1. Regulation of Mental Health and
Addiction Insurance Coverage
Texas Department of Insurance (TDI)
Doug Danzeiser
Regulatory Matters Team of the
Life, Accident, and Health Section
January 23, 2012

2. Overview
• Federal Laws Relating to Mental
Health and Addiction
• State Laws and Regulations Relating
to Mental Health and Addiction
• Other Federal and State Laws and
Regulations Relating to Health
Insurance
• What Resources TDI Offers

3. PUBLIC LAW
110-343
Paul Wellstone and Pete
Domenici Mental Health
Parity and Addiction
Equity Act (MHPAEA)

4. OVERVIEW
MHPAEA:
 enacted on October 3, 2008
 effective
for plan years beginning
October 3, 2009 (January 1, 2010, for
calendar year plans)

5. APPLICABILITY
applies to fully insured and self-funded
large employer plans (employers with more
than 50 employees)
Medicaid managed care plans must comply
with MHPAEA
applies only to plans that offer mental health
(MH) or substance use disorder (SUD)
benefits

6. BEFORE MHPAEA
Federal law only addressed parity
coverage for MH benefits.
Annual or a lifetime dollar limits for
MH benefits could be no lower than
those on medical/surgical benefits.

7. AFTER MHPAEA
Parity law was extended to include
substance use disorder (SUD)
benefits.
If offer MH/SUD
benefits, “financial requirements”
for them can be no more restrictive
than the “predominant” financial
requirements.

8. ESSENTIAL REQUIREMENTS
MHPAEA does not create a federal
mandate for MH or SUD benefit
coverage.
If a plan offers the coverage, then it
must be comparable.

9. COMPARABLE COVERAGE
Equivalency of coverage applies to all
financial requirements, including:
deductibles, copayments, coinsurance;
out-of-pocket expenses; and
treatment limitations, such as:
 frequency of treatment,
 number of visits,
 days of coverage, and
 similar limits.

10. OUT-OF-NETWORK BENEFITS
If provide out-of network
coverage for medical/surgical
benefits, must also provide out-
of-network coverage for
MH/SUD benefits.

11. SMALL EMPLOYER EXEMPTION
Small employers with 50 or fewer
employees are exempt from the
MH/SUD parity requirements.
Any state parity laws continue to
apply to small employers, as well
as to individual (non-employer)
plans.

12. PUBLIC LAW
111–148

13. PPACA OVERVIEW
PPACA identifies MH/SUD services, including
behavioral health treatment as essential health
benefits.
This means:
 carriers have limited ability to place lifetime or
annual limits on this coverage
 small employer and individual plans sold
through exchanges in 2014 will provide this
coverage.
More information :
www.tdi.texas.gov/consumer/cpmhealthcare.html

15. Number of Nonelderly Texans by Health Insurance Status
Employer
Uninsured
6.2 million
Individual
28% Employer
10.8 million
Medicaid
49%
Other Public Other Public
630 k Medicaid
3% 3.4 million Uninsured
16%
Individual
808 k
Source: Kaiser Family Foundation, StateHealthFacts.org –
4%
2008-2009 Census, CPS, ACS

16. 2009 Texas Insured Population by Funding
Source
Private (Fully
Insured)
Self-Funded Coverage Private (Fully Insured) Coverage
Coverage 5,741,122
7,682,878 29%
39% Publicly Funded Coverage
Publicly Funded
Coverage Self-Funded Coverage
6,473,862
32%

17. TIP
Look for
“TDI” or “DOI”
on insurance cards.

19. TEXAS LAWS AND REGULATIONS – CH. 1355
Group benefits for certain serious mental
illnesses and other disorders:
 must provide at least 45 days of inpatient
and 60 outpatient visits;
no lifetime limits on the number of days of
inpatient treatment or the number of visits
for outpatient treatment;
must provide parity with any
limitations, deductibles, copayments, and
coinsurance as those for physical illness;

20. TEXAS LAWS AND REGULATIONS – CH. 1355 --
CONTINUED
Benefits continued:
may not count outpatient visits for
medication management against the
number of outpatient visits; and
must provide the same coverage for
outpatient visits as for physical illness.

