (e.g., alcohol use disorder). By doing so, we address concerns that impacts on SUD outcomes may be related to the opioid epidemic, given that the opioid epidemic is associated with increases in the overall demand for OUD treatment during a similar time frame as the implementation of parity.