Part 1: Understanding Parity and Violations
The term parity means “equal to.” 3 The federal parity law is fundamentally grounded in ensuring equal access to treatment services under both the behavioral health and medical benefits offered by a health plan. Thus, the federal parity law requires that a health plan’s policies and practices to cover behavioral health services cannot be more restrictive than policies and practices for medical or surgical services. The comparisons between behavioral and medical/surgical benefits are made according to the same classifications of benefits, such that:
- If inpatient in-network medical/surgical benefits are provided, inpatient in-network MH/SUD services must also be provided.
- If inpatient out-of-network medical/surgical benefits are provided, inpatient out-of-network MH/SUD services must also be provided.
- If outpatient in-network medical/surgical benefits are provided, outpatient in-network MH/SUD services must also be provided.
- If outpatient out-of-network medical/surgical benefits are provided, outpatient out-of-network MH/SUD services must also be provided.
- If emergency care medical/surgical benefits are provided, emergency care MH/SUD services must also be provided.
- If prescription medical/surgical benefits are provided, prescription MH/SUD services must also be provided.
A parity violation can take many forms. Some policies and practices covered under the parity law are easily measured by a dollar amount or a number; for example, financial requirements such as co-payments or deductibles, and quantitative treatment limits (QTLs) such as day and visit limits. Under the federal parity law, financial requirements and QTLs cannot be more restrictive for behavioral health services than for medical services in the same class of benefits.
Other health plan practices or policies that limit benefits are called non-quantitative treatment limitations (NQTLs) because these limitations cannot be measured by a dollar amount or number. The basic rule is that a health plan cannot impose an NQTL that is not comparable or that is applied more stringently to MH/SUD benefits than to medical/ surgical benefits. Examples of NQTLs include, but are not limited to:
- Limits on the quantity or frequency of treatment: If a health plan places caps on the number of inpatient days or outpatient behavioral health visits allowed each year, but does not have the same caps on inpatient days or outpatient medical visits, the health plan is likely in violation of the federal parity law. Similarly, if a health plan limits outpatient behavioral health visits to once a week or every other week, but does not limit the frequency of medical outpatient visits, there is likely a parity violation.
- More restrictive prior authorization policies for behavioral health: Many health plans require prior authorization for non-emergency inpatient facility or hospital services, both for medical care and for behavioral health. However, if in practice a health plan’s prior authorization routinely approves up to seven inpatient days for medical services but just three inpatient days for behavioral health inpatient services, the plan is likely in violation of the federal parity law. The parity violation is the result of the health plan applying the prior authorization process more stringently to behavioral health services.
- Excessive concurrent review policies: When a patient is admitted to an inpatient or residential treatment facility or to day treatment, or is in need of long-term outpatient counseling, health plans may periodically review the medical necessity of the treatment in a process known as concurrent review. If health plans require concurrent review too frequently or impose overly burdensome requests on behavioral health care providers as compared with medical care providers to justify continued treatment, the plan may be in violation of the federal parity law.
- Step therapy or fail-first protocols: Sometimes health plans require patients to try and fail at a lower level of care before they will approve a greater benefit. For example, a plan may require patients to try intensive outpatient services or partial hospitalization for behavioral health treatment before they will approve inpatient treatment. The plan is in violation of the federal parity law if it does not have a fail-first requirement in place for obtaining inpatient medical treatment.
The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA) was passed in 2008 to help individuals who suffer from mental illness and/or addiction by ending discriminatory health care practices directed against those conditions.MHPAEA addresses both the financial and non-financial ways that plans limit access to addiction and mental health care services, more so than plans do for other physical conditions. Individuals with mental illness and/or addiction, their families, professionals in the field and employers all worked together to pass the law.The law does not require a plan to offer mental health and/or substance use disorder (MH/SUD) benefits; however, if the plan chooses to offer these benefits, it must offer MH/SUD benefits that are equal to the medical/surgical benefits. For example, if a plan covered as many appointments as needed with an immunologist, but only covers five appointments with a psychiatrist, this limitation would violate the parity law.
