Major mental health parity guidance signals continued enforcement focus for employers
Recent publications from federal regulators forecast a heightened focus on employer compliance related to mental health and substance use disorder benefits for the foreseeable future. Earlier this week, the Departments of Labor (DOL), Health and Human Services (HHS) and Treasury (the departments) published long-awaited mental health parity enforcement information and guidance, including new proposed rules for compliance with the Mental Health Parity and Addiction Equity Act (MHPAEA). The departments seek to improve mental health and substance use disorder (MH/SUD) benefits in group health plans through enforcement and rulemaking, with a particular focus on expanding access to in-network MH/SUD providers.
Two reports illustrate the departments’ significant MHPAEA enforcement activities and efforts to work with employers, carriers and third-party administrators (TPAs) to correct potential compliance failures, while providing specific examples of non-compliance and corrections. The accompanying proposed rules, if finalized, provide a roadmap for future enforcement activities and would add strict new guidelines related to network adequacy, but potentially offer some relief in the form of “exceptions” for group health plans and insurers.
MHPAEA requirement overview
The 2023 MHPAEA Comparative Analysis Report to Congress (the prior report was released in February 2022) indicates that between February 2021 and July 2022, DOL requested comparative analyses from more than 180 plans and issuers. During the second reporting period (Nov. 1, 2021 – July 31, 2022), DOL sent 25 letters requesting comparative analyses for nearly 70 NQTLs and continued to receive insufficient responses, including:
- Failure to have a comparative analysis available to provide upon request
- Failure to identify and adequately describe the factors used or how they were applied
- Failure to demonstrate how or if the factors were comparably applied to MH/SUD benefits and to M/S benefits.
- Failure to explain how the NQTL applied in operation
- Failure to demonstrate that, in operation, the NQTL was comparably applied to both MH/SUD and M/S benefits.
Specific examples of insufficiencies include failing to explain different time and distance access standards for MH/SUD network access as compared with the M/S network, and citing high cost as a factor in applying an NQTL without providing specific numbers or formulas to identify high-cost services.
The DOL reports that each investigation can take a year or more, and that more than half of the NQTL investigations initiated in the first reporting period are still ongoing. Nevertheless, the DOL stresses that most potential MHPAEA violations are corrected in response to the comparative analysis request or the subsequent insufficiency letter.
Separately, Centers for Medicare and Medicaid Services (CMS), which reviews comparative analyses from nonfederal government plans and issuers, held “entrance conferences” after an initial request for a comparative analysis to discuss the review process and address any questions from the plan sponsor or issuer. Conferences were also held after each subsequent step in the process. It is unclear if DOL will follow suit with similar conferences, but we suspect this would be a welcome addition for employers.
Notably, DOL retained all four priority areas of enforcement identified in the 2022 report and added two. The six priority areas are:
- New. Impermissible exclusions of key MH/SUD treatments (e.g., applied behavioral analysis (ABA) therapy for autism spectrum disorder (ASD), medication assisted treatment (MAT), nutritional counseling for eating disorders)
- New. Network adequacy standards for MH/SUD providers
- Prior authorization requirements for in-network (IN) and out-of-network (OON) inpatient services
- Concurrent care review for IN and OON inpatient and outpatient services
- Standards for provider admission to participate in a network, including reimbursement rates
- OON reimbursement rates (methods for determining usual, customary, and reasonable charges)
CMS priority enforcement areas are similar:
- Prior authorization treatment limitations
- Concurrent review treatment limitations
- New. Exclusions of specific treatments for certain conditions in the prescription drug classification
Interestingly, the DOL issued only three final determination letters to noncompliant plans and issuers during the second reporting period (CMS issued five between Jan. 25, 2021, and Sept. 1, 2022). The DOL targeted TPAs and, according to the report, “in many cases” the TPAs removed potentially impermissible exclusions from plans they administer, avoiding the need for the DOL to request a comparative analysis from each plan. Overall, it appears the departments are working with plans and issuers to achieve voluntary corrective action, which is welcome news for employers. Examples of voluntary corrections include:
- Removal of exclusion for MH/SUD residential facilities in plans that covered skilled nursing facilities and stroke rehab programs, and reprocessing of claims
- Ending the use of an employee assistance program (EAP) as a gatekeeper for MH/SUD services when no similar gatekeeper was used for M/S benefits
- Removal of MH/SUD telehealth exclusion where the plan covered telehealth M/S services
- Removal of prior authorization requirement for intensive outpatient MH/SUD benefits when no preauthorization was required for comparable outpatient M/S services like skilled nursing care and home health services
- Removal of exclusion for opioid treatment programs using methadone in plans that covered methadone to treat M/S conditions, and reprocessing of claims
- Removal of ABA therapy exclusion for treatment of ASD where plan generally covered other ASD services
- Removal of inpatient SUD treatment exclusion unless entire course of treatment is completed when plan had no similar limitation for inpatient M/S services
These examples are instructive for employers conducting a NQTL comparative analysis or contemplating benefit coverage changes for the 2024 plan year.
