Interim Final Rules Under the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, 5410-5451 [2010-2167]

Agencies

• Centers for Medicare & Medicaid Services
• Employee Benefits Security Administration
• DEPARTMENT OF HEALTH AND HUMAN SERVICES
• Internal Revenue Service
• DEPARTMENT OF LABOR
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 75, Number 21 (Tuesday, February 2, 2010)]
[Rules and Regulations]
[Pages 5410-5451]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-2167]


                                Tuesday,

February 2, 2010
             
             
             
             
             
             




Part IV

         Department of the Treasury

                   _________________________________


Internal Revenue Service
26 CFR Part 54

                   _________________________________

         Department of Labor

                   _________________________________


Employee Benefits Security Administration

29 CFR Part 2590

                   _________________________________

         Department of Health and Human Services

                   _________________________________


Centers for Medicare & Medicaid Services

                   _________________________________

45 CFR Part 146
Interim Final Rules Under the Paul Wellstone and Pete Domenici 
Mental Health Parity and Addiction Equity Act of 2008; Final Rule

Federal Register / Vol. 75, No. 21 / Tuesday, February 2, 2010 / 
Rules and Regulations

[[Page 5410]]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 54

[TD 9479]
RIN 1545-BJ05

DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Part 2590

RIN 1210-AB30

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-4140-IFC]

45 CFR Part 146

RIN 0938-AP65


Interim Final Rules Under the Paul Wellstone and Pete Domenici 
Mental Health Parity and Addiction Equity Act of 2008

AGENCIES: Internal Revenue Service, Department of the Treasury; 
Employee Benefits Security Administration, Department of Labor; Centers 
for Medicare & Medicaid Services, Department of Health and Human 
Services.

ACTION: Interim final rules with request for comments.

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SUMMARY: This document contains interim final rules implementing the 
Paul Wellstone and Pete Domenici Mental Health Parity and Addiction 
Equity Act of 2008, which requires parity between mental health or 
substance use disorder benefits and medical/surgical benefits with 
respect to financial requirements and treatment limitations under group 
health plans and health insurance coverage offered in connection with a 
group health plan.

DATES: Effective date. These interim final regulations are effective on 
April 5, 2010.
    Comment date. Comments are due on or before May 3, 2010.
    Applicability date. These interim final regulations generally apply 
to group health plans and group health insurance issuers for plan years 
beginning on or after July 1, 2010.

ADDRESSES: Written comments may be submitted to any of the addresses 
specified below. Any comment that is submitted to any Department will 
be shared with the other Departments. Please do not submit duplicates.
    All comments will be made available to the public. WARNING: Do not 
include any personally identifiable information (such as name, address, 
or other contact information) or confidential business information that 
you do not want publicly disclosed. All comments are posted on the 
Internet exactly as received, and can be retrieved by most Internet 
search engines. No deletions, modifications, or redactions will be made 
to the comments received, as they are public records. Comments may be 
submitted anonymously.
    Department of Labor. Comments to the Department of Labor, 
identified by RIN 1210-AB30, by one of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: E-OHPSCA.EBSA@dol.gov.
     Mail or Hand Delivery: Office of Health Plan Standards and 
Compliance Assistance, Employee Benefits Security Administration, Room 
N-5653, U.S. Department of Labor, 200 Constitution Avenue, NW., 
Washington, DC 20210, Attention: RIN 1210-AB30.
    Comments received by the Department of Labor will be posted without 
change to https://www.regulations.gov and https://www.dol.gov/ebsa, and 
available for public inspection at the Public Disclosure Room, N-1513, 
Employee Benefits Security Administration, 200 Constitution Avenue, 
NW., Washington, DC 20210.
    Department of Health and Human Services. In commenting, please 
refer to file code CMS-4140-IFC. Because of staff and resource 
limitations, we cannot accept comments by facsimile (FAX) transmission.
    You may submit comments in one of four ways (please choose only one 
of the ways listed):
    1. Electronically. You may submit electronic comments on this 
regulation to https://www.regulations.gov. Follow the instructions under 
the ``More Search Options'' tab.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-4140-IFC, P.O. Box 8016, 
Baltimore, MD 21244-1850.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-4140-IFC, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments before the close of the comment period 
to either of the following addresses:
    a. For delivery in Washington, DC--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, Room 445-G, Hubert 
H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 
20201.

    (Because access to the interior of the Hubert H. Humphrey 
Building is not readily available to persons without Federal 
government identification, commenters are encouraged to leave their 
comments in the CMS drop slots located in the main lobby of the 
building. A stamp-in clock is available for persons wishing to 
retain a proof of filing by stamping in and retaining an extra copy 
of the comments being filed.)

    b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1850.
    If you intend to deliver your comments to the Baltimore address, 
please call (410) 786-7195 in advance to schedule your arrival with one 
of our staff members.
    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the comment 
period.
    Submission of comments on paperwork requirements. You may submit 
comments on this document's paperwork requirements by following the 
instructions at the end of the ``Collection of Information 
Requirements'' section in this document.
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following Web 
site as soon as possible after they have been received: https://www.regulations.gov. Follow the search instructions on that Web site to 
view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, Maryland 21244, Monday

[[Page 5411]]

through Friday of each week from 8:30 a.m. to 4 p.m. EST. To schedule 
an appointment to view public comments, phone 1-800-743-3951.
    Internal Revenue Service. Comments to the IRS, identified by REG-
120692-09, by one of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail: CC:PA:LPD:PR (REG-120692-09), room 5205, Internal 
Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 
20044.
     Hand or courier delivery: Monday through Friday between 
the hours of 8 a.m. and 4 p.m. to: CC:PA:LPD:PR (REG-120692-09), 
Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue, 
NW., Washington, DC 20224.
    All submissions to the IRS will be open to public inspection and 
copying in room 1621, 1111 Constitution Avenue, NW., Washington, DC 
from 9 a.m. to 4 p.m.

