The U.S. Department of Labor (DOL) and state insurance regulators are stepping up enforcement actions relating to the Mental Health Parity and Addiction Equity Act, which prevents group health plans that provide mental health or substance abuse benefits from imposing stricter limits on those benefits than on medical/surgical benefits.
The recent actions have focused on what the law, which took effect in 2008, terms non-quantitative treatment limitations (NQTLs), as opposed to quantitative limits such as paying for the same number of visits whether for mental or physical health treatment.
The Consolidated Appropriations Act, 2021, also amended the Mental Health Parity and Addiction Equity Act to require group health plans and issuers to complete an analysis that explains whether the factors used to justify NQTLs for mental health coverage differ from limits imposed for medical and surgical benefits. The analysis must be provided to the DOL on the agency's request.
Among recent NQTL actions, in August the DOL announced a $15.6 million settlement in a case involving United Healthcare and its affiliates. The insurers, served with separate enforcement lawsuits by the DOL and the New York Attorney General, were charged with reducing reimbursements for certain out-of-network mental health treatments depending on the type of license held by the service provider, but not doing so for those providing medical services.
The settlement included $13.6 million to affected participants and beneficiaries and $2.08 million in penalties.
"Plans and insurance companies cannot place special hurdles in the paths of workers and their families when they seek mental health and substance use disorder benefits," said Acting Assistant Secretary for Employee Benefits Security Ali Khawar. "The law requires parity between these benefits and medical benefits. We are committed to vigorously enforcing the law's requirement and making sure workers in need of help are treated fairly."
The DOL created a self-compliance tool that plans can use to meet the law's requirements, Khawar noted.
The stepped-up enforcement actions "highlight the continued scrutiny by regulators and law enforcement on issues relating to mental health parity" according to a Sept. 14 post by Los Angeles and San Francisco-based attorneys at law firm Manatt.
While the recent actions have been brought against insurance companies, "it is possible that regulators and law enforcement may target other payers that engage in similar practices" such as employers that sponsor mental health benefits. These payers "should carefully examine their practices relating to … out-of-network reimbursement for compliance with parity requirements," the firm advised.
Bloomberg Law similarly reported on Sept. 22 that "health insurance companies are now in the crosshairs of the Department of Labor's aggressive enforcement of mental health parity, but it's unlikely to mean employers will escape scrutiny."
New Penalties Proposed
The Biden administration also "has made mental health parity enforcement a high priority, going so far as to ask Congress for additional authority to fine violators, including employers," Bloomberg reported. In the Democrats' 2022 budget reconciliation measure, for instance, the House Education and Labor Committee "included a provision to allow the Labor Department to impose civil monetary penalties on plan sponsors, insurers, and plan administrators."
The new analysis required from group health plans "coupled with the prospect of penalties, has only made employers more worried about being caught violating the law," Bloomberg reported.
Advice from a Former DOL Auditor
Employers may need to press their insurance carriers, if they are fully insured, or their third party administrators (TPAs), if self-funded, to provide them with the mental health parity comparative analysis that the DOL now requires employers make available upon request, said Rory Kane Akers, a former DOL mental health parity auditor.
Akers, who is a vice president and ERISA compliance attorney at Kansas City, Mo.-based Lockton, an insurance brokerage and employee benefits firm, was featured in an Oct. 4 Lockton podcast.
"Based on conversations that we've been having with carriers and TPAs, when it comes to the comparative analysis and whether they're going to provide these for employer plan sponsors, the responses have varied depending on if we're looking at self-funded [or fully insured] plans," Akers said.
Most of the fully insured carriers have told clients "they will be responsible for the comparative analysis and the obligation to provide it to the Department of Labor if they come calling," she said. "But for self-insured plans, TPAs have been a little bit more hesitant."
Akers advised employers to "start having conversations with carriers and TPAs, and holding their feet to the fire" with regard to the comparative analysis. Although the DOL's rules say the employer is responsible for producing the analysis, "we all work in the real world, and we understand that … the carrier or the TPA is the one administering those claims, and … most employers, at the end of the day, are just using the carrier or the TPA's network," Akers pointed out.
She added, "You need to consider the relationship you have with your carrier or TPA if they're coming to you and saying [that they're] not going to do this for you. … If they won't help at all, document that. Then the DOL should take issue with the carrier or TPA," although the employer is ultimately responsible for ensuring plan compliance.