Update: Guidance Issued
On April 2, 2021, the U.S. Department of Labor issued guidance to help plan sponsors and administrators comply with the changes made to the Mental Health Parity and Addiction Equity Act by the Consolidated Appropriations Act, 2021.
Employer-sponsored group health plans must evaluate their compliance with the federal Mental Health Parity and Addiction Equity Act (MHPAEA) to ensure there are equal coverage limits for mental health/substance use disorder benefits and medical/surgical benefits, according to the Consolidated Appropriations Act, 2021, which was signed into law on Dec. 27.
The MHPAEA parity requirements apply to quantitative treatment limitations (QTLs), such as visit limits, and nonquantitative treatment limitations (NQTLs), such as preauthorization requirements. The Department of Labor's (DOL's) Employee Benefits Security Administration can bring enforcement actions against both fully insured and self-insured employer-sponsored plans for MHPAEA violations.
The appropriations act amends the MHPAEA by requiring sponsors of group health plans to perform and document comparative analyses of the design and application of NQTLs.
New Documentation Disclosures
Beginning Feb. 10, 2021, plan sponsors must give regulators at the DOL or the Department of Health and Human Services (HHS), on request, comparative analyses of their health plan's NQTLs, including:
- Coverage terms regarding benefit limits, and a description of all mental health/substance use disorder and medical/surgical benefits to which each limit applies.
- Factors used to determine when the limits will apply to mental health/substance use disorder benefits and to medical/surgical benefits.
- Comparative analyses demonstrating that the application of coverage limits for mental health/substance use disorder benefits, as written and in operation, are comparable to—and no more stringent than—limits applied to medical/surgical benefits.
The new law also requires regulators to review MHPAEA compliance from a sample of group health plans every year, and to require health plans to take corrective action when noncompliance is found. The DOL and HHS must issue an annual report to Congress detailing the results of these reviews.
Federal regulators are charged with issuing new guidance with respect to these requirements by June 27, 2022.
"Until the expected regulatory guidance is issued to provide greater detail about the analyses expected by the departments, plan sponsors should make every effort to comply in good faith with the new requirements," said Leena Bhakta and Kaye Pestaina, principals at HR consultancy Mercer.
[SHRM resource spotlight: Mental Health.]
Working with TPAs
"These new rules will require plan sponsors to take steps to comply and possibly follow up with their third-party administrators (TPAs) to ensure compliance," advised Saghi Fattahian and Lindsay Goodman, attorneys in the Chicago office of law firm Morgan Lewis. "Plan sponsors now have a statutory obligation to ensure the comparative analyses are performed and should follow up with their TPAs and take steps internally, as necessary, to ensure they are ready to demonstrate compliance with these new requirements," they recommended.
The new requirements may create an increase in complaints by plan participants regarding parity noncompliance, according to HR consultancy Segal, and "plans that are found in noncompliance and required to notify enrollees will face increased litigation risk."
"The substantive MHPAEA requirements are not new—the statute is 13 years old, and the final implementing rules were published in 2013," noted Michael Kolber, a partner at Manatt Health, a professional services firm. "Nonetheless, given the expansive range of practices and policies that are subject to MHPAEA, some issuers and plans may have prioritized compliance evaluations for some [benefit limits] over others." The appropriations act "appears to reject a piecemeal approach," he noted.
While some states already require that state-regulated health insurance issuers perform comparative analyses of their coverage limits to demonstrate MHPAEA compliance, the new law "now makes this requirement applicable nationwide, including to self-insured group health plans not subject to state regulation," Kolber said.
DOL's Online Tool
Mercer's Bhakta and Pestaina said that although the concept of mental health parity is fairly straightforward, "ensuring compliance with these rules is very complex." They noted that the DOL recently updated its online self-compliance tool, which consists of questions and examples to help plan administrators assess whether their plans are in compliance with various MHPAEA requirements, including rules relating to medical management standards, pre-authorization requirements, and coverage exclusions and limits.
Plan Sponsor Takeaways
Attorneys at law firm Nixon Peabody advised that "plan sponsors and administrators have a limited time to shift into full compliance gear under the CAA mandates" as they "are now 'on-the-clock' to bring their plans into compliance." They recommend taking the following steps:
- Conduct an initial review of quantitative treatment limits to determine whether any parity compliance issues are apparent on the face of the plan design.
- For fully insured health plans, reach out to insurance carriers and request a copy of the most recent quantitative and NQTL comparative analyses.
- For self-insured health plans, work with TPAs to conduct comparative analyses. Particular care should be given to administrative structures that include separate (or "carve-out") pharmacy benefit and/or mental health and substance abuse providers. Where carve-out vendors exist, there is likely to be very little coordination between the vendors regarding parity compliance.
- If the comparative analyses indicate that adjustments are necessary, take further steps to bring the plans into compliance. These corrective efforts should be thoroughly documented.
Related SHRM Articles:
Legislation Increases Employee Health Plan Transparency, SHRM Online, January 2021
Workers' Mental Health Suffers During the Pandemic: How Managers Can Help, SHRM Online, October 2020
DOL Updates Tool to Determine If Health Plans Provide Mental Health Parity, SHRM Online, October 2020
Regulators Ramp Up Mental-Health Parity Efforts, SHRM Online, May 2018
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