FOR FURTHER INFORMATION CONTACT: Amy Turner or Beth Baum, Employee 
Benefits Security Administration, Department of Labor, at (202) 693-
8335; Russ Weinheimer, Internal Revenue Service, Department of the 
Treasury, at (202) 622-6080; Adam Shaw, Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, at (877) 267-2323, 
extension 61091.
    Customer Service Information: Individuals interested in obtaining 
information from the Department of Labor concerning employment-based 
health coverage laws, including the mental health parity provisions, 
may call the EBSA Toll-Free Hotline at 1-866-444-EBSA (3272) or visit 
the Department of Labor's Web site (https://www.dol.gov/ebsa). In 
addition, information from HHS on private health insurance for 
consumers (such as mental health and substance use disorder parity) can 
be found on the Centers for Medicare & Medicaid Services (CMS) Web site 
(https://www.cms.hhs.gov/HealthInsReformforConsume/01_Overview.asp).

SUPPLEMENTARY INFORMATION:

I. Background

    The Paul Wellstone and Pete Domenici Mental Health Parity and 
Addiction Equity Act of 2008 (MHPAEA) was enacted on October 3, 2008 as 
sections 511 and 512 of the Tax Extenders and Alternative Minimum Tax 
Relief Act of 2008 (Division C of Pub. L. 110-343).\1\ MHPAEA amends 
the Employee Retirement Income Security Act of 1974 (ERISA), the Public 
Health Service Act (PHS Act), and the Internal Revenue Code of 1986 
(Code). In 1996, Congress enacted the Mental Health Parity Act of 1996 
(MHPA 1996), which required parity in aggregate lifetime and annual 
dollar limits for mental health benefits and medical and surgical 
benefits. Those mental health parity provisions were codified in 
section 712 of ERISA, section 2705 of the PHS Act, and section 9812 of 
the Code, which apply to employment-related group health plans and 
health insurance coverage offered in connection with a group health 
plan. The changes made by MHPAEA are codified in these same sections 
and consist of new requirements as well as amendments to the existing 
mental health parity provisions. The changes made by MHPAEA are 
generally effective for plan years beginning after October 3, 2009.
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    \1\ A technical correction to the effective date for 
collectively bargained plans was made by Public Law 110-460, enacted 
on December 23, 2008.
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    On April 28, 2009, the Departments of the Treasury, Labor, and HHS 
(collectively, the Departments) published in the Federal Register (74 
FR 19155) a request for information (RFI) soliciting comments on the 
requirements of MHPAEA. After consideration of the comments received in 
response to the RFI, the Departments are publishing these interim final 
regulations. These regulations generally become applicable to plans and 
issuers for plan years beginning on or after July 1, 2010.

II. Overview of the Regulations

    These interim final regulations replace regulations published on 
December 22, 1997 at 62 FR 66932 implementing MHPA 1996. These 
regulations also make conforming changes to reflect modifications 
MHPAEA made to the original MHPA 1996 definitions and provisions 
regarding parity in aggregate lifetime and annual dollar limits, and 
incorporate new parity standards.

A. Meaning of Terms (26 CFR 54.9812-1T(a), 29 CFR 2590.712(a), and 45 
CFR 146.136(a))

    The paragraph with the heading ``definitions'' in the MHPA 1996 
regulations has been renamed ``meaning of terms'' under these 
regulations because some of the terms added by MHPAEA are not 
comprehensively defined. The change in heading reflects the fact that 
if a term is described as including a list of examples, the term may 
have a broader meaning than the illustrative list of examples.
1. Aggregate Lifetime and Annual Dollar Limits
    The word ``dollar'' has been added to the terms ``aggregate 
lifetime limit'' and ``annual limit'' under the MHPA 1996 regulations 
to distinguish them from lifetime and annual limits expressed in terms 
of days or visits which are subject to new requirements under MHPAEA.
2. Coverage Unit
    Paragraph (a) in these regulations cross-references the definition 
of coverage unit in paragraph (c)(1). Paragraph (c)(1) clarifies the 
term for purposes of the new MHPAEA rules and is discussed later in 
this preamble.
3. Cumulative Financial Requirements
    These regulations add a definition for the term ``cumulative 
financial requirements''. Under this definition, a cumulative financial 
requirement is a financial requirement that typically operates as a 
threshold amount that, once satisfied, will determine whether, or to 
what extent, benefits are provided. A common example of a cumulative 
financial requirement is a deductible that must be satisfied before a 
plan will start paying for benefits. However, aggregate lifetime and 
annual dollar limits are excluded from being cumulative financial 
requirements (because the statutory term financial requirements 
excludes aggregate lifetime and annual dollar limits).
4. Cumulative Quantitative Treatment Limitations
    These regulations add a definition for the term ``cumulative 
quantitative treatment limitations''. Similar to the definition for 
cumulative financial requirements, a cumulative quantitative treatment 
limitation is defined as a treatment limitation that will determine 
whether, or to what extent, benefits are provided based on an 
accumulated amount. A common example of a cumulative quantitative 
treatment limitation is a visit limit (whether imposed annually or on a 
lifetime basis).
5. Financial Requirements
    These regulations repeat the statutory language that provides the 
term ``financial requirements'' includes deductibles, copayments, 
coinsurance, and out-of-pocket maximums. The statute and these 
regulations exclude aggregate lifetime and annual dollar limits from 
the meaning of financial requirements; these limits are subject to

[[Page 5412]]

