The US Departments of the Treasury, Labor, and Health and Human Services (the Departments) recently issued much-anticipated proposed regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA) to better ensure that health plans allow access to mental health or substance use disorder (MH/SUD) benefits as easily as medical or surgical (M/S) benefits. The proposed regulations reiterate the Departments’ focus on mental health parity and underscore the importance of compliance for health plan sponsors. They also come after many plans have been subject to audit by the Departments which focused heavily on MHPAEA compliance, leaving plan sponsors frustrated at the lack of guidance and inconsistent application of MHPAEA.

The proposed regulations:

• Require health plans to collect and evaluate data to assess the impact of non-quantitative treatment limitations (NQTLs) on access to MH/SUD and M/S benefits, including a special rule regarding network composition;

• Amend examples and add examples regarding the application of the rules for NQTLs; and

• Adopt new content requirements for NQTL comparative analyses and specify how plans and issuers must make such a comparative analysis available to the Departments and any applicable state authority, participants and beneficiaries upon request.

IN DEPTH

BACKGROUND

In 1996, Congress enacted the Mental Health Parity Act of 1996, which required parity in aggregate lifetime and annual dollar limits for mental health benefits and medical/surgical benefits. The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) expanded the Mental Health Parity Act of 1996 by adding new requirements, including provisions to apply mental health parity to substance use disorder benefits. MHPAEA generally requires that group health plans and group health insurance issuers ensure that the financial requirements and treatment limitations applicable to MH/SUD benefits are no more restrictive (e.g., more restrictive lifetime or annual dollar limits, financial requirements or treatment limitations) than those applicable to M/S benefits and that there are no separate financial requirements or treatment limitations applicable only with respect to mental health or substance use disorder benefits.

The Consolidated Appropriations Act 2021 expanded MHPAEA by expressly requiring health plans that cover both M/S and MH/SUD benefits and impose NQTLs on MH/SUD benefits to perform and document their comparative analyses of the design and application of NQTLs. While the Departments have issued a steady stream of sub-regulatory guidance on the NQTL comparative analysis requirement, the proposed regulations are the first formal regulatory guidance they have issued since the 2013 final regulations.

More recently, many Department audits of health plans have focused heavily on MHPAEA compliance. In these audits, the lack of guidance and problems with the application of existing guidance have been apparent, with many plan sponsors complaining of Department requests that are not supported by law, not practical in application and even contradictory. Plan sponsors have also been faced by a dearth of third-party vendors and other qualified experts who are willing and able to assist them in preparing the required comparative analyses, leaving the full burden of compliance on understaffed benefit departments who don’t have access to the analytical tools necessary to meet the Departments’ varied requests.

NQTL RULES

The proposed regulations seek to improve access to MH/SUD benefits through the following key provisions:

• Meaningful Benefits NQTL Standard

The proposed regulations confirm that the requirement to provide MH/SUD coverage in each classification in which M/S benefits are provided applies on a condition or disorder basis. The proposed regulations provide that if a plan provides any MH/SUD benefits in any classification of benefits, the plan would not be considered to provide benefits for the MH/SUD in every classification in which M/S benefits are provided, unless the plan provides meaningful benefits for treatment for that condition or disorder in each classification, as compared to the M/S benefits. The 2013 final regulations established the following classifications for this purpose: inpatient, in-network, inpatient, out-of-network, outpatient, in-network, outpatient, out-of-network, emergency care and prescription drugs.

• NQTL Three-Part Test

The proposed regulations require that health plans meet three requirements to impose NQTLs on MH/SUD services:

1. The “no more restrictive” requirement: The NQTL is not more restrictive as applied to MH/SUD benefits than to M/S benefits. If adopted, this requirement would greatly increase plans’ MHPAEA-related compliance burdens.

2. Design and application requirement: A health plan satisfies requirements regarding the design and application of the NQTL.

3. Relevant data evaluation requirement: The plan collects, evaluates and considers the impact of relevant data on access to MH/SUD benefits relative to M/S benefits. As a result, the plan takes reasonable action to address any significant differences.

• Other NQTL Updates

The proposed regulations would also establish a special rule regarding network composition aimed at ensuring that plan networks include an adequate number of each category of provider and facility.

Finally, the proposed regulations include extensive examples applying NQTL standards to certain NQTLs, including telehealth, prior authorization and concurrent review requirements, peer-to-peer medical necessity reviews and a requirement for primary caregiver participation applied to ABA therapy. These examples explain whether the NQTL and the facts and circumstances of the case comply with any or all of the above-described three-part test.

NQTL Comparative Analysis

The proposed regulations elaborate on the content elements that must be included in the NQTL analysis, including:

• 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, and a demonstration of comparability and stringency in operation; and

• Findings and conclusions that the plan drew from the analysis.

NEXT STEPS

The Biden administration will publish the proposed regulations in the Federal Register on August 3, 2023. After publication, the public has 60 days to comment on the proposed regulations before they take effect. It may take some time for publication of the final regulations, depending on the volume of comments that the Departments receive and the extent to which they alter the proposed regulations as a result. If finalized, the proposed regulations would apply on the first day of the first plan year starting on or after January 1, 2025.

The proposed regulations are part of a larger, coordinated effort by the Biden administration to improve access to mental health care, which includes a Fact Sheet that emphasizes the role and importance of MHPAEA. Concurrent with the proposed regulations, the Departments also issued a Technical Release requesting comments from the public on the type of data and information plans should include in their existing NQTL analysis to the Departments and state regulators to determine whether plan participants have access to an appropriate number of MH/SUD providers in the plans’ or issuers’ network. This guidance sets out principles and seeks public comment. This Technical Release will be the subject of a future On the Subject.

In the meantime, the proposed regulations highlight that the Departments continue to focus on mental health parity, and employers and plan sponsors must ensure that they are in compliance with these additional NQTL standards. Plan sponsors should continue to take steps to ensure compliance with the MHPAEA requirements as modified by the Consolidated Appropriations Act of 2021, including the requirement to prepare a comparative analysis. For most plan sponsors, this will mean finding a suitable third-party vendor and collaborating with their third-party administrator to ensure compliance as soon as possible, including updating any existing analysis.