The U.S. Departments of Labor (DOL), Health and Human Services, and the Treasury (collectively, the “Tri-Departments”) published a Notice of Proposed Rulemaking (NPRM) on August 3, 2023, to propose new regulations for the Mental Health Parity and Addiction Equity Act (MHPAEA).
In particular, the proposed rules would implement amendments to MHPAEA that were passed under the Consolidated Appropriations Act of 2021 (CAA) to require documentation of comparative analyses for Non-Quantitative Treatment Limits (NQTLs). We anticipate that the Tri-Departments will publish new regulations for MHPAEA that will finalize most provisions of the NPRM in the coming days or weeks.
We anticipate that most provisions of the new regulations will finalize the proposed requirements without significant modifications. However, robust public comments were submitted with regard to several key provisions that may cause the Tri-Departments to modify or rescind the proposed rules.
Three of the most controversial provisions from the proposed rules to watch for in the final rules are:
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Quantitative testing for Non-Quantitative Treatment Limits
- Current guidance: Health plans must ensure that financial requirements (such as copays and coinsurance) and quantitative treatment limits (such as day or visit limits) that apply to benefits for the treatment of mental health and substance use disorders (MH/SUDs) are no more stringent than the predominant level of the financial requirement or treatment limit that applies to substantially all medical and surgical benefits. This is a mathematical test that has been well-established for these numerical limits since the first MHPAEA regulations were published in 2011.
- Potential Change: The 2023 NPRM also proposed to apply this mathematical test to NQTLs. If finalized, this new requirement may effectively prohibit most applications of prior authorization, step therapy, and other forms of utilization management for outpatient and prescription drug benefits for MH/SUD conditions.
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Application of MHPAEA to intellectual and developmental disabilities, including autism spectrum disorder
- Current guidance: There is some ambiguity about whether intellectual and developmental disabilities, including autism spectrum disorder, must be defined as “mental health conditions” that are protected by MHPAEA. Benefits for key services to treat these conditions—including applied behavior analysis; speech, physical, and occupational therapies; residential treatment services; assistance with activities of daily living; and respite care—are often subject to limits and exclusions under commercial health plans.
- Potential Change: Provisions of the NPRM would clarify that intellectual and developmental disabilities must be defined as mental health conditions. If finalized, these provisions would likely lead to new regulatory enforcement regarding limits and exclusions for services to care for people with these conditions.
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Fiduciary liability for health plan sponsors
- Current Guidance: Plan fiduciaries are responsible for ensuring the plan complies with the Employee Retirement Income Security Act (ERISA) both in its terms and in practice. ERISA’s requirements can be quite complex, and fiduciaries are expected to hire and rely on specialized experts where required, and they currently outsource compliance to various service providers, such as their third-party administrators.
- Potential Change: Under the NPRM, one or more named fiduciaries must review the comparative analysis and provide a certification stating whether they found the analysis to comply with applicable content requirements. If finalized, these provisions would require named fiduciaries to obtain the requisite knowledge to enable them to review the comparative analyses and determine whether the plan is in compliance with MHPAEA or to seek outside experts to review the comparative analyses so that the certification can be submitted accordingly.
Comment letters from industry groups representing health plans and benefits administrators raised significant legal and policy criticisms regarding each of these proposed requirements, even though these provisions were generally praised by mental health advocates and provider groups seeking to strengthen the parity requirements and enforcement. Given the robust public commentary on these points, it is possible that the final provisions on these topics may vary significantly from the proposed rules.
When the new final rules are published, employer health plans should take a variety of steps to ensure they comply with the new requirements, including:
1. Review service agreements for all delegated service providers that assist with the administration of your health plan benefits to ensure that agreements clearly identify and allocate obligations to ensure compliance with the new requirements.
Many current service agreements are silent on the particulars for MHPAEA compliance, including requirements to develop and routinely update comparative analyses for NQTLs and to support the health plan with any data or information needs in the event of a regulatory investigation. Applicable service providers may include an Administrative Service Organization, Pharmacy Benefit Manager, Utilization Management vendor, provider network, and/or other third-party administrators of your plan benefits. The need for effective service agreement language is heightened for plans that contract with multiple vendors, which may require coordination to develop a comprehensive set of NQTL analyses.
2. Develop a work plan to update your MHPAEA compliance documentation to align with the new requirements. The work plan should identify responsibilities and timelines for the health plan and each designated service provider.
The proposed rules include a broad range of clarifications that are intended to remedy common deficiencies that regulators are currently identifying in existing parity compliance documentation, especially regarding the requirements for comparative analyses for NQTLs that were added by the CAA. To date, in the absence of regulations to implement these statutory requirements, DOL investigations have routinely granted requests for additional time to submit requested analyses and have generally involved multiple rounds of requests for additional information to clarify gaps and ambiguities in the documentation that plans have submitted. However, DOL has indicated that following the publication of these rules, they will be less generous with extensions and will be more likely to find noncompliance where the submitted documentation fails to meet expectations.
In addition, as noted above, the new rules may finalize new requirements to apply the mathematical “predominant” and “substantially all” tests to NQTLs. If they do so, health plans will need to determine whether existing NQTLs will pass these tests, whether any safe harbors apply, and whether existing NQTLs will need to be modified or eliminated as applied to MH/SUD benefits.
Finally, in developing a work plan to make all updates to NQTL documentation necessary to comply with the new requirements, health plans should also consider the sufficiency of a variety of existing materials, including policies and procedures for the parity compliance program itself, quantitative testing procedures for financial requirements, definitions for benefits and benefit classifications, and disclosures of medical necessity criteria and reasons for denials.
3. Identify the named fiduciary that will be required to review each comparative analysis and certify that they believe the analysis complies with the new content requirements.
The proposed rules include detailed provisions on the content requirements needed to prepare a complete comparative analysis for each NQTL applicable to MH/SUD benefits offered under a group health plan or health insurance coverage. These include a proposed requirement for all plans subject to ERISA to identify at least one named fiduciary to certify that the comparative analysis complies with the content requirements. If finalized, plans should identify a named fiduciary responsible for the certification and confirm that the individual or entity is both aware of the new responsibility and qualified to review the comparative analysis. Due to the complexity and significant ambiguity of the MHPAEA requirements, as well as to the breadth and depth of detail that the MHPAEA analyses must cover, fiduciaries may wish to consult with competent counsel to advise on key questions regarding the sufficiency of the comparative analyses that are provided for review. Employers that do not have a formal governance structure similar to what they adopt for retirement plans should consider establishing a fiduciary committee that could, among other things, be the named fiduciary responsible for this new certification. Employers may also seek to negotiate with their third-party administrators to fulfill this named fiduciary responsibility.
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