The Consolidated Appropriations Act, 2021 (CAA) (Pub. L. No. 116-260) requires group health plans and issuers that cover mental health/substance use disorder (MH/SUD) and medical/surgical (M/S) benefits to prepare a comparative analysis of any nonquantitative treatment limits (NQTLs) that apply. Beginning Feb. 10, plans must supply this analysis and other information if requested by federal regulators (the Department of Labor (DOL) for ERISA plans). This GRIST describes these new requirements, the process agencies must follow when requesting these disclosures and the impact on existing parity regulations. The new law also requires agencies to prepare an annual report to Congress on these requests and to issue compliance program and additional NQTL guidance. FAQs issued April 2 (FAQs Part 45) provides more details on agency expectations for health plan compliance.
In recent years, federal agencies have released several sets of FAQs, a disclosure request template and other compliance materials on NQTLs under the Mental Health Parity and Addiction Equity Act (MHPAEA). Many of these initiatives come in response to the 2016 passage of the 21st Century Cures Act (Pub. L. No. 114-255), which requires federal agencies to issue MHPAEA guidance and step up parity enforcement for NQTLs.
NQTLs consist of any limitations on the scope and duration of benefits that are not expressed numerically. Examples of NQTLs include medical-management standards that limit or exclude coverage based on medical necessity, prior-authorization requirements, and methods used to determine provider reimbursement rates. Under final regulations issued in 2013, the “processes, strategies, evidentiary standards and other factors” used to define plan terms and administer NQTLs for MH/SUD benefits must be comparable to and applied no more stringently than the ones used for M/S benefits.
According to DOL, the MHPAEA and ERISA’s disclosure and claims rules entitle health plan participants to request information about these “processes, strategies, evidentiary standards and other factors” used to apply an NQTL to MH/SUD and medical/surgical benefits. Participants can also request information about the plan’s medical-necessity criteria for both MH/SUD and M/S benefits.
The 2021 CAA adds two new requirements to health plans’ existing MHPAEA obligations: a comparative analysis and the duty to disclosure this analysis and related information to DOL on request.
The CAA amends ERISA to require that plans “perform and document comparative analysis of the design and application of NQTLs.” The law does not define the comparative analysis or explain how to document it. However, DOL, the Centers for Medicare & Medicaid Services (CMS), some states and other organizations have discussed and, in some instances, produced templates to complete side-by-side comparisons documenting that the processes, strategies, evidentiary standards and other factors used for NQTLs in six separate classifications meet parity standards. FAQs Part 45 provide more information on what plans should include in their comparative analysis, including the types of documents plans should make available to support the analysis.
ERISA plans must be prepared to disclose the new comparative analysis on request from DOL starting Feb. 10, 2021 — 45 days after the CAA’s enactment. DOL must request this information from at least 20 different plans per year. The agency can determine appropriate circumstances for making a request, but must do so when it learns of a potential parity violation or receives a complaint alleging a violation. If DOL concludes that a plan’s comparative analysis does not have enough detail to review, the agency must specify what additional information the plan should submit. While the risk of a DOL request for this information on or shortly after Feb. 10 is low, plans still need to prepare for these requests.
The CAA added identical provisions to the Public Health Service Act (PHSA) and the Internal Revenue Code. This means CMS must annually request at least 20 different comparative analyses as part of its parity enforcement for self-insured state and local governmental plans and any state insurance programs for which CMS enforces parity. It is not clear whether IRS must also make these disclosure requests since it shares jurisdiction with DOL on MHPAEA enforcement.
The CAA’s list of specific information that health plans must disclose on request largely overlaps with information in DOL’s self-compliance tool for evaluating whether NQTLs comply with the parity law. DOL updated the tool in 2020 after gathering public comments on its content.
Under the new law, plans must make available to the DOL the following information:
FAQs Part 45 state that the comparative analysis must contain a “detailed, written, and reasoned” explanation of the basis for a plan’s conclusion that NQTLs comply with the parity law. Conclusory or generalized statements about compliance without detailed supporting explanations and evidence is not sufficient. The analysis must include at least nine elements listed in the guidance:
The guidance also lists documents that plans might need to provide to support the comparative analysis. Examples include claim-processing policies and procedures, along with samples of covered and denied MH/SUD and M/S claims.