separate provisions originally enacted as part of MHPA 1996 that remain 
in paragraph (b).
6. Medical/Surgical Benefits, Mental Health Benefits, and Substance Use 
Disorder Benefits
    Among the changes enacted by MHPAEA is an expansion of the parity 
requirements for aggregate lifetime and annual dollar limits to include 
protections for substance use disorder benefits. Prior law specifically 
excluded substance abuse or chemical dependency benefits \2\ from those 
requirements. Consequently, these regulations amend the meanings of 
medical/surgical benefits and mental health benefits (and add a 
definition for substance use disorder benefits). Under these 
regulations, medical/surgical benefits are benefits for medical or 
surgical services, as defined under the terms of the plan or health 
insurance coverage, but do not include mental health or substance use 
disorder benefits. Mental health benefits and substance use disorder 
benefits are benefits with respect to services for mental health 
conditions and substance use disorders, as defined under the terms of 
the plan and in accordance with applicable Federal and State law. These 
regulations further provide that the plan terms defining whether the 
benefits are mental health or substance use disorder benefits must be 
consistent with generally recognized independent standards of current 
medical practice. This requirement is included to ensure that a plan 
does not misclassify a benefit in order to avoid complying with the 
parity requirements.
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    \2\ The terms ``substance abuse,'' ``chemical dependency, '' and 
``substance use disorder'' are variously used to refer to substance 
use disorders. Although they mean essentially the same thing, the 
term used in MHPAEA is ``substance use disorder''.
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    The word ``generally'' in the requirement ``to be consistent with 
generally recognized independent standards of current medical 
practice'' is not meant to imply that the standard must be a national 
standard; it simply means that a standard must be generally accepted in 
the relevant medical community. There are many different sources that 
would meet this requirement. For example, a plan may follow the most 
current version of the Diagnostic and Statistical Manual of Mental 
Disorders (DSM), the most current version of the International 
Classification of Diseases (ICD), or a State guideline. All of these 
would be considered acceptable resources to determine whether benefits 
for a particular condition are classified as medical/surgical, mental 
health, or substance use disorder benefits.
7. Treatment Limitations
    These regulations repeat the statutory language with respect to the 
term ``treatment limitation'' and also distinguish between a 
quantitative and a nonquantitative treatment limitation. These 
regulations provide that the parity requirements in the statute apply 
to both quantitative and nonquantitative treatment limitations. A 
quantitative treatment limitation is a limitation that is expressed 
numerically, such as an annual limit of 50 outpatient visits. A 
nonquantitative treatment limitation is a limitation that is not 
expressed numerically, but otherwise limits the scope or duration of 
benefits for treatment. A non-exhaustive list of nonquantitative 
treatment limitations is included in these regulations in paragraph 
(c)(4). This list, as well as the application of these regulations to 
nonquantitative treatment limitations, is further discussed later in 
this preamble. However, these regulations provide that a permanent 
exclusion of all benefits for a specific condition or disorder is not a 
treatment limitation.

B. Conforming Amendments to Parity Requirements With Respect to 
Aggregate Lifetime and Annual Dollar Limits (26 CFR 54.9812-1T(b), 29 
CFR 2590.712(b), and 45 CFR 146.136(b))

    Paragraph (b) of these regulations addresses the parity 
requirements with respect to aggregate lifetime and annual dollar 
limits. The mechanics of these requirements generally remain the same 
as under the MHPA 1996 regulations, except that MHPAEA expanded the 
scope of the parity provisions to apply also to substance use disorder 
benefits. Accordingly, these regulations make conforming changes to 
reflect this expansion. Certain examples illustrating the application 
of MHPA 1996 to benefits for substance abuse and chemical dependency 
were deleted (as they are no longer accurate); other provisions were 
modified to include references to substance use disorder benefits as 
within the scope of the parity requirements for aggregate lifetime and 
annual dollar limits.

C. Parity Requirements With Respect to Financial Requirements and 
Treatment Limitations (26 CFR 54.9812-1T(c), 29 CFR 2590.712(c), and 45 
CFR 146.136(c))

    Paragraph (c) of these regulations implements the core of MHPAEA's 
new rules, which require parity with respect to financial requirements 
and treatment limitations.
1. Clarification of Terms
    In addition to the meaning of terms in paragraph (a), paragraph 
(c)(1) of these regulations clarifies certain terms that have been 
given specific meanings for purposes of MHPAEA.
    a. Classification of benefits. Paragraph (c)(1) cross-references 
the term ``classification of benefits'' in paragraph (c)(2)(ii). 
Paragraph (c)(2)(ii) describes the six benefit classifications and 
their application, which are discussed later in this preamble. These 
regulations provide that the parity requirements for financial 
requirements and treatment limitations are applied on a classification-
by-classification basis.
    b. Type. These regulations use the term ``type'' to refer to 
financial requirements and treatment limitations of the same nature. 
Different types include copayments, coinsurance, annual visit limits, 
and episode visit limits. Plans often apply more than one financial 
requirement or treatment limitation to benefits. These regulations 
specify that a financial requirement or treatment limitation must be 
compared only to financial requirements or treatment limitations of the 
same type within a classification. For example, copayments are compared 
only to other copayments, and annual visit limits are compared only to 
other annual visit limits; copayments are not compared to coinsurance, 
and annual visit limits are not compared to episode visit limits.
    c. Level. A type of financial requirement or treatment limitation 
may vary in magnitude. For example, a plan may impose a $20 copayment 
or a $30 copayment depending on the medical/surgical benefit. In these 
regulations, a ``level'' of a type of financial requirement or 
treatment limitation refers to the magnitude (such as the dollar, 
percentage, day, or visit amount) of the financial requirement or 
treatment limitation.
    d. Coverage unit. Plans typically distinguish between coverage for 
a single participant, for a participant plus a spouse, for a family, 
and so forth. Coverage unit is the term used in these regulations to 
refer to how a plan groups individuals for purposes of determining 
benefits, or premiums or contributions. These regulations provide that 
the general parity requirement of MHPAEA for financial requirements and 
treatment limitations is applied separately for each coverage unit.
2. General Parity Requirement for Financial Requirements and Treatment 
Limitations
    The general parity requirement of paragraph (c)(2) of these 
regulations

[[Page 5413]]

