What is parity?
The word “parity,” simply means “equality in amount or status.” When used in the context of mental health and substance use disorder care, it refers to the belief that insurance plan benefits offered for mental health and substance use conditions should be equal to those offered for physical health conditions. This means coverage should be equal without imposing higher deductibles, co-pays, or limitations on services.
Are insurers required to offer this equal coverage?
Over 15 years ago, the federal Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) was signed into law, requiring large group health plans to ensure parity between mental health and medical/surgical benefits. The law focused primarily on quantitative benefits, saying financial requirements (such as coinsurance and copays) and treatment limitations (such as visit limits) could not be more restrictive for mental health and substance use care than for medical and surgical care.
The MHPAEA did not require all insurers to cover mental health care — it only said that if they did, the coverage must be equitable. However, in 2010, the Affordable Care Act built on the MHPAEA by requiring coverage of mental health and substance use disorder services as one of its ten essential health benefit categories.
Although the MHPAEA is federal law, it still requires enforcement. The Employee Benefits Security Administration (EBSA) and the Centers for Medicare & Medicaid Services (CMS) are responsible for enforcing MHPAEA and fielding complaints from consumers about parity. In FY 2022, EBSA fielded 160 MHPAEA-related public inquiries, including 142 complaints.
What about in California?
California had a parity law in place even before the MHPAEA. The California Parity Act enacted in 1999 required that insurers cover care for nine mental illnesses and serious emotional disturbances of a child. It said these illnesses were “medically necessary treatment.” But the law only covered limited conditions and did not define what medically necessary treatment meant.
In 2020, SB 855, sponsored by the Steinberg Institute and The Kennedy Forum, was signed into law. It amended the California Parity Act and required most state-regulated health plans to cover all medically necessary treatments for mental health conditions and substance use disorders. It also defined medically necessary treatment and emphasized that treatment decisions must be based on generally accepted standards of care, rather than financial considerations.
Still, some California consumers report struggling to get health plans to comply with the law. The Steinberg Institute is committed to accountability and continues to work with state regulators to ensure SB 855 is properly implemented and enforced.
What are the new federal rules on parity I’ve heard about?
In September 2024, the Biden administration released new final rules on implementing MHPAEA. These rules amended certain provisions of the existing MHPAEA regulations and added new and more robust regulations about nonquantitative treatment.
The new rules add additional protections against “nonquantitative treatment limitations” or NQTLs, for mental health and substance use disorder benefits as compared to medical or surgical benefits. NQTLs include things like prior authorization requirements, number of providers in network, reimbursement rates, and step therapy.
Plans are now also required to collect and review data to spot any significant differences in access to mental health and substance use care versus medical care that might result from NQTLs. If there’s evidence that an NQTL limits access to mental health and substance use benefits, the plan is expected to address and fix it.
In addition, plans must also conduct a side-by-side analysis of the impact of their NQTLs on mental health and substance use benefits, as compared to medical benefits.
How will new federal rules affect California?
In California, state regulators at the Department of Managed Health Care and the Department of Insurance already have a more robust process for reviewing insurance plan NQTLs than in other states. However, the new federal protections against NQTLs will now require insurance plans in all states to comply. This will ultimately strengthen protections for nonquantitative treatment in insurance plans throughout the country and expand access to behavioral health care for all Americans. The Steinberg Institute continues to advocate for responsible regulation and enforcement, along with workforce expansion that is needed to make behavioral health parity a reality for all Californians.