By: HUB’s EB Compliance Team

The Departments of Labor, Health and Human Services, and Treasury (the “Departments”) have released final rules under the Mental Health Parity and Addiction Equity Act (“MHPAEA”). The rules focus on nonquantitative treatment limitations (“NQTLs”) and the comparative analysis requirement first required under the Consolidated Appropriations Act, 2021.

Background

Under MHPAEA, treatment limitations applicable to mental health or substance use disorder benefits generally cannot be no more restrictive than those that apply to medical and surgical benefits. This broad requirement has both a numerical, or quantitative, component, and a nonquantitative component. The rules around quantitative limitations (dollar limits, visit limits, etc.) have been in the law for many years, but there has been less guidance around NQTLs until recently. Satisfying parity has always been easier with numerical limitations that can be easily compared. By contrast, demonstrating parity for non-numerical limitations requires keen attention.

The NQTL Final Rules

These final rules amend existing MHPAEA regulations to incorporate new and revised definitions of key terms and to specify the steps that employers and insurers must take for their plans to comply with MHPAEA. They also specify minimum standards for NQTL comparative analyses which had long been a source of difficulty for plan sponsors and their service providers. The rules also reflect the sunset of the non-federal governmental plan opt-out election.

Meaningful Benefit Requirement

Plans that provide any benefits for a mental health or substance use disorder (MH/SUD) treatment must provide “meaningful benefits” for that disorder in every benefit classification in which meaningful medical/surgical benefits are provided. There are six classifications under the MHPAEA rules: inpatient, in-network; inpatient, out-of-network; outpatient, in-network; outpatient, out-of-network; emergency care; and prescription drugs. Under the regulations meaningful benefits consist of a core treatment for a MH/SUD condition in each classification in which the plan covers a core treatment for one or more medical conditions or surgical procedures. The regulations do not specify what a “core treatment” is for this purpose.

Definitions

When defining whether conditions or disorders are MH/SUD, plans must follow the most current version of the International Classification of Diseases (ICD) or the Diagnostic and Statistical Manual of Mental Disorders (DSM). There are also new definitions for a variety of terms related to NQTLs, including Evidentiary Standards, Factors, Processes, and Strategies, all of which are measured as part of the NQTL analysis.

Requirements for NQTLs

Within each of the six classifications, plans may not impose NQTLs with respect to MH/SUD benefits that are more restrictive, either as written or in operation, than the predominant NQTL that applies to substantially all medical/surgical benefits. This is challenging because NQTLs are not easily quantified in the same way that the dollar limits and visit limits are. Acknowledging this, the Departments did not finalize a mathematical test for defining “substantially all” and “predominant.” Instead, in implementing an NQTL, a plan must satisfy two sets of requirements:

  1. Design and Application. The plan must examine the processes, strategies, evidentiary standards, and other factors used in designing and applying an NQTL to MH/SUD benefits to ensure they are comparable to, and applied no more stringently than, those used in designing and applying a medical/surgical benefits limitation in the same classification. In addition, plans may not use discriminatory factors and evidentiary standards in designing an NQTL to be imposed on MH/SUD benefits. Generally recognized independent professional medical/clinical standards are considered nonbiased and objective. Additionally, “carefully circumscribed measures” reasonably designed to detect or prevent and prove fraud and abuse and minimize the negative impact on access to appropriate MH/SUD benefits are also considered nonbiased and objective.
  2. Relevant Data Evaluation. Plans must also collect and evaluate appropriate data in a manner reasonably designed to assess and consider the impact of the NQTL on relevant outcomes related to access to MH/SUD benefits and medical/surgical benefits. “Relevant data” may vary based on the facts and circumstances. Several examples are provided. If relevant data is not available, then the comparative analysis (discussed below) must include a detailed explanation of the lack of relevant data, the basis for the conclusion that there’s a lack of relevant data, and when and how the data will become available and be collected an analyzed.

Comparative Analysis Requirement

A plan must perform and document an NQTL comparative analysis and submit it to a requesting Department within ten business days of the request. The analysis must:

  1. describe the NQTLs;
  2. identify and define the factors and evidentiary standards used to design or apply the NQTLs;
  3. describe how factors are used in the design or application of the NQTLs;
  4. evaluate whether processes, strategies, evidentiary standards, or other factors are comparable to, and applied no more stringently than, those with respect to medical/surgical benefits, as written and as applied; and
  5. address findings and conclusions regarding comparability and relative stringency.

This analysis will take time and therefore is not something that can be requested from a vendor when the government is requesting one from the plan. As a result, employers should consider obtaining a comparative analysis as promptly as possible to ensure they have one available to furnish on request.

Plans must also prepare and make available to the Departments, upon request, a written list of all NQTLs imposed under the plan. An exhaustive list of NQTLs is not included in the regulations. Instead, plans must analyze any NQTL that limits the scope or duration of treatment. The Departments intend to provide additional examples in a future update to the MHPAEA Self-Compliance Tool.

Fiduciary Certification

For ERISA-governed plans subject, one or more named fiduciaries must review and understand any NQTL comparative analysis. The fiduciary must certify that the fiduciary prudently selected qualified service providers to perform and document the analysis and that has satisfied the duty to monitor those service providers.

When Does All This Come Into Effect?

The final rules generally apply for plan years beginning on or after January 1, 2025. However, the provisions implementing the meaningful benefits standard, the prohibition on discriminatory factors and evidentiary standards, the required use of outcomes data, and certain related comparative analysis requirements will not apply until plan years beginning on or after January 1, 2026.

The Departments anticipate that the final rules will result in changes in network composition and medical management techniques related to MH/SUD care, more robust MH/SUD provider networks, and fewer and less restrictive prior authorization requirements for MH/SUD care. Legal challenges seem likely given recent Supreme Court precedent, which is probably why the Departments took pains to tie the rules to specific statutory authority as much as possible.

Takeaways

Employers should begin work promptly on securing the comparative analysis and working through any results from that analysis. For insured plans, the insurance carrier is primarily responsible. However, for self-funded plans, the employer will likely need to engage a third party provider to conduct the analysis. The first stop on that journey is to interface with the plan’s third-party administrator or administrative services only provider to determine what support they can provide and then, in all likelihood, retain a third party to conduct the analysis. HUB’s employee benefits teams are able to help clients navigate this and aid them in selecting qualified vendors to perform these analyses.

If you have any questions, please contact your HUB Advisor. View more compliance articles in our Compliance Directory.

NOTICE OF DISCLAIMER

Neither Hub International Limited nor any of its affiliated companies is a law or accounting firm, and therefore they cannot provide legal or tax advice. The information herein is provided for general information only and is not intended to constitute legal or tax advice as to an organization’s or individual's specific circumstances. It is based on Hub International's understanding of the law as it exists on the date of this publication. Subsequent developments may result in this information becoming outdated or incorrect and Hub International does not have an obligation to update this information. You should consult an attorney, accountant, or other legal or tax professional regarding the application of the general information provided here to your organization’s specific situation in light of your or your organization’s particular needs.