The long-awaited Final Rules amending the Mental Health Parity and Addiction Equity Act (“MHPAEA”) were released on September 9, 2024, with the bulk of the requirements going into effect on January 1, 2025. As we previously reported here, in August 2023, the Departments of Labor, Health and Human Services (“HHS”) and Treasury (together, the “Departments”) published proposed rules further regulating insurance coverage for treatment for mental health and substance use disorders. Although the Final Rules appear less burdensome than the proposed rules, they do impose significant changes to the obligations of group health plans and health insurance issuers with a short time to achieve compliance. The key provisions are summarized below.

Key Changes in the Final Rules

The Final Rules’ stated intent is to “strengthen consumer protections consistent with MHPAEA’s fundamental purpose,” which includes reducing burdens on access to benefits for individuals in group health plans or with group or individual health insurance coverage seeking treatment for mental health and substance use disorders (“MH/SUD”) as compared to accessing benefits for the treatment of medical/surgical (“M/S”) conditions.

The Final Rules purport to achieve that goal through four key changes to the MHPAEA:

• Mandating content requirements for performing a comparative analysis of the design and application of each non-quantitative treatment limitation (“NQTL”) applicable to MH/SUD benefits.
• Setting forth design and application requirements and relevant data evaluation requirements to ensure compliance with NQTL rules.
• Increasing scrutiny of network adequacy for MH/SUD benefits.
• Introducing core treatment coverage requirements to the meaningful benefit standard.

Comparative Analysis Content Requirements

Since 2021, insurance plans and issuers offering plans that cover both M/S and MH/SUD benefits and impose NQTLs on MH/SUD benefits must have a written comparative analysis demonstrating that the factors used to apply an NQTL to MH/SUD benefits are comparable to and applied no more stringently than those used to apply that same NQTL to M/S benefits, as set forth in the 2021 Consolidated Appropriations Act (“CAA”). The Final Rules expand upon the NQTL analysis required by the CAA and include six specific content elements:

1. a description of the NQTL;
2. identification and definition of the factors and evidentiary standards used to design or apply the NQTL;
3. a description of how factors are used in the design or application of the NQTL;
4. a demonstration of comparability and stringency, as written;
5. a demonstration of comparability and stringency, in operation, including the required data, evaluation of that data, explanation of any material differences in access, and description of reasonable actions taken to address such differences; and
6. findings and conclusions.

Upon request, plans and issuers must provide written comparative analyses to U.S. regulators, plan beneficiaries, participants, or enrollees who have received an adverse benefit determination related to MH/SUD benefits, and participants and beneficiaries in plans governed by ERISA at any time. Plans and issuers only have 10 business days to respond to a request from the relevant Secretary to review its comparative analyses and, if an initial determination of noncompliance is made, the plan or issuer only has 45 calendar days to respond with specific actions it will take to bring the plan into compliance and provide additional comparative analyses that demonstrate compliance. Upon a final determination of noncompliance, notice must be given to all participants, beneficiaries, and enrollees within seven business days after the relevant Secretary’s determination.

Demonstrating Compliance with NQTL Rules

The Final Rules also require that a NQTL applicable to MH/SUD benefits in a classification is no more restrictive than the predominant NQTL applied to M/S benefits in the same classification. In order to ensure compliance with NQTL rules, plans and issuers must satisfy two sets of requirements: (1) the design and application requirements, and (2) the relevant data evaluation requirements. For example, under the design and application requirements, a plan cannot reimburse non-physician providers of MH/SUD services by reducing the rates for physician providers of MH/SUD services unless it applies the same reduction to non-physician providers of M/S services from the rate for physician providers of such services. Under the relevant data evaluation requirements, to compare the impact of NQTLs related to network composition on access to MH/SUD versus M/S benefits, a plan should evaluate metrics relating to the time and distance from plan participants and beneficiaries to network providers, the number of network providers accepting new patients, provider reimbursement rates, and in-network and out-of-network utilization rates.

Design and Application

Plans and issuers must examine the factors used to design and apply an NQTL to MH/SUD benefits to ensure such factors are comparable to those used with respect to M/S benefits in the same classification. The Final Rules also prohibit using information that discriminates against MH/SUD benefits as compared to M/S benefits, meaning information that systematically disfavors or was specifically designed to disfavor access to MH/SUD benefits. Appropriate information and other factors to use in designing and applying an NQTL to MH/SUD benefits include generally recognized independent professional medical or clinical standards.

Relevant Data Evaluation

The relevant data evaluation requirement means plans and issuers must collect and evaluate data to ensure, in operation, that an NQTL applicable to MH/SUD benefits is not more restrictive than the NQTL applied to M/S benefits in the same classification. The Final Rules anticipate that the relevant data for any given NQTL will depend on the facts and circumstances and provide flexibility for plans to determine what should be collected and evaluated. Examples of relevant data provided in the Final Rules include the number and percentage of claim denials, utilization rates, and network adequacy rates.

Network Adequacy

The Final Rules demonstrate the Departments’ increased scrutiny of network adequacy issues for MH/SUD benefits. For NQTLs related to network composition standards, a plan or issuer must collect data to assess the NQTLs’ aggregate impact on access to MH/SUD benefits and M/S benefits. By way of example, suppose the evaluated data suggests that an NQTL contributes to a material difference in access to MH/SUD benefits compared to M/S benefits. In that case, plans and issuers must act to address any material differences in access. The Final Rules provide examples of reasonable compliance actions, including increased recruiting efforts for MH/SUD providers, expanding telehealth options under the plan, and ensuring that provider directories are accurate and reliable. A plan must document the actions that it takes to address differences in access to in-network MH/SUD providers as compared to in-network M/S providers.

Meaningful Benefit Standard

The Final Rules require plans to provide “meaningful” benefits for MH/SUD disorders in every classification in which the plan provides M/S benefits. Benefits are “meaningful,” for MHPAEA purposes, when they cover core treatments for that condition, meaning a standard treatment or course of treatment, therapy, service, or intervention indicated by generally recognized independent standards of current medical practice.

The Final Rules provide examples to demonstrate the application of the meaningful benefits standard. In one example, a plan covers the full range of outpatient treatments (including core treatments) and treatment settings for M/S benefits when provided on an out-of-network basis. The same plan covers outpatient, out-of-network developmental screenings for a mental health condition but excludes all other benefits, such as therapeutic intervention, for outpatient treatment when provided on an out-of-network basis. The Departments view therapeutic intervention, however, as a core treatment for the mental health condition under generally recognized independent standards of current medical practice. Per the Final Rules, the Departments interpret such exclusion as a violation because the plan does not cover a core treatment for the mental health disorder in the outpatient, out-of-network classification. Since the plan’s coverage for M/S benefits includes a core treatment in the classification, the Final Rules opine that the plan fails to provide meaningful benefits for treatment of the mental health disorder.

Effective Dates

The new requirements of the Final Rules will go into effect on different dates. Plans and issuers have until January 1, 2026, to comply with the meaningful benefits standard, the prohibition on discriminatory factors and evidentiary standards, the relevant data evaluation requirements, and the related requirements in the provisions for comparative analyses. During this time, plans and issuers should assess whether their mental health provider networks are adequate, and also consider expanding the scope of MH/SUD benefits across classifications to meet new parity requirements.

The other requirements, including most of the new requirements affecting comparative analyses, go into effect on January 1, 2025. Accordingly, plans and issuers should the time remaining this year to develop a plan to prepare NQTL comparative analyses within the three-month compliance period, and have processes in place to quickly address any material changes to benefit design in the future.