The US Departments of the Treasury, Labor, and Health and Human Services (the Departments) recently unveiled a proposed rule intended to increase mental health coverage through expanded plan oversight and enforcement activity.
The July 25, 2023 proposed rule seeks to amend existing regulations under the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), which requires group health plans (or health insurance coverage offered by an issuer in connection with a group health plan) to impose no stricter limitations on mental health and substance use disorder (Mental Health) benefits than those for medical/surgical benefits. The proposed rule also implements the non-quantitative treatment limitations (NQTLs) comparative analysis requirement added by the Consolidated Appropriations Act of 2021 (CAA).
Since the enactment of the CAA, the Department of Labor’s Employee Benefits Security Administration has dedicated significant enforcement resources to auditing group health plan compliance with the MHPAEA, specifically with regard to NQTLs. Under the CAA, group health plans offering Mental Health benefits are required to complete a written “[NQTL][1] comparative analysis,” which the plan must make available to a federal regulator upon request.
In conducting that analysis, group health plans are required to evaluate the design and their application of NQTLs and demonstrate how such design and application complies with the MHPAEA.
As part of that comparative analysis, the CAA required plans to assess
The new proposed rule (1) updates MHPAEA terms and definitions; (2) prohibits plans from relying on any factor or evidentiary standard that discriminates against Mental Health benefits in applying and developing NQTLs; (3) further clarifies the types of data that a plan must collect in conducting its comparative analysis; (4) identifies what plans need to include in the NQTL reviews they have to provide to federal regulators; and (5) expressly applies MHPAEA parity standards to non–federal governmental health plans. These changes and clarifications are intended to ensure better access to Mental Health care, which has been a bipartisan priority.
The proposed rule provides some clarification and additional requirements with respect to NQTLs. To impose an NQTL, the following conditions must be met:
The proposed regulations provide extensive guidance on each condition and offer examples of their application to certain NQTLs. They also include new examples of NQTLs commonly used by group health plans, such as prior authorization, peer-to-peer concurrent review requirements, and provider network admission standards. Exceptions are allowed only for NQTLs consistent with recognized independent professional medical or clinical standards or those addressing fraud, waste, and abuse.
If a plan fails to meet any of these requirements for an NQTL in a classification, it risks violating the MHPAEA and the NQTL cannot be imposed on any Mental Health benefit in that classification. In such cases, the plan must make changes to ensure compliance.
In reviewing NQTLs, the proposed rule provides clarity on the types of information that group health plans should assess in determining their MHPAEA compliance and the information that must be covered in the comparative analysis.
Specifically, the proposed rule requires that a comparative analysis include
To the extent the comparative analysis reveals any differences between the treatment of Mental Health and medical/surgical benefits, the group health plan must document any actions taken or planned to be taken to mitigate those differences. A group health plan will therefore need to take a more comprehensive approach when compiling data to evidence compliance with the MHPAEA and address any instances in which areas of differences are identified in that assessment.
The proposed rules address the CAA requirement that group health plans demonstrate compliance with the MHPAEA by making an NQTL comparative analysis available to the Departments upon request. The comparative analysis generally must be disclosed to the applicable Department within 10 business days upon receipt of the request. According to the 2022 Report to Congress, the Departments noted that none of the comparative analyses reviewed on audit were sufficient.
The proposed rule attempts to clarify what would constitute a sufficient comparative analysis by including six specific content elements:
Group health plans must also prepare, and make available upon request, a written list of all NQTLs and a general description of any information on which the plan relied in preparing the comparative analysis for each NQTL. Plans can no longer simply provide details regarding how actual application of an NQTL may impact benefit usage; they must make clear how an NQTL may restrict a beneficiary’s access to Mental Health benefits if that is the case. If the Departments issue a final determination of noncompliance, the plan cannot impose the NQTL until compliance is demonstrated or appropriate action is taken to address the violation. If the plan remains noncompliant after the corrective action period, it is required to notify the plan participants of the noncompliance, among other details, within designated time frames.
The proposed rule will be published in the Federal Register on August 3, 2023. Once officially published, the public will have 60 days to comment before it takes effect. Given the widespread reaction from industry stakeholders and the volume of comments this rule is likely to elicit, it will likely be some time before a final rule is ultimately implemented. Whether comments will alter the landscape of the current rule is unclear given the Biden administration’s focus on expanding the breadth of Mental Health coverage.
Alongside the proposed rules, the Department of Labor issued a Technical Release seeking public comment with respect to the implementation of the proposed data collection and evaluation requirements for NQTLs linked to network composition. This input will play a crucial role in determining the criteria and requirements for evaluating whether health plans offer an adequate network of Mental Health providers.
We intend to publish an additional analysis on the impact the proposed rule will have on group health plans, which will provide further insight into the implications of the Technical Release. If you wish to receive the upcoming analysis, subscribe to our ML BeneBits mailing list.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following:
[1] The proposed rule provides that NQTLs are limitations on the scope or duration of benefits for treatment and includes an illustrative nonexhaustive list of NQTLs. See 26 CFR § 54.49812-1(c)(4)(iii), 29 CFR § 2590.712(c)(4)(iii), 45 CFR § 146.136(c)(4)(iii).