We previously reported on proposed regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA). If adopted in final form, these regulations would vastly complicate compliance by group health plans and health insurance issuers with an already challenging set of mental health parity rules.

The proposed regulations deal principally with non-qualified treatment limitations (NQTLs), i.e., non-numeric benefit coverage limits that must be no more restrictive for mental health and substance use disorder (MH/SUD) benefits than for medical surgical (M/S) benefits. Examples of NQTLs include prior authorization requirements, concurrent review, standards for provider admission, Rx formulary design, and fail-first policies or step therapy protocols.

The proposed regulations set out new requirements on NQTLs that include a three-part test consisting of a “no more restrictive” requirement, a “design and application” requirement and a “data evaluation requirement.” There is also a new meaningful benefit requirement, under which plans and issuers must provide meaningful benefits for MH/SUD treatment where the plan also provides a corresponding M/S benefit. With perhaps the exception of the “design and application” requirement, each of these requirements represents a major new compliance obligation on the part of plans and issuers.

This blog post focuses on the “no more restrictive” requirement. Future posts will examine the other requirements.

MHPAEA regulates aggregate lifetime and annual dollar limits, financial requirements, and treatment limitations. (The Affordable Care Act bars lifetime and annual dollar limits on essential health benefits (EHBs). Under MHPAEA, plans and issuers may not be able to impose lifetime and annual dollar limits on MH/SUD benefits that are not EHBs.) Treatment limitations are subdivided into quantitative treatment limitations (QTLs) (e.g., number of days or visits covered) and NQTLs.

The 2013 final MHPAEA regulations apply numerical standards testing to financial requirements and QTLs. These final regulations also adopted six classifications of benefits for this purpose: inpatient, in-network; inpatient, out-of-network; outpatient, in-network; outpatient, out-of-network; emergency care; and prescription drugs. To comply, a financial requirement or QTL imposed on an MH/SUD benefit must be no more restrictive than the predominant financial requirement or QTL that applies to substantially all M/S benefits in a classification. For this purpose:

• Substantially all” means that the financial limitation or QTL applies to at least two-thirds of all M/S benefits in the classification; and
• “Predominant” means the level of financial requirement or QTL that applies to more than one-half of the M/S benefits in the relevant classification.

The 2013 final regulations largely rely on a subjective analysis of the processes, strategies, evidentiary standards, and other factors used in the application of NQTLs. The proposed regulations retain this subjective standard and layer on a quantitative “no more restrictive” requirement. As proposed, NQTLs would be subject to numerical standards testing similar to the current law testing that applies to financial requirements and NQTLs. While the “substantially all” prong would not change, some minor modifications would be made to the “predominant” prong. Under the proposed regulations, when testing NQTLs, the term “predominant” would refer to the most common or most frequent variation of an NQTL within a benefit classification rather than “more than one-half.” The preamble to the proposed regulations explains the reason for the change by acknowledging that there are “significant differences between financial requirements or quantitative treatment limitations and NQTLs.”

Should the “no more restrictive” requirement be adopted as proposed, the consequences would be profound. It would, for example, be difficult or impossible to apply a prior authorization or concurrent review to any MH/SUD benefit in a classification unless two-thirds of the M/S benefits in the classification were also subject to prior authorization or concurrent review (unless the plan or issuer could qualify for an exception based on independent professional medical or clinical standards or standards related to fraud, waste and abuse). While the proposed guidelines do not flesh out these exceptions, it is anticipated that they will apply narrowly. Similarly, a plan or issuer that covers ADA therapy for autism spectrum disorder would not be able to apply an age limit of, say, age 26 since no such limit would apply to two-thirds of the M/S benefits in the relevant classification. (Such a limit would likely run afoul of other provisions of the proposed guidelines as well.)

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