The Affordable Care Act (ACA) expanded the federal parity law’s protections. As a result, qualified health plans (individual and small group health plans offered in and outside the health insurance exchanges) must include MH/SUD benefits as an essential health benefit offered to its customers. Additionally, the benefits offered to the Medicaid expansion population must include MH/SUD benefits.The federal parity law also guarantees new rights to individuals with mental health and substance use disorders that will make coverage rules more transparent and improve the appeals process. In order to preserve these rights, plans are required to:
- Provide medical necessity criteria (see “Terms to Know” upon request to plan participants and providers.
- Provide a reason for the denial of any claim to insureds and their providers.
- Disclose their parity compliance review and testing process in the event a parity law challenge is initiated.
The answer to this question depends on a few factors, and is not always readily apparent. If your health plan offers insurance coverage in the state-licensed group and individual markets, it is likely that the state has enforcement responsibility. However, if you have insurance through your employer, you may be insured by a self-insured employer. Around half of all health plans in the country are offered through self-insured employers. The federal Department of Labor has primary enforcement authority over these plans. As such, it is important to know which regulatory agency may be responsible for enforcement of the federal parity law for your plan. If you receive your insurance coverage through your employer, ask your benefits representative or a human resources employee if your employer is self-insured. Your state’s department of insurance may also be able to help you with this question.
To be in compliance with the federal parity law, health plans must address a number of issues:
- Financial requirements (e.g., deductibles, co-payments, coinsurance or out-of-pocket expenses) imposed on MH/SUD benefits may NOT be more restrictive than those imposed on medical/surgical benefits.
- Treatment limitations (e.g., frequency of treatment, number of visits, number of days or similar limits on scope or duration of treatment) imposed on MH/SUD benefits may NOT be more restrictive than those imposed on medical/surgical benefits.
- Plans that provide out-of-network coverage under the medical/surgical benefit must provide equivalent out-of-network coverage under the MH/SUD benefit.
- Plans cannot require patients to go to a MH/SUD facility in their own local or state area if the plan allows plan members to go outside of local or state areas for other medical services.
- Plans are prohibited from using “separate but equal deductibles.” In other words, MH/SUD and medical/surgical benefits must add up together towards the same, combined deductible.
- Plans cannot exclude specific MH/SUD facilities or provider types while covering a full range of medical/surgical facilities and provider types.
- Criteria for medical necessity determinations must be made available to any potential or current enrollee or contracting provider upon request.
- The reason for any denial of reimbursement or payment must be made available to the participant or beneficiary.
- Additionally, under both federal and state laws, health plans must make meaningful disclosures of plan documents and clinical guidelines to enable a parity appeal, as well as other types of medical necessity or administrative appeals.
Where there is a similar state parity law or regulation, the federal parity law serves as the minimum requirement. States may enact additional consumer protections beyond the federal parity law that regulators must enforce along with federal requirements. State laws that offer more consumer protections than the federal law are NOT preempted by the federal parity law, meaning that a state law will continue to apply and be enforced.
These parity requirements apply to the following facility types and services:
- Inpatient in- and out-of-network, outpatient in-and out-of-network, emergency care and prescription drugs) and,
- Intermediate levels of care (e.g., intensive outpatient, partial hospitalization and residential treatment).
Part 2: Parity Complaints vs Appeals vs Claims
An appeal is a request that you make to your health plan to reconsider its decision to deny coverage of an item, service, or medication.
A complaint is a grievance filed with entities that oversee your health plan to express dissatisfaction with the behavior or actions of your plan or its representatives.
Submit a complaint to hold insurance companies accountable and help improve oversight of health plan coverage for mental health and addiction services.
A claim is a request for coverage. You or your healthcare provider will usually file a claim to be reimbursed for the costs of treatment or services.
An appeal is a request that you make to your health plan to reconsider its decision to deny coverage of an item, service, or medication. You have the right to ask your insurance company to conduct a full and fair review of its decision. If the case is urgent, your insurance company must speed up this process.
You also have the right to take your appeal to an independent third party for review. This is called external review. External review means that the insurance company no longer gets the final say over whether to pay a claim.
Part 3: Health Plan Compliance
In order for plans to comply with the federal parity law, they are required to do their own parity compliance testing. In terms of NQTLs, plans must demonstrate that “any processes, strategies, evidentiary standards, or other factors used in applying the nonquantitative treatment limitation to MH/SUD benefits in the classification are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in applying the limitation with respect to medical surgical/benefits in the classification.”
