SECTION 21.2408. Parity Requirements with Respect to Financial Requirements and Treatment Limitations

(a) Clarification of terms.

(1) Classification of benefits. When reference is made in this subchapter to a classification of benefits, the term "classification" means a classification as described in subsection (b)(2) of this section.

(2) Type of financial requirement or treatment limitation. When reference is made in this subchapter to a type of financial requirement or treatment limitation, the reference to type means its nature. Different types of financial requirements include deductibles, copayments, coinsurance, and out-of-pocket maximums. Different types of quantitative treatment limitations include annual, episode, and lifetime day and visit limits. An illustrative list of nonquantitative treatment limitations is provided in §21.2409(b) of this title (relating to Nonquantitative Treatment Limitations).

(3) Level of a type of financial requirement or treatment limitation. When reference is made in this subchapter to a level of a type of financial requirement or treatment limitation, "level" refers to the magnitude of the type of financial requirement or treatment limitation. For example, different levels of coinsurance include 20% and 30%, different levels of a copayment include $15 and $20, different levels of a deductible include $250 and $500, and different levels of an episode limit include 21 inpatient days per episode and 30 inpatient days per episode.

(4) Coverage unit. When reference is made in this subchapter to a coverage unit, "coverage unit" refers to the way in which a health benefit plan groups individuals for purposes of determining benefits, or premiums or contributions. For example, different coverage units include self-only, family, and employee-plus-spouse.

(b) General parity requirement.

(1) General requirement. A health benefit plan that provides both medical/surgical benefits and mental health or substance use disorder benefits may not apply 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 of that type applied to substantially all medical/surgical benefits in the same classification. Whether a financial requirement or treatment limitation is a predominant financial requirement or treatment limitation that applies to substantially all medical/surgical benefits in a classification is determined separately for each type of financial requirement or treatment limitation. The application of the requirements of this subsection to financial requirements and quantitative treatment limitations is addressed in subsection (c) of this section; the application of the requirements of this subsection to nonquantitative treatment limitations is addressed in §21.2409 of this title.

(2) Classifications of benefits used for applying requirements.

(A) In general. If a health benefit plan provides mental health or substance use disorder benefits in any classification of benefits described in this subparagraph, mental health or substance use disorder benefits must be provided in every classification in which medical/surgical benefits are provided. In determining the classification in which a particular benefit belongs, a health benefit plan must apply the same standards to medical/surgical benefits and to mental health or substance use disorder benefits. To the extent that a health benefit plan 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, the requirements of this subsection apply separately with respect to that classification for all financial requirements or treatment limitations (illustrated in examples in paragraph (2)(C) of this subsection). The following classifications of benefits are the only classifications used in applying the requirements of this subsection:

(i) An "inpatient, in-network" classification is for benefits furnished on an inpatient basis and within a network of providers established or recognized under a health benefit plan. Special requirements for plans with multiple network tiers are addressed in subsection (c)(3) of this section.

(ii) An "inpatient, out-of-network" classification is for benefits furnished on an inpatient basis and outside any network of providers established or recognized under a health benefit plan. This classification includes inpatient benefits under a health benefit plan that has no network of providers.

(iii) An "outpatient, in-network" classification is for benefits furnished on an outpatient basis and within a network of providers established or recognized under a health benefit plan. Special requirements for office visits and plans with multiple network tiers are addressed in subsection (c)(3) of this section.

(iv) An "outpatient, out-of-network" classification is for benefits furnished on an outpatient basis and outside any network of providers established or recognized under a health benefit plan. This classification includes outpatient benefits under a health benefit plan that has no network of providers. Special requirements for office visits are addressed in subsection (c)(3) of this section.

(v) An "emergency care" classification is for benefits for emergency care.

(vi) A "prescription drug" classification is for benefits for prescription drugs. See special requirements for multi-tiered prescription drug benefits in subsection (c)(3) of this section.

(B) Application to out-of-network providers. Application to out-of-network providers is addressed in subparagraph (A) of this paragraph, under which a health benefit plan that provides mental health or substance use disorder benefits in any classification of benefits must provide mental health or substance use disorder benefits in every classification in which medical/surgical benefits are provided, including out-of-network classifications.

(C) Examples. The requirements of this paragraph are illustrated by examples provided in the figure §21.2408(b)(2)(C). In each example, the health benefit plan is subject to the requirements of this section and provides both medical/surgical benefits and mental health and substance use disorder benefits.

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(c) Financial requirements and quantitative treatment limitations.

(1) Determining "substantially all" and "predominant."

(A) Substantially all. For purposes of this section, a type of financial requirement or quantitative treatment limitation is considered to apply to substantially all medical/surgical benefits in a classification of benefits if it applies to at least two-thirds of all medical/surgical benefits in that classification. (For this purpose, benefits expressed as subject to a zero level of a type of financial requirement are treated as benefits not subject to that type of financial requirement, and benefits expressed as subject to a quantitative treatment limitation that is unlimited are treated as benefits not subject to that type of quantitative treatment limitation.) If a type of financial requirement or quantitative treatment limitation does not apply to at least two-thirds of all medical/surgical benefits in a classification, then that type cannot be applied to mental health or substance use disorder benefits in that classification.

(B) Predominant.

