The Wait Is Over! Departments Announce Final Rules to Strengthen MHPAEA

September 11, 2024

On September 9, 2024, the DOL, HHS, and IRS (the departments) announced final rules implementing MHPAEA, specifically aimed at ensuring equitable access to treatments for mental health and substance use disorders as compared to medical and surgical treatments. The final regulations are extensive and build on the existing MHPAEA compliance requirements. Certain notable highlights are summarized below, including a new certification requirement by a named plan fiduciary (e.g., the sponsor of a self-insured plan).

Background: 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 ultimately resulted in restricted access for 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 the preamble to the final 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 few 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 compliant NQTLs. (See our previous Compliance Corner articles on the 2023 Report to Congress and FY 2022 Enforcement Fact Sheet for more information.)

Final Rules: Key Provisions for Plan Sponsors

The final rules are extensive and focus on NQTLs, offering compliance guidance to plans and insurers. They have been partly modified to reflect the thousands of stakeholders’ comments the departments received.

To ensure MHPAEA compliance, including for purposes of preparing and/or reviewing NQTL comparative analysis, plans must:

• Ensure that the definitions of MH/SUD conditions used in coverage terms are consistent with the most current version of the International Classification of Diseases (ICD) or Diagnostic and Statistical Manual of Mental Disorders (DSM).
• Offer meaningful benefits that include at least one “core treatment” for each MH/SUD condition in every classification in which MED/SURG benefits are offered (those classifications being in-network outpatient, in-network inpatient, out-of-network outpatient, out-of-network inpatient, emergency care, and prescription drugs). The final regulations define core treatment as a standard treatment indicated by generally recognized independent standards of current medical practice.
• Ensure that the factors and evidentiary standards used to design NQTLs do not discriminate against MH/SUD conditions. This refers to biased factors or standards, rather than those based on reliable and independent sources.
• Collect and evaluate relevant outcomes data and take reasonable action to address material differences in access to MH/SUD benefits as compared to MED/SURG benefits.
• Include specific elements in the plan’s NQTL comparative analysis and make available to the departments, an applicable state authority, or participants upon request.

Fiduciary Certification

For ERISA plans, the final regulations require a named plan fiduciary – typically the insurer in a fully insured plan or an employer sponsoring a self-insured plan – to certify that they have engaged in a “prudent process” to select at least one qualified service provider (e.g., TPA) to complete the plan’s comparative analysis. The plan must also monitor the service provider’s work. Specifically, the DOL expects that a plan fiduciary will take an active role in the process by – at a minimum – reviewing the comparative analysis, confirming and understanding the findings, and seeking assurances from the service provider(s) that the plan’s NQTLs and comparative analysis comply with MHPAEA. These duties align with the general duties that ERISA imposes on plan fiduciaries.

Applicability Dates

While the final rules are generally applicable to group health plan years beginning on or after January 1, 2025, certain new requirements that will take more time to implement (e.g., those relating to the provision meaningful benefits, prohibition on discriminatory factors and evidentiary standards, evaluation of outcomes data, and related comparative analysis requirements) are applicable for plan years beginning on or after January 1, 2026.

Role of Insurers and TPAs

While MHPAEA compliance is directly applicable to health insurance issuers and group health plans, the departments view both issuers and TPAs as best situated to conduct the required comparative analyses. Since they already manage the same claims administration framework and provider networks across many plans, these entities are equipped to implement existing efficiencies to generate comparative analysis of NQTLs under their plan design and networks. The departments expect this will reduce the compliance burden on group health plan sponsors.

Specifically, with respect 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 also typically own claims data and other data related to plan administration. Accordingly, the departments assume that insurers will complete the NQTL comparative analysis for fully insured plans.

With respect to self-insured plans, the departments observed that 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 analysis, and therefore drive MHPAEA compliance. Accordingly, they are typically in the best position to generate the NQTL comparative analyses for their self-insured clients. While not directly subject to the comparative analysis requirements like insurers, the departments expect that TPAs will perform most of the work associated with the analyses because they can do so at the lowest cost and greatest scale. That said, self-insured plans are directly responsible for the comparative analysis under MHPAEA and may need to take additional steps (e.g., hiring an expert) to address unique plan issues.

Employer Takeaways

Even if steps towards MHPAEA compliance have not been taken in the past, employers should connect with their insurers and TPAs to inquire about assistance with a comparative analysis. While many provisions in these final rules are not applicable until 2026, the comparative analysis requirement is in effect today. These final rules will likely prompt insurers and TPAs to take a more active role in supporting employer-provided group health plans. MHPAEA enforcement will continue to be a top priority for the departments. It’s important not to overlook this requirement.

Fully insured employers should confirm the insurer’s obligation to comply with MHPAEA is acknowledged in the carrier agreement. Insurers are directly subject to MHPAEA’s comparative analysis requirements, so assurances of compliance should be readily available.

Self-insured employers should confirm that any administrative services agreements with their TPAs address responsibility for MHPAEA compliance. If necessary, these agreements should be amended to address how the TPA will support the plan’s NQTL comparative analysis. If the TPA will not provide the comparative analysis, then a self-insured plan will need to work with legal counsel or a qualified vendor to satisfy the requirements. Importantly, self-insured employers should evaluate the sufficiency of their TPA’s or other vendor’s comparative analysis with their legal counsel and take steps to remove any problematic NQTLs.

The departments indicated that updated guidance and compliance assistance materials will be released in the coming months. In addition, the rules may be challenged in court before becoming fully applicable. We will continue to report on any notable developments in Compliance Corner.

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