2024 final mental health parity regulations: first impressions
While some of the more objectionable features of the proposed MHPAEA regulations were not finalized, their basic structure remains fully intact, including provisions that employers found most burdensome.
While the rule’s primary impact is on employer sponsored group health plans, it is not clear that health plans’ voices were heard, based on the content of the rule. While some of the more objectionable features of the proposed regulations were not finalized, their basic structure remains fully intact, including provisions that employers found most burdensome. Specifically, the final regulations:
- Require plans and issuers to collect and evaluate NQTL data on relevant outcomes related to access to MH/SUD benefits and M/S benefits and to take reasonable action, as necessary, to address material differences in access to MH/SUD benefits as compared to M/S benefits.
- Amend examples and add new examples on the application of the rules for NQTLs to clarify and illustrate the requirements of MHPAEA.
- Set forth the content requirements for NQTL comparative analyses and specify how plans and issuers must make these comparative analyses available to the Departments, applicable state authorities, participants, beneficiaries and enrollees.
The regulation of NQTLs
The final regulations make significant changes to the previous 2013 final regulations that focus primarily on NQTLs. These final regulations implement changes to the Mental Health Parity and Addiction Equity Act (MHPAEA) made by the Consolidated Appropriations Act, 2021 (CAA). The CAA added a requirement that plans and issuers must prepare a written comparative analysis of any NQTL imposed on MH/SUD benefits to reflect parity as related to medical/surgical benefits within a similar classification and provide the comparative analysis to regulators and plan participants upon request. The focus in the final regulations is on testing and documenting NQTLs.
The final regulations establish a two-part test under which plans or issuers must determine whether their MH/SUD benefits are subject to greater restrictions than M/S benefits under the terms of the plan or coverage under which the plan or issuer must satisfy requirements related to the design and application of the NQTL (the “design and application requirement”); and the plan or issuer must collect, evaluate, and consider the impact of relevant data on access to MH/SUD benefits (the “relevant data evaluation requirement”). The proposed regulations would have imposed another requirement (a “no more restrictive requirement”) that would apply to NQTLs numerical testing rules similar to those that apply to financial requirements or quantitative treatment limitations (QTLs). The requirement was heavily criticized in the comments to the proposed rule. The comments pointed out that it probably wouldn’t make sense to apply a quantitative test to a non-quantitative limitation. Ultimately, the proposed regulations’ more restrictive requirement was not carried over into the final regulations.
The final regulations’ relevant data evaluation requirement represents a significant departure from previous guidance. The preamble to the 2013 final regulations said unequivocally that outcomes are not determinative of compliance. The change was challenged to no avail by commenters who posited that requiring plan sponsors to evaluate outcomes data is not supported by the statute. They also posited that, because not all NQTLs are quantifiable, data metrics should not be required to determine parity. The Departments disagreed on both counts. This is one of many requirements in the final regulations we expect may be challenged in litigation, following a recent U.S. Supreme Court decision in Loper Bright Enterprises v. Raimondo, effectively limiting deference to agency interpretations of ambiguous statutes.
The new data evaluation requirements require plans and issuers to collect and evaluate relevant data and to determine whether the data suggest an NQTL contributes to material differences in relevant outcomes related to access to MH/SUD benefits as compared to M/S benefits. The requirement is already being applied in the Department of Labor’s audits of group health plan compliance with MHPAEA, despite the 2013 rule, which disregards outcomes. This apparent shift was explained in a 2019 FAQ, in which the Departments note that greatly disparate outcomes are a red flag that a plan or issuer may be imposing an impermissible NQTL on MH/SUD benefits. The FAQ in question veered into the adjacent question of network composition, but even there, the Departments conceded that MHPAEA does not require a plan or issuer to ensure that the numbers of MH/SUD and M/S providers in the plan’s network are comparable. All the Departments were willing to say at the time was the “plan or issuer must undertake a comparable process and apply comparable strategies and evidentiary standards when developing and ensuring an adequate network.” Questions raised by disparate outcomes and inconsistencies in network composition have become a contentious flashpoint in MHPAEA audits.
NQTL content and disclosure requirements
In 2021, the CAA amended MHPAEA, in part, to expressly require plans and issuers that offer coverage that provides both MH/SUD and M/S benefits and impose NQTLs on the former to perform and document comparative analyses (beginning on February 10, 2021) of the design and application of NQTLs, and make their comparative analyses and certain information available to the Departments or applicable state authorities upon request (within 10 business days). The final regulations expand on and flesh out these requirements. They focus on how a plan or issuer “with a typical plan or coverage design” should collect and evaluate data for NQTLs related to network composition, which must be included in the comparative analysis. Examples are also provided that are intended to clarify what constitutes reasonable actions that plans and issuers may take in order to comply.
In an effort to bootstrap compliance, the proposed rules would have required that the comparative analysis include the date of the analysis and the title and credentials of all relevant persons who participated in the performance and documentation of the comparative analysis. The comparative analysis would have been required to include a certification by one or more named fiduciaries who have reviewed the analysis, stating whether they found the comparative analysis to comply with the content requirements of the proposed rules. This requirement was generally panned in the comments, and the Departments relented. The final regulations require only that a fiduciary engage “in a prudent process to select one or more qualified service providers to perform and document a comparative analysis in connection with the imposition of any NQTLs that apply to mental health and substance use disorder benefits under the plan in accordance with MHPAEA and its implementing regulations, as well as satisfaction of the duty to monitor those service providers.”
Effective dates
Since February 10, 2021, the CAA has required plans and issuers to perform NQTL comparative analyses, and the final regulations provide additional detail regarding how to perform such analyses, although they may leave plans and issuers with implementation questions. The newly added features of the final regulations generally take effect for group health plans for plan years commencing on or after January 1, 2025. However, certain of the regulations’ substantive requirements apply in plan years commencing on or after January 1, 2026. This does not give plan sponsors much time to comply, particularly since plan design changes for the coming year are in many instances already decided upon.