Kansas Mental Health Coalition

An Organization Dedicated to Improving the Lives of Kansans with Mental Illnesses

2009 KANSAS LEGISLATURE IMPROVES MENTAL HEALTH PARITY STATUTES

During the 2009 Legislative Session, compromise language to improve the Kansas mental health insurance statutes was developed and passed with the cooperation of representatives of the Kansas Association of Health Plans, the Kansas Mental Health Coalition and the Kansas Department of Insurance.

HISTORY:  In January 2009, the Insurance Department introduced SB 49 to bring Kansas statutes in line with the Federal Parity Act which passed in October 2008. 

The major impact of the Federal Act was to require large group policies to apply parity standards to substance abuse treatment and for mental health treatment.  (Mental health was already benefiting from the 1999 Federal Parity Act, and the 2001 Kansas Parity Act.  The new act expanded that application.)  Federal laws do not require that policies cover mental health and substance abuse treatment, but, if they are covered, they must meet basic equal coverage requirements.  In other words, such policies can't apply more restrictive annual or lifetime limits, co-pays, deductibles, out-of-pocket expenses, or other treatment limitations than those applied to substantially all other benefits under the plan.

Kansas already requires that health insurance policies cover mental health and substance abuse treatment.  However, except for a specific list of serious mental illnesses that are covered under the 2001 mental health parity statutes, other mental illnesses and substance abuse treatment were subject to very restrictive limitations.

The language of SB 49 as introduced simply added substance abuse treatment to the Kansas parity statutes.  The Senate passed that language twice.

The insurance industry was unhappy with SB 49, because it expanded the requirements for parity to cover substance abuse, but didn't go back and update Kansas' old requirements.  Therefore, large group policies would have to meet federal coverage standards for all mental health and substance abuse treatment, but also continue to provide first dollar coverage.  Also, certain day limits and such would be retained in our statutes, but the insurance plans may or may not apply them, depending on applicable federal law.  In the current statutes, one can not tell what an insurance plan is supposed to provide for mental health, because there are standards in our statutes that are unenforceable in the context of federal legislation. 

The mental health community was also disappointed with SB 49 - but for different reasons.  This situation enabled the two parties to get together over about five weeks and craft the Mental Health Insurance Compromise.

The insurance industry supported the compromise because it eliminates the old, complicated formulas for covering mental health treatment - making great improvement in their ability to administer the benefits.  One part of that old formula was first dollar coverage - which was being applied to the administration of certain mental illnesses that would now also be subject to the federal parity standards.  The compromise also puts small group coverage and large group coverage into separate statutes - clearly stating what is required for each.

The mental health community supported the compromise because it places all mental health diagnoses under the same coverage (formerly only enjoyed by those with the specific mental illnesses listed in the Kansas parity statute).  One of the most visible illnesses that had been covered in a restrictive manner by the current statute was Post Traumatic Stress Disorder.  The compromise specifically includes federal standards of parity for the large group policies for deductibles, co-pays, out of pocket expenses and other treatment limitations, including equal lifetime limits.  The compromise expands equal treatment for all mental illnesses to the small group policies as far as annual limits, deductibles, co-pays, and out of pocket expenses are concerned.  Small group policies would continue to have limited lifetime limits and limited inpatient benefits.  The lifetime limit for outpatient treatment would increase from $7500 to $15000 in the small group policies, while first dollar coverage would no longer be required.

Sandy Praeger, Kansas Insurance Commissioner, and the Insurance Department also supported the compromise language over the version of SB 49 that had been initially proposed.  Department staff was extremely helpful in reviewing the language and suggesting important revisions.

There were complications in the legislative process and the compromise was nearly lost.  Unfortunately, although we were able to brief both insurance committees on the compromise, the exact language had not received the insurance department's blessing and the "revisor" treatment by the end of the last committee meeting of the regular session.  We thought the language would receive action on the rail by the House Insurance Committee, but then were told it would be added in conference.  The compromise language was extensive and there was resistance to amending the language into the conference committee report until the final days of the veto session.

Thanks to the support of both Insurance committee chairs, Senator Ruth Teichman and Representative Clark Shultz, the compromise was ultimately approved as part of the Conference Committee Report on HB 2214. 

The compromise improves mental health statutes, eliminates outdated standards and achieves the following objectives:

• Modernize the mental health statutes to reflect the actual standards being currently applied to insurance regulation and delete unenforceable items;
• Apply federal parity standards to large group coverage of substance abuse treatment (as required by federal parity act);
• Apply federal parity standards to co-pays, deductibles, out of pocket expenses and other treatment limitations for all policies.
• Adds definition of treatment limitations specifying that insurance companies shall use the federal definition: “Treatment limitations includes limits on the frequency of treatment, number of visits, days of coverage or other similar limits on the scope or duration of treatment.”
• Eliminate the list of biologically based illnesses, providing consistent coverage for all mental illnesses listed in the DSM-IV.  Currently, only that list of illnesses receives the equal treatment required by the parity act.
• Delete the outdated and discriminatory formula for mental health coverage.  Currently, certain diagnoses that do not meet the definition of “biologically based” mental illnesses are covered by the following formula:  100% of the first $100, 80% of the next $100 and 50% of the next $1640 in any year and limited to not less than $7500 in such person's lifetime - this formula was known as "first dollar coverage" and dates back to 1977.
• Eliminate days of treatment requirements from the parity statute applying to large group policies.  Days of inpatient treatment are still required for small group policies – 45 days for mental illness and 30 days for substance abuse treatment – consistent with current law, except that the days of coverage shall also apply to all mental illnesses instead of just the defined “biologically based” illnesses;
• Update small group policies and double lifetime limits for outpatient treatment from $7,500 to $15,000 for out-patient coverage, and eliminate annual limits. 
• Replace the term "nervous and mental conditions" with "mental illness" to be consistent throughout the statutes.

The mental health insurance compromise language replaces the original language of SB 49.  It was passed by the Senate and the House of Representatives in the contents of the Conference Committee Report on HB 2214 on the final day of the 2009 Legislative Session.

It was signed by Governor Parkinson on May 21, 2009.

Amy A. Campbell

Kansas Mental Health Coalition

P.O. Box 4103

Topeka, KS  66604

785-969-1617