Federal mental health parity proposed rules target health plans and issuers

What is the MHPAEA?

Congress passed the Mental Health Parity Act of 1996 to prohibit group health plans from imposing limits on mental health benefits that are less favorable than medical and surgical benefits. In 2008, the MHPAEA significantly expanded the parity requirements and extended them to include substance abuse disorder benefits.

Generally speaking, the MHPAEA requires health plans and health insurance issuers that offer group health insurance coverage to ensure that the financial requirements and treatment limitations applicable to covered mental health or substance use disorder benefits are no more restrictive than those applicable to medical and surgical benefits.[1] This requirement, along with requirements to have comparable aggregate lifetime and dollar limits, is often referred to as requiring that mental health and substance abuse disorder benefits be “in parity” with medical and surgical benefits.

The MHPAEA has been amended several times, notably:

• The Patient Protection and Affordable Care Act of 2010 extended MHPAEA to apply to individual health insurance coverage;
• The Consolidated Appropriations Act of 2021 amended the MHPAEA to require plans to “perform and document comparative analyses of the design and application of NQTLs” and to make these available to state authorities and to the Departments upon request”[2]; and
• The Consolidated Appropriations Act of 2023 sunset the provisions that permitted certain self-funded state and local governmental plans to opt-out of the MHPAEA.[3]

Why did the Departments issue the Proposed Rules?

The Departments first jointly promulgated MHPAEA regulations in 2013. The Proposed Rule[4] was triggered, in part, by recent statutory changes in the CAA of 2021 and CAA of 2023. But it also revises and expands existing regulations in response to what the Departments describe as a “mental health and substance abuse disorder crisis” across the country and their concerns about compliance with existing MHPAEA requirements.[5] In the Preamble, the Departments explain that they “continue to receive and investigate complaints that plans and issuers fail to comply with [the] MHPAEA, by continuing to restrict access to benefits for mental health conditions and substance abuse disorders in ways that are more onerous and limiting than for medical and surgical care.”[6] The Departments state that “nearly all plans or issuers audited for MHPAEA compliance could not demonstrate compliance” with certain obligations of the law.

In particular, the Departments expressed concern about health plans’ use of NQTLs, which are “non-numerical requirements that limit the scope or duration of benefits, such as prior authorization requirements, step therapy, and standards for provider admission to participate in a network, including methodologies for determining reimbursement rates.”[7]

How would the Proposed Rule change current regulations?

The Proposed Rule includes significant revisions to the existing regulations, including:

• Clarifying that the MHPAEA requires access parity, i.e., that individuals can access their mental health and substance use disorder benefits in parity with medical and surgical benefits.[8]

• Revising key regulatory definitions, including the “mental health benefits,” “substance use disorder benefits,” “medical/surgical benefits,” and “treatment limitation.”[9]

• Adding several new definitions, including the terms “restrictive,” “substantially all,” and “predominant,” related to the required NQTL analyses.[10]

• Amending existing examples and providing new examples that explain the limits of a health plans’ and issuers’ abilities to impose NQTLs and include descriptions of prohibited conduct.[11]

• Codifying NQTL requirements, including the requirement that a plan or issuer that imposes any NQTL on mental health or substance use disorder benefits must perform and document comparative analyses of the design and application of all NQTLs, with specific standards related to network composition, out-of-network reimbursement rates, and prior authorization.[12]

• Outlining the NTQL compliance processes for providing NQTL analyses and additional data to regulators and, if the Departments determine that the plan is not in compliance, developing correction action plans. [13]

The Proposed Rule, if finalized, would apply on the first day of the first plan year beginning on or after January 1, 2025.[14]

How would the Proposed Rule affect plans and issuers?

The Proposed Rule would place a number of new responsibilities on plans and issuers that will require revisions to existing policies, procedures, and plan documents, as well as auditing and monitoring to ensure compliance. Specifically:

• Plans and issuers would need to review their coverage policies to ensure compliance with the parity requirements for each benefit classification. [15]

  • Note that the Proposed Rule states that coverage of mental health or substance abuse benefits must be “meaningful” in order to be considered for purposes of parity.[16] For example, the Departments say that if a plan provides primary treatment for autism spectrum disorder but not outpatient treatment and benefits, this fails the “meaningful” test.[17]

• Plans and issuers would need to comply with new content requirements for their NQTL comparative analyses, including among other things the identification and definition of the factors used to design or apply the NQTL, a demonstration of comparability and stringency (both as written and in operation), and findings and conclusions.[18]

• Plans and issuers would be required to make their comparative analyses available and send them to the Departments within 10 business days of a request. [19]

• When so determined by one of the Departments after a review process, plans and issuers would be required to provide all enrolled participants a standalone notice in no less than 14-point type stating that the plan or issuer has been determined not to be in compliance with the MHPAEA. [20]

What does the Technical Release say?

The Technical Release describes four types of data that group health plans and health insurance issuers would be required to collect and analyze to demonstrate compliance with the NQTL rules: (1) out-of-network utilization; (2) percentage of in-network providers actively submitting claims; (3) time and distance standards; and (4) reimbursement. [21]

The Technical Release also describes a potential federal enforcement safe harbor that the Departments intend to create for plans and issuers that meet or exceed certain data-based standards for network composition. Plans and issuers that satisfy the terms of the safe harbor would not be subject to an enforcement action by the Departments under the MHPAEA with respect to network composition NQTLs for an initial period.[22] The Departments seek comments on the potential utilization and effect of such a safe harbor, whether stakeholders would support the development of other safe harbors, and other issues related to the data collection and analysis.

Authored by Craig Smith, Elizabeth Halpern, Jessica Hanna, Lindsey Johnson, and Abdie Santiago