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EMPLOYEE BENEFITS BLOG
Insights on Employee Benefits and Executive Compensation
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Insights on Employee Benefits and Executive Compensation
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Lessons from Ryan S. v. UnitedHealth Group for the 2023 MHPAEA Proposed Rule

by | Apr 18, 2024 | , ,

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:

  • MHPAEA
  • The Employee Retirement Income Security Act (ERISA) fiduciary rules
  • The failure to follow the terms of the plan as required by ERISA

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:

  • Facial exclusion cases: A plaintiff can allege that a plan contains an exclusion that is discriminatory on its face.
  • “As-applied” cases: A plaintiff can allege that a plan contains a facially neutral term that is discriminatorily applied to MH/SUD treatment.
  • Internal process cases: A plaintiff can allege that a plan administrator applies an improper internal process that results in the exclusion of an MH/SUD treatment.

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

by | Feb 20, 2024 | , ,

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 | Feb 1, 2024 | , ,

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 MHPAEA Proposed Rule: Scalability and the Plight of the Small(er) Self-Funded Plan

by | Jan 4, 2024 | , ,

After a brief hiatus to discuss the pleading standards adopted by the US Court of Appeals for the Tenth Circuit in E.W. v. Health Net Life Insurance Company, we return to our examination of the comments submitted in response to the proposed regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA). The US Departments of Labor, Health and Human Services and the Treasury (the Departments) issued the proposed regulations in 2023. Our previous MHPAEA content is available here.

In this post, we examine the impact of the proposed regulations on small and medium-sized self-funded plans through the lens of a National Association of Benefits and Insurance Professionals (NABIP) comment letter.

The MHPAEA governs the conduct of group health plans and health insurance issuers. This structure works fine in the case of fully insured group health plans, since compliance by the issuer or carrier generally results in compliance by the plan. The former acts on the latter’s behalf. The calculus is different, however, in the case of self-funded plans that typically rely on third-party administrators for their MHPAEA compliance. Often, the third-party administrator is also a licensed carrier that is providing services on an “administrative services only” basis. Here, the group health plan alone bears the responsibility for MHPAEA compliance even though, as a practical matter, the plan will rely heavily, if not entirely, on its administrative services only provider to comply.

One of the attractions of self-funding is that the plan has the ability (in theory) to customize plan design features and strategies, including mental health benefits. In practice, only large employers have the bargaining leverage to modify their group health plan’s design features, however. Other employers are essentially beholden to their service provider(s) for their mental health benefits and other plan designs. To date, that compliance has been less than robust. See, e.g., a comment letter submitted by the state attorneys general of New York, California, Colorado, Delaware, the District of Columbia, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, Oregon, Pennsylvania, Rhode Island, Vermont and Washington addressing their efforts to enforce their mental health and substance use parity laws against carriers. In this sense, then, it can be said that MHPAEA compliance does not “scale.” As a plan’s leverage over its service providers decreases, so does its design flexibility and options.

There is another, perhaps more basic, sense in which the MHPAEA rules do not scale. The cost of compliance can be substantial. That cost may be manageable when spread over hundreds of thousands of covered lives but not so much when spread over hundreds of lives. The net effect of this disparity is that small plans will likely be forced to adopt far simpler, prepackaged and potentially less effective nonquantitative treatment limitation (NQTL) design strategies.

The NABIP’s comment letter addressed the following issues, principally from the perspective of self-funded plans:



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Parsing MHPAEA Claims Under the Proposed Rule: E.W. v. Health Net Life Insurance Company

by | Dec 28, 2023 | ,

In a series of recent posts, we have examined a sampling of comments 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.

This post considers a MHPAEA-related case decided by the US Court of Appeals for the Tenth Circuit, E.W. v. Health Net Life Insurance Company (available here). The case is notable because it represents the first US court of appeals to establish the elements required to state a claim under the current 2013 MHPAEA final regulations; it also provides us with an opportunity to consider how things might differ if the proposed regulation is adopted as a final rule.

Health Net involved a claim against Health Net Insurance Company and Health Net of Arizona, Inc. (collectively, Health Net) by the parents of a minor (I.W.). I.W. was admitted to a subacute care facility (an adolescent mental health residential treatment center), but her stay was cut short because it was determined that her treatment was no longer medically necessary. The determination of medical necessity was based on the application of the McKesson InterQual Behavioral Health 2016.3 Child and Adolescent Psychiatry Criteria (the InterQual Criteria).

At trial, the plaintiffs claimed that Health Net violated the MHPAEA by imposing medical necessity criteria for mental health benefits that were more stringent than those for medical/surgical benefits. The district court did not agree. On appeal, the Tenth Circuit reversed the MHPAEA claim based on the 2013 MHPAEA final regulations. (There was also an Employee Retirement Income Security Act-related claim, the dismissal of which by the district court was affirmed by the Tenth Circuit.) The Tenth Circuit held the medical necessity criteria applied by the plan to medical/surgical benefits in a subacute setting was less stringent than analogous, intermediate-level metal health benefits. In its holding, the court fashioned the following test under which, to state a claim under the MHPAEA, a plaintiff must:

  1. Plausibly allege that the relevant group health plan is subject to the MHPAEA;
  2. Identify a specific treatment limitation on mental health or substance use disorder benefits covered by the plan;
  3. Identify medical or surgical care covered by the plan that is analogous to the mental health or substance use disorder care for which the plaintiffs seek benefits; and
  4. Plausibly allege a disparity between the treatment limitation on mental health or substance use disorder benefits as compared to the limitations that defendants would apply to the medical or surgical analog.

Item (1) was not in dispute; the relevant group health plan was clearly subject to the MHPAEA. The court instead focused on, and dealt exhaustively with, each of the other three items:

  • Identify a specific treatment limitation on mental health or substance use disorder benefits covered by the plan.

The plaintiffs alleged [...]

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New Mental Health Parity and Addiction Equity Act Guidance from the DOL

by | Jun 28, 2016 | , ,

The US Department of Labor (DOL) has provided guidance on health plan provisions that could trigger a violation of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), as amended by the Affordable Care Act. The DOL provided particular examples broken down by categories of plan provisions relating to coverage of mental health (MH)/substance use disorder (SUD) benefits which should trigger careful analysis of coverage for medical (med)/surgical med/surg) benefits to ensure compliance with the MHPAEA’s provisions regarding parity of non-quantitative treatment.

Read the full article.

 



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