prohibits a plan (or health insurance coverage) from applying any 
financial requirement or treatment limitation to mental health or 
substance use disorder benefits in any classification that is more 
restrictive than the predominant financial requirement or treatment 
limitation applied to substantially all medical/surgical benefits in 
the same classification. For this purpose, the general parity 
requirement of MHPAEA applies separately for each type of financial 
requirement or treatment limitation (that is, for example, copayments 
are compared to copayments, and deductibles to deductibles). The test 
is applied somewhat differently to nonquantitative treatment 
limitations, as discussed later in this preamble.
    a. Classifications of benefits. Plans often vary the financial 
requirements and treatment limitations imposed on benefits based on 
whether a treatment is provided on an inpatient, outpatient, or 
emergency basis; whether a provider is a member of the plan's network; 
or whether the benefit is specifically for a prescription drug. 
Therefore, determining the predominant financial requirements and 
treatment limitations for the entire plan without taking these 
distinctions into account could potentially lead to absurd results. For 
example, if a plan generally requires a $100 copayment on inpatient 
medical/surgical benefits and a $10 copayment on outpatient medical/
surgical benefits, and most services (as measured by plan costs) are 
provided on an inpatient basis, the plan theoretically could charge a 
$100 copayment for outpatient mental health and substance use disorder 
benefits. Similarly, if most benefits are provided on an outpatient 
basis, the plan would only be able to charge a $10 copayment for 
inpatient mental health and substance use disorder benefits. Commenters 
generally agreed that the statute should be applied within several 
broad classifications of benefits.
    These regulations specify, in paragraph (c)(2)(ii), six 
classifications of benefits: Inpatient, in-network; inpatient, out-of-
network; outpatient, in-network; outpatient, out-of-network; emergency 
care; and prescription drugs. If a plan does not have a network of 
providers for inpatient or outpatient benefits, all benefits in the 
classification are characterized as out-of-network. These regulations 
provide that the parity requirements for financial requirements and 
treatment limitations are generally applied on a classification-by-
classification basis and these are the only classifications used for 
purposes of satisfying the parity requirements of MHPAEA. Moreover, 
these classifications must be used for all financial requirements and 
treatment limitations to the extent that a plan (or health insurance 
coverage) provides benefits in a classification and imposes any 
separate financial requirement or treatment limitation (or separate 
level of a financial requirement or treatment limitation) for benefits 
in the classification. Examples illustrate the application of this 
rule.
    Commenters noted that a common plan design imposes lower copayments 
for treatment from a primary care provider (for example, an internist 
or a pediatrician) as compared to higher copayments for treatment from 
a specialist (such as a cardiologist or an orthopedist). Some of these 
commenters requested that this distinction be permitted in applying the 
parity requirements by recognizing a separate classification for 
specialists; others of these commenters opposed allowing this 
distinction. Some plans (or health insurance coverage) identify a large 
range of mental health and substance use disorder providers as 
specialists. Allowing plans to provide less favorable benefits with 
respect to services by these providers than for services by providers 
of medical/surgical care that are classified by the plan as primary 
care providers would undercut the protections that the statute was 
intended to provide. These regulations, therefore, do not allow the 
separate classification of generalists and specialists in determining 
the predominant financial requirement that applies to substantially all 
medical/surgical benefits.
    Under these regulations, if a plan provides any benefits for a 
mental health condition or substance use disorder, benefits must be 
provided for that condition or disorder in each classification for 
which any medical/surgical benefits are provided. This follows from the 
statutory requirement that any treatment limitations applied to mental 
health or substance use disorder benefits may be no more restrictive 
than the predominant treatment limitations applied to substantially all 
medical/surgical benefits. Treatment limitation is not comprehensively 
defined under the statute. The statute describes the term as including 
limits on the frequency of treatment, number of visits, days of 
coverage, or other similar limits on the scope or duration of 
treatment, but it is not limited to such types of limits. Indeed, these 
regulations make a distinction between quantitative treatment 
limitations (such as day limits, visit limits, frequency of treatment 
limits) and non-quantitative treatment limitations (such as medical 
management, formulary design, step therapy). If a plan provides 
benefits for a mental health condition or substance use disorder in one 
or more classifications but excludes benefits for that condition or 
disorder in a classification (such as outpatient, in-network) in which 
it provides medical/surgical benefits, the exclusion of benefits in 
that classification for a mental health condition or substance use 
disorder otherwise covered under the plan is a treatment limitation. It 
is a limit, at a minimum, on the type of setting or context in which 
treatment is offered.
    This rule does not require an expansion of the range of mental 
health conditions or substance use disorders covered under the plan; it 
merely requires, for those conditions or disorders covered under the 
plan, that coverage also be provided for them in each classification in 
which medical/surgical coverage is provided. If a plan does not offer, 
for instance, any benefits for medical/surgical services on an 
outpatient basis by an out-of-network provider, then there is no 
requirement to provide benefits for mental health conditions or 
substance use disorders on an outpatient, out-of-network basis. 
Although this rule follows from the general parity requirement added by 
MHPAEA, the statute includes a specific provision in the case of out-
of-network benefits.\3\ The rule for out-of-network benefits is stated 
separately in these regulations to reflect the separate statutory 
provision, but the application of the general rule requires the same 
result with respect to all classifications.
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    \3\ See sections 9812(a)(5) of the Code, 712(a)(5) of ERISA, 
2705(a)(5) of the PHS Act.
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    These regulations do not define inpatient, outpatient, or emergency 
care. These terms are subject to plan design and their meanings may 
differ from plan to plan. Additionally, State health insurance laws may 
define these terms. A plan must apply these terms uniformly for both 
medical/surgical benefits and mental health or substance use disorder 
benefits. However, the manner in which they apply may differ from plan 
to plan. For example, a plan may treat a hospital stay of more than 12 
hours as inpatient care for medical/surgical benefits; in such case, it 
must also treat a hospital stay of more than 12 hours as inpatient care 
for mental health and substance use disorder benefits. However, another 
plan may treat a hospital stay that includes midnight as inpatient care 
for medical/surgical benefits; in such a case the plan must also treat 
a hospital stay that includes

[[Page 5414]]

