By Maanasa Kona, Assistant Research Professor at the Center on Health Insurance Reforms
On July 25, 2023, the Departments of Labor, Health and Human Services, and the Treasury (the tri-agencies) proposed a new rule to strengthen the enforcement of the federal Mental Health Parity and Addiction Equity Act (MHPAEA) and ensure that patients can access mental health and substance use disorder (MHSUD) services as easily as they can access medical/surgical services.
Alongside the proposed rule, the federal government also issued a technical release seeking feedback on new data requirements related to provider networks, the second annual MHPAEA comparative analysis report to Congress (as required under federal law), and a joint fact sheet issued by the Employee Benefits Security Administration (EBSA) and the Centers for Medicare and Medicaid Services (CMS) on MHPAEA enforcement in Fiscal Year (FY) 2022.
This proposed rule provides some much needed clarity to insurers that have struggled to comply with certain aspects of MHPAEA in the past while also strengthening the oversight tools available to regulators. If finalized, the new requirements will go into effect on January 1, 2025, for group health plans, and on January 1, 2026, for individual health plans.
What Is MHPAEA And How Is It Enforced?
In 2008, Congress enacted the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act in response to public concern over health insurers placing higher barriers to accessing MHSUD services than medical/surgical services. The law, as originally enacted, required all group health plans to ensure that the financial requirements and treatment limitations being applied to MHSUD services are no more restrictive than those applicable to medical/surgical services. In 2010, the Affordable Care Act (ACA) extended these requirements to individual health plans as well, such as the ones sold in the ACA Marketplace.
The federal government and state departments of insurance share the responsibility of enforcing MHPAEA across the plans they regulate. The EBSA, under the Department of Labor, enforces the law with respect to self-funded large group plans, such as many private employer-sponsored plans. State departments of insurance in all but three states enforce MHPAEA with respect to plans sold by insurers licensed in the state, such as the ones sold on ACA Marketplaces. CMS is responsible for enforcing MHPAEA in the three states where the state departments of insurance do not enforce the law—Missouri, Texas, Wyoming—as well as public-employer-sponsored plans, such as plans offered to state and local government employees.
In 2013, the tri-agencies issued regulations implementing MHPAEA, which state that parity requirements apply to financial requirements, such as deductibles and cost sharing; quantitative treatment limitations, such as day or visit limitations; and nonquantitative treatment limitations (NQTLs), such as prior authorization requirements, standards for provider admission to participate in networks, and methodologies used to determine provider reimbursement rates.
With respect to financial requirements and quantitative treatment limitations, the tri-agencies established a mathematical test that insurers can use to check if they are compliant with MHPAEA’s rule. Subsequently, a parity task force convened by the federal government in 2016 noted significant progress in achieving parity with respect to financial requirements and quantitative treatment limitations.
However, when it comes to NQTLs, state regulators and insurers have struggled to ensure parity. One major reason for this is that the standard for assessing compliance with respect to NQTLs is more subjective. The regulations require insurers to ensure that any factors used to impose an NQTL, such as a prior authorization requirement, on MHSUD benefits are comparable to and no more stringently applied than the factors used to apply that NQTL to medical/surgical benefits.
Since the initial rules implementing MHPAEA went into effect in 2013, the tri-agencies have issued several pieces of guidance—including “15 sets of FAQs with 96 questions, eight enforcement fact sheets, six compliance assistance tools and templates,” and more—to further clarify the requirements under MHPAEA, especially for NQTLs. Despite this, confusion has persisted among both insurers and state regulators.
To further assist regulators in enforcing the NQTL standard, under the Consolidated Appropriations Act of 2021, Congress required all health plans and insurers imposing NQTLs on MHSUD benefits to perform “comparative analyses” comparing the design and application of NQTLs to MHSUD and medical/surgical benefits. Plans and insurers are required to make these comparative analysis documents available to all relevant regulators upon request. The law sets certain standards for what these documents should include, such as factors used in determining when the NQTL applies to MHSUD and medical/surgical benefits, the evidentiary standards these factors rely on, and an analysis demonstrating how the standards and factors are comparable across MHSUD and medical/surgical benefits.
Unfortunately, in the first year of implementing this new law, federal regulators found that none of the comparative analyses they had requested from insurers met the requirements under the law. State regulators also reported struggling with insurer submissions.
What Is The Administration Proposing In This New Rule?
Through the new proposed rule, the tri-agencies fill certain gaps in the standards governing MHPAEA while providing more specificity and clarity over how to ensure parity with respect to NQTLs.
First, the tri-agencies change how MHSUD and medical/surgical services are defined. More specifically, they clarify that eating disorders and autism spectrum disorders are considered mental health conditions and protected under MHPAEA.
Second, the proposed rule codifies the requirement, enacted by the Consolidated Appropriations Act of 2021, that insurers perform and document comparative analyses for all NQTLs imposed on MHSUD services. The rule sets forth very detailed requirements for the content of each comparative analysis, as well as the process for making comparative analyses available to relevant regulators and beneficiaries upon request. Under the proposed rule, failure to provide a sufficient comparative analysis could result in the tri-agencies prohibiting the plan from imposing the NQTL in question until the insurer can demonstrate compliance with MHPAEA or remedy the violation.
