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Regulators Say Health Plans Miss the Mark on Mental Health Parity

Failures to equally cover mental and physical health are common

A man and woman talking on a couch in an office.

Federal agencies are warning health plans and health insurers that they will be subject to enforcement actions if they fail to deliver parity between physical health coverage and treatment for mental health and substance use disorders.

The departments of Labor (DOL), Health and Human Services (HHS), and the Treasury issued their 2022 report to Congress on the Mental Health Parity and Addiction Equity Act (MHPAEA) on Jan. 25. The joint report highlights the agencies' recent emphasis on greater MHPAEA enforcement, along with guidance on how to correct compliance failures.

The MHPAEA, enacted in 2008, mandates that financial requirements and treatment limits—such as co-payments and prior authorization requirements—imposed for mental health or substance use benefits cannot be more restrictive than the financial requirements and treatment limits that apply to physical and surgical benefits. The law applies to plans sponsored by employers with more than 50 employees, including self-insured and fully insured arrangements, and to health insurers that sell coverage to employers with more than 50 employees.

The agencies' joint report cites examples of both self-funded and fully insured plans failing to ensure treatment parity. For example, a health insurer covered nutritional counseling for physical conditions like diabetes but not for mental health conditions such as anorexia nervosa, bulimia nervosa and binge-eating disorder.

"Health plans and insurance companies are falling short of providing parity in mental health and substance-use disorder benefits, at a time when those benefits are needed like never before," U.S. Secretary of Labor Marty Walsh said in a statement.

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Stepped-Up Enforcement

The DOL's Employee Benefits Security Administration (EBSA) considers MHPAEA enforcement "a top priority," Walsh said. Similarly, HHS, through its Centers for Medicare & Medicaid Services, has increased its MHPAEA enforcement activities in the individual and fully insured group markets. The EBSA has primary enforcement jurisdiction over the MHPAEA for approximately 2 million health plans covering roughly 136 million Americans. The CMS has enforcement jurisdiction over the MHPAEA in the individual and fully insured group markets in states where it has enforcement authority.

The joint report also outlines the agencies' efforts to interpret, implement and enforce the amendments to the MHPAEA made by the Consolidated Appropriations Act, 2021, which provided the agencies with additional funding for enforcement actions.

The agencies issued a fiscal 2021 MHPAEA enforcement fact sheet along with the joint report. The fact sheet summarizes the EBSA's and the CMS' 2021 investigations, public inquiries and complaints related to the MHPAEA and highlights the EBSA's settlements against United Behavioral Health, United Healthcare and Oxford Health Insurance totaling $13.6 million in restitution to participants and beneficiaries.

Complying with 2021 Guidance

Last April, the EBSA issued a new set of MHPAEA frequently asked questions and answers, along with examples to help group health plan sponsors and administrators determine if their plans comply with the statute's parity requirements.

"Employers must be ready to prove their compliance with MHPAEA standards, particularly for nonquantitative treatment limitations (NQTL)," wrote Brian M. Johnston, an attorney in the Overland Park, Kan., office of Jackson Lewis, when the guidance was released. "NQTL can include medical management standards that limit or exclude coverage based on medical necessity, prior authorization or other bases," he explained, and when imposed on mental health and addiction treatment services, they must be comparable to and applied no more stringently than standards used for physical and surgical benefits.

"The departments warned that plans should not wait for a letter from a regulator to begin building their comparative analyses," noted law firm Manatt, Phelps & Phillips in Los Angeles. "Given that plans were required to have comparative analyses available upon a regulator's request by Feb. 10, 2021, plans that have not already prepared comparative analyses should do so as soon as practicable," the firm advised.

Last year, regulators issued 156 letters to plans and insurers requesting comparative analyses comparing physical and mental health benefits for 216 unique NQTLs across 86 investigations, the joint report said.

The NQTLs that were most commonly the subject of an inquiry from regulators included:

  • Preauthorization and precertification requirements.
  • Network provider admission standards.
  • Out-of-network reimbursement rates.
  • Treatment plan requirements.
  • Provider qualification or billing restrictions.
  • Limits on residential care or partial hospitalization programs.

Related SHRM Articles:

Mental Health Parity: Don't Get Left Out in the Cold, SHRM Online, December 2021

DOL, State Regulators Step Up Enforcement Around Mental Health Parity Enforcement, SHRM Online, October 2021

Mental Health Parity Compliance Returns to Forefront for Group Health Plan Sponsors, SHRM Online, May 2021

Appropriations Act Requires Employer Actions to Ensure Mental Health Parity, SHRM Online, January 2021


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