TO: All Companies Authorized To Transact Accident and Health Insurance In The State Of Kansas
SUBJECT: Mental Health Issues
DATE: February 12, 1998
The Kansas Insurance Department has received a number of questions regarding the requirements for coverage of mental health benefits as set out in the Mental Health Parity Act of 1996 ("MHPA") and 1997 Kansas Senate Bill 204 (K.S.A. 1997 Supp. 40-2258). The federal act and the corresponding state statute applies to groups of 51 or more employees and is effective January 1, 1998. This bulletin is intended to respond to some of the issues raised by insurance carriers.
Initially, it should be recognized that the federal law must be read in conjunction with the existing requirements for mental health coverage contained in K.S.A. 1997 Supp. 40-2,105. Both K.S.A. 1997 Supp. 40-2,105 and K.S.A. 1997 Supp. 40-2258 deal with mental health benefits provided under group health insurance policies.
The mental health "mandate" (K.S.A. 1997 Supp. 40-2,105) provides that health insurers must provide at least 30 days of inpatient treatment and the following outpatient benefits:
"...limited to not less than 100% of the first $100, 80% of the next 100 and 50% of the next $1,640 in any year and limited to not less than $7,500 in any such person's lifetime...."
K.S.A. 1997 Supp. 40-2,105 (emphasis added).
These requirements apply to "....every insurer which issues any individual or group policy of accident and sickness insurance providing medical, surgical or hospital expense coverage for other than specific diseases or accidents only..."
Questions:
(1). May carriers use different annual or lifetime dollar limits for outpatient mental health coverage than they use for hospital, medical and surgical coverage?
No. K.S.A. 1997 Supp. 40-2258 provides for the following with regard to annual and lifetime dollar limitations on benefits:
(a) If there is no aggregate limit on substantially all hospital, medical and surgical expense benefits, there can not be any aggregate limit on mental health benefits.
(b) If there is an aggregate lifetime limit on substantially all hospital, medical and surgical expense benefits the policy must either (1) apply the same limit to hospital, medical and surgical benefits as it does to mental health benefits or (2) not include any aggregate limit on mental health benefits.
(2) Do the provisions of K.S.A. 1997 Supp. 40-2258 apply to the inpatient mental health coverage requirements specified in K.S.A. 1997 Supp. 40-2,105?
No. Because the inpatient benefits in K.S.A. 1997 Supp. 40-2,105 are stated in the statute as limitations on the number of days which will be covered, the provisions of K.S.A. 1997 Supp. 40-2258 do not apply since they only address dollar limits on mental health coverage.
(3) May carriers substitute "per visit" limitations on outpatient mental health coverage for the outpatient dollar limits set out in K.S.A. 1997 Supp. 40-2,105?
Yes. The Department has in the past permitted carriers to pay for outpatient mental health coverage on a per visit basis provided that such coverage was actuarially equivalent to the minimum dollar limits on outpatient coverage.
(4) If a carrier pays for outpatient mental health benefits on a per visit basis, are they exempt from K.S.A. 1997 Supp. 40-2258 since that statute only applies to annual or lifetime "dollar" benefit caps?
No. The Department will permit carriers to substitute mental health outpatient "per visit" coverage for the minimum dollar amounts required in K.S.A. 1997 Supp. 40-2,105. However, it is the position of the Department that the "per visit" limits are directly based on and tied to the dollar amounts set out in that statute. The provisions of K.S.A. 1997 Supp. 40-2258 specifically refer to annual or lifetime dollar limits for mental health coverage and requires insurance carriers to parallel those limitations for hospital, medical and surgical expense benefits. However, it is permissible to increase the per visit copayment amounts to reflect any additional costs of providing coverage beyond your current benefit structure. For example, you currently limit the number of visits per year to 20 with a $25 copayment per visit. In the future, it would be acceptable to increase the per visit copayment amount with the 21st and subsequent visits.
(5) What is the practical effect of applying the provisions of K.S.A. 1997 Supp. 40-2258
to the mental health mandate in K.S.A. 1997 Supp. 40-2,105?
If a carrier does not have any annual or lifetime dollar limits on their hospital, medical and surgical expense benefits, they may not have annual or lifetime dollar limits on outpatient mental health coverage. If a carrier has an annual or lifetime dollar limit on their hospital, medical and surgical expense benefits, the same annual or lifetime dollar limits on outpatient mental health benefits must apply, whether such benefits are provided on an indemnity (dollar) basis or on a per visit basis.
(6) What are the minimum outpatient mental health benefits that can be provided for compliance with K.S.A. 1997 Supp. 40-2258 and K.S.A. 1997 Supp. 40-2,105?
The minimum outpatient mental health benefits that can be provided are 100% of the first $100, 80% of the next $100 and thereafter, a reasonable coinsurance no less favorable than that required by state law.
(7) Can a health carrier use different copayment or coinsurance amounts in mental health benefits and for medical and surgical coverage?
Yes. Insurance carriers may vary the amount of copayments or coinsurance required for mental health benefits and for hospital, medical and surgical expense benefits.
(8) Are Health Maintenance Organizations subject to K.S.A. 1997 Supp. 40-2258?
Yes. K.S.A. 1997 Supp. 40-2258 provides that its provisions apply to "an accident and sickness insurer which offers coverage through a group policy providing hospital, medical, or surgical expense benefits pursuant to K.S.A. 1997 Supp. 40-2209 and amendments thereto...." K.S.A. 1997 Supp. 40-2209 applies to any contract issued by a health maintenance organization.
(9) Are the mental health coverage provisions in K.S.A. 1997 Supp. 40-2,105 preempted by the federal Health Insurance Portability and Accountability Act of 1996?
No. The Health Insurance Portability and Accountability Act of 1996 and the conference report on the legislation stipulates that the federal act should not hinder the application of any state law which provides more favorable treatment for mental health benefits. There is nothing in the minimum outpatient dollar coverage requirements in K.S.A. 1997 Supp. 40-2,105 which prevents the application of the mental health coverage provisions in the federal law.
(10) How will insurance carriers which want to opt out of K.S.A. 1997 Supp. 40-2258 prove the 1% rate impact to the Insurance Department?
Companies will be required to follow the requirements set out in the Interim Rules for Mental Health Parity issued by the Department of Health and Human Services (Federal Register, Volume 62, No. 245, December 22, 1997). Any notices of exemptions by a health carrier should be provided to the Department of Health and Human Services. In addition, each insurer shall maintain at its home or principal office a complete file containing notices of exemption along with all supporting information. Such file shall be subject to regular and periodical inspection by this Department.
Any questions regarding this Bulletin may be directed to the Kansas Insurance Department, Accident and Health Division, 420 SW 9th Street, Topeka, Kansas 66612, (785)296-7850 or You may send e-mail to rhuncker@ink.org.