The US Departments of the Treasury, Labor, and Health and Human Services (the Departments) recently unveiled a proposed rule intended to increase mental health coverage through expanded plan oversight and enforcement activity.

The July 25, 2023 proposed rule seeks to amend existing regulations under the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), which requires group health plans (or health insurance coverage offered by an issuer in connection with a group health plan) to impose no stricter limitations on mental health and substance use disorder (Mental Health) benefits than those for medical/surgical benefits. The proposed rule also implements the non-quantitative treatment limitations (NQTLs) comparative analysis requirement added by the Consolidated Appropriations Act of 2021 (CAA).

Since the enactment of the CAA, the Department of Labor’s Employee Benefits Security Administration has dedicated significant enforcement resources to auditing group health plan compliance with the MHPAEA, specifically with regard to NQTLs. Under the CAA, group health plans offering Mental Health benefits are required to complete a written “[NQTL][1] comparative analysis,” which the plan must make available to a federal regulator upon request.

In conducting that analysis, group health plans are required to evaluate the design and their application of NQTLs and demonstrate how such design and application complies with the MHPAEA.

As part of that comparative analysis, the CAA required plans to assess

• plan or coverage terms or other relevant terms regarding NQTLs and a description of Mental Health benefits to which such terms apply;
• factors that plans use to determine how to apply NQTLs to Mental Health versus medical/surgical benefits;
• evidentiary standards that plans use to develop the factors that dictate how they apply NQTLs to Mental Health versus medical/surgical benefits;
• Standards that plans use to apply NQTLs in practice to Mental Health versus medical/surgical benefits; and
• to the extent any differences are identified regarding the application of NQTLs to Mental Health versus medical/surgical benefits, plans must document and disclose those differences.

The new proposed rule (1) updates MHPAEA terms and definitions; (2) prohibits plans from relying on any factor or evidentiary standard that discriminates against Mental Health benefits in applying and developing NQTLs; (3) further clarifies the types of data that a plan must collect in conducting its comparative analysis; (4) identifies what plans need to include in the NQTL reviews they have to provide to federal regulators; and (5) expressly applies MHPAEA parity standards to non–federal governmental health plans. These changes and clarifications are intended to ensure better access to Mental Health care, which has been a bipartisan priority.

ADDITIONAL GUIDANCE ON NQTLS

The proposed rule provides some clarification and additional requirements with respect to NQTLs. To impose an NQTL, the following conditions must be met:

• The limitation must not be more restrictive for Mental Health benefits than for medical/surgical benefits.
• The plan must meet specific requirements related to NQTL design and application.Group health plans should carefully consider the sources relied upon in developing and using NQTLs to ensure that the sources do not discriminate against Mental Health benefits as compared to medical/surgical benefits. Discriminatory sources and information would include those that “[are] biased or not objective, in a manner that results in less favorable treatment of [Mental Health] benefits, based on all the relevant facts and circumstances.” If any source of information is biased toward imposing greater restrictions on Mental Health benefits, it may not be relied upon. Plans may also not rely on “historical plan data or other historical information from a time when the plan or coverage was not subject to MHPAEA or was in violation of MHPAEA’s requirements where the use of such data results in less favorable treatment of” Mental Health benefits.
• The plan must collect, evaluate, and consider relevant data on access to Mental Health benefits compared with medical/surgical benefits and take appropriate action to address any significant differences.

The proposed regulations provide extensive guidance on each condition and offer examples of their application to certain NQTLs. They also include new examples of NQTLs commonly used by group health plans, such as prior authorization, peer-to-peer concurrent review requirements, and provider network admission standards. Exceptions are allowed only for NQTLs consistent with recognized independent professional medical or clinical standards or those addressing fraud, waste, and abuse.

If a plan fails to meet any of these requirements for an NQTL in a classification, it risks violating the MHPAEA and the NQTL cannot be imposed on any Mental Health benefit in that classification. In such cases, the plan must make changes to ensure compliance.

TYPES OF DATA TO CONSIDER FOR A COMPARATIVE ANALYSIS

In reviewing NQTLs, the proposed rule provides clarity on the types of information that group health plans should assess in determining their MHPAEA compliance and the information that must be covered in the comparative analysis.

