Alden Bianchi, Jake Mattinson, and Sarah Raaii recently authored an article in ALM Benefits Pro commenting on the final Mental Health Parity and Addiction Equity Act (MHPAEA) regulations issued last month by the Biden administration. While some of the more objectionable features of the proposed MHPAEA regulations were not finalized, they argue that their basic structure remains fully intact, including provisions that employers found most burdensome.
On September 9, 2024, the Biden administration issued much-anticipated final regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA). The rules implement a host of complicated new compliance requirements for sponsors and issuers of health plans, instituting new obligations to collect and evaluate plan data, conduct comparative analyses, and act to address material differences in access to mental health and substance abuse benefits as compared to medical and surgical benefits.
During a recent webinar, Alden Bianchi, Jake Mattinson, and Sarah Raaii provided a comprehensive overview of the new rules, including compliance deadlines and key takeaways for employers, plan sponsors, and issuers of group health plans. The speakers also addressed how the new rules might impact any ongoing US Department of Labor investigations.
On September 9, 2024, the US Departments of Health and Human Services , Labor, and the Treasury finalized a rule related to the Mental Health Parity and Addiction Equity Act. This rule introduces significant updates to mental health and substance use disorder benefits, ensuring parity with medical and surgical benefits. Key changes include enhanced protections against restrictive treatment limitations, clarified definitions, and new data evaluation requirements. These updates, effective from January 2025, are crucial for hospitals, health systems, and managed care providers.
The US Departments of the Treasury, Labor, and Health and Human Services recently issued much-anticipated final regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA). The newly issued final regulations update the 2013 final regulations principally to reflect the changes to MHPAEA enacted by the Consolidated Appropriations Act, 2021, which requires plans and issuers to formally analyze and compare nonquantitative treatment limitations as they apply to both mental health and substance use disorder benefits and medical/surgical benefits.
The changes in the final regulations largely take effect in 2025, with the effective date for some provisions delayed until 2026. Although the final regulations may face litigation challenges, considering the recent decision in Loper Bright Enterprises v. Raimondo, health plan sponsors should plan to comply by the quickly approaching deadlines.
The Biden administration recently released its Spring 2024 Unified Agenda (a few months late), which lists all the regulations that the administration plans to issue by the end of the year and beyond.
In this update, Jeffrey Davis previews new regulations that could impact the health and welfare benefits industry related to the No Surprises Act, new standards for the exchange of health information under the Health Insurance Portability and Accountability Act, the finalization of new Mental Health Parity and Addiction Equity Act rules, and more.
If our trade and industry sources have it right, we could see final regulations implementing the Mental Health Parity and Addiction Equity Act (MHPAEA), as most recently amended by the Consolidated Appropriations Act, 2021 (CAA), any day now. Last week, we offered a wish list of things we would like to see modified or addressed once the rules become final. Our previous MHPAEA commentary is available here.
An August 1, 2024, letter from Viginia Foxx, chairwoman of the US House of Representatives Committee on Education and the Workforce, to the secretaries of the US Department of Health and Human Services (HHS) and the US Department of the Treasury (Treasury) and the acting secretary of the US Department of Labor (DOL) leads us to add one more item to our wish list. It relates to a subject that has been a major item of contention and the cause of considerable frustration in MHPAEA audits: network composition and adequacy.
The CAA added a requirement that plans and issuers perform and document comparative analyses of the design and application of nonquantitative treatment limitations (NQTLs) on mental health and substance use disorder (MH/SUD) benefits and medical and surgical (M/S) benefits. Nothing in the CAA modifies prior law relating to network composition or adequacy, however. MHPAEA generally requires that the application of NQTLs on MH/SUD benefits “in operation” be comparable and no more stringent than on M/S benefits. In the case of an audit, the DOL has analyzed diverse types of outcomes data, such as denial or reimbursement rates.
But – and this is critical – nothing in existing law requires comparability of outcomes. Indeed, the DOL’s self-compliance tool makes clear that disparate outcomes are not determinative of noncompliance, recognizing that the law requires only that the processes and standards used in applying the NQTL be comparable across MH/SUD and M/S benefits. Different outcomes can still be MHPAEA-compliant. An intervening FAQ (No. 7) suggests otherwise, saying that disparate outcomes raise a “red flag.” FAQs lack the force of law, however.
The proposed rules upend current law by making differences in outcomes a strong indicator of noncompliance or, in the case of network composition, a conclusive determination of noncompliance. Chairwoman Foxx criticizes this approach, saying that “This [ ] suggests that approval or denial rates in either a MH/SUD or M/S context are indicative of appropriateness.” This is in her view a flawed assumption. She also claims that the DOL, HHS and Treasury (the Departments) have exceeded their statutory authority in the matter. The DOL is in our experience applying this rule on audit as though the proposed rule is the law.