The departments propose a major overhaul of the MHPAEA regulations that apply to employer-sponsored group health plans and insurers—the first since 2013. If finalized, the proposed rules would be effective for the 2025 plan year. The White House describes the proposed rules as increasing access to MH/SUD benefits, especially in-network mental health care, in line with Pres. Biden’s comprehensive national mental health strategy. Implementing the proposed rules and expanding mental health benefits is expected to increase plan costs, but regulators contend that improved access to in-network treatments would ultimately result in better mental health outcomes and lower out-of-pocket costs for participants. Key proposals include:
- Plans would be required to collect and evaluate certain relevant data (including the number of claims denials) to assess an NQTL’s impact on access to MH/SUD and M/S benefits. For NQTLs related to network composition, additional data must be collected and evaluated, including IN and OON utilization rates, time and distance data, and data on providers accepting new patients.
- The proposed rules require that plans use M/S claims data to determine whether an NQTL on MH/SUD benefits is more restrictive, using steps similar to how financial and quantitative treatment limits are tested.
- The proposed rules seek to preserve the ability of plans to impose NQTLs consistent with generally recognized independent professional or clinical standards or standards related to fraud, waste and abuse – in some instances, reducing the information required in the comparative analysis for a particular NQTL.
- The proposed rules list the content required in the written NQTL comparative analysis, including an evaluation of the outcomes resulting from NQTLs (based on relevant data collected by the plan) and, for plans subject to ERISA, a fiduciary certification.
- The departments provide many new and revised examples applying the proposed rules to a variety of NQTLs, and provide an illustrative, non-exhaustive list of NQTLs.
- The rules clearly delineate the process that the departments will follow in reviewing a plan’s NQTL comparative analysis.
- The proposed rules align with the elimination of the MHPAEA opt-out for nonfederal government plans (described in this GRIST).
In a technical release issued with the proposed rules, the DOL requests feedback on the type, form and manner of the data plans would be required to collect for NQTLs related to network composition, and a potential nonenforcement safe harbor for NQTLs related to network composition.
Employer next steps
- Review your plan’s current limits on MH/SUD benefits, including NQTLs, and your plan’s written comparative analysis to determine whether changes are required in light of recent enforcement efforts.
- Make sure the plan’s comparative analysis is updated when there is a change in benefit design, administration, or utilization.
- Plans without a comparative analysis should prepare one immediately—this should be a top compliance priority. Consider including outcomes data to support the analysis.
- Consider what operational and design changes would be required starting in 2025 if the rules are finalized as proposed, including an analysis of network adequacy. Explore whether any NQTLs would – or could be modified to – meet the proposed exceptions for NQTLs consistent with generally recognized independent professional or clinical standards or standards related to fraud, waste and abuse.
- Ensure that vendor contracts provide necessary compliance assistance, now and in the future.
- Consider whether to submit comments to the departments. Comments on the proposed rules are due 60 days from publication, while comments on the network adequacy technical release are due Oct. 2, 2023.