Specifically, the proposed rule requires that a comparative analysis include

• ·network adequacy data that identifies the standards used in determining provider reimbursement rates, credentialing standards, and the plan’s procedures for ensuring that it has an adequate number of Mental Health covered providers;
• data assessing whether the plan applies NQTLs to Mental Health benefits in a more restrictive manner than the plan applies similar NQTLs to all medical/surgical benefits through samples of covered and denied Mental Health and medical/surgical benefit claims, records documenting the application of NQTLs, policies and procedures regarding the use of NQTLs, and documents regarding MHPAEA compliance to the extent such benefits are delegated to another entity;
• data assessing the quantitative impact on Mental Health benefit access due to any new NQTL and whether the NQTL complies with the MHPAEA (including the number and percentage of relevant claims denials due to the NQTL); and
• data assessing in-network versus out-of-network utilization rates, network adequacy metrics, and provider reimbursement rates tied to NQTLs.

To the extent the comparative analysis reveals any differences between the treatment of Mental Health and medical/surgical benefits, the group health plan must document any actions taken or planned to be taken to mitigate those differences. A group health plan will therefore need to take a more comprehensive approach when compiling data to evidence compliance with the MHPAEA and address any instances in which areas of differences are identified in that assessment.

INFORMATION TO BE REPORTED TO FEDERAL REGULATORS REGARDING NQTL USAGE

The proposed rules address the CAA requirement that group health plans demonstrate compliance with the MHPAEA by making an NQTL comparative analysis available to the Departments upon request. The comparative analysis generally must be disclosed to the applicable Department within 10 business days upon receipt of the request. According to the 2022 Report to Congress, the Departments noted that none of the comparative analyses reviewed on audit were sufficient.

The proposed rule attempts to clarify what would constitute a sufficient comparative analysis by including six specific content elements:

• A description of each NQTL imposed on Mental Health benefits;
• Identification and definition of the factors that the plan used to design and apply each NQTL;
• A description of how the plan used those factors in designing or applying an NQTL;
• A demonstration that any factors that the plan used in designing and applying the NQTL to Mental Health benefits are comparable to, and no more stringent than, those used in designing and applying the NQTL with respect to medical/surgical benefits as written;
• A demonstration that any factors the plan used in designing and applying the NQTL to Mental Health benefits are comparable to, and no more stringent than, those used in designing and applying the NQTL with respect to medical/surgical benefits as applied; and
• All findings and conclusions that the plan drew in conducting its analysis.

Group health plans must also prepare, and make available upon request, a written list of all NQTLs and a general description of any information on which the plan relied in preparing the comparative analysis for each NQTL. Plans can no longer simply provide details regarding how actual application of an NQTL may impact benefit usage; they must make clear how an NQTL may restrict a beneficiary’s access to Mental Health benefits if that is the case. If the Departments issue a final determination of noncompliance, the plan cannot impose the NQTL until compliance is demonstrated or appropriate action is taken to address the violation. If the plan remains noncompliant after the corrective action period, it is required to notify the plan participants of the noncompliance, among other details, within designated time frames.

WHAT COMES NEXT

The proposed rule will be published in the Federal Register on August 3, 2023. Once officially published, the public will have 60 days to comment before it takes effect. Given the widespread reaction from industry stakeholders and the volume of comments this rule is likely to elicit, it will likely be some time before a final rule is ultimately implemented. Whether comments will alter the landscape of the current rule is unclear given the Biden administration’s focus on expanding the breadth of Mental Health coverage.

Alongside the proposed rules, the Department of Labor issued a Technical Release seeking public comment with respect to the implementation of the proposed data collection and evaluation requirements for NQTLs linked to network composition. This input will play a crucial role in determining the criteria and requirements for evaluating whether health plans offer an adequate network of Mental Health providers.

We intend to publish an additional analysis on the impact the proposed rule will have on group health plans, which will provide further insight into the implications of the Technical Release. If you wish to receive the upcoming analysis, subscribe to our ML BeneBits mailing list.

[1] The proposed rule provides that NQTLs are limitations on the scope or duration of benefits for treatment and includes an illustrative nonexhaustive list of NQTLs. See 26 CFR § 54.49812-1(c)(4)(iii), 29 CFR § 2590.712(c)(4)(iii), 45 CFR § 146.136(c)(4)(iii).

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