New Proposed Rules Take Great Strides to Further Mental Health Parity

On July 25, 2023, the Departments of Labor, Treasury, and Health and Human Services (collectively, “the Departments”) released guidance in an effort to clarify existing guidelines under the Mental Health Parity and Addiction Equity Act (MHPAEA) and to help group health plans and insurers with compliance. The ultimate goal of the proposed rules is to ensure that individuals are able to utilize their health plans to access mental health or substance use disorder (MH/SUD) benefits in the same manner and with as much ease in which they would medical or surgical (M/S) benefits. Said another way, any limitations the plan applies to MH/SUD benefits can be no more restrictive than a comparable limitation applied to M/S benefits.

With governmental audits of plans as it pertains to compliance with MHPAEA on the rise, the Departments’ further guidance, which includes the proposed regulations along with Technical Release 2023-01P from the DOL, is welcome news. If finalized, the proposed rules will be effective for plan years beginning on or after January 1, 2025. In conjunction with the release of the proposed rules and technical release, the Departments issued a MHPAEA Comparative Analysis Report to Congress and a MHPAEA Enforcement Fact Sheet covering the 2022 fiscal year. The report to Congress and Fact Sheet outline the myriad enforcement efforts undergone by the Departments and highlight the Departments’ priorities in this space.

The MHPAEA guidance provided by the Departments are all quite technical in nature, and focus on the comparative analysis that plans and insurance carriers must complete in order to confirm that each of the non-quantitative limitations (“NQTLs”) imposed by the plan or policy that apply to a MH/SUD benefit (i.e., prior authorization requirements, methodology to determine provider reimbursement rates, or step therapy requirements) is comparable to any NQTL applied to M/S benefits. We summarized the primary takeaways below.

NQTL Comparative Analysis Enhancements Under the Proposed Rules

The Consolidated Appropriations Act, 2021 (“CAA”) first introduced the NQTL comparative analysis obligation that plans and insurers are required to compete to demonstrate compliance with MHPAEA. However, the vagueness of the rules within the CAA combined with their overall complexity in application proved to be fairly frustrating and additional guidance was sought to better assist employers and carriers.

The new proposed rules preserve the overall requirements for an NQTL comparative analysis as introduced in the CAA, and reiterate that each comparative analysis must include the following:

• Specific plan or coverage terms or other relevant terms regarding the NQTLs and a description of all MH/SUD and M/S to which each such term applies in each benefit classification.
• The factors used to determine how the NQTLs will apply to MH/SUD benefits and medical/surgical benefits.
• The evidentiary standards used to develop the identified factors, when applicable, provided that each factor shall be defined, and any other source or evidence relied upon to design and apply the NQTLs to mental health or MH/SUD and medical/surgical benefits.
• Demonstrate the processes, strategies, evidentiary standards, and other factors used to apply the NQTLs to MH/SUD, as written and in operation, are comparable to and are applied no more stringently than those used to apply the NQTL to M/S.

The proposed rules build upon the above four (4) components and provide additional measures, evaluations, and documentation required to meet MHPAEA’s requirements, including clarification as to the factors, processes, strategies, evidentiary standards, and necessary data collection that are needed to complete the meaningful comparative analysis to prove MHPAEA compliance. The guidance also provides thirteen (13) additional new or amended examples to provide further clarity.

Additional Takeaways of the Proposed Rules

• A major emphasis on providing employers with more illustrative details on what exactly the requirements for a MHPAEA comparative analysis entail along with specific examples, in addition to formalizing the processes discussed initially in the CAA.
• New obligation for the NQTL comparative analysis to be certified by one or more named plan fiduciaries that have reviewed the analysis and concur with its status as MHPAEA compliant.
  • Analysis must include the title and credentials of all relevant persons who participated in the performance and documentation of the comparative analysis, an assessment of each expert’s qualifications, and the extent to which the plan ultimately relied upon each expert’s evaluation in performing and documenting the analysis of the design and application of each NQTL.
• Introduction of a new “meaningful benefits” obligation that requires a plan or insurer to provide a range of services and treatments for a MH/SUD benefit if a comparable M/S benefit in the same Classification (as defined below) provides for a range of treatment and services. The intent of this new obligation is to avoid a plan from covering only one limited service or treatment for a MH/SUD condition, when M/S conditions in the same Classification provide for a range of services and treatments
• Public comments on the proposed rules are due by October 2, 2023. More information on the comment process can be found here.

Background on MHPAEA

Passed in 2008, MHPAEA is a federal law that generally prevents group health plans and insurers that provide MH/SUD benefits from imposing additional benefit imitations as compared to the limitations for M/S benefits. In short, MH/SUD and M/S benefits must be offered in parity with one another. As such, any financial requirements must be equivalent (i.e., deductibles and out-of-pocket maximums).

The MHPAEA regulations separate the types of limitations that plans and insurers impose upon certain benefits into two separate categories; quantitative limitations (i.e., numerical quantities such as visit limits and day limits) and NQTLs. In 2021, the CAA amended MHPAEA to require group health plans and insurers to complete an analysis of NQTLs, as applied to each of the following six (6) Classifications:

1. in-patient, in-network;
2. inpatient, out-of-network;
3. outpatient, in-network;
4. outpatient, out-of-network;
5. emergency care; and
6. prescription drugs.

 

The regulations prohibit a plan or policy from imposing an NQTL with respect to MH/SUD benefits in any Classification unless, under the terms of the plan (or coverage) as written and in operation, any processes, strategies, evidentiary standards, or other factors used in applying the NQTL to MH/SUD benefits in the Classification are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in applying the limitation with respect to M/S in the Classification. 

Self-insured small non-federal government (with 50 or fewer employees) and self-insured small private employers (with 50 or fewer employees) are generally exempt from MHPAEA’s requirements. However, some states may have stricter requirements than what is mandated federally, so plans must be aware of those state-specific guidelines, where relevant.

The comparative analysis must be made available to the Departments and any other applicable agencies upon request.

Enforcement

The Departments are limited in the enforcement of the NQTL comparative analysis. However, the proposed rules provide that, in the event of a plan audit, an initial finding of non-compliance with MHPAEA, will require the plan sponsor to fix or provide additional explanation to justify the identified NQTL within 45 calendar days after initial determination. Following this 45-calendar day period, if the applicable agency determines that the correction or justification is insufficient, then the plan must cease the enforcement of the NQTL and provide a standalone notice to all enrolled participants and beneficiaries that the Plan has been found as non-compliant with MHPAEA.

What Do Clients Need to Do Now?

As a result of the proposed rules, there is nothing immediate for plan sponsors to do that they weren’t already taking into account prior to this update, as the proposed rules were designed to provide clarity and to enhance the obligations of the NQTL obligations currently required rather than prevent additional obstacles to compliance. Plan sponsors of either fully insured or self-funded plans should have already been taking action to ensure MHPAEA compliance, particularly as it relates to NQTLs. If finalized, the 2023 proposed rules would impose material changes to the current comparative analysis descriptions and justifications for each NQTL.

Although plan sponsors have the ultimate fiduciary duty to maintain compliance with MHPAEA, they can look to their carriers or third-party administrators for assistance.

 

Additional Link:

• Proposed Regulations
• MHPAEA Comparative Analysis Report to Congress
• DOL - Technical Release 2023-01P
• MHPAEA Enforcement Fact Sheet
• CMS – The Mental Health Parity and Addiction Equity Act (MHPAEA)