The Mental Health Parity and Addiction Equity Act (MHPAEA) generally requires group health plans and health insurance issuers to ensure that financial requirements (such as copays and deductibles), quantitative treatment limitations (such as visit limits), and nonquantitative treatment limitations (such as prior authorization and concurrent review) applicable to mental health or substance use disorder (MH/SUD) benefits are generally no more restrictive than the requirements or limitations applied to medical/surgical (M/S) benefits. The Consolidated Appropriations Act, 2021 imposed further obligations in the case of nonquantitative treatment limitations (NQTLs), which are the subject of final regulations issued in September 2024. (We explained the final regulations here.)

Among many other things, the final regulations establish a two-part test that applies to NQTLs consisting of:

• The design and application requirement. This test requires that the processes, strategies, evidentiary standards, or other factors used in designing and applying an NQTL to MH/SUD benefits in each classification must be comparable to and applied no more stringently than those used in designing and applying the limitation with respect to M/S benefits in that same classification. For this purpose, classifications include inpatient, in-network care; inpatient, out-of-network care; outpatient, in-network care; outpatient, out-of-network care; emergency care; and prescription drugs.
• The relevant data evaluation requirement. This test requires the plan or issuer to collect and evaluate relevant data in a manner reasonably designed to assess the impact of the NQTL on relevant outcomes related to access to MH/SUD benefits as compared to M/S benefits. Relevant data for this purpose includes the number and percentage of relevant claims denials and network composition data.

The relevant data evaluation requirement has proven especially challenging for self-funded group health plans of every size, as third-party administrators fail, refuse, or are otherwise unable to provide the information necessary to comply. There may be another option, however.

The final regulations do not specify the data set on which compliance with the relevant data requirement is tested. Rather, the regulations, which apply to both plans and issuers, seem to assume that the plans test on the basis of plan data, and issuers test on the basis of the issuer’s corresponding block of business. In their informal remarks at trade and industry conferences, representatives of the US Department of Labor (DOL), expressing their own views and not those of the DOL, have acknowledged that they are aware of and are considering their options related to the proper testing data set.

Some large carriers have shared the NQTL analysis that they previously prepared for their fully insured groups with the self-funded group to whom they provide administrative services. Presumably, this will give their self-funded groups a starting point. Many self-funded groups, particularly smaller groups, are not inclined to modify the standard set of NQTLs offered by their carriers/administrative-service-only (ASO) providers. If these groups were allowed to test based on the carrier’s corresponding book of business, a good deal of the work would be done. This would also have the salutary effect of exerting market pressure on carriers to comply with the MHPAEA’s NQTL and other requirements, since failure to do so would cause multiple additional failures. In the case of smaller plans, whose data may not be significant, this approach would also ensure that testing is done on a statistically significant sample. The option of designing custom NQTLs is, as a practical matter, reserved for larger self-funded groups. But even here, plans might simply modify a carrier’s standard NQTLs to the extent necessary to reflect the modification. Thus, even these groups might benefit from being able to leverage the carrier’s/ASO provider’s standard NQTL analysis with an appropriate, custom supplement.

For MHPAEA purposes, plans and carriers are the regulated entities. It is, however, painfully obvious that plan administrators rely heavily, if not exclusively, on their ASO providers and other advisors to comply. Using the carrier’s data for purposes of complying with (or at least undergirding) the plans’ NQTL analysis makes a good deal of sense. In both the preamble to the final regulations and in the public comments of its representatives, the DOL has promised additional guidance to help plans and issuers comply with the final regulations. This includes, among other things, an updated self-compliance tool. Clarification that the plans can choose to comply with the relevant data requirement by using their ASO provider’s data set would be welcome.