midnight as inpatient care for mental health or substance use disorder 
benefits.
    b. Applying the general parity requirement to financial 
requirements and quantitative treatment limitations. Paragraph (c)(3) 
of these regulations addresses the application of the general parity 
requirement of MHPAEA to plan financial requirements and quantitative 
treatment limitations.
    (1) Measuring plan benefits. In order to apply the substantive 
rules, these regulations first establish standards for measuring plan 
benefits. These regulations, similar to the MHPA 1996 regulations, 
provide that the portion of plan payments subject to a financial 
requirement or quantitative treatment limitation is based on the dollar 
amount of all plan payments for medical/surgical benefits in the 
classification expected to be paid under the plan for the plan year. 
Also similar to the MHPA 1996 regulations, any reasonable method may be 
used to determine the dollar amount expected to be paid under the plan 
for medical/surgical benefits subject to a financial requirement or 
quantitative treatment limitation.
    Some cumulative financial requirements, such as deductibles and 
out-of-pocket maximums, involve a threshold amount that causes the 
amount of a plan payment to change. These regulations clarify that, for 
purposes of deductibles, the dollar amount of plan payments includes 
all payments with respect to claims that would be subject to the 
deductible if it had not been satisfied. For purposes of out-of-pocket 
maximums, the dollar amount of plan payments includes all plan payments 
associated with out-of-pocket payments that were taken into account 
towards the out-of-pocket maximum as well as all plan payments 
associated with out-of-pocket payments that would have been made 
towards the out-of-pocket maximum if it had not been satisfied. Other 
threshold requirements are treated similarly.
    (2) ``Substantially all''. The first step of these regulations in 
applying the general parity requirement of MHPAEA is to determine 
whether a financial requirement or quantitative treatment limitation 
applies to substantially all medical/surgical benefits in a 
classification. Regulations issued under MHPA 1996 interpreted the term 
``substantially all'' to mean at least two-thirds. Under these 
regulations, a financial requirement or quantitative treatment 
limitation applies to substantially all medical/surgical benefits in a 
classification if it applies to at least two-thirds of the benefits in 
that classification. In determining whether a financial requirement or 
quantitative treatment limitation applies to substantially all medical/
surgical benefits in a classification, benefits expressed as subject to 
a zero level of a type of financial requirement are treated the same as 
benefits that are not subject to that type of requirement, and benefits 
expressed as subject to an unlimited quantitative treatment limitation 
are treated the same as benefits that are not subject to that type of 
limitation. For example, in the classification of outpatient, in-
network medical/surgical benefits, a plan could reduce the normal 
copayment amount of $15 to $0 for well baby care or routine physical 
examinations, while a copayment is not imposed on office visits for 
allergy shots. For purposes of this analysis, both of these benefits 
are treated as not subject to a copayment.
    If a type of financial requirement or quantitative treatment 
limitation does not apply to at least two-thirds of the medical 
surgical benefits in a classification, that type of requirement or 
limitation cannot be applied to mental health or substance use disorder 
benefits in that classification. If a single level of a type of 
financial requirement or quantitative treatment limitation applies to 
at least two-thirds of medical/surgical benefits in a classification, 
then it is also the predominant level and that is the end of the 
analysis. However, if the financial requirement or quantitative 
treatment limitation applies to at least two-thirds of all medical/
surgical benefits in a classification but has multiple levels and no 
single level applies to at least two-thirds of all medical/surgical 
benefits in the classification, then additional analysis is required. 
In such a case, the next step is to determine which level of the 
financial requirement or quantitative treatment limitation is 
considered predominant.
    (3) ``Predominant''. MHPAEA provides that a financial requirement 
or treatment limitation is predominant if it is the most common or 
frequent of a type of limit or requirement. Under these regulations, 
the predominant level of a type of financial requirement or 
quantitative treatment limitation is the level that applies to more 
than one-half of medical/surgical benefits subject to the financial 
requirement or quantitative treatment limitation in that 
classification. If a single level of a type of financial requirement or 
quantitative treatment limitation applies to more than one-half of 
medical/surgical benefits subject to the financial requirement or 
quantitative treatment limitation in a classification (based on plan 
costs, as discussed earlier in this preamble), the plan may not apply 
that particular financial requirement or quantitative treatment 
limitation to mental health or substance use disorder benefits at a 
level that is more restrictive than the level that has been determined 
to be predominant.
    If no single level applies to more than one-half of medical/
surgical benefits subject to a financial requirement or quantitative 
treatment limitation in a classification, plan payments for multiple 
levels of the same type of financial requirement or quantitative 
treatment limitation can be combined by the plan (or health insurance 
issuer) until the portion of plan payments subject to the financial 
requirement or quantitative treatment limitation exceeds one-half. For 
any combination of levels that exceeds one-half of medical/surgical 
benefits subject to the financial requirement or quantitative treatment 
limitation in a classification, the plan may not apply that particular 
financial requirement or quantitative treatment limitation to mental 
health and substance use disorder benefits at a level that is more 
restrictive than the least restrictive level within the combination. 
The plan may combine plan payments for the most restrictive levels 
first, with each less restrictive level added to the combination until 
the combination applies to more than one-half of the benefits subject 
to the financial requirement or treatment limitation. Examples in these 
regulations illustrate the application of this rule.
    These regulations provide an alternative, simpler method for 
compliance when a type of financial requirement or quantitative 
treatment limitation applies to at least two-thirds of medical surgical 
benefits in a classification but no single level applies to more than 
one-half of the medical/surgical benefits subject to the financial 
requirement or quantitative treatment limitation in that 
classification. In such a situation, a plan is permitted to treat the 
least restrictive level of the financial requirement or quantitative 
treatment limitation applied to medical/surgical benefits in that 
classification as the predominant level.
    If a plan provides benefits for more than one coverage unit and 
applies different levels of financial requirements or quantitative 
treatment limitations to these coverage units within a classification 
of benefits, determining the predominant level of a particular 
financial requirement or quantitative treatment limitation must be done 
separately for each coverage unit. Thus, for example, a plan with

[[Page 5415]]

