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The MHPAEA Proposed Rule: ‘Meaningful Benefits’ and the ‘Scope of Services’

by Alden Bianchi | Feb 20, 2024 | Employee Benefits, Health and Welfare Plans, Mental Health Parity and Addiction Equity Act

This post continues our consideration of comments submitted in response to proposed regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA). Our previous MHPAEA content is available here.

Under current law, if a plan provides any mental health or substance use disorder (MH/SUD) benefits in any classification of benefits, benefits for that condition or use disorder must be provided in every classification in which medical/surgical (M/S) benefits are provided. Classifications for this purpose include inpatient, in-network; inpatient, out-of-network; outpatient, in-network; outpatient, out-of-network; emergency care; and prescription drugs. The proposed regulations modify this standard by providing that a plan does not provide benefits for MH/SUD benefits in every classification in which M/S benefits are provided unless the plan provides meaningful benefits for treatment for the condition or disorder in each such classification “as determined in comparison to the benefits provided for medical/surgical conditions in the classification.”

The term “meaningful benefits” is nowhere defined. The regulators nevertheless “recognize that the proposal to require meaningful benefits [ ] is related to scope of services.” “Scope of services” for this purpose generally refers to the types of treatments and treatment settings that are covered by a group health plan or health insurance issuer. The preamble to the proposed regulation invites comments on how the meaningful benefits requirement “would interact with the approach related to scope of services adopted under the 2013 final regulations.” The preamble of the 2013 final regulations addressed an issue characterized as ‘‘scope of services’’ or ‘‘continuum of care’’ but otherwise failed to provide any substance. Two examples from the proposed regulations do, however, give us a sense of what the regulators have in mind.

A plan that generally covers treatment for autism spectrum disorder (ASD), a mental health condition, and covers outpatient, out-of-network developmental evaluations for ASD but excludes all other benefits for outpatient treatment for ASD, including applied behavior analysis (ABA) therapy, when provided on an out-of-network basis. (ABA therapy is one of the primary treatments for ASD in children.) The plan generally covers the full range of outpatient treatments and treatment settings for M/S conditions and procedures when provided on an out-of-network basis. The plan in this example violates the applicable parity standards.
In another example, a plan generally covers diagnosis and treatment for eating disorders, a mental health condition, but specifically excludes coverage for nutrition counseling to treat eating disorders, including in the outpatient, in-network classification. Nutrition counseling is one of the primary treatments for eating disorders. The plan generally provides benefits for the primary treatments for medical conditions and surgical procedures in the outpatient, in-network classification. The exclusion of coverage for nutrition counseling for eating disorders results in the plan failing to provide meaningful benefits for the treatment of eating disorders in the outpatient, in-network classification, as determined in comparison to the benefits provided for M/S conditions in the classification. Therefore, the plan violates the proposed rules.

Notably, the newly proposed meaningful benefits requirement is separate from, [...]

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The MHPAEA Proposed Rule: Standards of Care and Medical Necessity

by Alden Bianchi | Feb 1, 2024 | Employee Benefits, Health and Welfare Plans, Mental Health Parity and Addiction Equity Act

Comments submitted in response to the proposed regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA) reflect a broad range of perspectives. Our previous MHPAEA content is available here.

A nontrivial subset of the comments single out a particular nonqualified treatment limitation (NQTL) for special treatment or scrutiny. An example of this trend is found in an October 16, 2023, comment letter submitted by the Legal Action Center. The letter asks the US Departments of Labor, Health and Human Services, and the Treasury (the Departments) to address the rule’s treatment of medical standards of care and medical necessity.

Under the 2013 final MHPAEA regulations, a plan or issuer may not impose an NQTL with respect to mental health/substance use disorder (MH/SUD) benefits in any classification unless the processes, strategies, evidentiary standards or other factors used in applying the NQTL in the classification are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards or other factors used in applying the limitation with respect to medical/surgical (M/S) benefits. (Classifications for this purpose include inpatient, in-network; inpatient, out-of-network; outpatient, in-network; outpatient, out-of-network; emergency care; and prescription drugs.)

