The Mental Health Parity and Addiction Equity Act (MHPAEA) should sound very familiar to you. This act was signed into law on October 3, 2008, and became effective for plan years beginning on or after October 3, 2009. That said, the fact that it’s 16 years old doesn’t mean the law and its subsequent regulations haven’t been challenging.

Background of the MHPAEA

As a quick refresher, this federal law requires health insurance plans to provide comparable coverage for mental health and substance use disorders and  medical and surgical benefits. This includes financial requirements, such as co-pays and deductibles, as well as other treatment limitations, gatekeepers, and restrictions. 

In theory, plan sponsors, carriers, third-party administrators (TPAs), and pharmacy benefits managers (PBMs) all should have been worrying about compliance with this law for a while. In practice, it turns out, we all may have been wrong about how well mental health and substance use disorder plans have been complying.

Over the past several years, additional statutes and regulations have been released designed to increase compliance with the law. Among the most recent is the requirement to complete a parity assessment, which is found in the Consolidated Appropriations Act of 2021 and the recently released 2024 final mental health parity regulations.

The Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury are concerned about access to sufficient mental health and substance use disorder networks and ensuring they are on a par with medical and surgical benefits. But what about employers?

Post-Pandemic Issues With Mental Health and Substance use Disorder Benefit Use

According to a McKinsey & Company survey completed in April 2021, nearly 80 percent of employers surveyed immediately after the pandemic reported concerns about employee mental health overall, while at the same time, about two-thirds reported concerns about substance use disorders.

Meanwhile, the same report showed a disconnect between employers and employees in three main areas — employer support for these benefits, employee access to mental health and substance use disorder treatment, and workplace stigma. In other words, employers are concerned with making these benefits available, but employees don’t think the benefits are theirs to use and are afraid of what others in their workplace will think.

With regulators and employers in alignment on offering these critical benefits (at least on parity levels with medical and surgical benefits), why is it such a seemingly difficult task?

The Benefits Aren’t Equal

First, comparing medical and surgical benefits to mental health and substance use disorder benefits isn’t as simple as lining up a one-to-one match. There are six classifications of benefits that must be assessed, and not every classification found on the mental health and substance use disorder side has a clearly matching category on the medical and surgical side. In layman’s terms, it’s like comparing apples to oranges.

In addition, the requirement to perform a non-quantitative treatment limitation (NQTL) analysis as well as a quantitative treatment limitation (QTL) analysis has been a difficult task since the regulations on this subject aren’t always easy to follow and were open to interpretation. In addition, this information is not visible to a self-funded plan sponsor since it is owned and managed by a TPA.

The changes created by the 2024 final regulations are an attempt to standardize the definitions associated with the parity assessments and clarify the basic content found in a final analysis. In other words, plan sponsors and issuers now have a slightly better roadmap to support them in arriving at the destination that the DOL specifies.

Significant Updates to the Regulation

To determine if an NQTL is no more restrictive as written or in operation, the final regulation provides that a plan must satisfy the 1) design and application requirements or the 2) relevant data evaluation requirements. This basically means that, when analyzing the NQTL, a plan ensures that everything used in designing and applying that NQTL is no more stringent than those on the medical and surgical side. I’ve outlined some of the other significant updates below.

Bias Review

Factors or evidence used to create the mental health plan shouldn’t be formed using standards that have built-in biases against mental health and substance use disorder benefits. While this sounds basic, some evidentiary materials created earlier than the 2000s do display inherent biases.

Data Collection and Evaluation

Plans must now collect and evaluate relevant data, often known as outcomes data. A plan should evaluate the data to assess the impact of the NQTL on relevant mental health outcomes. Data like this would include claims denials, accreditation standards, network composition, and provider reimbursement rates. If you’ve been seeing articles recently about “ghost networks” (health providers that show up in a provider directory but who aren’t available to see new patients), the focus on reviewing this data is one reason.

Compliance Timeframes

Timeframes for compliance are specific under the final regulations.

• A plan has 10 days following a request from the DOL to supply a copy of their NQTL analysis, and 30 days to supply the analysis to a requesting plan participant.
• If the DOL finds the initial response insufficient, the plan has 10 more days to supply the additional information.
• Once a plan has supplied that information, if the DOL makes an initial finding of non-compliance, the plan has 45 days to address those findings.
• Once the DOL makes a final determination of non-compliance, the plan has seven (7) business days to notify everyone covered under the plan of that finding. At this point, claims may also need to be reprocessed.

Service Provider Certification

Finally, as of the start of a sponsor’s plan year in 2025, those with self-funded plans will need to make a certification that they have reviewed the analysis and state they underwent a prudent process to select a qualified service provider to perform the analysis. This will include that the plan monitored the service provider to ensure a complete analysis was done.

Regulation Lawsuits Have Begun

There are already lawsuits contemplated over this regulation. A recent Supreme Court decision, Loper Bright Enterprises v. Raimondo, gives courts the ability to make their own judgments regarding the meaning of a regulation. We should anticipate challenges to this regulation while still recognizing that performing the NQTL analysis is a current statutory and regulatory requirement.

Holmes Murphy recognizes the complexity of all these issues. The new regulations, although more helpful and clear in definitions and standards, are still difficult to parse. TPAs find themselves mostly reluctant to perform these analyses for clients.

This has led to the DOL’s current approach — begin with a single employer to discover a TPA’s standard protocol. The DOL will then require a TPA to notify all clients that such a provision is problematic. The DOL is determined to root out faulty analyses and assumptions, making mental health and substance use disorder benefits easier to access. This continues to be a top priority.

While this still — unfortunately — leaves a self-funded employer in the middle of this mess, there are available vendors with solid reputations to assist in this process. Your Holmes Murphy Service team is here to work with you to establish a strategy to manage this hurdle, just as we are for every compliance bump in the road. All you have to do is reach out!