Embedded in the Consolidated Appropriations Act, 2021 (the “CAA”) is a new obligation for group health plan sponsors and insurers that provide health insurance to document that their group health plan or insurance policy complies with the non-quantitative treatment limitations of the Mental Health Parity and Addiction Equity Act of 2008 (the “MHPAEA”). The provision was effective February 10, 2021.
As background, the MHPAEA generally requires group health plans to ensure that the benefits provided by the plan for mental health and substance abuse disorders are on par with those provided for medical and surgical benefits. This parity applies to both quantitative requirements, such as dollar limits or limitations on the number of days of treatment, as well as nonquantitative treatment limitations (“NQTLs”) such as medical necessity determinations, pre-certification requirements, and the criteria to designate medical providers as in-network providers. The new documentation obligation applies to NQTLs only.
At a high level, the CAA requires that plan sponsors and issuers document the following:
- The plan terms regarding NQTLs and the classification of benefits that they apply to;
- The factors and standards used to determine those NQTLs for both medical/surgical and mental health/substance use disorder benefits;
- An analysis to show whether the NQTLs, both as written and in operation, are not more stringent for the mental health/substance use disorder benefits than they are for the medical/surgical benefits; and
- Specific findings and conclusions on the parity of the NQTLs.
In a recently released set of FAQs, the three federal government agencies charged with enforcing this new rule – the Department of Labor, Internal Revenue Service, and Department of Health and Human Services (collectively, the “Departments”) – include some additional detail, such as:
- Analyses should explain whether any factors used in creating a NQTL were given more weight than others and the reason(s) for doing so, including an evaluation of any specific data used in the determination.
- To the extent the plan or issuer defines any of the factors, evidentiary standards, strategies, or processes in a quantitative manner, it must include the precise definitions used and any supporting sources.
- If the application of the NQTL turns on specific decisions in administration of the benefits, the plan or issuer should identify the nature of the decisions, the decision maker(s), the timing of the decisions, and the qualifications of the decision maker(s).
- If the plan’s or issuer’s analyses rely upon any experts, the analyses, as documented, should include an assessment of each expert’s qualifications and the extent to which the plan or issuer ultimately relied upon each expert’s evaluations in setting recommendations.
Plan sponsors and insurers do not have to file this report documenting their analysis of NQTLs; rather, if a Department requests a copy, the plan sponsor or insurer is required to provide a copy to the Department. The Departments will generally request a copy when they are investigating potential MHPAEA violations or complaints regarding noncompliance with MHPAEA that concern NQTLs, although the law also permits the Departments to request a copy of the report in other circumstances, which could include a routine health plan audit.
If one of the Departments requests the report and determines that it is insufficient, it will tell the plan sponsor or issuer what additional information is needed. If one of the Departments, after reviewing the report, determines that there is a problem in how the NQTLs are being applied to mental health/substance use disorder benefits, it will give the plan sponsor or issuer 45 days to correct the issue. If the issue is not corrected to the satisfaction of the Department, then the plan will be required to notify its participants that its plan violates the MHPAEA.
The report must also be provided upon request of state insurance regulators and plan participants.
Plan sponsors that offer fully-insured benefits should discuss with their insurance broker whether the report is available from the insurance carrier. Under the CAA, the insurance carrier is obligated to prepare the report.
Plan sponsors that offer self-insured benefits are responsible for preparing the report. So far, while we’ve seen third party administrators provide some of the information needed to prepare the report, that information is not tailored to the plan sponsor’s particular plan and does not include all of the analyses that are needed, so plan sponsors will need to work with their ERISA counsel or benefits consultant to turn the information from the third party administrator into a report that would satisfy these legal requirements. Third party administrators should be aware of this new obligation and that most plan sponsors with self-insured plans are looking to their third party administrators for this data.