The proposed regulation defines “strategies” as “practices, methods, or internal metrics that a plan or issuer considers, reviews, or uses to design an NQTL.” Compliance with and deviations from generally accepted standards of care are cited as examples. Strategies for this purpose include “the development of the clinical rationale used in approving or denying benefits,” which is the central purpose of medical necessity determinations.

Medical necessity criteria are considered NQTLs because the criteria have the capacity to limit a patient’s access to or duration of MH/SUD treatment that are not based on the frequency of treatment, number of visits, days of coverage or days in a waiting period (the latter are quantitative treatment limitations). The Legal Action Center claims that plans sometimes develop their own criteria for determining medical necessity for MH/SUD treatment or use criteria developed by nonprofit clinical specialty associations or industry entities, despite the law’s admonition that plans must treat the two comparably. Concerned that under the proposed regulation plans retain significant discretion to adopt overly restrictive medical necessity criteria, the Legal Action Center asks the Departments to revise the definition of “strategies” to include a definition of “generally accepted standards of care” that is tied to criteria and guidelines from the nonprofit clinical association for the relevant specialty.

One way to determine the quality of a medical necessity definition is to look at claims data, which offer a useful test of parity compliance. Current law does not require parity of outcomes, but the proposed regulation does. The proposed rule would require that plans collect and evaluate outcomes data for the express purpose of assessing the impact of the NQTL on access to MH/SUD benefits. Material differences in outcomes are viewed as a strong indicator of noncompliance. (For the network composition NQTL, a material difference in outcomes data [...]

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The Proposed MHPAEA Regulations: Comments on Behavioral Health Carve-Out Vendors

by Alden Bianchi | Dec 5, 2023 | Employee Benefits, Health and Welfare Plans, Mental Health Parity and Addiction Equity Act

This post continues our focus on comment letters submitted in response to proposed regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA). The proposed regulations were issued earlier this year by the US Departments of Labor, Health and Human Services and the Treasury (the Departments). Our previous MHPAEA content is available here.

The MHPAEA generally requires parity between mental health/substance use disorder (MH/SUD) benefits and medical/surgical (M/S) benefits with respect to annual and lifetime dollar limits, financial requirements and treatment limitations. Treatment limitations may be quantitative (quantitative treatment limitations or QTLs) or nonquantitative (nonquantitative treatment limitations or NQTLs). As the names suggest, QTLs involve limits to which numbers may be applied, e.g., cost-sharing amounts or length of a hospital stay, while NQTLs involved limitations that are not so restricted. The Consolidated Appropriations Act, 2021 added a requirement that plans and issuers perform and document comparative analyses of the design and application of NQTLs on MH/SUD and M/S benefits. The proposed regulations focus on the regulation of NQTLs and compliance with the comparative analyses requirement.

The proposed regulations establish a three-prong test that plans and issuers must pass to impose an NQTL in a classification. To qualify, an NQTL:

Must be no more restrictive when applied to MH/SUD benefits as compared to M/S benefits;
The plan or issuer must meet specified design and applications requirements; and
The plan or issuer must collect, evaluate and consider the impact of relevant data on access to MH/SUD benefits as opposed to M/S benefits and take reasonable action to address any material differences.

These requirements, if adopted as proposed, could make it difficult for group health plans to use third-party payers that manage their MH/SUD benefits under so-called “MH/SUD carve-out” vendor arrangements. Also referred to generically as “managed behavioral health organizations,” MH/SUD carve-out vendors are payers that claim specialized expertise with, and focus exclusively on the treatment of, mental health and substance use disorders. Plans contract with these providers for reasons of cost, quality and ease of administration. Even under current law, demonstrating compliance for a single NQTL involves a number of steps, each of which must be repeated for each additional NQTL. NQTLs designed and adopted by mainstream M/S providers and administrative services vendors and carve-out vendors will differ in their particulars. Layering on new, quantitative “no more restrictive” and “data collection” requirements will add a new level of complexity that may be prohibitively costly for plans that seek to use MH/SUD carve-out vendors.

Even if plans using MH/SUD carve-out vendors could manage to obtain and process all the required data, there is another concern: These entities typically design and adopt their own NQTLs that are presumably informed by their expertise adjudicating MH/SUD claims. These NQTLs will at least in some if not many instances bear little resemblance to the NQTLs adopted by a plan’s M/S benefit vendors, networks and payers. The proposed regulations include exceptions under which an NQTL applied to MH/SUD benefits [...]

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The ‘Meaningful Benefit’ Requirement for NQTLs Under the Proposed MHPAEA Regulations

by Alden Bianchi | Sep 13, 2023 | Employee Benefits, Health and Welfare Plans, Mental Health Parity and Addiction Equity Act

In previous posts, we reported on proposed regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA) issued by the Departments of Labor, Health and Human Services, and the Treasury (collectively, the Departments). More recently, we turned our attention to the treatment of non-quantitative treatment limitations (NQTLs), i.e., non-numeric benefit coverage limits that must be no more restrictive for mental health and substance use disorder (MH/SUD) benefits than for medical surgical (M/S) benefits. This blog post focuses on the proposed regulations’ “meaningful benefit” requirement.

Current law contains the now familiar rule that says if a plan (or health insurance issuer) provides MH/SUD benefits in any classification, those benefits must be provided in every classification in which M/S benefits are provided. (“Classifications” for this purpose include inpatient, out-of-network; inpatient, in-network; outpatient, out-of-network; outpatient, in-network; emergency care and prescription drugs.) But current law says nothing about which MH/SUD benefits must be provided in any classification. A plan or issuer might, for example, be able to comply by offering a single limited benefit for MH/SUD disorders or conditions in one or more classifications.

The proposed regulations add a requirement that plans and issuers must provide “meaningful benefits” for the treatment of MH/SUD disorders or conditions. While the term “meaningful benefit” is not defined, the proposed regulations offer two examples:

Autism Spectrum Disorder (ASD)

A plan that covers treatment for ASD, including outpatient, out-of-network developmental evaluations, but excludes all other benefits for outpatient treatment for ASD, including applied behavior analysis (ABA). (ABA therapy is one of the primary treatments for children with ASD.) The plan covers the full range of outpatient treatments and treatment settings for medical conditions and surgical procedures when provided on an out-of-network basis. The failure to cover ABA therapy violates the “meaningful benefits” requirement in the outpatient, out-of-network classification.

Eating Disorders

A plan covers diagnosis and treatment for eating disorders but specifically excludes coverage for nutrition counseling to treat eating disorders, including in the outpatient, in-network classification. (Nutrition counseling is one of the primary treatments for eating disorders.) The plan generally provides benefits for the primary treatments for medical conditions and surgical procedures in the outpatient, in-network classification. The exclusion of coverage for nutrition counseling results in the failure of the “meaningful benefits” requirement for the treatment of eating disorders in the outpatient, in-network classification.

The Departments invite comments on how to define “meaningful benefits” and on whether there might be other potential alternatives. Would it be more practical, for example, to require plans and issuers to provide “substantial coverage” of MH/SUD benefits or benefits for the “primary or most common or frequent types of treatment for a covered condition or disorder” in each classification in which M/S are provided? Violations of the “meaningful benefits” requirement would, under the proposal, constitute an MHPAEA parity violation, which would allow the Department of Labor to order the plan or issuer not to impose the NQTL unless (and until) the plan or issuer demonstrates compliance.

The ‘Data Evaluation Requirement’ for NQTLs Under the Newly Proposed MHPAEA Regulations

by Alden Bianchi | Sep 7, 2023 | Employee Benefits, Health and Welfare Plans, Mental Health Parity and Addiction Equity Act

Last week’s post examined the “no more restrictive” requirement that would apply to non-quantitative treatment limitations (NQTLs) set out in recently proposed regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA). (Our description of the proposed regulations is available here.) The proposed regulations deal principally with NQTLs, which are non-numeric benefit coverage limits that must be no more restrictive for mental health and substance use disorder (MH/SUD) benefits than for medical surgical (M/S) benefits. We previously claimed that “if adopted in final form [the proposed regulations] would vastly complicate compliance by group health plans and health insurance issuers with an already challenging set of mental health parity rules.” Our views have not changed.

