New Interim Final Regulations on Mental Health Parity and Addiction Equity Act of 2008

The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (the "Act") was signed into law on October 3, 2008.  Generally, the Act prohibits group health plans from applying financial requirements (e.g., copays) or treatment limitations (e.g., number of annual visits) that are more restrictive than those applied to the group health plan's medical and surgical benefits.  On February 2, 2010, the Internal Revenue Service ("IRS"), Department of Labor ("DOL") and Centers for Medicare and Medicaid Services ("CMS") (collectively, "the agencies") published interim final regulations (the "Regulations") implementing the Act. 

The Regulations replace the prior mental health parity regulations effective April 5, 2010, and generally apply to group health plans and health insurance issuers for plan years beginning on or after July 1, 2010 (there is a special rule for collectively bargained plans – see section G below).  This means the provisions would be applicable on January 1, 2011 for most calendar year plans. The rules generally apply to employers who employed an average of more than 50 employees on business days during the preceding calendar year.

Overall, the Regulations were more expansive than many had anticipated and contained some surprises.  Plan sponsors (many of whom adopted changes to their plan designs to comply with the Act without the benefit of interpretive guidance) will now need to review their plan designs to determine whether their plans are in parity under the rules as set forth in the Regulations – particularly with regard to non-quantitative treatment limitations (such as medical management tools).  Additionally, the parity tests for financial requirements and quantitative treatment limitations are complex and will require in-depth analysis.  The Regulations provide a good faith compliance period until the applicability date, but there may be certain aggressive plan designs that plan sponsors may wish to change prior to the applicability date.  These issues are discussed in more detail in the attached memo.