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NQTLs

Complying With the ‘Relevant Data’ Requirement Under the Final 2024 Mental Health Parity and Addiction Equity Act: A Proposal for a Workable Alternative

by Alden Bianchi | Dec 19, 2024 | Employee Benefits, Health and Welfare Plans, Mental Health Parity and Addiction Equity Act

The Mental Health Parity and Addiction Equity Act (MHPAEA) generally requires group health plans and health insurance issuers to ensure that financial requirements (such as copays and deductibles), quantitative treatment limitations (such as visit limits), and nonquantitative treatment limitations (such as prior authorization and concurrent review) applicable to mental health or substance use disorder (MH/SUD) benefits are generally no more restrictive than the requirements or limitations applied to medical/surgical (M/S) benefits. The Consolidated Appropriations Act, 2021 imposed further obligations in the case of nonquantitative treatment limitations (NQTLs), which are the subject of final regulations issued in September 2024. (We explained the final regulations here.)

Among many other things, the final regulations establish a two-part test that applies to NQTLs consisting of:

The design and application requirement. This test requires that the processes, strategies, evidentiary standards, or other factors used in designing and applying an NQTL to MH/SUD benefits in each classification must be comparable to and applied no more stringently than those used in designing and applying the limitation with respect to M/S benefits in that same classification. For this purpose, classifications include inpatient, in-network care; inpatient, out-of-network care; outpatient, in-network care; outpatient, out-of-network care; emergency care; and prescription drugs.
The relevant data evaluation requirement. This test requires the plan or issuer to collect and evaluate relevant data in a manner reasonably designed to assess the impact of the NQTL on relevant outcomes related to access to MH/SUD benefits as compared to M/S benefits. Relevant data for this purpose includes the number and percentage of relevant claims denials and network composition data.

The relevant data evaluation requirement has proven especially challenging for self-funded group health plans of every size, as third-party administrators fail, refuse, or are otherwise unable to provide the information necessary to comply. There may be another option, however.

The final regulations do not specify the data set on which compliance with the relevant data requirement is tested. Rather, the regulations, which apply to both plans and issuers, seem to assume that the plans test on the basis of plan data, and issuers test on the basis of the issuer’s corresponding block of business. In their informal remarks at trade and industry conferences, representatives of the US Department of Labor (DOL), expressing their own views and not those of the DOL, have acknowledged that they are aware of and are considering their options related to the proper testing data set.

Some large carriers have shared the NQTL analysis that they previously prepared for their fully insured groups with the self-funded group to whom they provide administrative services. Presumably, this will give their self-funded groups a starting point. Many self-funded groups, particularly smaller groups, are not inclined to modify the standard set of NQTLs offered by their carriers/administrative-service-only (ASO) providers. If these groups were allowed to test based on the carrier’s corresponding book of business, a good deal of the work would be done. This would also have the salutary effect of exerting market pressure [...]

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Webinar Replay: Unpacking the Final Mental Health Parity Regulations

by Alden Bianchi, Jacob Mattinson and Sarah Raaii | Oct 8, 2024 | Employee Benefits, Health and Welfare Plans, Mental Health Parity and Addiction Equity Act

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.

Access the recording here.

Anticipating the MHPAEA Final Regulations: A Word About Network Composition

by Alden Bianchi | Aug 6, 2024 | Employee Benefits, Health and Welfare Plans, Mental Health Parity and Addiction Equity Act

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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Six Wishes for the Forthcoming Final Regulations Under MHPAEA

by Alden Bianchi | Jul 30, 2024 | Employee Benefits, Health and Welfare Plans, Mental Health Parity and Addiction Equity Act

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.

Application of the Quantitative Testing Requirements to NQTLs

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.

Mental Health Carve-Out Vendors

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 application requirements; and
The plan or issuer must collect, evaluate and consider the impact of relevant data on [...]

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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 Proposed MHPAEA Regulations: A Comment on the Comments

by Alden Bianchi | Nov 14, 2023 | Employee Benefits, Health and Welfare Plans, Mental Health Parity and Addiction Equity Act

In our last post, we considered some of the comment letters submitted in response to proposed regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA) issued by the US Departments of Labor, Health and Human Services and the Treasury (the Departments). Our previous MHPAEA content is available here.

The comment period for the proposed regulations closed on October 17, 2023. Stakeholders submitted more than 7,500 comments. While we have not read them all, we’ve seen enough to discern the broad contours. There are those in favor, those opposed and those that take some middle ground with recommended modifications. Among the latter, the modifications run the gamut from trivial to substantive. One particular comment generally approving of the rule but urging modifications caught our attention. It was submitted by the Brookings Institution, and it offered the following (at least in our view) useful insights.

Heterogeneity of Mental Health/Substance Use Disorder (MH/SUD) Benefits Versus Medical/Surgical (M/S) Benefits

The comment explains that roughly 41% of M/S visits are for chronic conditions, which are less likely to be subject to concurrent review. In contrast, between 64% and 69% of MH/SUD visits focus on treatment of mood disorders, anxiety disorders, psychoses and personality disorders, i.e., chronic recurring conditions. The comment notes: “Even if all chronic visits in general medical practice were subject to concurrent review, any concurrent review for mental health or substance use disorder services would fail the ‘substantially all’ test.” (Emphasis added)

The comment recommends that the Departments consider a more fine-grained method of comparing the use of nonquantitative treatment limitations (NQTLs) between MH/SUD benefits and those for M/S benefits.

