Compliance FYI: Final Mental Health Parity Rules Released
Senior Compliance Attorney
On September 9, 2024, the Departments of Labor, Health and Human Services, and the Treasury (“the Departments”) released final rules related to the Mental Health Parity and Addiction Equity Act (MHPAEA).
The MHPAEA was enacted in 2008 and requires that mental health/substance use disorder (MH/SUD) benefits are not subject to less favorable limitations than those imposed on medical/surgical (M/S) benefits. This requirement applies to both quantitative treatment limitations, which are numerical, such as visit limits, and non-quantitative treatment limitations (NQTLs), which are non-numerical requirements that limit the scope or duration of benefits.
Since 2021, group health plan sponsors and health insurance issuers have been required to conduct and maintain a comparative analysis that demonstrates how the processes, strategies, and factors used to apply an NQTL to MH/SUD benefits are comparable and not more restrictive than the NQTL applied to M/S benefits to ensure compliance with MHPAEA.
Major changes under the final rule are highlighted below. Note that certain aspects of the final rule go into effect before others.
Updated Definitions
The final rule provides definitions for several key terms. Many of these newly defined terms, such as factors or evidentiary standards, will help complete the required comparative analysis discussed above. These definitions are applicable for plan years beginning on or after January 1, 2025.
Notably, the definitions of “mental health benefits” and “substance use disorder benefits” have been updated to include references to the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders (DSM) and World Health Organization’s International Classification of Disease (ICD). Mental health benefits and substance use disorder benefits are benefits with respect to items and services for mental health conditions and substance use disorder condition respectively.
Any condition defined as, or not defined as, a mental health condition or substance use disorder benefit, must be defined consistently with generally recognized independent standards of current medical practice as based on the most current DSM and ICD.
NQTL “No More Restrictive” Requirement
The final rule prohibits plans from establishing any NQTL on MH/SUD benefits that is more restrictive, in writing or in operation, than the predominant NQTL applied to substantially all M/S benefits in the same classification.1 For an NQTL applied to MH/SUD benefits to be considered “no more restrictive” under the final rule, a plan must satisfy the design and application requirements and relevant data evaluation requirements.
The “no more restrictive” standard goes into effect for plan years beginning on or after January 1, 2025, though certain aspects of the standard will not be effective until plan years beginning on or after January 1, 2026.
Design and Application Requirements
A plan cannot impose an NQTL unless it can demonstrate that any processes, strategies, evidentiary standards, or other factors used in designing and applying the NQTL to MH/SUD benefits in a classification is comparable, and applied no more stringently, than the processes strategies, evidentiary standards, or other factors used in designing and applying the NQTL to M/S benefits in a classification.
For plan years beginning on or after January 1, 2026, an NQTL will no longer pass the design and application analysis if the plan relied upon discriminatory factors or evidentiary standards to design the NQTL for MH/SUD benefits. A factor or evidentiary standard is discriminatory if the information, evidence, sources, or standards on which the factor or evidentiary standard are biased or not objective in manner that discriminates against MH/SUD benefits compared to M/S benefits.
Relevant Outcome Data Requirements
Beginning with plan years starting on or after January 1, 2026, a plan must consider the impact that NQTLs on MH/SUD benefits have on access to those benefits compared to M/S benefits. To do this, the plan must collect and analyze relevant outcome data, such as the number and percentage of claims denials. Plans must also analyze relevant data on NQTLs related to network composition.
If the data analysis suggests that the NQTL contributes to “material differences” in access to MH/SUD benefits compared to M/S benefits, it is a “strong indicator” that the plan is violating the “no more restrictive” requirement. A plan must take “reasonable action” to address the difference and must document the actions taken in its comparative analysis.
Meaningful Benefit Requirement
The final rule requires a plan to provide “meaningful benefits” for a MH/SUD condition in all classifications in which M/S benefits are provided, if the plan provides any benefit for the MH/SUD condition in any single classification. As reminder, under the MHPAEA, there are six classifications of benefits.
Whether a MH/SUD benefit is a “meaningful benefit” is determined in comparison to the benefits provided for M/S conditions and requires, at a minimum, coverage of benefits for that MH/SUD condition in each classification in which the plan provides benefits for one or more M/S conditions.
A benefit is not a meaningful benefit if it does not provide a “core treatment” for the MH/SUD condition. A core treatment is a standard treatment or course of treatment, therapy, service, or intervention indicated by generally recognized independent standards of current medical practice.
The meaningful benefit requirement applies to plans beginning on or after January 1, 2026.
Updated Comparative Analysis Requirements
The final rule formalizes the content requirements of the comparative analysis. For plan years beginning on or after January 1, 2025, a comparative analysis must include:
- Descriptions of each NQTL and which MH/SUD are subject to the NQTL
- Identification and definition of the factors and evidentiary standards used to design or apply the NQTL
- Description of how factors are used in the design and application of the NQTL
- Demonstration of comparability and stringency, as written
- Demonstration of comparability and stringency, in operation
- Findings and conclusions regarding the plan’s compliance with MHPAEA
Fiduciary Certification
Under the final rule, the comparative analysis for plans subject to the Employee Retirement Income Security Act (ERISA) must contain a certification by one or more named fiduciaries that they engaged in a prudent process to select a qualified service provider to perform and document the comparative analysis. The fiduciary must also certify that they satisfied their duty to monitor the service provider as required by ERISA.
Disclosing the Comparative Analysis
If requested by the Departments, a plan must provide the comparative analysis within 10 business days of receiving the request. If the Departments decide that the comparative analysis is insufficient, they will specify additional information that must be provided within 10 business days.
If after reviewing the comparative analysis and any additional information, the Departments make the initial determination that the plan is not compliant, plans must respond within 45 calendar days and specify the actions it will take to bring the plan into compliance.
Failing to comply or receiving a final determination of noncompliance from the Departments can lead to enforcement action such as notifying plan participants of noncompliance, the reprocessing of claims, or monetary penalties.
Plan participants may request the comparative analysis after an adverse benefit determination related to MH/SUD benefits. Participants in plans subject to ERISA may request the comparative analysis at any time, and it must be provided with 30 days.
Key Takeaways
The final mental health parity rules change the way non-quantitative treatment limitations (NQTLs) on mental health and substance use disorder benefits are analyzed for compliance with the Mental Health Parity and Addiction Equity Act. While not a new requirement, the final rules emphasize the importance of a compliant comparative analysis to demonstrative parity between medical and surgical benefits and mental health and substance use disorder benefits.
You may be well served to contact your carrier, TPA, or PBM to see how they can assist you with the comparative analysis requirement. If your carrier, TPA, or PBM will not assist, you will need to complete the comparative analysis yourself or engage a third party to complete the analysis on your behalf. Please contact your M3 Team if you have any questions.
1 There are six classifications of benefits under the MHPAEA: 1) inpatient, in-network, 2) in patient, out-of-network, 3) outpatient, in-network, 4) outpatient, out-of-network, 5) emergency care, and 6) prescription drugs.
The information provided is a summary of laws and regulations relating to employee benefit plan compliance. This information should not be construed as legal advice. In all cases, employers should consult with their own legal counsel.