Aside from information on a plan’s findings and conclusions, other elements of the CAA disclosure are almost identical to the steps listed in question 7 of DOL’s self-compliance tool. According to FAQs Part 45, plans that have already “carefully applied” the guidance in this tool are well-positioned to meet the CAA’s standards for the comparative analysis. The following chart summarizes DOL’s four-step NQTL compliance inquiry.
The CAA does not add much to DOL’s existing enforcement tools to investigate NQTL issues. The law adds no new civil penalties to ERISA, despite proposals to do so in some pending legislation. However, the required comparative analysis could provide more information to aid DOL parity investigations, which have increased in recent years. According to latest DOL enforcement fact sheet for fiscal 2020, the agency closed MHPAEA investigations of 180 health plans (the agency does not report on ongoing investigations) and noted two NQTL violations.
DOL can still require plans to correct parity violations, such as by reprocessing improperly denied claims. A federal court recently ordered that remedy in private class-action litigation that did not involve the federal government (Wit v. United Behavioral Health, No. 14-cv-02346-JCS (N.D. Cal. Nov. 3, 2020); remedies order stayed pending appeal). DOL also can refer violations to IRS, which can assess civil penalties of up to $100 a day, although whether the agency has ever done so is unclear. Other DOL penalties for failure to disclose certain information to participants or for specific fiduciary violations could also apply.
Defined corrective process. The CAA outlines a specific process to follow when DOL’s review of a plan’s comparative analysis indicates a parity violation has occurred. After DOL’s initial determination, the plan has to specify what actions it will take to correct the violation and/or provide an additional comparative analysis within 45 days. If DOL makes a final determination that the plan is still in violation, the plan must notify all enrollees about the noncompliance within seven days of DOL’s determination. The agencies will also share findings of compliance and noncompliance with the state where the group health plan is located or the issuer is licensed to do business. Documents or communications related to DOL’s recommendations to a plan will not be subject to disclosure under the Freedom of Information Act (FOIA). However, the CAA is not specific about the scope of information protected from FOIA disclosure.
New annual report naming violators. The CAA requires the agencies with MHPHEA oversight to issue an annual report to Congress and the public. The report must include, among other details, a summary of the comparative analyses reviewed during the year and the identity of each plan or issuer receiving a final determination of noncompliance. The first report is due by Dec. 27, 2021, with later reports due every Oct. 1.
Required new guidance. The Cures Act amended the PHSA to require that DOL, the Department of Health and Human Services (HHS) and the Treasury Department jointly issue a “compliance program guidance document.” This document builds on a 2016 DOL and HHS publication on warning signs that specific NQTLs could violate the law. The CAA adds this PHSA provision, along with the Cures Act’s provision calling for additional guidance, to ERISA and the Internal Revenue Code. This presumably requires DOL and IRS to participate in developing this joint guidance required by the Cures Act. Before CAA’s passage, however, DOL already noted these Cures Act obligations when it rolled out its updated self-compliance tool in last October.
Standards across the health coverage system. These new CAA requirements apply to all ERISA plans, including grandfathered plans, and to health insurers, including those in the individual, small and large group markets. The new requirements also apply to CMS-regulated self-insured state and local governmental plans that have not opted out of the mental health parity rules. Medicaid managed care plans, alternative benefit plans and certain Children’s Health Insurance Program (CHIP) plans will be deemed to satisfy the CAA requirements if the plans comply with similar Medicaid mental health parity documentation standards. Some of this documentation is already available on state Medicaid websites. MHPAEA does not apply to Medicare.
Self-insured plan sponsors that have not yet conducted a NQTL comparative analysis will need to prepare one as soon as possible in case the agencies request this information. As some of the publicly available NQTL analysis templates demonstrate, reviewing every NQTL will take some time and involve scrutinizing clinical guidelines or provider reimbursement standards — a task typically conducted by the plan’s third-party administrator (TPA), not the plan sponsor. Employers should consider these steps: