The relevance of network reimbursement rates to mental health parity compliance

Have you ever asked the Department of Labor a question? If you have, I hope your experience was better than my recent one. The response I received – and the fact that I had to ask the question in the first place – is very telling of the current lack of guidance the self-funded industry is up against in the context of the Mental Health Parity and Addiction Equity Act.

The MHPAEA, in general

Let’s back up a minute. The MHPAEA is designed to hold insurance companies and health plans to certain standards relative to their coverage of mental health and substance use disorder benefits. Like any other consumer protection law, though, someone else has to lose certain rights when a consumer gains rights, since sometimes rights are a limited commodity.

In this context, the MHPAEA furthers the balancing act performed by health plans and patients: patients need care, but health plans need to contain costs! This is nothing new, of course, but in the last few years the Department of Labor has gotten wind of large-scale and mostly unnoticed violations of the MHPAEA, whether intentional or accidental.

New requirements to complement an old law

In response to the DOL’s impression of widespread noncompliance with the Mental Health Parity and Addiction Equity Act, Congress made use of the Consolidated Appropriations Act of 2021 – the same sweeping law containing another major consumer protection in the form of the No Surprises Act.

Specifically, the CAA contained a requirement for insurance issuers, including health plans, to “show their work” and proactively prove their compliance with the MHPAEA’s parity requirements. That proof must come in the form of a comprehensive written analysis of the insurer’s nonquantitative treatment limitations (NQTLs), and how those NQTLs are applied to mental health/substance use disorder benefits compared to how they are applied to medical/surgical benefits.

The insurers must also keep the analysis “current”, although to this day the regulators have not provided helpful guidance to explain what that actually means. Getting off topic just a bit, the industry at large typically considers an annual analysis of the prior plan year to be “current” – or, in any event, annually tends to be as often as most think it would be reasonable to expect a plan to complete the NQTL analysis. It’s not so simple, after all, and since most plans engage vendors to perform it for them, it’s not free, either.

To be clear, the requirement to provide mental health/substance use disorder benefits and medical/surgical benefits in parity with one another is far from new. The novelty rests in the requirement to perform the proactive analysis of the plan’s compliance. It should be conceptualized as two parallel obligations: one is to be compliant with the MHPAEA itself by applying NQTLs in parity, and the other is to analyze the parity (or lack thereof) in writing. It is possible to be compliant with one requirement without being compliant with the other, but of course compliance with both is ideal.

Regulations, sort of

The DOL is trying. They really are. But never before has compliance with the MHPAEA been under such a microscope – and even the DOL isn’t quite sure what it is looking at a lot of the time. Historically, it was easy enough to review an alleged violation on a case-by-case basis, but now that health plans have to proactively analyze NQTLs, it has become much more difficult to gauge compliance when most of the NQTLs that are in a given health plan haven’t been examined before either at all or at least not in a way that allows the public to understand what the relevant responsibilities are.

To try to promote compliance, the DOL has published a “Self-Compliance Tool for the Mental Health Parity and Addiction Equity Act (MHPAEA)”, geared at clarifying some of its goals and identifying some specifications for both the NQTL analysis and the NQTLs themselves. The NQTL that I had occasion to ask the DOL about is an entry listed in the “illustrative, non-exhaustive list of NQTLs” within the Self-Compliance Tool: “Standards for provider admission to participate in a network, including reimbursement rates”. The question was, basically, what the relevance of reimbursement rates is to the NQTL.

What’s the real issue?

There are two ways reimbursement rates for in-network providers could be relevant to mental health parity. The first is that the DOL wants to ensure that the plan or network does not require health/substance use disorder providers to be forced to accept lower reimbursement rates or percentages than their medical/surgical counterparts – essentially to prohibit bullying them on the basis of their respective medical fields. That is not so much about the ultimate reimbursement rates themselves, but about the method of determining reimbursement rates (i.e. the difference between free negotiation and strong-arming into taking a low rate).

The logic here would be that if a mental health or substance use disorder provider is forced to jump through different, more cumbersome hoops than a medical or surgical provider, and is forced to accept a certain low rate or else not be able to join the network, parity has perhaps not been achieved since the provider makeup of the network will have been changed artificially. Mental health and substance use disorder providers will be more sparse within the network, they may be less satisfied with the payment rates, and overall the practice may trickle down to patient access in certain ways. Although some view the connection between what happens prior to contracting and the resultant benefits provided as too tenuous to be relevant to any real plan operation (especially since providers are still free to say “no thank you” to the network), the DOL doesn’t seem to agree, and has listed it explicitly within its non-exhausted list of things that it considers NQTLs.

The second option is that the DOL wants to ensure that negotiated reimbursement rates – as in, the literal dollar amounts paid – for mental health/substance use disorder claims are no lower than reimbursement rates for medical/surgical claims. This would effectively penalize a plan for utilizing a network that is good at negotiating (or penalize a plan for being a good negotiator, in the case of direct contracts), or penalize a plan for being located near a particular provider that charges lower fees.

The conceptual difference between the first option (only allowing mental health and substance use disorder providers to join the network if they agree to arbitrarily low negotiated rates) and this second option (freely negotiating lower rates) is small but meaningful; the former involves some sort of discrimination on the basis of provider specialty, while the latter is more innocuous and not focused on the type of provider being negotiated with.

Under this latter option, aside from the idea that a plan could find itself out of compliance if its local medical or surgical providers happen to charge more than its local mental health or substance use disorder providers (resulting in lower reimbursement rates paid to mental health or substance use disorder providers), the irony is that the MHPAEA isn’t designed to protect mental health and substance use disorder providers; it’s designed to protect patients! Negotiating lower rates with providers means lower OOP for patients (since the same in-network coinsurance applied to a lower negotiated rate results in lower coinsurance). Therefore, lower in-network reimbursement to mental health/substance use disorder providers actually means patients get greater protection in the form of lower OOP costs.

Intuitively, this second option – for the DOL to consider the amounts actually accepted by mental health/substance use disorder providers compared to medical/surgical providers to be an NQTL – seems odd, since providers are free to negotiate rates as high or as low as the transaction will bear. Take, for instance, the example of a network that has negotiated rates in a given suburban area. The large hospital systems and ancillary providers have been in business for a long time and are expert negotiators, resulting in higher network reimbursement rates, while the mental health and substance use disorder providers may be less experienced with negotiating, simply by virtue of being newer practices. The network therefore negotiates lower reimbursement rates with the mental health and substance use disorder providers, but still amounts that the provider are happy to accept as the result of a free negotiation. In this example, any plan using this network in this area would be out of compliance not because the plan or network has treated mental health or substance use disorder providers unfairly, but simply because negotiations turned out that way. That doesn’t seem quite like Congress’ or the DOL’s intent.

To that point, I asked the DOL – in plain language, asking them very simply to choose between the two interpretations – whether the reference in its guidance to “reimbursement rates” refers to the actual reimbursement rates, or to the method of determining the reimbursement rates. The industry has differing opinions on which is the correct interpretation, so it made sense to try to get some feedback from the folks who published the guidance.

After submitting the form to the EBSA – the employee benefits-specific arm of the DOL – I received a voicemail in response some weeks later. When I listened to the voicemail, I couldn’t help but laugh (and forward it along to some of my coworkers so they could laugh as well).

The “answer”

Paraphrasing doesn’t do this voicemail justice, so here’s a word-for-word transcription of the relevant part:

“I did check with some of our subject matter experts on that topic and their suggestion was to look at our public website, which it sounds like you’ve probably already done, but there are a number of resources there for your consideration.”

That was it. I asked a very straightforward question, explained why their guidance was unclear, and noted explicitly that I have been down the rabbit hole of guidance and haven’t found an answer, and their answer was “…I don’t know…check our website, I guess? Bye.”

Glad I took the time to ask.

My favorite part of the voicemail is the closing, which still makes me chuckle: “I appreciate your interest in the department of labor.” My interest. Sure.

The aftermath

In the absence of more specific guidance, federal law requires health plans to employ a “good faith, reasonable interpretation” to a given law or regulation, which is what we’ll be advising our clients to do. It’d be nice to have an answer, but the DOL has proven time and time again that that’s not really their style.

Read more: DOL issues guidance for remote workers under FLSA, FMLA

In the meantime, health plans should be mindful of how they interpret certain provisions in light of the lack of guidance; when making interpretations, they should always be in an abundance of good faith, and if possible, consider the text and intent of the law as a whole rather than the ambiguous wording of any one particular provision.