Now you know.

It could not be any clearer to employers that compliance with the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) will be a—maybe the—top health and welfare benefit priority for federal regulators for years to come.

That is the nearly inescapable conclusion following the July 25, 2023, release of the following:

• Proposed regulations that would update the 2013 final MHPAEA regulations from the U.S. Department of Treasury, the U.S. Department of Labor (DOL) and the U.S. Department of Health and Human Services (HHS) in ways that would make compliance much more difficult and costly for employers. These rules would take effect in 2025.
• A long-awaited report to the U.S. Congress by the three federal agencies summarizing their recent enforcement efforts and for the first time naming three specific employee benefit plans cited for MHPAEA violations.
• A technical release outlining, and soliciting comments on, a potential approach that the agencies may take to determining the types of data that employers will have to compile to demonstrate that any nonquantitative treatment limitations (NQTLs) in their health plans do not run afoul of the MHPAEA standards regarding composition of provider networks.
• A fact sheet highlighting MHPAEA enforcement efforts in fiscal year 2022 by the DOL and the U.S. Centers for Medicare and Medicaid Services (CMS).

Quick Hits

• MHPAEA compliance generally would be much more challenging for employers under the proposed regulations.
• The proposed rules would for the first time provide employers with detail on the requirements for the “comparative analysis” regarding nonquantitative treatment limitations that plans have to do under a 2021 statute.
• Outcomes data would be needed to evaluate material differences in access between MH/SUD providers and medical/surgical providers.

MHPAEA generally requires that health plans and insurers offering mental health and substance use disorder (MH/SUD) benefits provide those benefits on terms no less generous than those for medical/surgical benefits. The MHPAEA rules require plans and insurers to make various comparisons between MH/SUD benefits and medical/surgical benefits to ensure compliance. The Consolidated Appropriations Act, 2021 (CAA) set a new requirement that plans and insurers, as of February 10, 2021, document MHPAEA compliance in a “comparative analysis” that would need to be disclosed to federal regulators, and plan participants, upon request.

The proposed regulations, published in the Federal Register on August 3, 2023, are written in response to what federal officials have called “evasion” of MHPAEA, and would generally require far more analysis and disclosure and limit plans’ discretion to set rules in ways that the agencies say hurt plan participants. The agencies are seeking comments on the proposed rules until October 2, 2023.

Here are summaries of three key changes that the proposed regulations would make.

NQTL Comparative Analysis

Under the CAA, plans are required to have a comparative analysis demonstrating that the processes, strategies, evidentiary standards, and other factors used to apply an NQTL (such as a prior authorization or fail-first requirement) to MH/SUD benefits are comparable to, and applied no more stringently than, those used to apply that same NQTL to medical/surgical benefits. This analysis is generally done separately in each of six benefit classifications (in-network inpatient, out-of-network inpatient, in-network outpatient, out-of-network outpatient, emergency care, and prescription drugs).

Though the CAA comparative analysis requirement took effect in 2021, the agencies have indicated that most or all of the analyses they have examined have been incomplete or inadequate. The CAA itself provides basic content requirements for the analyses, which the agencies expanded on a bit in frequently asked questions guidance issued in 2021. The proposed regulations for the first time would define key terms —such as “evidentiary standards,” “factors,” “processes,” and “strategies”—and add extensive detail about the analysis that plans would need to provide for each NQTL they used.

First, the proposed regulations would set content requirements for comparative analyses. An analysis would have to: identify the relevant NQTL, identify all MH/SUD and medical/surgical benefits to which it applies, describe which benefits are included in each classification, and identify the predominant NQTL that applies to “substantially all” medical/surgical benefits in the relevant classification.

Second, the analysis would have to identify all the “factors” used to design or apply the NQTL. This would include identifying the “evidentiary standards” considered or relied upon to design or apply each factor. The analysis would also have to define each factor. (Factors generally include all information a plan considers or relies upon to design an NQTL or to determine how an NQTL would apply to specific benefits. Examples include clinical efficacy, severity of condition, cost variability, and licensing and accreditation of providers. Evidentiary standards are sources, evidence, or standards considered or relied upon in designing or applying an NQTL. They can be statistical, clinical, or empirical in nature, and include medical literature, professional standards, payment rates, and clinical treatment guidelines.)

Third, the analysis would describe how each factor is used in designing or applying the NQTL to MH/SUD benefits and medical/surgical benefits in a classification. If more than one factor is identified, the analysis would have to explain how the factors relate to each other, the order in which they are applied, whether and how any factors are given more weight than others, the reason for the weighting or ordering of factors, and any deviation or variation from a factor.

