Comparative Analysis of Nonquantitative Treatment Limitations
Background. The Mental Health Parity and Addiction Equity Act (MHPAEA) requires health plans and health insurance policies to provide benefits for mental health and substance use disorders that are comparable to the benefits that they provide for medical and surgical expenses. The Act addresses comparability in both quantitative and nonquantitative terms. The quantitative rules apply mathematical tests to a plan’s cost-sharing (deductibles, copayments, and coinsurance) requirements and limits on the quantity of care (number of visits, treatments, or days of care). The nonquantitative rules evaluate matters that, by their nature, do not lend themselves easily to numerical analysis.
New Rule. The Consolidated Appropriations Act, 2021 (CAA) introduces a requirement for health plans and health insurers to conduct and document an analysis that compares the nonquantitative treatment limitations (NQTLs) that apply to benefits for the care provided for mental health and substance use disorders to the NQTLs for medical and surgical expenses.
To conduct this analysis, health plans and insurers must first identify the plan’s NQTLs and the benefits to which they apply. Guidance issued on the new requirements identifies four NQTLs that will receive particular scrutiny:
- Prior authorization requirements for in-network and out-of-network inpatient services;
- Concurrent review requirements for in-network and out-of-network inpatient and outpatient care;
- Standards for provider admission to participate in a network, including reimbursement rates; and
- Out-of-network reimbursement rates.
These are only a sampling of the NQTLs that may apply under any particular plan. Plan sponsors will need to consider other limitations.
In considering the benefits that are subject to these NQTLs, plans should keep in mind the classifications that are used in the quantitative tests. The quantitative tests require comparability to be tested separately for six different types of benefits: in-network inpatient care, in-network outpatient care, out-of-network inpatient care, out-of-network outpatient care, prescription drugs, and emergency care. The comparative analysis for nonquantitative limits should take these different classifications of benefits into account.
Health plans and insurers must then analyze and identify the basis for each NQTL. This requires an examination of the factors that support the implementation of the NQTL and the sources relied on in establishing the NQTL. For example, a plan may use NQTLs to prevent excess utilization and fraud or to address situations where costs vary widely or where there has been a recent escalation in costs. In identifying and evaluating these factors, a plan sponsor may examine various sources, such as the plan’s own data, the accreditation standards of a reputable entity, and relevant literature on plan costs and trends. The analysis should take into account the weight given to different sources and factors.
The plan should then compare the NQTLs for mental health and substance use disorders to the NQTLs for medical and surgical expenses. This analysis must look at plan design and plan administration. The end result does not necessarily need to be the same if there is comparability in other matters, such as the process, evidence, and other factors used in establishing an NQTL and uniformity in its application.
The report or other documentation of the analysis must provide more than general comments and conclusory statements. It must be specific with reasoned, detailed explanations that are based on evidence that can be produced on request. Differences between the NQTLs for mental health and substance disorders and those for medical and surgical expenses need to be addressed. The information evaluated in the analysis should be current and relevant. Precise definitions, standards, and data (such as samples of covered and denied claims) should be used, where possible. The report documenting the analysis must state the date when it was prepared and identify who conducted the analysis.
Citations. ERISA section 712(a); Internal Revenue Code section 9812(a); Public Health Services Act section
2726(a); FAQS ABOUT MENTAL HEALTH AND SUBSTANCE USE DISORDER PARITY IMPLEMENTATION AND THE CONSOLIDATED APPROPRIATIONS ACT, 2021 PART 45; Self-Compliance Tool for the Mental Health Parity and Addiction Equity Act (MHPAEA)
Effective Date. February 10, 2021.
Enforcement. For health plans that are subject to ERISA, the Department of Labor and plan participants and beneficiaries may enforce compliance with these rules. Plans not subject to ERISA may be subject to enforcement by the Department of Health and Human Services. HHS shares responsibility for enforcement against insurers with state agencies. In addition, the Internal Revenue Service may impose an excise tax of $100 per day per affected individual under section 4980D of the Internal Revenue Code for any failure to comply.
