Departments Announce Proposed Rules to Strengthen MHPAEA

On July 25, 2023, the DOL, HHS, and IRS (the departments) announced proposed rules under MHPAEA aimed at ensuring that people seeking coverage for mental health and substance use disorders can access treatment as easily as people seeking coverage for medical treatments.

MHPAEA Compliance and NQTLs
Enacted in 2008, MHPAEA applies to group health plans and insurers that cover mental health/substance use disorder (MH/SUD) benefits. Self-insured plans sponsored by small employers (50 or fewer employees) and stand-alone retiree-only medical plans that do not cover current employees are exempt. Broadly, MHPAEA requires plans and insurers that cover MH/SUD benefits to provide such coverage on par with medical/surgical (MED/SURG) benefits. This means plans and insurers cannot impose financial requirements (e.g., deductibles, copays, coinsurance, or out-of-pocket maximums), quantitative treatment limitations (“QTLs”, e.g., number of covered days, visits, or treatments), or non-quantitative treatment limitations (“NQTLs”, e.g., coverage exclusions, prior authorization requirements, medical necessity guidelines, network restrictions, or reimbursement rates) on MH/SUD benefits that are more restrictive than those applied to MED/SURG benefits.

Since the law was passed in 2008, MHPAEA enforcement has been a challenge for insurers, employers, regulators, and courts. The departments have reported a significant amount of noncompliance regarding the design and application of NQTLs that apply to MH/SUD benefits. To address this, the Consolidated Appropriations Act, 2021 (CAA, 2021) included an amendment to MHPAEA requiring that applicable group health plans and insurers document compliance with the law by providing an NQTL comparative analysis beginning February 10, 2021. Plans must make their comparative analysis available to the departments, applicable state agencies, or participants upon request.

In announcing the proposed rules, the departments chronicle America’s mental health crisis and describe pervasive barriers to access MH/SUD treatment, despite MHPAEA protections. While the departments have prioritized MHPAEA enforcement over the last two years, they continue to encounter widespread noncompliance, especially with respect to the design and application of NQTLs that apply to MH/SUD benefits. The departments’ comparative analyses reviews revealed that many plans and issuers had not carefully designed and implemented their NQTLs to be compliant with MHPAEA. (See our articles on the 2023 Report to Congress and FY 2022 Enforcement Fact Sheet for more information.)

Newly Proposed Rules
The newly proposed rules focus on NQTLs and are intended to ensure that individuals with mental health conditions and substance use disorders can benefit from the full protections afforded to them under MHPAEA, along with offering compliance guidance to plans and insurers. If finalized, the proposed rules would be effective beginning with 2025 plan years. Notable highlights of the departments’ actions in the proposed rules include:

• Delineating a three-part test for imposing an NQTL on MH/SUD benefits:
  1. First, a plan or insurer must show the NQTL is applied to MH/SUD no more restrictively than a comparable NQTL applied to MED/SURG benefits. The elements of this “no more restrictive” standard mirror the current tests for parity financial requirements and QTLs and would require comparisons to MED/SURG plan payments.
  2. Second, a plan or insurer must show that no factor or evidentiary standard relied on in designing or applying the NQTL “discriminates” against MH/SUD benefits as compared to MED/SURG benefits.
  3. Third, the plan or insurer must collect, evaluate, and consider the impact of relevant outcomes data (e.g., claim denial rates) on access to MH/SUD benefits relative to access to MED/SURG benefits. “Reasonable action” must then be taken to address any material differences in access, and such action must be documented in the relevant NQTL’s comparative analysis.
     
     The departments note specific concerns related to network composition, and to that end, the proposed rules require plans and insurers to collect and evaluate specific data points related to network composition, such as in-network and out-of-network utilization rates, network adequacy metrics (including time and distance data, and data on providers accepting new patients), and provider reimbursement rates (including as compared to billed charges). The DOL issued a Technical Release with the proposed rules to set out principles and seek public comment on data submissions for NQTLs related to network composition and a potential enforcement safe harbor. (See our article on the Technical Release 2023-01 for more information.)

Importantly, there are certain exceptions under this three-part test for NQTLs based on impartially applied independent professional medical or clinical standards, or standards related to fraud, waste, and abuse.