Questions about insurance coverage often arise when individuals are trying to access mental health/addiction care. Here are some tips that can help you when seeking answers to your insurance-related questions:
- Speak with your insurer or managed care provider’s customer service department.
- Ask for the person’s name each and every time you call.
- Make a note of the person’s name, the date and time of the call.
- Ask your provider for help.
- Talk with the consumer advocacy office of the government agency that oversees your plan (ask for, and write down the names of who you speak to).
- Learn about the laws regarding insurance that protect the public.
When coverage for behavioral health services has been denied, or when behavioral health services have not been paid for at the same level as medical services, there are two types of parity tests to help determine whether a violation has occurred:
1. Quantitative Treatment Limitation (QTL) Test: a parity violation may have occurred in relation to a QTL under one of the following scenarios for each class of benefits:
- Are the patient’s behavioral health benefits subject to higher out-of-pocket spending than at least 2/3 of the medical benefits in the same classification?
- Are the patient’s behavioral health co-insurance amounts higher than the co-pay or co-insurance amounts applied to at least 2/3 of the medical benefits in the same class?
- Are the patient’s behavioral health day and visit limits applied more restrictively than the day and visit limits applied to at least 2/3 of the medical benefits in the same class?
- Does the overall effect of the plan’s limitation result in zero days of coverage for MH/ SUD care? Does the plan:
- Exclude levels of care for behavioral health services, while covering a full continuum of care for medical/surgical services? For example, does the plan cover inpatient in-network treatment for medical/surgical services but not for behavioral health services?
- Offer outpatient out-of-network coverage for behavioral care that is more limited than outpatient out-of-network coverage for other medical conditions?
- Require the patient to receive in-state treatment for MH/SUD treatment while permitting medical/surgical patients to receive care out-of-state?
2. Non-Quantitative Treatment Limitation (NQTL) test: A parity violation may have occurred in relation to an NQTL under one of the following scenarios for each classification of benefits:
- Is a comparable treatment, service or medically necessary item provided by the plan to covered individuals with medical/surgical conditions?
- Is the plan requiring the patient to “fail first” at MH/ SUD lower cost treatments or medications before a higher cost treatment or medication is approved but not requiring “fail first” to approve comparable medical/surgical treatments or medications?
- Are there differences between behavioral health and medical/surgical coverage regarding:
- Formulary design for prescription drugs? For example is there a wider variety of medications for medical/surgical conditions, both by type and by category?
- Standards for provider admission to participate in a network, including reimbursement rates?
- Plan methods for determining charges?
- Exclusions based on failure to complete a course of treatment?
- Restrictions based on geographic location, facility type, provider specialty or other criteria that limit the scope or duration of benefits?
In addition, are there any separate treatment limitations applied to the behavioral health benefit that are not applied to the medical/surgical benefit?
It is not unusual for a prior authorization request to be denied. In cases where prior-approval (and resulting payment) is not approved by the plan to cover a test, procedure, treatment services or provider type, it is important to have a working relationship with a customer service representative or case manager at the health plan with whom the patient or authorized representative/provider can talk about the situation. A first step should be to re-submit the request for care or the claim with a copy of the denial letter. The patient may need the treating physician to explain or justify what has been done or is being requested
Sometimes the test or service will only need to be “coded” differently, or the health plan might just need additional information. If questioning or challenging the denial in these ways is not successful, then the patient may need to:
- Resubmit the request for care or claim a third time and request a doctor to doctor (peer to peer) review.
- Ask to speak with a supervisor who may have the authority to reverse a decision.
- Request a written response outlining the reason for the denial.
While it is frustrating to have a prior authorization denied, the following tips can help you if you choose to move forward and formally appeal the decision:
- Keep the originals of all letters.
- Keep a record of dates, names and conversations about the denial.
