MHPAEA Final Regulations Are Here – What You Need to Know

The Departments of Labor, Treasury, and Health and Human Services (the “Tri-Agencies”) released long-promised final regulations related to the Mental Health Parity and Addiction Equity Act (MHPAEA), as amended on September 9, 2024. As health plan sponsors know, enforcement of the MHPAEA requirements has been and will continue to be a high priority for the Tri-Agencies. The regulations add to the compliance burden of plan sponsors, but they also offer welcome clarifications. This article is intended as a high-level summary of the Tri-Agencies’ newest guidance.

Background

The MHPAEA was enacted in 2008 with the intention of ensuring that participants and beneficiaries covered by a health plan that provides mental health and substance use disorder (MH/SUD) benefits have access to those benefits on par with their access to benefits for medical and surgical conditions (“M/S benefits”). The MHPAEA was amended in 2020 to require plans to undertake and document certain nonquantitative treatment limitation (NQTL) comparative analyses. An example of an NQTL is a pre-authorization requirement, while a limit on the number of annual office visits is an example of a quantitative limit. The NQTL analyses were expected to demonstrate that NQTLs are applied to MH/SUD benefits in a substantially similar way as to M/S benefits under the health plan. However, it was never clear what parity should look like, in general, or what the NQTL analyses should cover.

In January 2022, the Tri-Agencies published their first report to Congress since the 2020 MHPAEA amendment that added the requirement of NQTL analyses. The agencies reported that every comparative analysis reviewed was insufficient when first submitted.

The Tri-Agencies then released promised guidance related to the MHPAEA on July 25, 2023, in the form of proposed regulations. The proposed regulations provided more detailed guidance and examples for conducting a sufficient NQTL comparative analysis and sought comments on the provisions. Thousands of comments were submitted. After their review, the Tri-Agencies have released the final regulations that seek to clarify the protections intended by the MHPAEA and the requirements for NQTL comparative analyses.

Final Regulations

Generally speaking, the final regulations:

• Clarify that MHPAEA is intended to protect plan participants and beneficiaries seeking MH/SUD benefits from being subjected to greater access restrictions than recipients of M/S benefits and state that the final regulations should be interpreted consistently with this purpose.
• Require that if, for any condition or disorder an MH/SUD benefit in any classification is provided under a plan, the plan must provide meaningful benefits (discussed in more detail below) for that condition or disorder in every classification in which meaningful M/S benefits are provided. (The six benefits classifications are inpatient/in-network, inpatient/out-of-network, outpatient/in-network, outpatient/out-of-network, emergency care, and prescription drugs.)
• Reiterate that NQTLs applied to MH/SUD benefits cannot be more restrictive than the predominant NQTL that applies to substantially all M/S benefits in the same classification.
• Require plans to collect and assess outcomes data and take action to address material differences in access to mental health and substance use services in comparison to access to medical and surgical services.
• Provide detailed content requirements for NQTL comparative analyses, including evaluating standards for network composition, out-of-network reimbursement rates, and pre-authorizations.
• Bar plans, when designing NQTLs, from using discriminatory information, evidence, sources or standards that disadvantage (or are designed to disadvantage) access to MH/SUD benefits as compared to M/S benefits.
• Retain the sunset provision for self-funded (non-federal governmental) plans’ elections to opt out of compliance with MHPAEA so that no “opt-out” can be made or renewed after June 27, 2023.

The final regulations also specifically provide that a plan cannot apply an NQTL unless it meets two separate sets of requirements:

• Design and Application Requirements. The factors used in designing and applying the NQTL to MH/SUD benefits in a particular classification of benefits, including processes, strategies, and evidentiary standards, must be comparable to those used for designing and applying the NQTL to M/S benefits in the same classification. A plan cannot use any factor or evidentiary standard for this purpose that is biased or not objective and that adversely impacts or “discriminates” against MH/SUD benefits as compared to M/S benefits. Whether factors are biased or not objective is based on all the relevant facts and circumstances as to whether they systematically disfavor access to MH/SUD benefits.
• Relevant Data Evaluation Requirements (Outcome Data). In operation, NQTLs applied to MH/SUD benefits in a classification cannot be more restrictive than the predominant NQTL that applies to substantially all M/S benefits in the same classification. The plan must collect and evaluate relevant data to assess the impact of the NQTL on access to mental health and substance use disorder services as compared to medical and surgical services. “Relevant data” should be broadly interpreted and would include, for example, the number and percentage of relevant claim denials and the variance between in-network and out-of-network utilization rates.

In addition, the plan must take reasonable action to address any material differences it discovers in access to MH/SUD benefits as compared to M/S benefits. Differences are not material if they are attributable to generally recognized independent professional medical or clinical standards or carefully circumscribed measures reasonably designed to detect, prevent, or prove fraud or abuse.

Definitions in the Final Regulations

The final regulations continue to provide that “medical and surgical benefits,” “mental health benefits,” and “substance use disorder benefits” must be defined consistently with current medical practices’ generally recognized independent standards. These standards are currently provided, in general, in the most current versions of the International Classification of Diseases (ICD) or the Diagnostic and Statistical Manual of Mental Disorders (DSM). If a treatment, disorder or procedure is not described under such standards, then a plan can define it in accordance with applicable federal or state law.

The final regulations also provide new or revised definitions (and examples) of critical terms, such as “strategies,” “factors,” “processes,” and “evidentiary standards.” They are generally defined as follows:

• “Strategies” are methods, internal metrics, or practices that a plan uses or considers in designing an NQTL. An example of “strategies” is the rationale used in selecting and adopting threshold amounts to apply to an NQTL.
• “Factors” are all information (including processes and strategies) that a plan considers or relies upon to design the NQTL or to decide how the NQTL applies to benefits. For example, the use of the Medicare Physician Fee Schedule to establish base rates for in-network physician services is not considered a biased or not-objective factor when used to design an NQTL.
• “Processes” are procedures, steps or actions that a plan uses to apply an NQTL. For example, the procedures to submit information to authorize coverage for an item or service prior to receiving the benefit is one such “process.”
• “Evidentiary standards” are any evidence, sources or standards that a plan relies upon or considers in designing or applying a factor respecting an NQTL. An example of an evidentiary standard would be a published research study.

