"In Colorado, there was an amendment to the parity law that provides for nondiscriminatory utilization review and precertification. Most of the existing parity laws, especially those that relate to five to seven major psychiatric illnesses, have been implemented through managed care plans that have more stringent utilization review and precertification requirements for mental illness. We need to work to close that loophole. Right now, three or four states have such language. Hopefully, the way it will be implemented will mean the same or an equal amount of paperwork as in other medical practices."
Congress passed a limited form of parity law in 1996 that became effective in 1998. The federal law required health plans to offer the same annual and lifetime limits for mental health coverage as they impose on other illnesses, but it did not affect limits on visits or cost-sharing measures, such as deductibles and co-payments. The law contained a sunset provision, requiring Congress to re-authorize it in 2000. At the end of the year, the Senate approved a broader version of the law, which was added to another spending bill, but that plan was opposed by the House of Representatives and blocked in a joint conference committee. Instead, Congress extended the 1996 law for one more year.
Arizona, Delaware, Louisiana, Montana, Nevada and Tennessee have parity statutes that follow the federal pattern.
Existing parity statutes fall roughly into three categories: mental health parity laws, minimum mandated benefit laws and mandated offering laws, with states mixing and matching provisions to create a wide range of variations. Because there is no federal standard, states have been able to pick and choose the types of plans they offer, who will be covered, the level of benefits that will be required and any exceptions to the basic premise.
Full parity laws require insurers to offer the same levels of benefits -- limits on visits, co-payments, deductibles, and annual and lifetime maximums -- for mental illness as for physical illness. However, full parity can be a misleading term, if the law itself limits coverage to certain diagnoses or allows exclusions for certain groups. For example, most full parity laws state that the provisions only apply to a laundry list of mental illnesses, usually defined as biological in origin. All but a handful of states exclude substance abuse from the parity requirements.
Some full parity states provide loopholes for small businesses or for employers whose insurance costs will increase above a specified limit as a result of equalizing coverages. Arkansas requires full parity for mental illnesses and developmental disorders for employee groups but excludes groups of 50 or fewer workers and waives the parity requirement for employers whose premiums would increase by 1.5% or more. A 1991 Texas law requires full parity for state employee groups only.
Until last year, advocates said that only Vermont provided a full parity law with no exclusions for substance abuse. This year, however, a new law in Rhode Island, which replaces an earlier statute, offers a similarly broad range of coverage.
Mandated benefit laws require that some level of coverage be provided for mental illness, but they allow health plans to set different levels for physical and mental illnesses. A plan may set higher co-payments and deductible levels for mental health care.