Mental health “parity” test getting trickier
Over the past few years, the federal government has made improving access to mental health care a point of growing emphasis. For employers this means growing scrutiny, and increasingly prescriptive regulation, of the health coverage they sponsor and how it handles treatment for mental health and substance use disorders.
In particular, major changes were proposed in August to the regulations that apply to “mental health parity” in health benefits. The provisions of the new rule are exceedingly detailed and technical, but the bottom line is that employers and their service providers could face major new burdens on the design, administration, and documentation of mental health benefits.
About the MHPAEA
First a bit of background: the Mental Health Parity and Addiction Equity Act (MHPAEA), enacted in 2008, prohibits group health plans and their insurers from imposing stricter limits on mental health benefits, including drug and alcohol treatment, than those in effect for medical or surgical benefits.
Under the current regulations that date to 2013, quantitative treatment limits (such as caps on dollar amounts or number of visits) are subject to a mathematical formula for determining parity. On the other hand, so-called nonquantitative treatment limits (NQTLs) have been subject to a somewhat squishier test. NQTLs include plan provisions like preauthorization, medical necessity, and the design and composition of provider networks.
The current rules generally allow a plan to place nonquantitative limits on mental health benefits as long as the underlying factors are comparable to those being used in limits on medical benefits and are not being applied any more stringently.
Changes on the way
The proposed rule changes, however, would make things much tougher for NQTLs. The limit could not be applied to mental health benefits unless it also applies to two-thirds of medical benefits in one of six listed categories, such as outpatient, in-network.
Benefits attorneys have warned that there are likely to be many instances in which a prior authorization requirement, for example, will have to be discarded because it does not apply to two-thirds of medical benefits. This could be the case even if the requirement complies with the existing rules because it applies the same factors consistently to mental health and medical benefits.
Assuming an NQTL survives that test, it would also have to be supported by an analysis of outcomes data to demonstrate that the limit does not disfavor mental health benefits in practice. If the analysis turned up “material differences in access” between mental health and medical benefits, the plan would have to take “reasonable action” to address that disparity.
If finalized, the proposed changes would take effect for plan years that begin in 2025. According to benefits attorneys, mental health parity is already becoming a top enforcement priority for regulators, and the new rules would make compliance more challenging.
Employers will often be reliant on outside administrators for data and other assistance, and it’s not too early to make sure that plan insurers or service providers are on board and their responsibilities are clearly spelled out by contract.
More paperwork
The documentation needed to comply with the proposed rule would come on top of the “comparative analysis” requirement added to MHPAEA by the Consolidated Appropriations Act of 2021.
Employers have had to perform detailed analyses of how their nonquantitative limits are designed and applied to mental health vs. medical benefits and have them available in case the Labor Department requests them. So far, regulators have not liked what they’re seeing. So, the proposed rule would add more detail to these analyses and require a plan fiduciary to certify their accuracy.