Meaningful Benefits

Whether the benefits provided are meaningful is determined by comparing the MH/SUD benefits to the M/S benefits provided in the same classification. Meaningful benefits require coverage of a core treatment for the condition or disorder in each classification in which the plan provides benefits for a core treatment for one or more M/S benefits. For these purposes, a core treatment for a condition or disorder is a treatment or course of treatment, therapy, service or intervention that is generally recognized under independent standards for current medical practice.

As an example, a plan generally covers the full range of outpatient treatments (including core treatments) for medical and surgical procedures when provided on an out-of-network basis. However, the same plan covers only outpatient developmental screenings (not considered a core treatment) for autism spectrum disorder (ASD) on an out-of-network basis. Therefore, the plan fails to provide “meaningful benefits” for the treatment of ASD in the outpatient/out-of-network classification.

Content Requirements for the Comparative Analysis

Plans that cover both M/S benefits and MH/SUD benefits and impose NQTLs on MH/SUD benefits must perform and document a comparative analysis of the design and application of each applicable NQTL. The final rules require the comparative analyses to contain, at a minimum, the following content elements:

• Description of the NQTL, including the MH/SUD and M/S benefits that are subject to the NQTL, which benefits are included in each classification and identification of the predominant NQTL applicable to substantially all M/S benefits in each classification and how that determination was made;
• Identification and definition of the factors and evidentiary standards used to design or apply the NQTL, including what steps, if any, were taken to correct, cure or supplement any factor or evidentiary standard that would otherwise have been determined to be biased or not objective;
• Description of how factors are used in designing or applying the NQTL, and if there is more than one factor, how the factors relate to one another, the order in which they were applied, and if and why one or more factors is given more weight than the others;
• Demonstration of the comparability and rigor of the MH/SUD benefits’ factors and evidentiary standards as they relate to the M/S factors and evidentiary standards in connection with the NQTL, as written, including, if any, relevant quantitative data, calculations or other analyses in each classification;
• Demonstration of the comparability and rigor in applying the NQTL, in operation, including the required data, evaluation of that data, explanation of any material differences in access, and a description of reasonable actions taken to address such differences; and
• Findings and conclusions, addressing each of the first five content requirements (and note that for an ERISA-covered plan, a certification by a plan fiduciary is required).

Requests for Comparative Analyses and Consequences of a Final Determination of Noncompliance

The final regulations also provide the steps the Tri-Agencies will follow to request and review a plan’s comparative analysis of an NQTL and detail the process when the analysis is found to be noncompliant, as described below.

• After an initial request for a comparative analysis, the plan must submit it to the relevant Tri-Agency Secretary within the later of 10 business days or the date specified.
• If the relevant Tri-Agency Secretary determines the comparative analysis is insufficient, it will specify the additional information needed, which the plan must provide within the later of 10 business days or the date specified in the noncompliance determination.
• If the relevant Tri-Agency Secretary makes an initial determination of noncompliance, the plan has 45 calendar days to (1) specify the actions it will take to comply and (2) provide additional comparative analyses.
• If the relevant Tri-Agency Secretary makes a final determination of noncompliance, the plan must notify all participants, beneficiaries and enrollees in the plan not later than 7 business days after the date of the determination. The final regulations provide specific content for this notice and also require that a copy be provided to the relevant Tri-Agency Secretary, service providers and fiduciaries.

If a plan receives a determination that an NQTL is not compliant with the requirements provided in the final regulations, including because the plan has not submitted a sufficient comparative analysis that demonstrate compliance, the plan may be directed to not impose the NQTL with respect to MH/SUD benefits until it is able to demonstrate compliance or it takes appropriate action to remedy the violation.

Plans must make available a copy of the comparative analysis when requested by any applicable state authority, a participant, beneficiary, or enrollee who has received an adverse benefit determination related to MH/SUD benefits, and any ERISA plan participants and beneficiaries at any time.

Effective Dates

The final regulations generally apply to group health plans and group health insurance coverage as of the first day of the first plan year beginning on or after January 1, 2025.

Provisions (described above) regarding the meaningful benefits standard, the prohibition on discriminatory factors and evidentiary standards, the relevant data evaluation requirements and related comparative analyses requirements are not applicable until the first day of the first plan year beginning on or after January 1, 2026.

Next Steps

Plans that are fully insured should contact their insurance providers to confirm that the insurer is completing the requisite comparative analyses.

Plans that are not fully insured and covered by MHPAEA (that is, have more than 50 employees) should consult with their third-party administrator (TPA) to collaborate with them to collect and analyze the data needed to comply with the MHPAEA final regulations and the required NQTL comparative analyses.

At the very least, the TPA should be expected to provide the data necessary for another qualified service provider to complete the comparative analyses.

Additionally, plan sponsors that have a separate prescription drug benefit administered by a pharmacy benefit manager (PBM), should confirm that the PBM or another service provider is completing the comparative analyses in connection with the drug benefits.

Finally, plans should confirm that their TPA, PBM or other service provider will work with plan sponsors if additional data or information is required on audit.

This article only scratches the surface of the 536 pages of final regulations. If you have any questions about the Tri-Agencies’ MHPAEA final regulations, or your plan’s compliance with MHPAEA in particular, please contact any member of Calfee's Employee Benefits and Executive Compensation practice group.