21. TEXAS LAWS AND REGULATIONS – CH. 1355 -- CONTINUED
Chapter 1355 does not require coverage for the
treatment of:
 addiction to a controlled substance used in
violation of the law
 mental illness that results from the use of a
controlled substance in violation of the law.

22. TEXAS LAWS AND REGULATIONS – CH. 1355 --
CONTINUED
Small employers:
 Carriers must offer coverage of serious
mental illness to small employers.
 Small employers may reject the
coverage.

23. TEXAS LAWS AND REGULATIONS – CH. 1355 --
CONTINUED
Alternative mental health treatment benefits:
 IF coverage of mental or emotional illness or
disorder treatment is provided when confined in a
hospital, THEN must also provide coverage for
treatment in a residential treatment center for
children and adolescents or in a crisis stabilization
unit;
 coverage must be at least as favorable as that
provided for treatment in a hospital;

24. TEXAS LAWS AND REGULATIONS – CH. 1355 -- CONTINUED
Alternative mental health treatment benefits --
continued:
 certain requirements are required for coverage;
 same benefit maximums, durational
limitations, deductibles, and coinsurance that
apply to inpatient psychiatric treatment under
the plan; and
 two days of treatment is equal to one day of
treatment in a hospital or inpatient program.

25. TEXAS LAWS AND REGULATIONS – CH. 1355 --
CONTINUED
Psychiatric day treatment facilities:
 IF group policy provides coverage for
treatment of mental or emotional illness or
disorder when confined in a hospital, THEN
must provide coverage for treatment in a
psychiatric day treatment facility.
 no less favorable than hospital coverage
 subject to the same durational
limits, deductibles, and coinsurance factors.
 two days of treatment equal to one day of
treatment in a hospital or inpatient program.

26. TEXAS LAWS AND REGULATIONS – CH. 1355 --
CONTINUED
Psychiatric day treatment facilities --
continued:
 Insurer is required to OFFER coverage for
treatment of mental or emotional illness or
disorder when confined in a hospital or
psychiatric day treatment facility.
 Policyholder is entitled to reject coverage.
 Policyholder may select an alternative level
of benefits if offered by or negotiated with
the insurer.

28. Texas Laws and Regulations – Ch. 1368 -- continued
Availability of chemical dependency
coverage:
 group health benefit plan must provide
coverage for the necessary care and
treatment of chemical dependency;
 parity required except for dollar and
durational limits (which have minimum
requirements); and
 not required for individual plans.

29. Texas Laws and Regulations – Ch. 1368 -- continued
Minimum coverage requirements:
 Coverage may not be less favorable
than that provided for physical
illness.
 Coverage is subject to the same
durational limits, dollar
limits, deductibles, and coinsurance
that apply to physical illness.

30. Texas Laws and Regulations – Ch. 1368 -- continued
Availability of chemical dependency coverage -
- continued:
Required coverage is limited to a lifetime
maximum of three separate treatment series
for each covered individual.
Coverage for necessary care and treatment in
a chemical dependency treatment center must
be provided as if the care and treatment were
provided in a hospital.

32. Texas Laws and Regulations -- continued
The TDI parity rules –
were adopted February 9, 2011, for
plans issued after March 1, 2011
enable TDI to maintain state
regulatory authority
apply to serious mental health and
substance use disorder benefits.

34. Texas Laws and Regulations -- continued
Implements the legislative requirement
in section 1368.007 of the Insurance
Code that TDI adopt guidelines for
reasonable cost controls and utilization
review of chemical dependency
treatment.

35. Texas Laws and Regulations -- continued
For various levels of care (inpatient to
outpatient), the rule addresses criteria
for:
admission
continued stay
length of stay, and
discharge.

36. DEPARTMENT OF INSURANCE

37. Texas Laws and Regulations -- continued
APPLICABILITY
 Applicable to Accident and Health:
• health maintenance organizations (HMOs)
• insured PPO plans
 Not applicable to:
• self-funded ERISA plans
• indemnity plans
• Medicaid, Medicare, and Medicare Supplement
• self-funded government and school plans
• Children’s Health Insurance Program (CHIP), or
• plans issued in other states.

