On September 9, 2024, the Departments of the Treasury, DOL, and Health and Human Services (the “Departments”) released final rules concerning the Mental Health Parity and Addiction Equity Act (MHPAEA). Among other things, the final rules amend the requirements imposed on nonquantitative treatment limitations (NQTL).
As background, MHPAEA requires that plans and insurers providing mental health and substance abuse disorder (MH/SUD) care do so in parity with medical/surgical (MED/SURG) coverage. To be in parity, the quantitative limitations (e.g. visit limits), financial requirements (e.g. deductibles, copays, coinsurance), and nonquantitative treatment limitations (e.g. preauthorization requirements, network tier design, prescription drug formulary) imposed on MH/SUD coverage must be no more restrictive than the predominant standard that applies to substantially all MED/SURG benefits.
In August of 2023, the Departments issued a proposed rule that was aimed at providing clarity around the way NQTLs are analyzed to determine their parity. The Departments reviewed thousands of comments from stakeholders and held dozens of listening sessions as they prepared to finalize the rules.
The major provisions of the final rule:
- Clarify how plans and issuers prove their MH/SUD NQTLs are no more restrictive than those imposed on MED/SURG coverage;
- Codify the NQTL comparative analyses requirement established by the CAA, 2021; and
- Finalize the MHPAEA sunset provision for self-funded non-Federal governmental plans.
NQTL Parity
The final rules focus on how plans and issuers will show that the NQTLs imposed on MH/SUD coverage are no more restrictive than those imposed on MED/SURG coverage. Importantly, in one of the major departures from the proposed rules, the Departments chose not to subject MH/SUD NQTLs to the actuarially determined calculation of whether they are more restrictive than the predominant NQTL applied to substantially all MED/SURG coverage in the same classification. That calculation is required for financial requirements and quantitative limitations, but many commenters indicated that it was not possible to test NQTLs in a similar manner.
As a result, the Departments are requiring plans and issuers to consider and evaluate the NQTL’s design, application, and data to determine if the NQTL is in parity. Specifically, the processes, strategies, evidentiary standards, and other factors used to design and apply an NQTL to MH/SUD benefits must be comparable to and no more stringently applied than the ones used to design and apply the NQTL for MED/SURG benefits. There’s also now an expectation that the evidence, sources or standards on which factors are based are unbiased and are objective so that they don’t discriminate against MH/SUD benefits.
The final rules also flesh out the requirement for plans and issuers to analyze relevant data on access to MH/SUD benefits to determine if there are material differences compared to access to MED/SURG benefits. The analysis of relevant data will include analysis of network composition and rates (instead of their being a special rule concerning network composition). Overall, the requirement to analyze relevant data indicates that the Departments expect plans to show that their plan is in parity in operation and not just in writing.
The final rules also kept the requirement that a plan provide ‘meaningful benefits’ for an MH/SUD condition or disorder in every classification in which MED/SURG benefits are provided. In order to provide a meaningful benefit, the plan must provide benefits for a core treatment for that condition or disorder. The rules provide examples that remove some ambiguity on whether certain exclusions violate MHPAEA’s requirements.
NQTL Comparative Analysis
The final rule codifies the requirement for plans and issuers to complete an NQTL comparative analysis that must be provided to the Departments, state governments, any claims-adjudicating party, and plan participants and beneficiaries upon request. The rules lay out the required content for the NQTL comparative analysis and explain how the rule’s changes should be reflected in it.
Employer plan sponsors should take note that the rule requires plan fiduciaries to obtain an NQTL comparative analysis. It also clarifies that plan fiduciaries will be expected to certify that they have engaged in a prudent process to select a service provider to create the analysis. In addition to selecting a provider, the plan fiduciary must review the analysis, ask questions to understand the findings, and ensure that the creator provides assurances that the analysis complies with MHPAEA. As an alternative, plan fiduciaries can certify that the NQTL comparative analysis is in compliance with the content requirements imposed by MHPAEA.
MHPAEA Application to Self-funded, Non-Federal Governmental Plans
The final rule also confirms that self-funded, non-federal governmental plans may no longer opt out of MHPAEA. This change was made under the Consolidated Appropriations Act, 2023 (passed in December 2022). The final rules codify the end of this opt-out option, such that state and local governments must comply with MHPAEA.
Employer Takeaways:
- These final rules are effective for plan years beginning on or after January 1, 2025, but some of the newer elements are not effective until plan years beginning after January 1, 2026 (including the meaningful benefits standard, the prohibition of discriminatory factors and evidentiary standards, and the relevant data evaluations).
- Mental health parity continues to be a focus of the Departments and they will continue heavy enforcement of the rules.
- This rule has been heavily scrutinized by the health and employer plan industry. We expect there to be litigation challenging the rule.
- Employers must make a plan to obtain an NQTL comparative analysis and potentially engage with a lawyer or other consultant to review the analysis.
Hausmann Group will provide additional details applicable to employers, specifically as it relates to compliance for fully insured and self-insured group health plans.
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