February 2002
Government Relations
Practice Organization
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Congress should provide parity coverage for mental disorders with physical disorders. The Senate passed the Domenici/Wellstone parity bill (S. 543) last year as part of the Labor-HHS-Education Appropriations Act. The bill was dropped in conference, despite support from a majority of House members, because House authorizers wanted to consider the bill outside of the appropriations process. Now is the time for House authorizers to act. Representatives should urge authorizing committees to mark up Representative Roukema’s parity bill (H.R. 162) so that Congress can end discriminatory mental health coverage this year.

The Domenici/Wellstone and Roukema bills close the loopholes in the Mental Health Parity Act of 1996. The 1996 Act prevents larger health plans from imposing lifetime and annual dollar limits on mental health benefits that are different from those imposed on medical/surgical benefits. Because the 1996 Act does not provide full parity for all aspects of coverage, GAO found that 87% of those employers that comply with the law have reduced other aspects of their mental health coverage, such as day and visit limits. S. 543 closes these loopholes that allow employers to avoid the spirit of the 1996 law by requiring full parity for all aspects of coverage, including dollar limits, day/visit limits, coinsurance, deductibles and out-of-pocket maximums. H.R. 162 goes further by providing parity for substance abuse services as well.

Amendments in Senate markup of S. 543 addressed employer concerns. Substance abuse parity is not required, and small employers (50 or fewer employees) are exempted from the bill’s requirements. Like the Federal Employee Health Benefit Plan on which it is modeled, S. 543 proposes parity only for in-network services. Employers and health plans may use preadmission and other care review techniques to deliver cost-effective mental health care.

The Congressional Budget Office projects that S. 543 would raise costs just 0.9%. This cost increase is shared between the employer and employee, with the employer typically paying 0.36% of the total. Actuarial analysis by PricewaterhouseCoopers agrees, and shows that S. 543 would cost the typical plan only four and one half cents per covered person per day.

S. 543 should cover all diagnoses, as listed in the Diagnostic and Statistical Manual of Mental Disorders (“DSM-IV”). Some have suggested that coverage be provided only for “biologically-based” severe mental illnesses (“SMI”). Persons in our country, however, suffer debilitating and severe mental illnesses, regardless of whether their illnesses are considered “biologically-based” or not. Since science cannot say with certainty which mental illnesses are completely “biologically-based”, an SMI list is necessarily random with potentially harmful consequences for persons with diagnoses not on the list. People who suffer physical illnesses are covered for and provided care even when the origin of their illness is unknown (such as certain types of muscular dystrophy). No insurance policy would cover heart disease but not cancer. Persons with mental illness should not be treated differently.

Consider some of the people who are excluded from parity coverage under a typical SMI list (coverage only for schizophrenia, schizoaffective disorder, major depression, and bipolar, obsessive-compulsive, and panic disorders)—

Children with

• Autism and other pervasive developmental disorders
• Pica (eating of nonnutritive substances such as paint, plaster, or cloth) and other serious eating disorders
• Rumination (repeated regurgitation and rechewing of food without an underlying medical reason) and other serious feeding disorders
• Tic disorders, such as tourette’s disorder
• Attention deficit/hyperactivity disorder (ADHD) and other disruptive disorders
• And many more disorders.

Adolescents and adults with

• Anorexia nervosa and bulimia
• Schizophreniform disorder (a mild form of schizophrenia, but two-thirds of individuals with this disorder sadly progress to schizophrenia or schizoaffective disorder)
• Agoraphobia, post-traumatic stress disorder, and other serious anxiety disorders
• Trichotillomania (recurrent pulling out of one’s hair, which often begins in childhood)
• Multiple personality disorder
• Dementia due to Parkinson’s disease
• And many more disorders.

The Diagnostic and Statistical Manual of Mental Disorders (DSM-IV) is the current insurance industry standard for determining mental diagnoses for purposes such as claims reimbursement. While the DSM-IV contains the full range of possible diagnoses, insurers today do not cover all diagnoses. Congressional enactment of the Domenici/Wellstone and Roukema bills will not require insurance coverage for every DSM-IV diagnosis. Rather managed care techniques and medical necessity will determine, as in current practice, coverage for diagnoses listed in the DSM-IV.

The Federal Employee Health Benefits Program (FEHBP) provides parity coverage for all DSM-IV diagnoses. DSM-IV codes are used for Medicare and Medicaid reimbursement. Many state parity laws do not define mental diagnoses for which parity is required, and therefore DSM-IV as an industry standard applies. Some states, like Connecticut, Kentucky and Georgia have specifically defined their parity laws to cover DSM-IV diagnoses. All of these states and FEHBP have provided parity for all DSM-IV diagnoses with no change in coverage requirements or any but minimal cost increases.

The Domenici/Wellstone bill can provide parity for all persons with mental illness for about the same cost as providing parity only for some with SMI. SAMHSA has found that providing parity coverage for SMI costs about 90% of the cost of parity coverage for all diagnoses. Since CBO has determined that S. 543 will increase premiums by about 0.9%, this means that SMI coverage would cost about 0.81%. Ensuring parity coverage for all persons, regardless of diagnosis could be accomplished with a cost difference of less than one tenth of one percent (0.09%).

February 2002
APA Practice Organization