Guidance on the Mental Health Parity and Addiction Equity Act (the "MHPAEA") recently released by the Departments of Health and Human Services, Labor, and Treasury (the "Departments") proposes significant requirements for health plan sponsors in addition to the existing requirement for a nonquantitative treatment limitation ("NQTL") analysis, including a plan fiduciary certification requirement, which will result in more compliance burdens, costs, and risks for plan sponsors. The guidance consists of proposed regulations, a technical release, a 2023 report to Congress, an Enforcement Fact Sheet, and a MHPAEA Guidance Compendium (the "2023 Guidance") and provides detail on compliance with the MHPAEA (especially with respect to NQTLs).
Pending issuance of final rules, plan sponsors should assess compliance with the MHPAEA and ensure they have a current, compliant, NQTL analysis. If finalized, the proposed rules would apply on the first day of the first plan year beginning on or after January 1, 2025.
The MHPAEA was passed in 2008, prohibiting group health plans and issuers who provide mental health or substance use disorder ("MH/SUD") benefits from imposing less favorable financial requirements and treatment limitations on those benefits in a particular classification than on medical/surgical ("M/S") benefits in the same classification. The six classifications under the MHPAEA are (i) inpatient, out-of-network benefits, (ii) inpatient, in-network benefits, (iii) outpatient, out-of-network benefits, (iv) outpatient, in-network benefits, (v) emergency care, and (vi) prescription drugs (each, a "Classification").
In 2013, the Departments finalized rules including an express requirement (not originally part of the MHPAEA) that NQTLs (such as medical necessity, prior authorization requirements and step therapy protocols) applicable to MH/SUD benefits in a Classification be no more stringent than the same NQTL applicable to M/S benefits in the same Classification.
In 2021, the Consolidated Appropriations Act ("CAA") mandated that plan sponsors prepare a written NQTL comparative analysis (and update it as necessary) to be provided to the Departments upon request.
The 2023 Guidance proposes a number of changes to MHPAEA compliance, primarily with respect to NQTL requirements. The NQTL provisions are intended to prevent plans from designing and implementing NQTLs with greater limits on access to MH/SUD benefits as compared to M/S benefits.
The 2023 Guidance proposes the following:
New 3-Prong Test for NQTLs: The proposed regulations introduce a new three-part test applicable to NQTLs. If any of the prongs are failed, the NQTL cannot be imposed, unless the NQTL is changed to bring it into compliance.
- No More Restrictive NQTLs for MH/SUD: NQTLs applied to MH/SUD benefits in any Classification must not be more restrictive (as written or in operation) than the predominant NQTL that applies to substantially all M/S benefits in that Classification. Previously, this requirement applied only to quantitative treatment limitations ("QTL") and financial requirements. To meet this requirement, a mathematical test must be performed to analyze plan payments. A NQTL applies to "substantially all" M/S benefits in a Classification if it applies to at least two-thirds of those benefits based on plan payments for those benefits. If it does not apply to at least two-thirds of the M/S benefits in a Classification, the NQTL cannot be imposed on the MH/SUD benefits in that Classification (in other words, for an NQTL to apply to MH/SUD benefits, it must also apply to at least two-thirds of the M/S benefits in the same Classification).
However, there are two exceptions to this prong for NQTLs that are impartially applied and consistent with (1) generally recognized independent professional medical or clinical standards, or (2) standards related to fraud, waste, and abuse. Note, these exceptions must still meet other requirements imposed by the proposed regulations (for example the design and application requirement below) and should not be considered a free pass.
- Design and Application Requirements for NQTLs: A NQTL cannot be imposed on MH/SUD benefits in any Classification unless any processes, strategies, evidentiary standards or other factors used in designing and applying the NQTL to MH/SUD benefits in the Classification are comparable to, and are applied no more stringently than the same used in designing and applying the NQTL with respect to M/S benefit in the Classification. For example, this prong would test access to benefits, and a plan could not discriminate against MH/SUD benefits by using biased information. Plans cannot rely on a factor or evidentiary standard if the information on which it is based discriminates against MH/SUD.