Third, the tri-agencies establish a new, more prescriptive standard for evaluating whether an NQTL complies with MHPAEA. The new standard prohibits the application of an NQTL to MHSUD benefits unless the insurer can prove that it satisfies three requirements:
- No more restrictive requirement: The tri-agencies propose establishing a mathematical test, similar to the one currently in place for financial requirements and quantitative treatment limitations to ensure that an NQTL is no more restrictive as applied to MHSUD services than to medical/surgical services.
- Design and application requirement: Through their comparative analyses, insurers will be required to document the process, strategy, evidentiary standard, and other factors used in the design and application of each NQTL to an MHSUD benefit and to demonstrate how they are comparable to those used in designing and applying that NQTL to a medical/surgical benefit. In conducting this analysis, the tri-agencies propose prohibiting insurers from using biased historical data, such as low rates paid to MHSUD providers at a time when MHPAEA was not in effect or the insurer was in violation of MHPAEA.
- Outcomes data requirement: To ensure parity in practice and not just in written policy, the tri-agency proposes requiring insurers to collect and evaluate relevant outcomes data (for example, number and percentage of relevant claims denials), identify if there are any material differences between access to MHSUD and medical/surgical benefits, and remedy any material differences identified. The analysis of the outcomes data is expected to be part of the insurer’s comparative analysis.
When an insurer impartially applies independent professional medical or clinical standards to create an NQTL, consistent with generally accepted standards of care without imposing additional or different requirements, the tri-agencies propose automatically considering the NQTL to be compliant with MHPAEA without needing it to meet the above requirements.
The tri-agencies are also seeking comment on other topics related to MHSUD access, such as the treatment of telehealth in assessing parity, how provider directory requirements can improve MHSUD access, and ways to incentivize third-party administrators who administer many employer-sponsored health plans to comply with MHPAEA.
Special Rule For The Network Composition NQTL
In the proposed rule, the tri-agencies specifically call attention to the treatment of provider network composition as an NQTL. While recognizing that network composition is closely tied to and dependent on other NQTLs, such as provider network admission standards, methods for determining reimbursement rates, and credentialing standards, the tri-agencies propose treating network composition as its own NQTL. To assess the outcomes associated with network composition, under the proposed rules, insurers would be required to collect data including, but not limited to, in- and out-of-network utilization rates, network adequacy metrics (time and distance data, number of providers accepting new patients), and provider reimbursement rates. If an analysis of the data reveals a material difference between accessing in-network MHSUD and medical/surgical services, the insurer would be required to take reasonable actions to remedy this disparity. However, recognizing the reality of MHSUD provider shortages, the tri-agencies propose an enforcement safe harbor for insurers that can demonstrate that the material differences exist because of provider shortages and despite their reasonable efforts to expand their MHSUD provider networks.
In the technical release issued alongside the proposed rule, the tri-agencies provide further detail on the special rule for assessing network composition as an NQTL. The tri-agencies are seeking detailed feedback from stakeholders on various elements of the proposed special rule as well as general comments on issues with implementing the rule, such as the challenges insurers would face in providing the required data, what other data elements the tri-agencies should ask insurers to provide, and how the tri-agencies should account for provider shortage areas and heavily consolidated provider markets. These comments are due by October 2, 2023.*
What Does The Latest Enforcement Report Show?
Under the Consolidated Appropriations Act of 2021, the tri-agencies are required to submit annual reports to Congress on their review of NQTL comparative analysis documents. On July 25, 2023, the tri-agencies released the second annual report. This annual report finds that between February 2021 and July 2022, the EBSA issued 182 letters requesting comparative analyses for 450 NQTLs across 102 investigations. Analyses were most frequently requested for prior authorization, exclusion of applied behavioral analysis therapy, and network admission standards. Between February 2021 and September 2022, CMS issued 26 letters requesting comparative analyses from 24 plans and issuers. Analyses were most frequently requested for prior authorization and concurrent review.
Both departments found that a significant portion—almost 50 percent of comparative analyses reviewed by the EBSA and almost 80 percent of those reviewed by CMS—were deficient, as in they did not include everything a comparative analysis is supposed to include. The departments also issued several initial determinations of substantive MHPAEA violations, but they note that most plans and insurers had responded to these initial determinations by providing and implementing corrective action plans. Together, the two agencies issued only eight final determinations finding a substantive violation of MHPAEA.
In addition to the above report, the EBSA and CMS also issue annual enforcement fact sheets reviewing their MHPAEA enforcement activities for each year. These fact sheets include investigations related to not just NQTLs but also financial requirements and quantitative treatment limitations, and only include information about investigations concluded in a given year. In FY 2022, the EBSA and CMS investigated MHPAEA violations related to annual dollar limitations, aggregate lifetime dollar limitations, financial requirements, and quantitative and non-quantitative treatment limitations. The EBSA cited 18 violations, 10 of which were NQTL violations, and CMS cited 7 violations, all of which were NQTL violations.
Although MHPAEA has been in effect for more than a decade now, regulators enforcing the law have often struggled to narrow the many gaps in access between MHSUD and medical/surgical benefits. One major driver of this has been the inability of regulators to effectively oversee insurer compliance with respect to NQTLs, especially network composition-related NQTLs. This proposed rule makes the NQTL standard more prescriptive and incorporates outcomes data, and if finalized, these rules would represent a significant step forward in MHPAEA enforcement.
[Editor’s Note: The deadline for comments on the proposed rule was extended to October 17, 2023.]