Will Federal Rules on Mental Health Parity Work This Time?
Agencies Issue Guidance Regarding Consolidated Appropriations Act, 2021 (“CAA”) Amendments to Mental Health Parity and Addiction Equity Act (“MHPAEA”)
by Dannae Delano, Barry Salkin and Roberta Casper Watson
It has been long understood that mental and behavioral health treatment is just as important as physical health to an individual’s well-being. Unfortunately, lack of understanding and deep-rooted stigma result in longtime unequal coverage for mental and behavioral health, limiting access to needed care and subjecting many Americans to the risk of major financial losses from out-of-pocket health costs. Interestingly, mental health parity has been championed over the last 50 years by national-level politicians on both sides of the aisle. The first major step occurred in 1996 with the enactment of the Mental Health Parity Act (“MHPA”), which provided that employer health plans covering 50 or more employees and offering mental health benefits cannot impose disparate annual or lifetime limits on mental health care. The MHPA didn’t produce the needed fundamental change because employers just substituted caps on numbers of outpatient visits and inpatient days, and other new restrictions and limitations on mental and behavioral health benefits.
Many subsequent efforts to enact a comprehensive Federal law were unsuccessful, and, although many states acted, the laws varied widely and did not regulate employer-provided self-funded coverage. The MHPAEA, enacted in 2008, focused on curbing both financial and non-quantitative plan provisions that limit access to addiction and mental health care. Unfortunately, exemptions and lack of enforcement still made national and state level mental health parity an important issue.
Under the MHPAEA, if a group health plan includes both medical/surgical benefits and mental health/substance use disorder (“MH/SUD”) benefits, then the financial limitations (e.g. deductibles and copayments) and the treatment limitations (such as visit limits and days limits) that apply to MH/SUD benefits must be no more restrictive than the predominant financial requirements or treatment limitations that apply to substantially all medical/surgical benefits. This statutory requirement is generally referred to as the substantially all/predominant test.
Under final regulations issued under the MHPAEA, IRS, DOL and HHS (the “Departments”) distinguished between quantitative treatment limitations, as discussed above, and qualitative treatment limitations, although the agencies referred to qualitative limitations as nonquantitative treatment limitations (“NQTLs”). As a result, certain utilization reviews, prior authorizations and other group health plan provisions may only be applied to MH/SUD benefits if they are comparable to or less restrictive than those for medical/surgical services. NQTLs include (i) medical management standards limiting or excluding benefits based on medical necessity, on medical appropriateness, or on whether the treatment is experimental or investigational, including standards for concurrent review; (ii) formulary design for prescription drugs; (iii) network tier design; (iv) fail-first policies or step therapy protocols, such as refusal to pay for higher cost therapies until it can be shown that a lower-cost therapy is not effective; (v) exclusions based on failure to complete a course of treatment; and (vi) restrictions based on geographic limitation, facility type, provider specialty, and other criteria that limit the scope or duration of benefits for services provided under the plan or coverage. These NQTL provisions are not prohibited outright but are prohibited if they are applied more stringently to MH/SUD benefits than to medical surgical/benefits.
The CAA amended the MHPAEA, effective February 10, 2021, by expressly requiring group health plans and health insurance carriers that offer both medical/surgical and MH/SUD benefits to perform and document their comparative analyses of the design and application of NQTLs, and to report their findings to state and local agencies. These comparative analyses must demonstrate that the processes, strategies, evidentiary standards, and other factors used to apply the NQTLs to MH/SUD benefits are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, and other factors used to apply NQTLs to medical/surgical benefits in a benefit claim analysis. Under final regulations issued by the Departments, there are six benefit classifications that must be tested: (i) inpatient, in-network; (ii) inpatient, out-of-network; (iii) outpatient, in-network; (iv) outpatient, out-of-network; (v) emergency care; and (vi) prescription drugs. The Departments recently released a series of FAQs implementing the new CAA MHPAEA transparency provisions, which provide important practical guidance for plans offering MH/SUD benefits.
Plans and issuers should currently be prepared to make their comparative analyses available to the Departments or applicable state authorities upon request. There is no delay from the February 10, 2021 date specified in the CAA. The comparative analyses must be sufficiently specific, detailed, and reasoned to demonstrate whether the processes, strategies, evidentiary standards, and other factors used in developing and applying a NQTL are comparable and applied no more stringently to MH/SUD benefits than to medical/surgical benefits. That requirement will not be satisfied merely by a general statement of compliance, coupled with a conclusory reference to broadly stated processes, strategies, evidentiary standards, or other factors. Rather, the analysis for each plan must be detailed and specific.
The Departments have listed six specific practices and procedures that would not satisfy the CAA requirements:
- Production of a large volume of documents without a clear explanation of how and why each document is relevant to the comparative analysis;
- Conclusory or generalized statements, including mere recitation of the legal standard, without specific supporting evidence and detailed explanation;
- Identification of processes, strategies, sources, and other factors without the required clear and detailed comparative analysis;
- Identification of factors, evidentiary standards, and strategies without a clear explanation of how they were defined and applied in practice;
- Reference to factors and evidentiary standards that were defined or applied in a quantitative manner, without the precise definitions, data, and information necessary to assess their development or application; and
- Analyses that are outdated due to the passage of time, a change in plan structure, or any other reason.
The Departments further stated that the DOL’s MHPAEA Self-Compliance Tool includes useful guidance regarding the manner in which comparative analyses should be conducted, and provided a list of nine items that would be the minimum required elements of the analysis, including the date of the analysis; the name, title and position of the person or persons performing the analysis; if there was any reliance on experts, an assessment of the expert’s qualifications and the extent to which the plan ultimately relied on the recommendations of the expert; and, if application of the NQTLs was based on specific decisions in the administration of benefits, the nature of the decision, the decision makers, the timing of the decisions, and the qualifications of the decision makers.
The FAQs also identified the types of documents that plans and issuers should be prepared to make available to the Departments to support the analyses and conclusions in their comparative analyses. These documents would include any materials that may have been prepared for compliance with applicable state reporting requirements, and any guidelines, claims processing policies and procedures or other standards that the plan or issuer relied on to determine that the NQTLs were applied no more stringently to MH/SUD benefits than to medical/surgical benefits.
If the plan or issuer has not provided enough information to review the required comparative analyses, the plan or issuer will have a 45-day period within which it may take corrective action. If, following that 45-day corrective action period, the Departments have determined that the plan is still not in compliance, not later than seven days after such determination, the plan or issuer must notify all individuals enrolled in the plan or coverage that the coverage does not comply with the MHPAEA. The Departments will also share findings of compliance and noncompliance with the relevant State authorities.