- Get help from a consumer service representative from a state or federal agency. (see Appendix C for helpful links)
Yes, here is a sample health plan coverage checklist:
My health plan coverage is through:
- My employer:
- My plan is a fully-insured plan (my employer purchases insurance and the insurer pays claims); any plan denials are eligible for state external review
- My plan is a self-insured plan (my employer pays all health insurance claims); any denials are NOT eligible for state external review
- My employer employs more than 50 people
- A policy I bought myself
- An association-sponsored policy (such as a trade or educational organization)
My health plan:
- Covers mental health and addiction benefits
- Manages mental health and addiction benefits directly
- Contracts with an outside entity (e.g., Managed Behavioral Health Organization (MBHO)) to manage them
Plan phone number to call if I have a problem: ___________________
My primary care physician is: ____________________
My physician’s phone number is: ____________________
My mental health/addiction provider’s phone number: ____________________
I need prior authorization for: ___________________
I do not need a referral from my primary care physician: Y/N
ORI need a referral from my primary care physician for:
- Lab and x-ray tests
- Othre specialist visits
Part 4: Parity Appeals Overview
All insured people, whether under medical or behavioral health benefits, have a guaranteed legal right to challenge a coverage denial by a health plan. All plans—including Medicaid managed care plans, private individual and group insurance policies provided in and outside of exchanges and employer sponsored health plans—must provide a process to appeal an adverse determination (denial of coverage) by a health plan. Appeal timelines and deadlines vary. Each insured individual should carefully read appeal instructions enclosed with denial letters and become familiar with their plan’s appeal processes and timelines.
Managed Care Appeals Checklist
- Identify the type of insurance policy(fully insured or self-insure).
- Understand the terms of the policy (and what it does and does not cover)
- Determine if the plan is subject to ERISA, ACA and/or MHPAEA. Your rights to plan document or external review remedies may vary depending on which law(s) govern your plan type.
- If there is a possible violation of MHPAEA, reference that in your appeal.
- Obtain the reason for the denial of care.
- Request an analysis from the plan of how the criteria was comparable and applied no more stringently to the MH/SUD benefits versus medical/surgical benefits.
The federal parity law and some state laws allow insured individuals or their providers to challenge a coverage determination if the plan does not cover the same level or scope of services for MH/SUDs as the plan covers for medical/surgical conditions. A parity appeal of denied or limited services may be based upon the insurer’s determination that the MH/SUD services requested are not medically necessary or are not a covered service under the benefit plan.
There are a number of types and levels of appeals that an insured individual, attending provider or advocate can utilize, some of which overlap. A good place to start is in the plan’s internal appeals process.
According to advocates, many parity appeals begin with medical necessity coverage determinations (i.e. a specific service has been denied as not medically necessary). Several court decisions have issued rulings based upon a medical necessity test of the requested service rather than delving into a parity test.In other cases, a parity appeal could be handled through the administrative process or through another avenue. Patients or their advocates should check in with the applicable regulator, plan administrator, attorney or other expert to confirm which appeals process to use.
When filing an appeal, the insured, their attending provider or advocate should take advantage of the additional requirements afforded by the federal parity law. In many respects, the law gives the patient more due process protections to ensure that the health plan is not taking any shortcuts that may be prohibited under MHPAEA. For example, an appeal that includes a challenge based on the federal parity law should entitle the insured or their attending provider to documents that the individual may not be otherwise eligible to receive
Part 5: Filing an Appeal Based on a Parity Violation
Knowing what the insurance policy will and will not cover prior to a doctor’s appointment, procedure or inpatient admission allows the insured individual to make more informed decisions about their health care. Often, a summary plan description (SPD) and Benefit Booklet are made available to the insured. This information should be offered through the insurance company’s website, an online Exchange or in-house through an employer’s HR department. If you misplaced or cannot find this information, ask your insurance broker, plan representative or human resources personnel who can help you find it.
Here are some common examples of policies and practices that may violate the federal parity law if they are applied more restrictively to behavioral health benefits:
Steps to take if your appeal fails:
Step #1 – Appeal again and again: Most insurance companies must offer and/or support three to four levels of appeals, and each appeal will involve new people, increasing the chance that the insurance company will agree with the proposed care plan.Step #2 – Request an appeal review by an external party: A review by somebody who is not on the insurance company’s staff will be more objective. There may or may not be a charge to you and/or your provider for such a review.
Step #3 – Enlist the help of a consumer assistance program or your employer’s Human Resources Department, if applicable: Your state may have established a Consumer Assistance Program to assist you with health insurance problems, and/or your employer’s Human Resources staff may be available to assist you with benefit problems you encounter.
