All group health plan sponsors of both fully-insured and self-funded plans must consider the requirements of the Mental Health Parity and Addiction Equity Act and the Patient Protection and Affordable Care Act (ACA). The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) is a federal law that generally prevents large group health plans and health insurance issuers that provide mental health or substance use disorder (MH/SUD) benefits from imposing less favorable benefit limitations on those benefits than on medical/surgical benefits. The ACA then impacts smaller employers by requiring coverage of mental health and substance use disorder services as one of the ten Essential Health Benefit (EHB) categories.
These rules were modified and enhanced by the Consolidated Appropriations Act (CAA) of 2021, which will require group health plans and health insurance carriers to perform comparative analyses to demonstrate compliance with mental health parity requirements. The results of the testing will be provided to the Department of Labor (DOL), Health and Human Services (HHS) and state agencies upon request. These rules went into effect on February 10, 2021. Agencies will be required to audit plans annually. Guidance is required to be issued by these agencies within 18 months of the Consolidated Appropriations Act (CAA) being enacted. Plan participants, beneficiaries and enrollees will be permitted to request copies of the comparative analysis and plan sponsors will be required to provide the information under ERISA.
Action Plan: Employers should now be actively working on the annual analysis of their group health plans. Fully insured plan sponsors should reach out to their carriers to determine how the carrier will be handling the requirements. Self-funded plan sponsors should put an action plan in place to complete the testing. A small number of third-party administrators are offering this service to their self-funded clients. Additionally, reputable vendors are now offering these services. Alera Group strongly recommends that employers sponsoring self-funded health plans complete this analysis in 2022 and annually thereafter in the event they are audited by the Department of Labor or a plan participant requests a copy of the analysis.
The DOL had previously issued warning signs for plan sponsors to review in determining compliance with the parity rules. In April of 2021, they released an FAQ on these new requirements. The DOL has also updated its self-compliance tool for plan sponsors. The DOL has been increasing the number of audits in this space and all employers at risk of receiving a request, particularly those who are already being investigated by the Department of Labor on unrelated benefits or wage and hour issues.
Within each of the MHPAEA’s six classifications, the financial requirements and treatment limitations that apply to mental health or substance abuse disorder benefits must be compared to the financial requirements and treatment limitations that apply to medical/surgical benefits in that same classification. If a financial requirement or treatment limitation does not apply to “substantially all” of the medical/surgical benefits in that classification, it cannot be applied to mental health or substance abuse disorder benefits in that classification. “Financial requirements” include deductibles, copayments, coinsurance and out-of-pocket expenses, but exclude an aggregate lifetime limit and an annual limit. Additional non-quantitative limitations are held to the same parity.
The MHPAEA notably does not require equitable lifetime limits or annual limits, which raises the question as to whether an annual lifetime or dollar limit on particular therapies would be permissible. The code does require that plans without an annual limit on medical/surgical benefits cannot impose an annual limit on mental health benefits. By virtue of the ACA, few plans today have annual or lifetime limits. Mental health benefits do not have to be covered by plans that are not subject to EHB requirements, however, once a plan covers an EHB, it is subject to the full EHB rules. One important EHB rule to remember is that the ACA prohibits annual or lifetime dollar limits on EHBs. Any plan (including large, grandfathered or self-funded plans) that chooses to offer a benefit that falls into an EHB category is then subject to the same prohibition on annual or lifetime dollar limits.
The substantially all/predominant test outlined in the statute must be applied separately to six classifications of benefits: inpatient in-network; inpatient out-of-network; outpatient in-network; outpatient out-of-network; emergency; and prescription drug. Sub-classifications are permitted for office visits separate from all other outpatient services, as well as for plans that use multiple tiers of in-network providers.
The regulation requires that all cumulative financial requirements, including limits, deductibles and out-of-pocket limits, in a classification must combine both medical/surgical and MH/SUD benefits in the classification.
The regulation distinguishes between quantitative treatment limitations and non-quantitative treatment limitations.
A group health plan or coverage cannot impose a non-quantitative treatment limitation with respect to MH/SUD benefits in any classification unless, under the terms of the plan (or coverage) as written and in operation, any processes, strategies, evidentiary standards or other factors used in applying the non-quantitative treatment limitation to MH/SUD benefits in the classification are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards or other factors used in applying the limitation with respect to medical surgical/ benefits in the classification.
The regulation provides that all plan standards that limit the scope or duration of benefits for services are subject to the non-quantitative treatment limitation parity requirements. This includes restrictions such as geographic limits, facility-type limits and network adequacy.
Under the requirements set forth by the CAA, plans and issuers should ensure that NQTL comparative analyses are sufficiently specific, detailed and reasoned to demonstrate whether the processes, strategies, evidentiary standards or other factors used in developing and applying an NQTL are comparable and applied no more stringently to MH/SUD benefits than to medical/surgical benefits. Regulators have been very clear that a general statement of compliance, coupled with a conclusory reference to broadly stated processes, strategies, evidentiary standards or other factors will be insufficient to meet this statutory requirement.
The CAA testing will require plans to be able to show:
Analysis under the CAA must include discussion on the following:
Plans should have the following to support their NQTL testing:
There are four areas of critical focus regarding NQTL enforcement at this time:
Consequences of non-compliance: if federal regulators do not receive sufficient NQTL testing information, they will direct the plan to submit a more responsive request. If the plan is not in compliance with the MHPAEA, they must detail how they will bring the plan into compliance and submit additional analysis showing compliance within 45 days of failing. If the plan is unable to bring the plan into compliance at that point, they will have seven days to notify plan participants that coverage is non-compliant and federal regulators will report the plan to the state where the employer is located or licensed to do business. Failure to provide the required analysis is likely to trigger the $100 a day penalty per plan participant.
The information contained herein should be understood to be general insurance brokerage information only and does not constitute advice for any particular situation or fact pattern and cannot be relied upon as such. Statements concerning financial, regulatory or legal matters are based on general observations as an insurance broker and may not be relied upon as financial, regulatory or legal advice. This document is owned by Alera Group, Inc., and its contents may not be reproduced, in whole or in part, without the written permission of Alera Group, Inc.
Updated as of 06/09/2021