By Dannae Delano, Roberta Casper Watson and Barry Salkin
On July 25, the Departments of Treasury, Labor, and Health and Human Services (the “Departments”) issued proposed regulations and other related guidance under the Mental Health Parity and Addiction Equity Act (“MHPAEA”), focused primarily on nonquantitative treatment limitations (“NQTLs”). See our client alert discussing the proposed regulations. NQTLs include, among other things, medical management standards such as prior authorization limiting or excluding benefits based on medical necessity or medical appropriateness, or whether the treatment is experimental or investigative; formulary design for prescription drugs; for plans with multiple network tiers, such as preferred providers or participating providers, network tier design; methods for determining out of network rates; fail-first policies or step therapy protocols; exclusions based upon failure to complete a course of treatment; and restrictions based on geographic location, facility type, provider specialty, and other criteria that limit the scope or duration of benefits provided under the plan.
This followed an enhanced enforcement period in 2022 required under the Consolidated Appropriations Act that was designed to focus on the lack of mental health parity compliance in health plan design. The proposed regulations would, if finalized, establish new requirements for group health plans to collect and evaluate relevant data in a manner reasonably designed to assess the impact of a NQTL on access to mental health and substance use disorder benefits and medical and surgical benefits, and consider the impact as part of the plan’s or issuer’s analysis of whether the NQTL, in operation, complies with the relevant provisions of the proposed regulations.
In Technical Release 2023-01 P, the Departments indicated that they are particularly concerned with the adequacy of plans’ networks for providing mental health and substance use disorder benefits. They are concerned that participants are more often forced to go out-of-network to obtain mental health and substance use disorder treatment, and that that puts a significant burden on plan participants and limits their access to care for mental health and substance use disorder issues. As a result, the Departments are suggesting the possible creation of a network adequacy safe harbor, and they set out principles regarding the relevant data that group health plans and health insurance issuers would be required to collect and evaluate for those NQTLs related to network composition.
In the Technical Release, the Departments request comments on the type, form, and manner of data required to be collected and evaluated under the proposed regulations, if finalized, and operational instructions on what constitutes relevant data for NQTLs relating to network composition. This data would be used by plans and issuers as part of their comparative analysis for NQTLs related to network composition.
In the Technical Release, the Departments identified four specific types of data they are considering requiring plans and issuers to collect and evaluate as part of their comparative analyses related to network composition: out of network utilization, percentage of in-network providers actively submitting claims; time and distance standards; and reimbursement rates. If the proposed regulations are finalized, the Departments intend to create an enforcement safe harbor with respect to NQTLs related to network composition for plans and issuers that meet or exceed specific data-based standards. The exact standards will be identified in future guidance but are anticipated to be high standards.
Plans and issuers that satisfy the terms of the safe harbor would not be subject to an enforcement action by the Departments under MHPAEA with respect to network composition for a period of time, as specified in the guidance, with one possible time period being two years from the date when the comparative analysis is requested. The NQTLs related to network composition covered by the safe harbor would include standards for provider and facility admission to participate in a network or for continued network participation, including methods for determining reimbursement rates, credentialing standards, and procedures for ensuring the network includes an adequate number of each category of provider and facility to provide covered services under the plan or coverage. The Departments indicated that a phased-in approach for this federal enforcement safe harbor is being considered, in which plans and issuers demonstrate progress towards meeting or exceeding the standards over multiple plan years to establish a long-term standard for plans and issuers to achieve if the standards for the safe harbor are not initially met. Such standards would provide noncompliant plans and issuers with a pathway to meet or exceed those standards from their current baselines.
However, such enforcement relief would only be available if, during the two year or other specified period, the plan or issuer has not reduced its coverage of NQTLs. Specifically, the plan must not have made a change in benefit design or in the processes, strategies, evidentiary standards, and other factors used to design or apply the plan’s NQTLs to (i) additionally limit the scope or duration of those benefits, (ii) increase the scope or duration of medical and surgical benefits without comparably increasing the scope or duration of mental health or substance use disorder benefits or (iii) substantially affect the probative value of the data submitted in the comparative analysis. If such a change was made by a plan or health insurance issuer, the enforcement safe harbor would cease to apply as of the date of the change. In order to qualify for this potential enforcement safe harbor, all of the standards specified in future guidance would need to be satisfied. As an additional qualification, the potential enforcement safe harbor would be limited to NQTLs related to network composition and would not extend to other NQTLs.
Finally, the Departments are asking for comments on various issues relating to the possible federal enforcement safe harbor, including whether plans and issuers would actually seek to utilize a federal enforcement safe harbor. (It appears that, in light of the continued potential for state enforcement or, for plans covered by ERISA, the private right of action for participants and beneficiaries, and whether states might provide similar relief, the Departments do not want to provide for an enforcement safe harbor that would not actually be utilized.
Plan sponsors who have struggled with Mental Health Parity compliance, both due to the complexity of the rules and the cost of compliance, should welcome the proposed regulations and potential enforcement safe harbor and assist the Departments with the information being solicited, in hopes the guidance will be quickly finalized.