Fourth, the analysis would have to demonstrate that in any classification and “under the plan terms “as written,” any processes, strategies, evidentiary standards, or other factors used in designing and applying the NQTL to [MH/SUD] benefits in the classification are comparable to, and are applied no more stringently than,” those used in designing and applying that same NQTL to medical/surgical benefits. (Emphasis added.) This would have to include documentation of each such factor, including quantitative data, calculations, or other analyses showing whether MH/SUD benefits satisfy any applicable threshold identified in the relevant evidentiary standard. This would also include, among other things, an evaluation of relevant data to determine whether the NQTL would apply.

(Under the proposed regulations, processes would mean “actions, steps, or procedures that a plan uses to apply an NQTL,” “provider referral requirements,” and “the development and approval of a treatment plan.” Strategies would mean “practices, methods, or internal metrics that a plan considers, reviews, or uses to design an NQTL,” including the information “deemed reasonably necessary” to determine medical necessity, and relying on treatment guidelines.)

Fifth, the analysis would have to demonstrate that in any classification and under the plan terms in operation, any “processes, strategies, evidentiary standards, or other factors used in designing and applying the NQTL to [MH/SUD] benefits in the classification are comparable to, and are applied no more stringently than,” those used in designing and applying that same NQTL to medical/surgical benefits. The analysis would need to comprehensively explain: how the plan ensures that its operations in designing and applying each NQTL are comparable between MH/SUD and medical/surgical benefits; and how NQTLs are not applied more stringently to MH/SUD benefits than to medical/surgical benefits. This explanation may include the plan’s methodologies with respect to designing and applying NQTLs, and data demonstrating NQTL application. If a plan includes such data, it would need to define all relevant data elements including the time period and inputs used in any calculations. The analysis would also explain any criteria used to select the MH/SUD and medical/surgical benefits to which each NQTL would apply.

And, finally, the comparative analysis would include a detailed discussion of the findings and conclusions as to the comparability of the processes, strategies, evidentiary standards, and other factors used in designing and applying the NQTL to MH/SUD benefits and medical/surgical benefits within each classification, and the “relative stringency” of their application, both as written and in operation. This would need to include any findings indicating that a plan might violate the requirements and actions the plan intends to take to correct the potential failures. The plan would also need to list any citations supporting the conclusions, the names, and credentials of the individuals involved in preparing the comparative analysis, and the qualifications of any experts relied upon in generating that analysis.

The analysis would be dated and named fiduciaries of the plan would need to certify that the comparative analysis satisfied the content requirements. No similar certification is currently required by plan fiduciaries.

Required Use of Outcomes Data—Access

Under the proposed regulations, plans would have to collect and evaluate outcomes data and take action to address material differences in access to MH/SUD benefits compared to medical/surgical benefits, with a specific focus on ensuring their network composition standards do not create material differences in access. Examples of this data include: metrics on time and distance from plan participants; the share of network providers accepting new patients; and the portion of MH/SUD and medical providers in a region that are in-network.

Part of the process would be to review and consider quantitative outcomes data to get a sense of how the NQTL functions in the context of the plan’s administration (e.g., sampling of covered and denied claims available to support analysis). The proposed regulations emphasize the need for plans to evaluate those outcomes and take reasonable action to address any material differences in access. The agencies believe “that material differences in access shown by outcomes data related to such NQTLs should be subject to a higher level of scrutiny than for other NQTLs.”

Exception for Independent Medical Standards, Standards to Prevent Fraud or Abuse

The proposed regulations would create two exceptions to the general rule under the proposed regulations that an NQTL can be applied to MH/SUD benefits only if: (1) the limitation is “no more restrictive” as applied to MH/SUD benefits than to medical/surgical benefits; (2) the factors and evidentiary standards relied on in designing and applying the NQTL are not based on information, evidence, sources, or standards that discriminate against MH/SUD benefits; and (3) the plan collects, evaluates, and considers the impact of relevant data on access to MH/SUD benefits relative to access to medical/surgical benefits and takes “reasonable action” to address any material differences.

This “no more restrictive” requirement would be waived regarding an independent professional medical or clinical standard if an NQTL is applied impartially using “generally recognized independent professional medical or clinical standards (consistent with generally accepted standards of care),” and did “not deviate from those standards in any way, such as by imposing additional or different requirements.” The requirement would also not apply to an NQTL “reasonably designed to prevent fraud, waste, and abuse based on indicia of fraud, waste, and abuse that have been reliably established through objective and unbiased data, and also [] narrowly designed to minimize the negative impact on access to appropriate [MH/SUD] benefits.”