• Adding a “meaningful benefits” obligation. The proposed rules require plans and insurers to provide “meaningful benefits” for the treatment of a particular MH/SUD condition. This means that when plans and insurers cover a range of treatments for MED/SURG conditions in a classification (e.g., outpatient, out-of-network), they cannot provide only limited benefits for a MH/SUD condition in that same classification. For example, a plan that generally covers the full range of outpatient treatments and settings for MED/SURG conditions on an out-of-network basis cannot only cover outpatient out-of-network developmental evaluations for autism spectrum disorder (ASD) while excluding applied behavioral analysis (ABA) therapy, which is one of the primary treatments for ASD in children.
   
• Specifying six elements required for a sufficient NQTL comparative analysis:
  1. A description of the NQTL
  2. The identification and definition of the factors used to design or apply the NQTL
  3. A description of how factors are used in the design and application of the NQTL
  4. A demonstration of comparability and stringency as written
  5. A demonstration of comparability and stringency in operation
  6. Findings and conclusions
      
• Requiring certification of the comparative analysis by a named ERISA plan fiduciary. For employer-sponsored plans subject to ERISA, the proposed rules require one or more named plan fiduciaries to review a written list of all NQTLs, a general description of documentation relied on in preparing the comparative analysis, and the findings and conclusions of each NQTL analysis and certify whether they found the comparative analysis to comply with the content requirements.
   
• Illustrating how the proposed rules apply to NQTLs. The proposed rules provide thirteen particularly helpful examples of NQTLs – some in compliance and some not. Specifically, the examples illustrate more restrictive prior authorization and peer-to-peer review requirements in operation; more stringent methods for determining reimbursement rates; compliant provider network admission standards; more restrictive exclusions for experimental or investigative treatment applied to ABA therapy; a separate EAP exhaustion treatment limitation applicable only to MH/SUD benefits; a residential treatment exclusion applicable only to MH/SUD benefits; and exceptions for generally recognized independent professional medical or clinical standards.

Departments’ Regulatory Impact Analysis
The departments believe that the proposed rules will increase compliance with MHPAEA’s requirements for imposing NQTLs, which will expand access to MH/SUD benefits and ultimately lead to better mental health outcomes and lower out-of-pocket costs related to MH/SUD benefits. While the departments acknowledge that plans and insurers will incur costs to comply with the proposed rules, and that those costs may be passed on via higher premiums and cost-sharing, they have determined that the benefits of the proposed rules (e.g., increased compliance with MHPAEA, better mental health outcomes) justify the costs.

As to fully insured plans, the departments observed that insurers, as the designers of the products and claims administrators, make decisions about which NQTLs to use and how to implement them. Insurers are also typically the owners of claims and other data related to plan administration. As to self-insured plans, the departments observed that since TPAs and insurance companies providing administrative services only (ASO) overwhelmingly design the plans, administer the networks, manage claims, provide plan services, maintain and hold the data relevant to the comparative analyses, and drive MHPAEA compliance, they are in the best position to conduct comparative analyses, and to provide the analyses in an efficient and cost-effective manner. Accordingly, the departments expect that TPAs and insurers will perform most of the work associated with the analyses because they can do so at the lowest cost and greatest scale. However, self-insured plans may require additional work to address unique plan issues. The departments seek comments on these observations, specifically how to best ensure that all the entities involved in plan design and administration provide the information necessary to document MHPAEA NQTL compliance.

Takeaways
With these proposed rules in mind, employers should confirm their current plan designs and claims applications comply with MHPAEA requirements. The thirteen new examples of NQTLs are particularly helpful in identifying potential areas of noncompliance. The examples should be reviewed in addition to the MHPAEA Self-Compliance Tool. If an employer identifies a problematic NQTL in their plan, they should work with their legal counsel to review and resolve the issue with their carrier or TPA. While the proposed rules are extensive, they largely provide clarity on the NQTL comparative analysis, with some new requirements related to network adequacy and ERISA plan fiduciary certification of the comparative analysis.

The departments have requested a wide range of comments on the proposed rules, which can be submitted 60 days following publication in the Federal Register. Even though the rules have not been finalized and may change following the comment period, the requirement to perform and document NQTL comparative analysis has been effective under the CAA, 2021 since February 10, 2021, and the proposed rules provide valuable insight into the departments’ interpretation of MHPAEA compliance. Contact your consultant for additional information on MHPAEA’s NQTL requirements.

Requirements Related to MHPAEA: Proposed Rules »