different deductibles for self-only and family coverage units would not 
determine the predominant level of a deductible applied for benefits 
across both the self-only and family coverage units. Instead, the plan 
would determine the predominant level of the deductible for self-only 
coverage independently from the predominant level for family coverage.
    c. Special rule for prescription drug benefits with multiple levels 
of financial requirements. These regulations include, in paragraph 
(c)(3)(iii), a special rule for applying the general parity requirement 
of MHPAEA to prescription drug benefits. Although applying the general 
parity requirement to a prescription drug program with a single level 
of a type of financial requirement would be relatively uncomplicated, 
the analysis becomes more difficult if different financial requirements 
are imposed for different tiers of drugs. The placement of a drug in a 
tier is generally based on factors (such as cost and efficacy) 
unrelated to whether the drug is usually prescribed for the treatment 
of a medical/surgical condition or a mental health condition or 
substance use disorder. To the extent such a program does not 
distinguish between drugs as medical/surgical benefits or mental health 
or substance use disorder benefits, requiring the program to make that 
distinction solely for the purpose of determining the predominant 
financial requirement or quantitative treatment limitation that applies 
to substantially all medical/surgical benefits in a classification 
might impose significant burdens without ensuring any greater parity 
for mental health and substance use disorder benefits.
    Consequently, these regulations provide that if a plan imposes 
different levels of financial requirements on different tiers of 
prescription drugs based on reasonable factors (such as cost, efficacy, 
generic versus brand name, and mail order versus pharmacy pick-up), 
determined in accordance with the requirements for nonquantitative 
treatment limitations, and without regard to whether a drug is 
generally prescribed with respect to medical/surgical benefits or 
mental health or substance use disorder benefits, the plan satisfies 
the parity requirements with respect to the prescription drug 
classification of benefits. The special rule for prescription drugs, in 
effect, allows a plan or issuer to subdivide the prescription drug 
classification into tiers and apply the general parity requirement 
separately to each tier of prescription drug benefits. For any tier, 
the financial requirements and treatment limitations imposed with 
respect to the drugs prescribed for medical/surgical conditions are the 
same as (and thus not more restrictive than) the financial requirements 
and treatment limitations imposed with respect to the drugs prescribed 
for mental health conditions and substance use disorders in the tier. 
Moreover, because the financial requirements and treatment limitations 
apply to 100 percent of the medical/surgical drug benefits in the tier, 
they are the predominant financial requirements and treatment 
limitations that apply to substantially all of the medical/surgical 
drug benefits in the tier.
    d. Cumulative financial requirements and quantitative treatment 
limitations, including deductibles. While financial requirements such 
as copayments and coinsurance generally apply separately to each 
covered expense, other financial requirements (in particular, 
deductibles) accumulate across covered expenses. In the case of 
deductibles, generally an amount of otherwise covered expenses must be 
accumulated before the plan pays benefits. Financial requirements and 
quantitative treatment limitations that determine whether and to what 
extent benefits are provided based on accumulated amounts are defined 
in these regulations as cumulative financial requirements and 
cumulative quantitative treatment limitations.
    In response to the RFI, the Departments received a number of 
comments regarding how to apply the parity requirements to cumulative 
financial requirements, in particular to deductibles (although some 
also referred to out-of-pocket maximums). The comments reflect two 
opposing views. One view is that a plan can have deductibles that 
accumulate separately for medical/surgical benefits on the one hand, 
and mental health or substance use disorder benefits on the other, as 
long as the level of the two deductibles is the same (separately 
accumulating deductibles). The opposing view is that expenses for both 
mental health or substance use disorder benefits and medical/surgical 
benefits must accumulate to satisfy a single combined deductible before 
the plan provides either medical/surgical benefits or mental health or 
substance use disorder benefits (combined deductible).
    The provisions of the statute imposing parity on financial 
requirements and treatment limitations do not specifically address this 
issue; the language of the statute can be interpreted to support either 
position. The comments that supported allowing separately accumulating 
deductibles maintained that it is commonplace for plans to have such 
deductibles, and that the projected cost of converting systems to 
permit unified deductibles would be extremely high for the many plans 
that use a separate managed behavioral health organization (MBHO).\4\
---------------------------------------------------------------------------

    \4\ Several commenters stated that the estimated cost to develop 
interfaces between MBHOs and the entity administering medical/
surgical claims would be $420,000-$750,000 per interface, and that 
in some cases multiple interfaces per MBHO (as many as 40-50) would 
be necessary. In response to these cost concerns, the Departments 
performed an independent analysis, which indicated that the initial 
cost per interface could be as low as $35,000. The Departments' 
lower estimated cost reflects, in part, the use of less expensive 
interface systems (for example, batch processing rather than real-
time), and the ability to model new interfaces on existing systems 
used to interface with pharmacy benefit managers and dental 
insurers. In addition, many MBHOs already have developed interfaces, 
because their clients requested combined deductibles. This should 
result in reduced costs, because interface development costs are 
incremental and should decrease after the first interface is 
created. For a further discussion of this issue, see section IV. 
Economic Impact and Paperwork Burden later in this preamble.
---------------------------------------------------------------------------

    By contrast, comments that supported requiring combined deductibles 
argued that allowing separately accumulating deductibles undermines a 
central goal of parity legislation, to affirm that mental health and 
substance use disorder benefits are integral components of 
comprehensive health care and generally should not be distinguished 
from medical/surgical benefits. Distinguishing between the two requires 
individuals who need both kinds of care to satisfy a deductible that is 
greater than that required for individuals needing only medical/
surgical care. Other comments that supported requiring combined 
deductibles noted that mental health and substance use disorder 
benefits typically comprise only 2 to 5 percent of a plan's costs, so 
that even using identical levels for separately accumulating 
deductibles imposes a greater barrier to mental health and substance 
use disorder benefits.
    The Departments carefully considered the positions advanced by both 
groups of comments regarding separately accumulating and combined 
deductibles. Given that the statutory language does not preclude either 
interpretation, the Departments' view is that prohibiting separately 
accumulating financial restrictions and quantitative treatment 
limitations is more consistent with the policy goals that led to the 
enactment of MHPAEA. Consequently, these regulations provide, in 
paragraph (c)(3)(v), that a plan may not apply cumulative financial 
requirements or cumulative quantitative treatment limitations to mental 
health or

[[Page 5416]]

substance use disorder benefits in a classification that accumulate 
separately from any such cumulative financial requirements or 
cumulative quantitative treatment limitations established for medical/
surgical benefits in the same classification.\5\ Examples in these 
regulations illustrate the application of this rule.
---------------------------------------------------------------------------

    \5\ This rule in the interim final regulations prohibiting 
separately accumulating financial requirements and quantitative 
treatment limitations does not apply with respect to aggregate 
lifetime and annual dollar limits. The statutory language of MHPA 
1996 specifically permitted plans to impose aggregate lifetime or 
annual dollar limits that distinguish between mental health benefits 
and medical/surgical benefits. MHPAEA left the language of this 
statutory provision intact, modifying it only to expand its 
applicability to include substance use disorder benefits.
---------------------------------------------------------------------------

