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Advocates of mental health parity won a significant victory as the Clinton Administration announced it would force businesses to comply with the 1996 Mental Health Parity Act before allowing them to seek exemptions.
"The parity rule as finally issued is designed to ensure broad application of the law," commented APA Medical Director Steven Mirin, M.D. "Businesses, insurers, employees, and mental health advocates now have clear guidelines on compliance, exemption, public notification, and enforcement. President Clinton and [federal] officials deserve praise and thanks for rejecting proposals which would have minimized the impact of this, the first major step toward ending discrimination in health insurance coverage of persons with mental illness."
The parity act mandates a limited form of parity for mental health services in which the aggregate dollar amount of annual and lifetime limits for mental health services cannot be lower than that for other medical and surgical benefits. But the law applies only to firms that cover mental health services, exempts businesses with 50 or fewer employees, and permits companies to opt out if providing the parity benefit raises a company’s medical costs by 1 percent or more.
In October a bitter controversy emerged over how businesses would be permitted to calculate the cost. At that time, the Clinton Administration appeared ready to permit businesses to use 1997 cost data to project what the cost of applying the parity act would be. This would have allowed businesses that had never established the limited parity coverage for mental health services to opt out if their calculations suggested that applying the act would raise their medical costs by 1 percent or more.
The possibility that businesses would be able to exploit the 1 percent exemption without ever trying to implement the parity benefit angered APA and other mental health advocacy groups (Psychiatric News, November 21, 1997). At a hastily called press conference in October, parity act supporters, including the legislation’s authors, Senators Pete Domenici (R-N.M.) and Paul Wellstone (D-Minn.), were joined by APA Medical Director Steven M. Mirin, M.D., in criticizing the White House for the loose interpretation of the exemption rule. Secretary of Health and Human Services Donna Shalala and mental health advocate Tipper Gore, Vice President Albert Gore’s wife, also let it be known that they objected to the Administration’s interpretation of the law.
The final rule was a major improvement, but nonetheless a compromise, observed Mirin. "Businesses can apply for an exemption after six months, although they have to use retrospective actual cost data to qualify," he observed. "We argued for a full year’s compliance. We’re also concerned about what steps will be taken to monitor compliance and particularly to determine whether a claimed business exemption is substantiated by facts, not by self-asserted and determined cost data. We’re ready to assist employees who believe their employer is playing fast and loose with the law," Mirin added.
Jay Cutler, J.D., director of APA’s Division of Government Relations, noted that the White House was subjected to intensive lobbying from the business community, but kept an open mind.
"That APA and other mental health advocacy groups had to marshal their forces to stave off the antiparity efforts of narrow-minded representatives of the business community shows once again that eternal vigilance is the price of parity," Cutler remarked. "Now the millions of families that were relying on the act to provide some measure of relief will at least have a chance to see it go forward. The White House deserves credit for stepping back from the chorus of corporate greed and heeding those who speak for the patients so long subjected to callous and discriminatory treatment at the hands of short-sighted employers."
The Administration’s regulatory ruling requires businesses to comply with the act for at least six months and provides another 30 days’ notice to participants and beneficiaries before they can seek an exemption. The Administration agreed to give businesses that say they intend to comply with the law a four-month grace period before they will be subject to its provisions. For such businesses, the law will become effective on March 31.
Those businesses able to demonstrate that six months of compliance has raised their medical expenses by 1 percent or more will be able to opt out by notifying the government no sooner than July 1. Although they will not need federal approval, any exemption will be subject to challenge and investigation at the government’s discretion.
The National Alliance on Mental Illness (NAMI) hailed the Administration for "standing behind a landmark law that ends at least some health insurance discrimination against millions of Americans with severe mental illness."
NAMI Executive Director Laurie Flynn said the ruling was "an important first step in getting equal treatment for mental illness."
The Administration may have been swayed by two surveys dealing with the parity issue, according to NAMI. One survey conducted for NAMI by William M. Mercer Inc. showed that most employers were either already complying with the act or were planning to do so. The other, by the RAND Corporation, found that parity within managed care would raise employers’ medical costs very little (Psychiatric News, December 19, 1997).