On December 23, 2010, the Departments of Labor and Health and Human Services (the “Departments”) issued helpful new guidance under both the Patient Protection and Affordable Care Act of 2010, as amended (the “Affordable Care Act”) and the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). The guidance—which is in the form of Frequently Asked Questions (FAQs)—is the fifth in a series of FAQs issued on the Department of Labor’s website.1 While the prior FAQs were limited to issues arising under the Affordable Care Act, this FAQ also tackles questions under MHPAEA. This client alert summarizes the important features of this latest guidance, which is referred to below as the “FAQ.”

Affordable Care Act

Value-Based Insurance Design in Connection with Preventive Care Benefits

Public Health Service Act (PHSA) section 2713, as added by the Affordable Care Act, generally requires non-grandfathered group health plans and individual health insurance policies and contracts to provide coverage for recommended preventive services without cost sharing. This requirement is the subject of an interim final rule issued July 19, 2010, which, among other things, generally encourages plans to apply reasonable medical management techniques. The FAQ gives plans the green light to adopt value-based insurance designs (VBIDs), i.e., “health plan designs that provide incentives for enrollees to utilize higher-value and/or higher-quality services or venues of care.”