- Relevant Data Evaluation of NQTLs: Plans must collect and evaluate outcomes data to determine the impact of a NQTL on access to MH/SUD benefits relative to M/S benefits. If there is a negative material difference in outcomes data for how the NQTL impacts MH/SUD benefits as compared to M/S benefits, it is a strong indicator of noncompliance, and the plan will need to take reasonable action (and document such) to address the material difference. This includes evaluating, for example, claim denials, network composition, payment to out-of-network providers, frequency of prior authorization, and rate of denial for prior authorization requests.
Content Requirements for NQTL Comparative Analysis: The proposed regulations expand on the CAA's requirement for a NQTL analysis and require the analysis contain a detailed, written, and reasoned explanation of the specific plan terms and practices at issue, plus the bases for concluding that the NQTLs comply with MHPAEA. Plans must evaluate standards related to network composition, out-of-network reimbursement rates, and prior authorization. The proposed regulations specify the following six content requirements for each analysis:
- Description of the NQTL;
- Identification and definition of the factors used to design or apply the NQTL;
- Description of how factors are used in the design or application of the NQTL;
- Demonstration of comparability and stringency, as written;
- Demonstration of comparability and stringency in operation; and
- Findings and conclusions
In addition, the proposed rule requires a fiduciary of an ERISA plan to review the comparative analysis and certify that it complies with the content requirement. This is a significant new requirement.
Meaningful Benefits: The proposed rules mandate that, if a plan provides MH/SUD benefits in any one of the Classifications, the plan must provide "meaningful" MH/SUD benefits in all Classifications in which M/S benefits are provided. To illustrate this requirement, two examples were included.
The first example involves a plan which covers treatment for autism spectrum disorder (ASD) which is a MH/SUD condition, specifically outpatient, out-of-network developmental evaluations for ASD. However it excludes all other benefits for outpatient treatment for ASD, including applied behavioral analysis (ABA) therapy, when provided on an out-of-network basis. The plan generally covers the full range of outpatient treatments and treatment settings for medical conditions and surgical procedures when provided on an out-of-network basis.
The Departments conclude that, because the plan only covers one type of benefit for ASD in the outpatient, out-of-network Classification and excludes all other benefits for ASD in the Classification, but generally covers the full range of M/S benefits in the Classification, it fails to provide meaningful benefits for treatment of ASD in the Classification.
In the second example, a plan generally covers diagnosis and treatment for eating disorders, which is a MH/SUD condition, but specifically excludes coverage for nutrition counseling to treat eating disorders, in the outpatient, in-network Classification. Nutrition counseling is one of the primary treatments for eating disorders. The plan generally provides benefits for the primary treatments for M/S conditions in the outpatient, in-network Classification.
The Departments conclude that the exclusion of coverage for nutrition counseling for eating disorders results in the plan failing to provide meaningful benefits for the treatment of eating disorders in the outpatient, in-network Classification, as determined in comparison to the benefits provided for M/S conditions in the Classification.
What Should Plan Sponsors Do?
The issuance of the extensive guidance suggests that mental health parity compliance is a priority for the Departments, meaning it will continue to be an enforcement priority. Plan sponsors should take the following steps pending final rules:
- Review plan design for MH/SUD parity, taking a broad approach to what might be an NQTL. This should include analysis of provider networks and their composition, network credentialing standards, out-of-network rates, prior authorization, etc. The 2023 Guidance contains many examples of improper NQTLs and insufficient NQTL comparative analyses. Those examples provide insight into what the Departments will hone in on during an investigation.
- Obtain an NQTL analysis. This is harder than it should be. Plan sponsors do not have expertise to produce these analyses, and it is difficult to obtain one from an outside vendor. Third-party administrators will often say they can provide an NQTL analysis based on their standard insurance offering, but that is not much help for a different plan design.
Comments on the proposed regulations and the technical release are requested and must be submitted by October 17, 2023.
Please reach out to the DWT employee benefits practice if you need help understanding this guidance, evaluating your group health plan's nonquantitative treatment limitations or reviewing the plan's NQTL comparative analysis. Our benefits attorneys also assist plan sponsors who have been notified by one of the Departments that it intends to investigate compliance with the Mental Health Parity and Addiction Equity Act.