We express no opinion on whether the proposed rule comports with the statue. This is for the courts to decide. It’s no secret, however, that the Departments now face a higher bar in the wake of the US Supreme Court’s decision in Loper Bright Enterprises v. Raimondo (wherein the Court overruled the [...]
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On July 1, 2024, the US Department of Labor (DOL) submitted final regulations to the Congressional Budget Office (CBO), implementing the Mental Health Parity and Addiction Equity Act (MHPAEA) as most recently amended by the Consolidated Appropriations Act, 2021 (CAA). The CAA added a requirement that plans and issuers perform and document comparative analyses of the design and application of nonquantitative treatment limitations (NQTLs) on mental health and substance use disorder benefits (MH/SUD) and medical and surgical (M/S) benefits. Submission to the CBO is the last step in the process of issuing a binding, final rule. The agency ordinarily acts on these submissions within 90 days, but it is widely anticipated that the final rule will be issued sooner.
The final regulations implement proposed regulations issued in July 2023, which were widely commented on. Our previous content explaining the proposed regulations, including a series of blog posts commenting on the comments, is available here.
To call the proposed rule contentious is an understatement, and the stakes for group health plan sponsors that provide mental health benefits are significant. Many comments on the proposed regulations asked the regulators to withdraw the proposed rule and to reconsider the issue anew. While the chance of that happening was always remote, it is now clear that this is not going to happen. There will shortly be final regulations. Recognizing this to be the case, here are six items in the proposed regulations that we would like to see changed or clarified.
MHPAEA generally provides that financial requirements and treatment limitations imposed on MH/SUD benefits cannot be more restrictive than the predominant financial requirements and treatment limitations that apply to substantially all M/S benefits in a classification. The 2013 final regulations established the following classifications for this purpose: inpatient, in-network; inpatient, out-of-network; outpatient, in-network; outpatient, out-of-network; emergency care; and prescription drugs. “Treatment limitations” can be either quantitative treatment limitations (QTLs) (e.g., visit limits) or NQTLs (i.e., concurrent review). The rules for the testing of QTLs set out in the 2013 final regulations include detailed numerical standards, which have spawned a cottage industry for testing services.
The proposed regulations would impose quantitative testing requirements on NQTLs. This is at least modestly counterintuitive. It would also make an already complex testing rule materially more complicated. It is our hope that the DOL, US Department of Health and Human Services, and the US Department of the Treasury (the Departments) see fit to back away from this 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:
A recently decided US Court of Appeals for the Ninth Circuit case, Ryan S. v. UnitedHealth Group, Inc., offers some useful insights on the enforcement by private litigants of the Mental Health Parity and Addiction Equity Act (MHPAEA). Like other similar cases, the case invites questions about the impact of potential changes under the proposed regulations issued under MHPAEA last year. Despite that the issues at this stage are procedural, the case nevertheless offers some useful insights, which this post explores.
Our previous MHPAEA content is available here.
According to the complaint, the group health plan under which Ryan S. was covered was administered by UnitedHealthcare. The plan covered outpatient, out-of-network mental health and substance use disorder (MH/SUD) benefits at 70% of covered charges and at 100% once the out-of-pocket maximum was met.
Ryan S. completed two different outpatient, out-of-network substance use disorder programs, coverage for which was denied on multiple occasion and for disparate reasons. As the complaint explains, the denials resulted from UnitedHealthcare’s use of an algorithm that assessed patients’ progress and referred cases for additional review. This additional layer of review was not applied to outpatient, out-of-network medical/surgical (M/S) claims. Ryan S. alleges that UnitedHealthcare applied a more stringent review process to benefits claims for outpatient, out-of-network MH/SUD treatment than to otherwise comparable M/S treatment. The complaint states this disparity in applicable review standards violates:
The Disposition of the Plaintiffs’ Claims
The district court had dismissed all the claims. The Ninth Circuit reversed on MHPAEA and ERISA fiduciary claims but let stand the district court’s dismissal of the claim related to plan terms.
MHPAEA requires that any limitations on “mental health or substance use disorder benefits” in an ERISA plan be “no more restrictive than the predominant treatment limitations applied to substantially all [covered] medical and surgical benefits.” Thus, said the court, to succeed, a plaintiff must show an ERISA plan that offers both M/S and MH/SUD benefits imposed a more restrictive limitation on MH/SUD treatment than limitations on treatment for M/S issues. The court then identified three situations in which such a violation might occur:
In the court’s view, the complaint raises internal process claims. As such, violations cannot be discerned with reference to the plan document. The court therefore saw no reason to disturb the district court’s dismissal of the claim relating to plan terms.
With respect to the MHPAEA and ERISA fiduciary claims, [...]
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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.
Notably, the newly proposed meaningful benefits requirement is separate from, [...]
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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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