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Insurer coverage of mental, physical illness must be equal
Feb. 8, 2010 e-Reports
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Your patients and referrals for treatment of mental illnesses and addictions should begin to find some relief in paying for their care. Federal law, effective Jan. 1, now mandates equitable coverage of mental illness and physical illness, though businesses with fewer than 50 employees are exempt.

An interim final rule, published in the Federal Register Feb. 2, contains guidance on implementing the law, which will apply to plan years that start with July 1.

The government will accept comments for the next 60 days; see the rule here.

ISMA Reports will deliver further information as it becomes available. What we do know is the Mental Health Parity and Addiction Equity Act requires insurers offering group health plans to have financial and treatment limitations for mental illness that are no different than those for physical illness.

For patients seeking treatment for addiction, substance abuse or mental illness, that means things like co-payments, deductibles, lifetime limits and number of treatments per year cannot be different than what they’re used to paying or seeing for physical conditions.

“The law takes away discrimination,” said Stephen McCaffrey, president and CEO of Mental Health America of Indiana. He noted that Indiana has a state statute on mental health parity, but it left unprotected about two-thirds of insured citizens, those covered by ERISA (Employee Retirement Income Security Act) plans or employer-sponsored insurance.

“The state law was difficult for patients and physicians to understand because the application was different depending on whether you were covered by state or federal law,” noted McCaffrey. “Physicians can now refer their patients for treatment of mental illness or addiction knowing they will not need to pay more than they had to pay for a physical illness.”

However, the law does not require insurers to offer mental health benefits and does not change existing state parity laws. Where the federal law’s provisions are stronger – as in Indiana – it prevails over state law. In cases where state laws are stronger, those state provisions remain in effect.

The Centers for Medicare & Medicaid Services will release specific rules for adults and children covered by Medicaid managed care plans at a later date; keep reading ISMA Reports for updates.

Mental Health America has more information about this law here.

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