    e. Application to nonquantitative treatment limitations. Plans 
impose a variety of limits affecting the scope or duration of benefits 
under the plan that are not expressed numerically. Nonetheless, such 
nonquantitative provisions are also treatment limitations affecting the 
scope or duration of benefits under the plan. These regulations provide 
an illustrative list of nonquantitative treatment limitations, 
including medical management standards; prescription drug formulary 
design; standards for provider admission to participate in a network; 
determination of usual, customary, and reasonable amounts; requirements 
for using lower-cost therapies before the plan will cover more 
expensive therapies (also known as fail-first policies or step therapy 
protocols); and conditioning benefits on completion of a course of 
treatment.
    Paragraph (c)(4) of these regulations generally prohibits the 
imposition of any nonquantitative treatment limitation to mental health 
or substance use disorder benefits unless certain requirements are met. 
Any processes, strategies, evidentiary standards, or other factors used 
in applying the nonquantitative treatment limitation to mental health 
or substance use disorder benefits in a classification must be 
comparable to, and applied no more stringently than, the processes, 
strategies, evidentiary standards, or other factors used in applying 
the limitation with respect to medical surgical/benefits in the 
classification. However, these requirements allow variations to the 
extent that recognized clinically appropriate standards of care may 
permit a difference. These requirements apply to the terms of the plan 
(or health insurance coverage) both as written and in operation.
    The phrase, ``applied no more stringently'' was included to ensure 
that any processes, strategies, evidentiary standards, or other factors 
that are comparable on their face are applied in the same manner to 
medical/surgical benefits and to mental health or substance use 
disorder benefits. Thus, for example, assume a claims administrator has 
discretion to approve benefits for treatment based on medical 
necessity. If that discretion is routinely used to approve medical/
surgical benefits while denying mental health or substance use disorder 
benefits and recognized clinically appropriate standards of care do not 
permit such a difference, the processes used in applying the medical 
necessity standard are considered to be applied more stringently to 
mental health or substance use disorder benefits. The use of discretion 
in this manner violates the parity requirements for nonquantitative 
treatment limitations.
    Different types of illnesses or injuries may require different 
review, as well as different care. The acute versus chronic nature of a 
condition, the complexity of it or the treatment involved, and other 
factors may affect the review. Although the processes, strategies, 
evidentiary standards, and other factors used in applying these 
limitations must generally be applied in a comparable manner to all 
benefits, the mere fact of disparate results does not mean that the 
treatment limitations do not comply with parity.
    Examples in these regulations illustrate the operation of the 
requirements for nonquantitative treatment limitations. Medical 
management standards are implemented by processes such as 
preauthorization, concurrent review, retrospective review, case 
management, and utilization review; the examples feature the 
application of these requirements to some of these processes. The facts 
in the examples reflect simple situations for purposes of better 
illustrating the application of the rules rather than reflecting the 
realistic, complex facts that would typically be found in a plan. The 
Departments invite comments on whether additional examples would be 
helpful to illustrate the application of the nonquantitative treatment 
limitation rule to other features of medical management or general plan 
design.
    Commenters asked if the MHPAEA requirements apply when eligibility 
for mental health and substance use disorder benefits under a major 
medical program is conditioned on exhausting some limited number of 
mental health and substance use disorder counseling sessions offered 
through an employee assistance program (EAP). Generally, the provision 
of mental health or substance use disorder benefits by an EAP in 
addition to the benefits offered by a major medical program that 
otherwise complies with the parity rules would not violate MHPAEA. 
However, requiring participants to exhaust the EAP benefits--making the 
EAP a gatekeeper--before an individual is eligible for the major 
medical program's mental health or substance use disorder benefits is a 
nonquantitative treatment limitation subject to the parity 
requirements. Consequently, if similar gatekeeping processes with a 
similar exhaustion requirement (whether or not through the EAP) are not 
applied to medical/surgical benefits, the requirement to exhaust mental 
health or substance use disorder benefits available under the EAP would 
violate the rule that nonquantitative treatment limitations be applied 
comparably and not more stringently to mental health and substance use 
disorder benefits.
    The Departments received many comments addressing an issue 
characterized as ``scope of services'' or ``continuum of care''. Some 
commenters requested, with respect to a mental health condition or 
substance use disorder that is otherwise covered, that the regulations 
clarify that a plan is not required to provide benefits for any 
particular treatment or treatment setting (such as counseling or non-
hospital residential treatment) if benefits for the treatment or 
treatment setting are not provided for medical/surgical conditions. 
Other commenters requested that the regulations clarify that a 
participant or beneficiary with a mental health condition or substance 
use disorder have coverage for the full scope of medically appropriate 
services to treat the condition or disorder if the plan covers the full 
scope of medically appropriate services to treat medical/surgical 
conditions, even if some treatments or treatment settings are not 
otherwise covered by the plan. Other commenters requested that MHPAEA 
be interpreted to require that group health plans provide benefits for 
any evidence-based treatment.
    The Departments recognize that not all treatments or treatment 
settings for mental health conditions or substance use disorders 
correspond to those for medical/surgical conditions. The Departments 
also recognize that MHPAEA prohibits plans and issuers from imposing 
treatment limitations on mental health and substance use disorder 
benefits that are more restrictive than those applied to medical/
surgical benefits. These regulations do not address the scope of 
services issue. The Departments invite comments on whether and to what

[[Page 5417]]

extent MHPAEA addresses the scope of services or continuum of care 
provided by a group health plan or health insurance coverage.

D. Availability of Plan Information (26 CFR 54.9812-1T(d), 29 CFR 
2590.712(d), and 45 CFR 146.136(d))

    MHPAEA includes two new disclosure provisions for group health 
plans (and health insurance coverage offered in connection with a group 
health plan). First, the criteria for medical necessity determinations 
made under a plan (or health insurance coverage) with respect to mental 
health or substance use disorder benefits must be made available by the 
plan administrator (or the health insurance issuer offering such 
coverage) in accordance with regulations to any current or potential 
participant, beneficiary, or contracting provider upon request. These 
regulations repeat the statutory language without substantive change. 
The Departments invite comments on what additional clarifications might 
be helpful to facilitate compliance with this disclosure requirement 
for medical necessity criteria.
    MHPAEA also provides that the reason for any denial under a group 
health plan (or health insurance coverage) of reimbursement or payment 
for services with respect to mental health or substance use disorder 
benefits in the case of any participant or beneficiary must be made 
available, upon request or as otherwise required, by the plan 
administrator (or the health insurance issuer) to the participant or 
beneficiary in accordance with regulations. These regulations clarify 
that, in order for plans subject to ERISA (and health insurance 
coverage offered in connection with such plans) to satisfy this 
requirement, disclosures must be made in a form and manner consistent 
with the rules for group health plans in the ERISA claims procedure 
regulations,\6\ which provide (among other things) that such 
disclosures must be provided automatically and free of charge. In the 
case of non-Federal governmental and church plans (which are not 
subject to ERISA), and health insurance coverage offered in connection 
with such plans, these regulations provide that compliance with the 
form and manner of the ERISA claims procedure regulations for group 
health plans satisfies this disclosure requirement. The Departments 
invite comments regarding any additional clarifications that would be 
helpful to facilitate compliance with MHPAEA's disclosure requirements 
regarding denials of mental health or substance use disorder benefits.
---------------------------------------------------------------------------

