Group Health Plans Must Perform Comparative Analyses of Non-Quantitative Treatment Limitations under Mental Health Parity
The Consolidated Appropriations Act, 2021, enacted December 27, 2020 (the “Act”), amended the Public Health Service Act (PHSA), the Employee Retirement Income Security Act of 1974 (ERISA), and the Internal Revenue Code of 1986 (the “Code”) to add new requirements for group health plans that provide mental health and substance use disorder (MH/SUD) benefits.
This Alert addresses the new requirements relating to mental health and substance use disorder benefits which became effective on February 10, 2021.
The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), as amended, generally requires that group health plans and health insurers ensure that the financial requirements and treatment limitations on MH/SUD benefits are no more restrictive than the predominant financial requirements and treatment limitations that apply to substantially all medical and surgical benefits. Generally, treatment limitations are either quantitative limitations (e.g., limitations on the number of visits or treatments) or non-quantitative limitations (NQTLs) (e.g., use of prior authorization; concurrent review or retrospective review; experimental determinations; and usual, customary, and reasonable determinations).
New Requirements for Documentation of Parity of NQTLs
The Act seeks to strengthen parity in mental health and substance use disorder benefits by requiring plans to perform and document comparative analyses of their design and application of NQTLs. Beginning February 10, 2021, group health plans that offer health care coverage that provides both medical and surgical benefits and MH/SUD benefits and that impose non-quantitative treatment limitations (NQTLs) on MH/SUD benefits, must perform and document comparative analyses of the design and application of such NQTLs and make such analyses and documentation available to the applicable State authority (or, as applicable, to the Secretary of Labor, the Secretary of HHS, or the Secretary of Treasury), upon request. The Act clarifies that the documentation must include the following information:
- The specific plan or coverage terms or other relevant terms regarding the NQTLs and a description of all mental health or substance use disorder and medical or surgical benefits to which each such term applies in each respective benefits classification.
- The factors used, along with applicable evidentiary standards, to determine that the NQTLs will apply to mental health or substance use disorder benefits and medical or surgical benefits.
- The comparative analyses demonstrating that the processes, strategies, evidentiary standards, and other factors used to apply the NQTLs to mental health or substance use disorder benefits, as written and in operation, are comparable to, and are applied no more stringently than, those that apply to medical or surgical benefits. These comparative analyses must be done for each of the six benefit classifications: inpatient in-network, inpatient out-of-network, outpatient in-network, outpatient out-of-network, emergency care, and prescription drugs.
- The specific findings and conclusions reached, including any results of the analyses that indicate whether that the plan or coverage is in compliance.
The Act provides that the agencies (HHS, DOL, and Treasury) shall request a plan or insurer submit the comparative analyses for plans that involve potential violations, complaints regarding noncompliance, or in other situations it deems appropriate. Furthermore, the agencies can request additional information and can require the plan or insurer to take specific actions to get into compliance within 45 days. If one of the agencies determines that the plan is still noncompliant after such 45-day period, then it can require the plan to inform all enrollees about the noncompliance within seven days of its determination.
While the Act did not add any additional penalties for noncompliance, the agencies can apply existing penalties to plans within their jurisdictions. For example, the DOL can assess a penalty of up to $161 per day for failure to provide requested mental health parity documents to participants.
The Act directs the agencies to request at least 20 such analyses per year and to annually report results to Congress and share information with the State where the plan or insurer is located. Further, within 18 months after passage of the Act (or by June 27, 2022), the secretaries of the agencies are required to finalize any draft or interim guidance and regulations relating to the Act’s mental health parity rules, including guidance to clarify the process and timeline for participants (and their health care providers) to file complaints of potential violations.
CHEIRON OBSERVATIONS: This new statutory requirement adds an additional burden to group health plans to have their documentation of parity complete and readily available. Self-insured plans will likely need assistance from both their MH/SUD administrator/network manager and their medical and surgical administrator/network manager in order to complete and document the analyses. Plans may want to confirm that their existing parity documentation contains all of the required financial, quantitative limitations, and NQTL comparisons to comply with MHPAEA.
Cheiron consultants can assist you with your analyses of NQTLs, financial requirements, and quantitative limitations.
Cheiron is an actuarial consulting firm that provides actuarial and consulting advice. However, we are neither attorneys nor accountants. Accordingly, we do not provide legal services or tax advice.