38. Prompt Pay Laws - Continued
 Contracted providers under HMO
plans, insured PPO plans
 Non-contracted providers of emergency and
referral services

39. Prompt Pay Laws - Continued
 disclosure of services for which preauthorization is
required
 once preauthorized, carrier may not deny or
reduce payment based on medical necessity or
appropriateness of care
 response deadlines
• life-threatening condition or post-stabilization -
one hour
• concurrent hospitalization - 24 hours
• all other requests - three calendar days.

40. Prompt Pay Laws - Continued
 eligibility inquiry
• not a guarantee of payment
 verification
• guarantee of payment: “cannot reduce or
deny payment”
• exceptions: misrepresentation and failure to
perform
• response deadlines without delay, not to
exceed:
olife-threatening condition or post-
stabilization - one hour
oconcurrent hospitalization - 24 hours
oall other requests - five calendar days.

41. Prompt Pay Laws - Continued
 www.tdi.texas.gov/hprovider/ppsb418faq.html

43. DEPARTMENT OF INSURANCE

44. DEPARTMENT OF INSURANCE
responds to inquiries from providers
and carriers regarding the prompt
payment of claims laws and
regulations.
monitors complaint trends among
carriers and across issues
email: PromptPay@tdi.state.tx.us

45. DEPARTMENT OF INSURANCE
1. receive complaint
phone call
written, including online form, e-
mail, fax, or letter
anonymous
2. prioritize complaints according to
nature, severity, and industry impact;
appropriately note confidential
information

46. DEPARTMENT OF INSURANCE
3. prepare response to correspondence
• send acknowledgement to customer
• write to regulated entity, include
complaint
• entity must respond in 10 days or request
an extension
• review responses from regulated entity
• complete legal research and obtain
additional necessary information

47. DEPARTMENT OF INSURANCE
4. screen issues for referral:
 identify “frivolous,” justified, and unjustified
complaints
 check for potential enforcement, fraud, or
market conduct referrals; and
 check for consumer education issues.
5. send response to customer
 mail, fax, or e-mail response with
informational/educational content
 copy the carrier or other entity complained
about on TDI’s closing letter (as appropriate)
 average processing time is 30 days.

48. DEPARTMENT OF INSURANCE

49. DEPARTMENT OF INSURANCE
complaints internal discovery
• providers • examination
• consumers • failure to file
• agent • failure to respond
• company to TDI inquiry
• anonymous other regulatory
agency
law enforcement

50. DEPARTMENT OF INSURANCE
written inquiry
on site examination
subpoena
witness statements
undercover

51. DEPARTMENT OF INSURANCE
TDI may seek:
revocation of license or authorization
fine
restitution
corrective action
cease and desist order

52. DEPARTMENT OF INSURANCE
informal resolution with or without a
consent order
contested case resolution
emergency cease and desist order
referral to Texas Attorney General

53. DEPARTMENT OF INSURANCE
review your contracts
complain to TDI
provide copies of correspondence
between you and the insurer
provide other documentation
supporting your complaint

54. DEPARTMENT OF INSURANCE

55. DEPARTMENT OF INSURANCE
 investigates insurance fraud for referral to state and
federal prosecutors
 employs certified peace
officers, prosecutors, certified fraud
examiners, certified internal auditors, and criminal
analysts
 coordinates investigations with other agencies
 interviews suspects and witnesses
 analyzes financial, business, and legal documents
 documents the flow of money transactions
 prepares investigative reports for prosecutors

56. DEPARTMENT OF INSURANCE
Report insurance
fraud by calling
1-888-327-8818
Insurance Fraud Hotline
Online reporting available at:
www.tdi.texas.gov
Follow link to “Insurance Fraud”

57. DEPARTMENT OF INSURANCE
 federal health reform
• guaranteed issue/individual mandate
• premium support and Medicaid expansion
• exchanges and essential health benefits
• risk adjustment
 limited networks
• exclusive provider plans
• accountable care organizations
• health care collaboratives
• tiered networks
 preferred provider plan rules
 decline of commercial HMO enrollment

58. DEPARTMENT OF INSURANCE
 TDI Website: www.tdi.texas.gov
 Consumer Protection Help Line:
800-252-3439
 Consumer Protection:
consumerprotection@tdi.state.tx.us
 Doug Danzeiser:
doug.danzeiser@tdi.state.tx.us,
512-475-1964