The Consolidated Appropriations Act (CAA), the year-end stimulus and budget law enacted on December 27, 2020, imposes a significant new disclosure requirement on group health plans subject to federal mental health parity rules. Specifically, group health plans must make available to the Department of Labor (DOL), Health and Human Services (HHS) or the applicable State authority, upon request, an analysis comparing the application of non-quantitative treatment limitations (NQTLs) on medical benefits and mental health and substance use disorder benefits. This requirement went into effect on February 10, 2021.
The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) generally prohibits grandfathered and non-grandfathered group health plans that cover mental health and substance use disorder (MH/SUD) benefits from imposing limitations on these benefits that are less favorable than the limitations imposed on medical/surgical (M/S) benefits*. The DOL’s Employee Benefits Security Administration (EBSA) is actively enforcing MHPAEA, and violations of MHPAEA are a frequent subject of lawsuits.
Overview of Parity Requirements
The DOL has established specific criteria for plans to use in evaluating whether MH/SUD benefits are comparable to medical benefits.
Classifications. If a plan provides MH/SUD benefits in any classification, MH/SUD benefits must also be provided in every classification in which M/S benefits are provided. The six classifications of benefits (and two subclassifications) are:
Financial Requirements and Quantitative Treatment Limits. As a general rule, a plan may not impose a financial requirement (e.g. copayment) or quantitative treatment limit (e.g. visit limit) applicable to MH/SUD benefits within any of the above classifications that is more restrictive than those applied to M/S benefits within the same classification. In order to evaluate whether a plan complies with these requirements, there is an analysis that compares MH/SUD benefits to M/S benefits using two tests referred to as the “substantially all” and “predominant” tests. Plans must determine if the type of financial requirements (such as copayments or deductibles) or quantitative treatment limits (such as visit or treatment limits) apply to at least two-thirds of the M/S benefits within each classification above.
If this first test is satisfied, plans must next determine whether the level of the financial requirement or quantitative treatment limit applies to more than half the M/S benefits.
Example: If 75% of outpatient, in-network visits involving M/S services are subject to a $30 copay, then the plan cannot impose a copay higher than $30 for outpatient, in-network MH/SUD visits.
Nonquantitative Treatment Limitations (NQTLs). A NQTL is a limitation that restricts coverage under the plan that is not expressed numerically. This requirement extends to a number of plan design features like medical management standards limiting benefits based on medical necessity or an exclusion for experimental/investigational treatments, prescription drug formulary design and standards for determining provider admission in a network including reimbursement rates.
The NQTL parity analysis involves a four-step process that requires plans to:
New Comparative Analysis Requirement
Certain disclosure requirements have been in effect for years under MHPAEA, however, the CAA has created a more formal analysis. Starting February 10, 2021, the DOL, HHS or applicable state authority can begin requesting from group health plans documentation that they have analyzed whether the application of NQTLs is on par between MH/SUD and M/S. This NQTL analysis must include the following information:
•the specific plan or coverage terms or other relevant terms regarding the NQTLs and a description of all MH/SUD and M/S benefits to which each such term applies in each of the six classifications;
•the factors used to determine that the NQTLs should apply to MH/SUD and to M/S benefits;
•the evidentiary standards and any other sources on which the plan relied to back up the factors used to design the NQTL and justify its application to a benefit;
•a comparative analysis demonstrating that the application of coverage limits for MH/SUD benefits, as written and in operation, are comparable to and no more stringent than limits applied to M/S benefits; and
•the results of the comparative analysis with specific findings on what is and is not in compliance with parity rules.
The new law also requires regulators to review MHPAEA compliance from a sample of group health plans every year, to require health plans to take corrective action when noncompliance is found, and to issue an annual report to Congress detailing the results of these reviews
Newly Released Guidelines
On April 2, 2021, the DOL, HHS, and Treasury jointly released guidance on several aspects of the comparative analysis requirement in the form of FAQ Part 45. Among other items, the FAQs confirm the following:
•The requirement is indeed applicable beginning on February 10, 2021
•Plans and insurers should be prepared to provide specific, detailed, and reasoned analyses with supporting documentation upon request from the Departments
•A general statement of compliance, coupled with a conclusory reference to broadly stated processes, strategies, evidentiary standards, or other factors will be insufficient
•In addition to responding to complaints, enforcement efforts in the near term will focus on:
1.Prior authorization requirements for in-network and out-of-network inpatient services
2.Concurrent review for in-network and out-of-network inpatient and outpatient services
3.Standards for provider admission to participate in a network, including reimbursement rates
4.Out-of-network reimbursement rates (plan methods for determining usual, customary, and reasonable charges)
The FAQs also refer to the DOL’s existing MHPAEA Self-Compliance Tool and explain that this tool will help provide extensive guidance and assistance with compliance. Per the FAQs, plans and issuers that have carefully applied it should be in a strong position to provide documentation considered to be adequate.
For fully-insured plans, insurers will be responsible for preparing, and furnishing upon request, NQTL comparative analyses. For self-funded plans, however, employers will ultimately be responsible for compliance, although the involvement of their third-party administrators (TPAs) will surely be indispensable. Sponsors of self-insured health plans should begin discussions with their TPAs (including behavioral health vendors and pharmacy benefit managers) to assess their capabilities in assisting them with NQTL comparative analyses.
*Retiree only plans, self-insured non-federal governmental plans that have elected to exempt the plan from MPHAEA, and group health plans covering only excepted benefits, are generally not subject to MHPAEA. In addition, self-funded plans sponsored by employers with fewer than 50 employees are exempt.
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