The 2021 Consolidated Appropriations Act that was signed into law on December 27, 2020 requires group health plans to evaluate compliance under the federal Mental Health Parity and Addiction Equity Act (MHPAEA) with regard to specific types of treatment limits imposed on mental health and substance use disorder benefits and to maintain written documentation of the analysis performed to ensure compliance under MHPAEA. On and after February 10, 2021, group health plans will be required to make such compliance documentation available to federal regulators upon request. This new law also requires federal regulators to review such MHPAEA compliance analysis from at least 20 different group health plans every year, and institute a formal process where noncompliance is found, including a corrective action period for plans. The agencies must issue an annual report to Congress detailing the results of these reviews. Federal regulators have also been charged with issuing new guidance with respect to these requirements within 18 months of this law’s enactment, including guidance in setting up a compliance program.
While we await this new guidance, plan sponsors should continue their MHPAEA compliance efforts. The concept of mental health parity is fairly straightforward – health plan coverage for mental health and substance use disorder (MH/SUD) conditions should be comparable to coverage for any other medical or surgical condition. Although, the premise of federal mental health parity laws is straightforward, ensuring compliance with these rules is very complex. The Department of Labor’s recently updated Self-Compliance Tool consists of questions and examples to help plan administrators assess whether their plans are in compliance with the various MHPAEA requirements, including rules relating to medical management standards, pre-authorization requirements, and coverage exclusions and limitations.
In case plan sponsors need more motivation to step up compliance efforts, we’re also seeing more litigation against plan sponsors and insurers alleging MHPAEA violations and breach of fiduciary duties under ERISA. In late 2020, in Wit v United Behavioral Health (UBH), a class action lawsuit ended with a decision by a federal court granting the plaintiffs the full extent of relief they requested and requiring UBH to reprocess nearly 67,000 mental health and substance use disorder (MH/SUD) benefit claims that were denied between 2011 and 2017. The federal court held that UBH breached its fiduciary duty to plan participants based on its use of overly restrictive medical necessity guidelines that resulted in the improper denial of more than 67,000 MH/SUD claims. This is just one example of the more than 100 lawsuits filed in the past several years alleging various MHPAEA and ERISA claims review violations relating to exclusions for ABA therapy, coverage for residential and other treatment facilities, medical necessity standards, and other items.
As we begin 2021, employers should evaluate their behavioral health policies to confirm compliance with ERISA and MHPAEA. We expect enforcement of existing mental health parity laws to continue to be a priority under the new administration as President-Elect Biden has committed to increase enforcement of MHPAEA and to expand protections for mental health services. The plaintiff’s victory in the Wit v. UBH case also raises the risk of similar cases being brought against other insurers or plan sponsors. The carriers for fully insured health plans are generally responsible for ensuring the policies they issue are compliant with federal and state mental health parity laws, but employers offering fully insured plans should ask their carriers for assurance that all applicable laws are being followed. Employers that sponsor self-insured plans should be especially vigilant in working with the plan’s third party administrator to assess and document compliance with federal mental health parity rules to reduce the risk of litigation and penalties.