The CAA requires government auditors to request at least 20 NQTL comparative analyses from plans or insurers each year. If auditors find the documentation of a comparative analysis to be insufficient, they will specify what needs to be provided. If they find noncompliance, they will specify actions that need to be taken. Plans and insurers will generally have 45 days to respond with additional comparative analyses that demonstrate compliance. The auditors will issue a final determination. If that determination concludes that the plan or insurer remains out of compliance, the plan or insurer will need to notify all enrollees of that determination within seven days. Although documents in the exchange with auditors will not be subject to public disclosure, certain information will be shared. The regulating agencies will report their audit findings to state regulators and Congress. The report to Congress will identify plans and insurers that did not provide adequate information or are found to be noncompliant. Plans and insurers are also required to provide documentation of their comparative analyses to state regulators and plan participants on request.
Regulators may also conduct an investigation in response to a complaint.
The Departments of the Treasury, Labor, and Health and Human Services are required to publish a document with extensive guidance on improving compliance with the MHPAEA. This document exists in the form of a self-compliance tool, which is updated every two years and is to be supplemented by additional guidance on compliance with the MHPAEA. It is expected that some additional guidance will be issued before (or soon after) the end of 2021.
Plan Considerations. The requirement to conduct and document the comparative analysis of NQTLs under the MHPAEA is already in effect and presents at least a current audit risk to plans and insurers. Although the Departments have produced guidance on the NQTL requirements, there are no clear standards for how the analysis should be conducted or documented. It is clear, however, that plan sponsors will need to rely on their vendors for compliance.
Health insurance carriers should be performing a comparative analysis of their insurance products. Sponsors of insured health plans may seek to rely on that analysis.
Sponsors of self-funded health plans will need to confer with the vendors that administer benefits under their plans. Those vendors are typically insurance carriers and need to comply with the NQTL requirements for their insured business; plan sponsors should seek vendor assistance in conducting the analysis or in providing important information and insight into the analysis. Self-funded plan sponsors may consider the extent to which their plan design draws on an insured plan model. Even if a vendor is unwilling to perform the analysis and prepare a report, a plan sponsor will need to obtain information from the vendor regarding subjects such as network development, internal policies, procedures, and controls, and operational compliance and may seek documentation that the vendor has prepared for the analysis of its own insurance products. A plan sponsor that has carved out the administration of behavioral health benefits to a separate vendor will need to consider how to coordinate the collection and analysis of information from different vendors.
It can be difficult to conduct an apples-to-apples comparison between mental health and substance use disorder benefits and medical and surgical benefits, particularly regarding matters that are not quantitative. Compliance with the new rules does not always require results to be the same. Compliance could involve parity in the process or factors considered in establishing a limitation on benefits. It may require a clear explanation of how a difference on the surface does not reflect an underlying lack of comparability. It is also possible that an analysis of this nature will suggest that certain changes ought to be made to a plan’s design or administration.
The issuance of further guidance may help plan sponsors better understand what the Departments seek in a comparative analysis and its documentation. More significantly, that guidance may provide insight into what the Departments seek in terms of parity between the two types of benefits.
Recommended Steps. Plan sponsors should consider the following actions:
- Determine the internal and external resources that they will need to conduct and document the required comparative analysis and the support that they can expect from a plan’s third-party claims and network administrators.
- For sponsors of insured health plans, confirm that their insurers have documentation in place that is applicable to their plans and that their insurers are in compliance with MHPAEA requirements.
- For sponsors of self-funded health plans, determine whether claims administrators or one or more other plan vendors will conduct the comparative analysis (or portions of the analysis) and, if not, obtain their commitment to provide relevant information and cooperation.
- Request a copy of applicable reports and other documentation that plan vendors have prepared for their insurance products.
- Identify who has conducted or will conduct and document the comparative analysis.
- Enter into or revise contracts to provide for the comparative analysis, the provision of assistance with the comparative analysis, and appropriate updates.
- Address the different elements of the comparative analysis, including the factors and sources of information that form the basis for NQTLs in plan design, the application of those NQTLs in plan administration, and differences that emerge between mental health and substance use disorder benefits and medical and surgical benefits.
- Take measures to update and shore up support for NQTLs or to bring them into parity, as appropriate
- Evaluate contractual relationships for ongoing compliance with the MHPAEA, including the internal controls implemented by vendors and the right to monitor compliance.
- Coordinate, as appropriate, responsibility for the NQTL comparative analysis with the numerical testing for the quantitative treatment limitations.
- Follow new guidance on NQTLs, the comparative analysis, and the documentation of the comparative analysis.