    \6\ 29 CFR 2560.503-1.
---------------------------------------------------------------------------

E. General Applicability Provisions (26 CFR 54.9812-1T(e), 29 CFR 
2590.712(e), and 45 CFR 146.136(e))

    Paragraph (e) of these regulations addresses the applicability of 
these regulations to group health plans and health insurance issuers 
and clarifies the scope of these regulations.
1. Overview
    These regulations make a number of changes to the general 
applicability provisions in the MHPA 1996 regulations (paragraphs (c) 
and (d) in those regulations). Amendments made by MHPAEA require some 
of these changes. For example, the MHPA 1996 rules of construction 
specifically excluded any plan provisions relating to cost sharing, 
limits on the number of visits or days of coverage, and requirements 
relating to medical necessity from the application of the parity 
requirements for aggregate lifetime and annual dollar limits. MHPAEA 
replaces these exclusions with a rule providing that the provisions 
should not be construed as affecting the terms and conditions of the 
plan or coverage relating to mental health and substance use disorder 
benefits except as provided in the rules relating to financial 
requirements and treatment limitations. These regulations make 
corresponding changes to the MHPA 1996 regulations.
    These regulations also (1) establish a new rule with respect to the 
mental health and substance use disorder parity requirements for the 
determination of the number of plans that an employer or employee 
organization maintains, (2) combine what were in the MHPA 1996 
regulations separate rules for group health plans and benefit packages, 
and (3) make additional clarifications.
    a. Group health plans. In 2004, the Departments issued proposed 
regulations for a number of issues under Chapter 100 of the Code, Part 
7 of ERISA, and Title XXVII of the PHS Act, including rules for 
determining the number of group health plans that an employer or 
employee organization is considered to maintain for purposes of those 
provisions.\7\ Those proposed regulations generally would have 
respected the number of plans designated in the instruments governing 
the employer's or employee organization's arrangements to provide 
medical care benefits as long as the arrangements were operated 
pursuant to those instruments as separate plans. The 2004 proposed 
regulations included an anti-abuse clause, providing that, if a 
principal purpose of establishing separate plans was to evade any 
requirement of law, then the separate plans would be considered a 
single plan to the extent necessary to prevent the evasion.
---------------------------------------------------------------------------

    \7\ See 69 FR 78800 (December 30, 2004).
---------------------------------------------------------------------------

    The Departments recognized that under the 2004 proposed 
regulations, absent the anti-abuse clause, plan sponsors might attempt 
to provide mental health (and now substance use disorder) benefits 
under a plan that is separate from a plan that provides only medical/
surgical benefits. Because the mental health (and now substance use 
disorder) parity requirements apply only to plans that provide both 
mental health or substance use disorder benefits and medical/surgical 
benefits, the absence of medical/surgical benefits in a plan providing 
mental health or substance use disorder benefits would have resulted 
in, absent the anti-abuse clause, the inapplicability of the parity 
requirements. The 2004 proposed regulations included the anti-abuse 
clause to avoid this kind of evasion of the parity requirements. 
Commenters raised problems of proof with the subjective intent element 
of the proposed anti-abuse clause. While the 2004 rule remains 
proposed, these interim final regulations include a rule for 
determining the number of plans that an employer or employee 
organization maintains for the mental health and substance use disorder 
parity requirements that operates irrespective of the intent of a plan 
sponsor. The rule is that all medical care benefits provided by an 
employer or employee organization constitute a single group health 
plan.
    MHPAEA left unchanged the rule from MHPA 1996 requiring that the 
parity requirements be applied separately to each benefit package 
option under a group health plan. The MHPA 1996 regulations used the 
term ``benefit package'' rather than ``benefit package option'' and 
clarified that the parity requirements would apply separately to 
separate benefit packages also in situations in which the participants 
(or beneficiaries) had no choice between multiple benefit packages, 
such as where retirees are provided one benefit package and active 
employees a separate benefit package. Under these regulations, the 
statutory rule providing that the parity requirements apply separately 
to separate benefit package options (reflected in paragraph (c) of the 
MHPA 1996 regulations), the statutory rule providing that the parity 
requirements

[[Page 5418]]

apply to a group health plan providing both mental health or substance 
use disorder benefits and medical/surgical benefits (reflected in 
paragraph (d) of the MHPA 1996 regulations), and the determination of 
how many plans an employer or employee organization maintains have been 
combined as a single rule in paragraph (e)(1).
    The new combined rule in these regulations does not use the term 
benefit package. Instead, it provides that (1) the parity requirements 
apply to a group health plan offering both medical/surgical benefits 
and mental health or substance use disorder benefits, (2) the parity 
requirements apply separately with respect to each combination of 
medical/surgical coverage and mental health or substance use disorder 
coverage that any participant (or beneficiary) can simultaneously 
receive from an employer's or employee organization's arrangement or 
arrangements to provide medical care benefits, and (3) all such 
combinations constitute a single group health plan for purposes of the 
parity requirements. This new combined rule clearly prohibits what 
might have been formerly viewed as a potential evasion of the parity 
requirements by allocating mental health or substance use disorder 
benefits to a plan or benefit package without medical/surgical benefits 
(when medical/surgical benefits are also otherwise available). For 
example, if an employer with a single benefit package for medical/
surgical benefits also has a separately administered benefit package 
for mental health and substance use disorder benefits, the parity 
requirements apply to the combined benefit package and the combined 
benefit package is considered a single plan for purposes of the parity 
requirements.
    Similarly, if an employer offered three medical/surgical benefit 
packages, A, B, and C, and a mental health and substance use disorder 
benefit package, D, that could be combined with each of A, B, and C, 
then the parity requirements must be satisfied with respect to each of 
AD, BD, and CD. If the A benefit package had a standard option and a 
high option, A1 and A2, then the parity 
requirements would have to be satisfied with respect to each of 
A1D and A2D.
    b. Health insurance issuers. These regulations make a change 
regarding applicability with respect to health insurance issuers. Both 
the MHPA 1996 regulations and these regulations apply to an issuer 
offering health insurance coverage. The MHPA 1996 regulations provide 
that the health insurance coverage must be for both medical/surgical 
and mental health benefits in connection with a group health plan; the 
r