Holland & Hart - The Benefits Dial

We previously blogged about the new Mental Health Parity and Addiction Equity Act (MHPAEA) reporting and disclosure requirements established by the Consolidated Appropriation Act, 2021 (CAA).

As a refresher, employers and carriers that sponsor group health plans are now required to provide upon request a full analysis of the process followed by the plan in establishing non-quantitative treatment limitations (NQTLs) for the plan and the impact these NQTL’s have on mental health and substance use disorder (MH/SUD) benefits provided by the plan.  This disclosure requirement went into effect on February 10, 2021.

The DOL has recently signaled its intent to focus on MHPAEA issues in filing suit against United Healthcare Insurance Company (“UHIC”) and United Behavioral Health (“UBH”).  

While the facts in this case are an excellent case study of why plan sponsors should monitor their service providers closely, the case also serves as a signal to plan sponsors that the DOL intends to take the new MHPAEA disclosure requirements under the CAA very seriously.  In discussing the case, Ali Khawar from the Employee Benefits and Security Administration stated: “Enforcing the mental health parity law is a very high priority for the Department of Labor and this administration”.

Although UHIC and UBH quickly settled this case with the DOL, we think employers should review the facts of this case closely and ensure that similar practices are not occurring in their plans (even with respect to other TPAs and insurers).  Our brief summary below of the DOL’s claims against UHIC and UBH and our suggested action steps are a good starting point for employers:

The DOL’s Complaint

The case filed by the DOL against UHIC and UBH involved claims of violations of the MHPAEA and ERISA fiduciary breaches stemming from UHIC and UBH’s management of mental health claims in its insurance business and its self-insured TPA business.  The DOL claims related to two UHIC/UBH practices involving mental health services.

Systematic Out-of-Network Reimbursement Reductions

The DOL asserted that UHIC and UBH systematically cut the reimbursement rate on out of network mental health services provided by non-physician professionals.  These reductions were not initially described in the group health plan documents and were not applied to medical service providers.

The DOL asserted that plan participants incurred greater out of network charges for mental health services than what the plan provided and that these reductions monetarily benefited UHIC, UBH and plan sponsors at the expense of plan participants.   The DOL argued that UHIC and UBH breached their ERISA fiduciary duties and violated the MHPAEA.

Outlier Services Program

The DOL also identified a separate practice of limiting access to mental health services through an outlier review process applicable to mental health services.

This outlier review process involved using data analytics to identify high-use participants and high cost practices involving mental health services that was not similarly applied to medical services.  Once these high use participants and high use practices were identified, UBH would engage the mental health service provider to determine if the services satisfied the plan’s medical necessity requirement and in some cases denied further coverage.  The DOL argued that UBH breached its ERISA fiduciary duties and violated the MHPAEA.

Key Action Steps

  • MHPAEA is a complex law. Employers should not assume that carriers and TPAs are able to effectively apply the MHPAEA standards across all of their business units, subcontractors, lines of business, networks and claims processes.
  • Understand both the terms of the plan (as described in the plan documents) and the procedures the TPAs follow in administering the plan.
  • Use the CAA MHPAEA disclosure process described in our prior blogs as a tool to identify buried practices and policies that should be described in the plan document or eliminated if not in compliance with applicable benefits laws.
  • Ensure service provider agreements place strict indemnity obligations on the TPA in administering the plan in compliance with the plan document, particularly if the TPA is responsible for network design, claims administration, and plan document drafting.