The proposed regulations would, if adopted, impose a series of new requirements on NQTLs that include a “data evaluation requirement.” This new requirement would provide that the plan or issuer designing and applying an NQTL collect and evaluate relevant data to assess the impact of the NQTL on access to MH/SUD and M/S benefits. The plan or issuer would also consider whether the NQTL, in operation, complies with the mental health parity rules. The specific type, form, and manner of data collection and evaluation will be the subject of future guidance. (A technical release accompanied the proposed regulations, described here, which invites comment and suggests a possible, narrow safe harbor.)

The proposed regulations establish two new network-related rules governing NQTLs:

For NQTLs not involving network composition, a material difference in the metrics/data gathering for the NQTL as applied to MH/SUD and M/S benefits would be considered a strong indicator of a violation.
For NQTLs involving network composition, a violation is deemed to occur if the relevant data shows material differences in access to in-network MH/SUD benefits as compared to in-network M/S benefits.

The proposed regulations would make compliance depend on outcomes. This position represents a significant shift in, if not an outright reversal of, existing law. Under the 2013 final MHPAEA regulations, outcomes are not determinative of compliance. Rather, comparability turns on the application of processes, strategies, evidentiary standards and other design-based factors. Compliance under current law thus turns on an examination of inputs, not outcomes. While the proposed regulations include exceptions for professional medical/clinical standards and for standards to detect fraud, waste and abuse, the preamble to the proposed regulations advises that “these exceptions should be narrowly tailored.”

The ‘No More Restrictive’ Requirement for NQTLs Under the Proposed MHPAEA Regulations

by Alden Bianchi | Aug 29, 2023 | Employee Benefits, Health and Welfare Plans, Mental Health Parity and Addiction Equity Act

We previously reported on proposed regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA). If adopted in final form, these regulations would vastly complicate compliance by group health plans and health insurance issuers with an already challenging set of mental health parity rules.

The proposed regulations deal principally with non-quantitative treatment limitations (NQTLs), i.e., non-numeric benefit coverage limits that must be no more restrictive for mental health and substance use disorder (MH/SUD) benefits than for medical surgical (M/S) benefits. Examples of NQTLs include prior authorization requirements, concurrent review, standards for provider admission, Rx formulary design, and fail-first policies or step therapy protocols.

The proposed regulations set out new requirements on NQTLs that include a three-part test consisting of a “no more restrictive” requirement, a “design and application” requirement and a “data evaluation requirement.” There is also a new meaningful benefit requirement, under which plans and issuers must provide meaningful benefits for MH/SUD treatment where the plan also provides a corresponding M/S benefit. With perhaps the exception of the “design and application” requirement, each of these requirements represents a major new compliance obligation on the part of plans and issuers.

This blog post focuses on the “no more restrictive” requirement. Future posts will examine the other requirements.

MHPAEA regulates aggregate lifetime and annual dollar limits, financial requirements, and treatment limitations. (The Affordable Care Act bars lifetime and annual dollar limits on essential health benefits (EHBs). Under MHPAEA, plans and issuers may not be able to impose lifetime and annual dollar limits on MH/SUD benefits that are not EHBs.) Treatment limitations are subdivided into quantitative treatment limitations (QTLs) (e.g., number of days or visits covered) and NQTLs.

The 2013 final MHPAEA regulations apply numerical standards testing to financial requirements and QTLs. These final regulations also adopted six classifications of benefits for this purpose: inpatient, in-network; inpatient, out-of-network; outpatient, in-network; outpatient, out-of-network; emergency care; and prescription drugs. To comply, a financial requirement or QTL imposed on an MH/SUD benefit must be no more restrictive than the predominant financial requirement or QTL that applies to substantially all M/S benefits in a classification. For this purpose:

Substantially all” means that the financial limitation or QTL applies to at least two-thirds of all M/S benefits in the classification; and
“Predominant” means the level of financial requirement or QTL that applies to more than one-half of the M/S benefits in the relevant classification.

The 2013 final regulations largely rely on a subjective analysis of the processes, strategies, evidentiary standards, and other factors used in the application of NQTLs. The proposed regulations retain this subjective standard and layer on a quantitative “no more restrictive” requirement. As proposed, NQTLs would be subject to numerical standards testing similar to the current law testing that applies to financial requirements and NQTLs. While the “substantially all” prong would not change, some minor modifications would be made to the “predominant” prong. Under the proposed regulations, when testing NQTLs, the term “predominant” [...]

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