New Rules on Mental Health Parity Finalized - Next Steps for Employers

The long anticipated Final Rules regarding the Mental Health Parity and Addiction Equity Act (MHPAEA) were published to the Federal Register on September 23, 2024, as issued by the U.S. Departments of Labor, Health and Human Services, and Treasury (collectively, the Departments). In a September 9th Fact Sheet, the Departments noted that the recently released Final Rules would seek to clarify and amend certain existing longstanding MHPAEA regulations and add further guidelines as it pertains to content requirements and timeframes for responding to requests for non-quantitative treatment limitation (NQTL) comparative analyses under MHPAEA. Numerous aspects of MHPAEA were also amended by the Consolidated Appropriations Act, 2021 (CAA, 2021).

Employers with fully insured plans should ensure that they have their carrier’s NQTL analysis, that they review it, and that they acknowledge, agree, and sign-off on their carrier’s work. Employers with self-funded plans will need to engage further on this topic.

What is the purpose of MHPAEA?

Ultimately, the Final Rules aim to further MHPAEA’s fundamental purpose of ensuring that individuals in group health plans or group or individual health insurance coverage who seek treatment for covered Mental Health (MH) or Substance Use Disorders (SUD) do not face additional hurdles or burdens in obtaining care or accessing benefits for those conditions than they would be seeking coverage for the treatment of a standard medical condition or surgical (Medical Surgical or “M/S”) procedure.

Under MHPAEA, group health plans offering MH or SUD benefits must do so “in parity” with (equal or better than) the M/S benefits available under the plan. MHPAEA does not impose a requirement on plans to offer MH or SUD benefits but plans that do are held to the standards of parity. The requirements are applicable to fully insured and self-funded plans alike, but not to excepted benefits or retiree-only plans.

What are the new requirements and when are they applicable?

For each NQTL, the Final Rules will require plans to perform and document a comparative analysis of their design and application, with the primary goal of achieving parity in network composition. Plans must also be prepared at all times to provide a written list of NQTLs to the relevant Department(s) upon request. Once a comparative analysis has been formally requested, plans will have 10 business days from the receipt of the request to comply.

The Departments contend that incomplete/insufficient information or a lack of reasonable action to shore up any material differences in access to MH/SUD benefits as compared to M/S benefits will likely result in a determination of noncompliance. Once a Department Secretary makes an initial determination of noncompliance, the plan will have an additional 10 business days to provide the information requested and 45 calendar days to specify the actions it will take to fully comply. If the plan again fails to comply within that timeframe, then all plan participants, beneficiaries, and enrollees will need to be notified within 7 business days that a final determination has been made noting that the plan is not in compliance with the MHPAEA requirements.

The notice of non-compliance would need to be prominently displayed in no less than 14-point font on the first page of the communication and should read as follows:

Attention! The [Department of Labor/Department of Health and Human Services/Department of the Treasury] has determined that [insert the name of group health plan or health insurance issuer] is not in compliance with the Mental Health Parity and Addiction Equity Act.

Due to this truncated timeframe, it would be virtually impossible for a plan that had not prepared in advance of a formal governmental request to comply, as this work can be both time consuming and costly. However, non-compliance would prove to be expensive as well, with penalties of up to $110 per day per affected individual being assessed if a plan fails to provide information in a timely manner to the Departments.

While most components of the regulations will go into effect for group health plans beginning on or after January 1, 2025, some of the more substantial changes will not go into effect until January 1, 2026. The Departments have stressed that enforcement will be a top priority moving forward and are looking to plans to fully comply with the latest requirements by the 2026 deadlines.

What steps should employers take?

Employers should begin making any preparations needed to comply in advance of the upcoming staggered effective dates. The MHPAEA requirements are inherently complex and could potentially cause much consternation for employers so beginning the process as early as possible is recommended. As noted above, the testing can also be expensive due to that complexity, but employers should ensure that they are ready and able to provide the necessary information to the Departments once a request is received and have a strategy in place to correct any non-compliant aspects of their plans, as applicable.

Fully insured plans have the benefit of relying on their carriers for compliance with the regulations, as carriers generally would not offer plans that are not in compliance with MHPAEA. Employers offering self-funded plans, on the other hand, will be primarily responsible for compliance and will need to take the appropriate steps to ensure that the MHPAEA requirements are appropriately adhered to, including plan design, administration, preparing comparative analyses for NQTLs or providing data to vendor partners to do so, etc. Self-funded employers will need to dig deep with their service providers to determine if their plans are indeed compliant with MHPAEA and should obtain a full perspective of how their vendors will assist with guaranteeing compliance in their NQTL design, financial requirements of the plan for MH and SUD benefits vs. M/S benefits, and any quantitative treatment limitations (QTLs), i.e., visit or treatment limits.

Previous Guidance

For a deeper dive into the world of Mental Health Parity please see our prior articles on the subject below:

• New Proposed Rules Take Great Strides to Further Mental Health Parity
• New  Mental Health Parity Disclosure Requirement
• Mental Health Parity Updated Guidance from DOL, HHS, & Treasury