(i) If a type of financial requirement or quantitative treatment limitation applies to at least two-thirds of all medical/surgical benefits in a classification as determined under subparagraph (A) of this paragraph, the level of the financial requirement or quantitative treatment limitation that is considered the predominant level of that type in a classification of benefits is the level that applies to more than one-half of medical/surgical benefits in that classification subject to the financial requirement or quantitative treatment limitation.

(ii) If, with respect to a type of financial requirement or quantitative treatment limitation that applies to at least two-thirds of all medical/surgical benefits in a classification, there is no single level that applies to more than one-half of medical/surgical benefits in the classification subject to the financial requirement or quantitative treatment limitation, the plan may combine levels until the combination of levels applies to more than one-half of medical/surgical benefits subject to the financial requirement or quantitative treatment limitation in the classification. The least restrictive level within the combination is considered the predominant level of that type in the classification. (For this purpose, a plan may combine 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.)

(C) Portion based on plan payments. For purposes of this section, the determination of the portion of medical/surgical benefits in a classification of benefits subject to a financial requirement or quantitative treatment limitation (or subject to any level of 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 (for the portion of the plan year after a change in plan benefits that affects the applicability of the financial requirement or quantitative treatment limitation).

(D) Clarifications for certain threshold requirements. For any deductible, the dollar amount of plan payments includes all plan payments with respect to claims that would be subject to the deductible if it had not been satisfied. For any out-of-pocket maximum, the dollar amount of plan payments includes all plan payments associated with out-of-pocket payments that are taken into account toward the out-of-pocket maximum, as well as all plan payments associated with out-of-pocket payments that would have been made toward the out-of-pocket maximum if it had not been satisfied.

(E) Determining the dollar amount of plan payments. Subject to subparagraph (D) of this paragraph, any reasonable method may be used to determine the dollar amount expected to be paid under a plan for medical/surgical benefits subject to a financial requirement or quantitative treatment limitation (or subject to any level of a financial requirement or quantitative treatment limitation).

(2) Application to different coverage units. If a health benefit plan applies different levels of a financial requirement or quantitative treatment limitation to different coverage units in a classification of medical/surgical benefits, the predominant level that applies to substantially all medical/surgical benefits in the classification is determined separately for each coverage unit.

(3) Special requirements.

(A) Multi-tiered prescription drug benefits. If a health benefit plan applies different levels of financial requirements to different tiers of prescription drug benefits based on reasonable factors determined in accordance with the requirements in §21.2409(a) of this title and without regard to whether a drug is generally prescribed with respect to medical/surgical benefits or with respect to mental health or substance use disorder benefits, the health benefit plan satisfies the parity requirements of this section with respect to prescription drug benefits. Reasonable factors include cost, efficacy, generic versus brand name, and mail order versus pharmacy pick-up.

(B) Multiple network tiers. If a health benefit plan provides benefits through multiple tiers of in-network providers (such as an in-network tier of preferred providers with more generous cost-sharing to participants than a separate in-network tier of participating providers), the plan may divide its benefits furnished on an in-network basis into subclassifications that reflect network tiers, if the tiering is based on reasonable factors determined in accordance with the requirements in §21.2409(a) of this title (such as quality, performance, and market standards) and without regard to whether a provider provides services with respect to medical/surgical benefits or mental health or substance use disorder benefits. After the subclassifications are established, the issuer may not impose any financial requirement or treatment limitation on mental health or substance use disorder benefits in any subclassification that is more restrictive than the predominant financial requirement or treatment limitation that applies to substantially all medical/surgical benefits in the subclassification using the methodology in subsection (c)(1) of this section.

(C) Subclassifications permitted for office visits, separate from other outpatient services. For purposes of applying the financial requirement and treatment limitation requirements of this section, a plan may divide its benefits furnished on an outpatient basis into the two subclassifications described in this subparagraph. After the subclassifications are established, the plan may not impose any financial requirement or quantitative treatment limitation on mental health or substance use disorder benefits in any subclassification that is more restrictive than the predominant financial requirement or quantitative treatment limitation that applies to substantially all medical/surgical benefits in the subclassification using the methodology in paragraph (1) of this subsection. Subclassifications other than these special requirements, such as separate subclassifications for generalists and specialists, are not permitted. The two subclassifications permitted under this subparagraph are:

(i) office visits (such as physician visits), and

(ii) all other outpatient items and services (such as outpatient surgery, facility charges for day treatment centers, laboratory charges, or other medical items).

(4) Examples. The requirements of paragraph (3)(A) - (C) of this subsection are illustrated by examples provided in figure 28 TAC §21.2408(c)(4). In each example, the health benefit plan is subject to the requirements of this section and provides both medical/surgical benefits and mental health and substance use disorder benefits.

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(5) No separate cumulative financial requirements or cumulative quantitative treatment limitations.

(A) A health benefit plan may not apply any cumulative financial requirement or cumulative quantitative treatment limitation for mental health or substance use disorder benefits in a classification that accumulates separately from any established for medical/surgical benefits in the same classification.

(B) The requirements of this paragraph are illustrated by examples provided in figure 28 TAC §21.2408(c)(5)(B).

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Source Note: The provisions of this §21.2408 adopted to be effective September 7, 2021, 46 TexReg 5571