Step #4 – Send your appeal to your State Insurance Commissioner, Member of Congress and relevant plan accrediting body to ask them to intervene with your insurer.
Limits on the quantity or frequency of treatment.
If a health plan places caps on the number of inpatient days or outpatient behavioral health visits allowed each year, but does not have the same caps on inpatient days or outpatient medical visits, the health plan is likely in violation of the federal parity law. Similarly, if a health plan limits outpatient behavioral health visits to once a week or every other week, but does not limit the frequency of medical outpatient visits, there is likely a parity violation.
More restrictive prior authorization policies for behavioral health.
Many health plans require prior authorization for non-emergency inpatient facility or hospital services, both medical and behavioral health. However, if in practice a health plan’s prior authorization routinely approves up to seven inpatient days for medical services but just three inpatient days for behavioral health inpatient services, the plan is likely in violation of the federal parity law. The parity violation is the result of the health plan applying the prior authorization process more stringently to behavioral health services.
Excessive concurrent review policies.
When a patient is admitted to an inpatient or residential treatment facility or to day treatment, or is in need of long-term outpatient counseling, health plans may periodically review the medical necessity of the treatment in a process known as concurrent review. If health plans require concurrent review too frequently or impose overly burdensome requests on behavioral health care providers as compared with medical care providers to justify continued treatment, the plan may be in violation of the federal parity law.
Step therapy or fail-first protocols:
Sometimes health plans require patients to try and fail at a lower level of care before they will approve a greater benefit. For example, a plan may require patients to try intensive outpatient services or partial hospitalization for behavioral health treatment before they will approve inpatient treatment. The plan is in violation of the federal parity law if it does not have a fail-first requirement in place for obtaining inpatient medical treatment.
In addition, under federal and state laws, health plans must make meaningful disclosures of plan documents and clinical guidelines to enable a parity appeal.
The federal parity law requires that plans use QTLs and NQTLs on behavioral health conditions as imposed on other medical conditions. As a result, to better prepare the appeal, the patient should request the following from the plan:
- A copy of the plan’s summary plan description (SPD), complete benefit booklet and any other evidence/ certificate of coverage documents.
- A complete list of the medical/surgical conditions covered by the plan and the terms under which they are covered.
- A copy of the plan’s medical necessity criteria for MH/SUD services and for other medical services.
- Any clinical guidelines used by the plan to make benefit determinations for both medical and MH/SUD conditions.
- If the plan is subject to the Employee Retirement Income Security Act (ERISA) (large and small employer group plans), request all plan documents related to how the plan is operated. If you aren’t sure if your plan is subject to ERISA, call a customer service representative at the plan.
In most cases, an individual or their authorized representative/provider will initiate the parity appeal through the clinical or administrative appeals system. Adding a parity law compliance challenge to the appeal will require a health plan to provide more disclosure of information, documents and the plan’s parity compliance review and testing.
Appeals are only successful when they are:Presented according to the particular plan’s appeals process and timeframe. It is important that the insured individual, their attending provider or their representative educate themselves about the particular plan’s appeals processes
Factual, and clearly state their intent to appeal the adverse determination (denial)
- Remain focused and to the point even as the person jumps some of the bureaucratic hoops associated with most appeals.
Expect to provide the following information in your written appeal:
- Your name, address and telephone number.
- Your provider’s name and billing information.
- Referrals to specialist services (if applicable).
- Description of the service or procedure that you requested to be covered.
- Information supporting why the service should be covered.
- Explanation of Benefits (EOB) forms.
- References to the sections from the Evidence of Coverage or Summary Plan Description that apply to your situation.
- Clinical information on your medical condition or treatment, such as your medical record, treatment guidelines from your plan, information from medical journal articles or studies that says the treatment is more cost-effective in the long-term.
- Documentation that the services are covered by the plan or are required by state or federal law.
More than 20% of appeals of denials of coverage or reimbursement by health insurers are successful in favor of the covered individual and an even higher number at the external review level. Just because this process can be long and complicated does not mean it is not worth it. Individuals should keep all of the plan’s coverage information and correspondence in a notebook or an online file to help ease the process and organize your appeals materials. Individuals often do not win at the first level of appeal. Success is more likely with ongoing and persistent appeals until all options are exhausted.