As part of the Administration’s focus on mental health care, the Departments of Labor, Treasury and Health and Human Services published a proposed rule on July 25, 2023, attempting to strengthen the regulations implementing the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (“MHPAEA”). The proposed rulemaking, if finalized, would provide guidance on provisions of the Consolidated Appropriations Act of 2021 that required all health plans and insurers that impose Non-Quantitative Treatment Limitations (“NQTLs”) on mental health and/or substance abuse benefits to conduct and document a comparative analysis of the design, application, and impact of NQTLs to show compliance with MHPAEA.

If the rule is finalized as proposed, it would fill some gaps in understanding the requirements of MHPAEA, generally, and it would identify detailed requirements for health plans and insurers to use in determining whether an NQTL imposes greater limits on access to mental health and substance use disorder benefits as compared to physical health benefits. If material differences are found, it would be a strong indicator that the NQTL violates the MHPAEA, and the plan or insurer would need to take reasonable actions to mitigate those differences or not impose the NQTL.

The proposed rule would also newly require plans and insurers to collect and evaluate network and outcomes data to assess the impact of NQTLs. This would require plans and insurers to collect data regarding, for instance, outof-network utilization, reimbursement of out-of-network providers, prior authorization requirements, time and distance standards, and denial rates. This data collection would force plans and insurers to actively show parity with respect to access to mental health and substance use disorder treatment services.

The proposed rule would allow for a couple of exceptions, which, if satisfied, would insulate a plan or insurer from liability. Plans and insurers that apply NQTLs that (1) apply generally accepted standards of care and/or (2) apply solely for the purposes of detecting or preventing fraud, waste and abuse (as established through objective, unbiased data) would not violate MHPAEA with respect to the specific excepted NQTL. These rules would take a significant step toward parity-related transparency and enforceability, but payors have expressed broad dissent over the proposals, calling them vague, overreaching, and costly. Payors argue the proposals could lead to higher costs and less access to mental health care services. We will continue to watch indications as to how the administration will respond to those concerns and/or whether it finalizes the proposed parity rules later this year.