The Mental Health Parity and Addiction Equity Act (MHPAEA) became law in 2008 but wasn't "given teeth" until Congress passed the Consolidated Appropriations Act, 2021 (CAA, 2021), which requires employers to evaluate their compliance with the MHPAEA and ensure they provide equal coverage limits for mental health/substance use disorder benefits and medical/surgical benefits. Last April, the Department of Labor (DOL) issued guidance to help plan sponsors and administrators comply with the stepped-up compliance requirements.
Employers that sponsor physical health and mental health coverage are on notice that they can face DOL enforcement actions and be sued by employees if they fail to provide equal coverage for mental health issues, said Jay Kirschbaum, benefits compliance director and senior vice president at World Insurance Associates, based in Washington, D.C.
Parity in coverage has posed a problem for insurance carriers, Kirschbaum said March 29 at the SHRM Employment Law & Compliance Conference 2022 in Washington, D.C. "There's no X-ray to show if you have ADHD [attention-deficit/hyperactivity disorder]," he noted. "You can't diagnose people in half an hour," which is how long many telehealth providers allow to evaluate and prescribe medication for a physical ailment, for example.
Mental health parity rules are directed at both insurance carriers and employer-sponsored group health plans. Fully insured employer-sponsored plans, however, often rely on their insurance carriers and trust that their administration is appropriately following the rules. For self-funded plans, employers rely on third-party administrators (TPAs) and, if drug coverage is carved out, pharmacy benefits managers (PBMs).
But, Kirschbaum explained, employers' role as fiduciaries under the Employee Retirement Income Security Act (ERISA) applies to health and welfare benefits as well as to retirement plans.
"ERISA fiduciaries are responsible for making sure vendors have their act together and are following up, or else employers bear the blame," he noted. "It's your responsibility to make sure your issuers or vendors are complying with the rules."
MHPAEA requirements and implementing regulations, he said, don't require that employers offer mental health coverage, "but if offered, it must be on substantially the same basis as medical and surgical benefits, with no special limitations." That means no separate or higher deduction for mental health treatment that doesn't apply to medical benefits, and the same is true for co-pays and maximum out-of-pocket expenses.
Making parity more complicated are "nonquantitative treatment limits" (NQTLs), which are nonfinancial factors such as preauthorization requirements and access to in-network providers.
There can be differences in the maximum number of covered days at inpatient facilities, Kirschbaum said, but plans must be able to show why these differences exist. For instance, substance use disorders can require longer in-facility stays than post-surgical stays at a rehab center.
Prescription drug coverage and formulary rules also have to be the same or essentially similar for mental and physical treatments.
New Enforcement Teeth
As of February 2021, the CAA, 2021 requires group health plans that provide both medical/surgical and mental health/substance use disorder benefits to document comparative analyses of the design and application of NQTLs. They must also make these comparative analyses available on request to plan participants and to the DOL, and to the Department of Health and Human Services (HHS) or applicable state authorities. The HHS is required to submit to Congress and make publicly available an annual report summarizing compliance with these measures.
Enforcement actions are handled by the DOL and the Centers for Medicare and Medicaid Services, Kirschbaum said, and regulators are signaling that they plan to step up their activities. DOL investigations are triggered by employee complaints, Kirschbaum said, and those complaints can also lead to class-action lawsuits.
Because lawyers bringing suits on behalf of employees have been able to make employers pay their fees as part of settlements, "the plaintiffs' bar is taking note. They won't go just after the carriers but after the plans," Kirschbaum said.
Employers are generally not monitoring parity factors, Kirschbaum noted, so that job falls to insurance carriers for fully insured plans and TPAs for self-funded plans. But employers should "make sure your carriers or TPAs are watching what's happening."
Comparative Analysis Reports
Regarding the required comparative analyses, "you should have been complying all along, but you're now required to get your analysis in place. If a plan participant or the DOL asks for a copy of the analysis, you have 45 days to provide it," Kirschbaum said.
Don't wait until a participant requests a copy as part of a claims dispute to discover it isn't available.
"You are responsible for making sure that your carrier has done the analysis," he added. "Self-funded plans may have to press their TPAs. Connect with your broker, consultant, carrier or whoever you use to administer your plans and find out where they are with this process."
Document Compliance Efforts
Kirschbaum advised employers to document their due diligence activities. "Plaintiffs' lawyers will ask," he said. "Saying, 'We relied on our carriers to do that' isn't a good place to be in when plaintiffs' attorneys ask."
He encouraged employers to put in place a health and welfare benefits committee to show they are carrying out their fiduciary responsibilities—even if it only meets annually to review the employer's relationship with its carrier or TPA.
"There's no mandate that you have a committee, but it can show you're doing due diligence on an ongoing basis," he said. This is particularly true for self-funded plans, which have higher liability than fully insured plans.
Benefits committee minutes that show the employer asked its carrier or TPA to ensure that a parity analysis had been done "is the position you want to be in," Kirschbaum said.