Benefits Monthly Minute
The July Monthly Minute introduces Part I of our mental health parity update and provides highlights of the newly released proposed rules under the MHPAEA.
Part I: New Proposed Rules Addressing Mental Health Parity Compliance
At the end of this month, the Departments (collectively the DOL, HHS and Treasury) released a deluge of mental health parity (MHP) guidance, most notably proposed rules under the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). As reported in the April 2021 Monthly Minute, the Departments previously set forth FAQs on complying with the comparative analysis requirement of the nonquantitative treatment limitation (NQTL) rules under the Consolidated Appropriations Act, 2021. Notwithstanding this guidance, we later reported that the 2022 MHPAEA Report to Congress concluded that none of the comparative analyses that EBSA reviewed contained sufficient information. The Departments now take another bite at the apple. Among other things, the proposed rules seek to reinforce the 2008 law by bolstering mental health parity rules with respect to NQTLs and related reporting, clarifying the coverage of benefits for eating disorders and autism spectrum disorder (ASD), and by setting out a framework for penalties/noncompliance as well as government and participant access to mental health parity-related analyses.
In particular, the proposed rules --
- Add additional requirements for plans that apply NQTLs with respect to mental health/substance use disorder (MH/SUD) benefits while preserving the ability of plans to impose those NQTLs to the extent consistent with generally recognized independent professional medical or clinical standards or standards related to fraud, waste, and abuse.
- Require plans to collect and evaluate outcomes data and take action to address material differences in access to MH/SUD benefits as compared to medical/surgical (M/S) benefits, with a specific focus on ensuring no material differences in access flow from network composition standards.
- Formalize the requirement that plans conduct meaningful comparative analyses to measure the impact of NQTLs, including an evaluation of network composition, out-of-network reimbursement rates, and prior authorization. These proposed rules add a new regulation establishing minimum standards for developing NQTL comparative analyses, set forth content elements, and a 10 business-day timeframe for plans to respond to a request from the Departments to submit comparative analyses. Additionally, the proposed rules would require a plan to prepare a written list of all NQTLs imposed under the plan and a general description of information used in preparing their respective comparative analyses.
- Provide that if a plan receives a final determination of noncompliance from the relevant Secretary (i.e., of the DOL or HHS) with respect to an NQTL, the plan may be directed not to impose the NQTL unless and until the plan demonstrates MHPAEA compliance or takes appropriate action to remedy the violation. Further, when a plan receives a final determination based on failure to demonstrate compliance with the NQTL comparative analysis requirements, such a failure may be treated not only as a violation of the NQTL comparative analysis documentation requirements, but also as a violation of the substantive NQTL rules.
- Clarify that NQTL comparative analyses are considered instruments under which a plan is established or operated; therefore, ERISA plans generally must furnish those documents to participants and beneficiaries upon request within 30 days. Similarly, the comparative analyses would qualify as documents, records, and other information relevant to the claimant’s claim for benefits to which plans must provide reasonable access, upon request and free of charge.
- Confirm that eating disorders are mental health conditions under generally recognized independent standards of current medical practice; therefore, benefits for treatment of eating disorders are mental health benefits for purposes of MHPAEA and may not be defined as M/S benefits.
- Make clear that ASD is a mental health condition under generally recognized independent standards of current medical practice, and a plan may not impose any financial requirements or treatment limitations in a classification on benefits for ASD treatment that are more restrictive than the predominant financial requirements or treatment limitations that apply to substantially all M/S benefits in the classification. A plan also may not impose any financial requirements or treatment limitations, including exclusions for Applied Behavior Analysis (ABA) therapy that are separately applicable to ASD benefits in a classification and not to any M/S benefits in the same classification.
- Ensure that when plans cover benefits for a range of services or treatments for medical/surgical conditions in a classification, plans cannot provide, for example, only one limited benefit for a mental health condition or substance use disorder in that classification.
These proposed rules, if finalized, would generally apply on the first day of the first plan year beginning on or after January 1, 2025.
KMK Comment: Certain aspects of the proposed rules provide needed clarification in the form of enhanced definitions and illustrative examples which are impactful in satisfying the NQTL comparative analyses requirements, however, at almost 400 pages, the proposed rules are both expansive and complex. While plan sponsors of self-insured plans typically rely on TPAs for operational compliance with mental health parity in terms of plan and network design, claims administration, parity testing and comparative analyses, the rules ultimately saddle plan sponsors with this legal compliance obligation. Although the Departments acknowledge this incongruence, unfortunately, nothing in the proposed rules offers a direct route from the Departments to the TPAs other than through the self-insured plans that they administer. For this reason, it is essential for plans to work with their legal counsel and service providers to ensure compliance in time for the 2025 effective date.
The KMK Law Employee Benefits & Executive Compensation Group is available to assist with these and other issues.
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