Schematic Representation of NQTLs (and Why This Matters)

The comment expresses concern over the depth of the analysis that is required for each NQTL. Page four provides a useful schematic that fleshes out the particulars. The schematic makes the point that a substantial amount of effort is involved in demonstrating compliance for a single NQTL. The steps include “identifying which services apply [ ], identifying factors considered in the design of the NQTL, identifying sources used to define these factors, and demonstrating that the NQTL is applied no more stringently to mental health and substance use disorder benefits than medical/surgical benefits.”

Moreover, all steps must be repeated for each additional NQTL. While even a casual review of the proposal would lead the reader with the sense that compliance would be a challenge, the use of the visual schematic drives the point home visually.

The Exception for Independent Professional Medical or Clinical Standards

The proposed rule identifies two exceptions to the NQTL requirements, the first of which is based on “Independent Professional Medical or Clinical Standards.” While there is a good deal of disagreement as to its proper scope and even its utility, the Brookings comment worries that “the language in the proposed rule also opens the door to regulatory gaming because it is overly broad.” According to the comment: “If the [...]

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Discerning Congressional Purpose from the Proposed MHPAEA Regulations Comment Letters

by Alden Bianchi | Nov 8, 2023 | Employee Benefits, Health and Welfare Plans, Mental Health Parity and Addiction Equity Act

We continue our investigation of proposed regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA) issued by the US Departments of Labor, Health and Human Services and the Treasury (the Departments). Our previous MHPAEA content is available here.

The comment period for the proposed regulations closed on October 17, 2023, and one thing is clear: Stakeholders are divided not so much over particulars of the proposal but rather on the broad scope and reach of the rule. The is no doubt that the rule is intended to enact an overarching policy goal of the Biden administration. One need look no further than the administration’s July 25, 2023, fact sheet, which touts the administration’s “comprehensive national strategy to transform how mental health is understood, accessed, treated, and integrated in and out of health care settings.” Nor is there any doubt that the proposed rule is granular and prescriptive, as we previously explained.

While many of the comment letters address the particulars of the rule, certain high-profile comments ask whether it should be adopted at all. On one side are the providers (see the American Hospital Association’s comments, which offer a full-throated endorsement of the rule); on the other are the carriers (see AHIP’s comments, which claim the rule is vague and impossible to administer and calls for its withdrawal.)

If the final rule looks anything like the proposal, there will be a challenge, the particulars of which will likely include one central question: Is the final rule consistent with Congress’ intent in the matter? Dueling comments by the majority and minority members of the House of Representatives Committee on Education and the Workforce and (in the case of the minority) the Subcommittee on Health, Employment, Labor, and Pensions frame the question as follows:

Comment letter of Virginia Foxx, Chairwoman, Committee on Education and the Workforce

Citing MHPAEA’s legislative history, the majority claims that “Congress did not intend to include NQTLs [nonquantitative treatment limitations] when enacting the MHPAEA.” According to the comment letter, “the [MHPAEA] Committee report does not contain one mention of an NQTL.” (While the letter refers to the “Consolidated Appropriations Act, 2021 (CAA),” it does not attach any significance to that law’s requirement for plans and issuers to prepare and furnish on-demand reports detailing their NQTL compliance.) The majority also expresses its view that measuring and analyzing outcomes data is both impractical and exceeds the scope of the law. The majority is perplexed that the Departments believe they have the authority “to require plans to measure outcomes data stems from the statutory language.”

Comment letter of Bobby Scott, Ranking Member, Committee on Education and the Workforce, and Mark DeSaulnier, Ranking Member, Subcommittee on Health, Employment, Labor, and Pensions.

The minority’s comments welcome the proposed rules’ “emphasis on access to behavioral health care” and make the claim that the imposition of rules governing NQTLs is “entirely consistent with the statutory [...]

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New MHPAEA Guidance Regarding NQTLs: Network Access and Composition

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

Federal regulators recently announced new mental health parity proposed rules that may add significant new compliance burdens for health plan sponsors, insurers and service providers. The proposed rules may also impact the operation of health plans. A Technical Release accompanied the rules that further explains and invites comment on certain provisions of the proposed rules relating to nonquantitative treatment limitation data collection requirements and network composition. Read more here.

The Proposed MHPAEA Regulations’ ‘Meaning of Terms’ Part Two: Processes, Strategies, Evidentiary Standards and Other Factors

by Alden Bianchi | Oct 2, 2023 | Employee Benefits, Health and Welfare Plans, Mental Health Parity and Addiction Equity Act

This post continues our investigation of proposed regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA) issued by the US Departments of Labor, Health and Human Services and the Treasury (the Departments). Our previous MHPAEA content is available here. In Part One, we examined the proposed regulations’ definitions of “medical or surgical benefits,” “mental health benefits” and “substance use disorder benefits.” The proposed regulations would, if adopted, make minor (albeit important) clarifications to these terms, which were previously defined in the 2013 final MHPAEA regulations. This post explains other terms defined in the proposed regulations that, while used in the 2013 final rules, regulators did not previously define. MHPAEA generally requires parity between a group health plan’s and health insurance issuer’s financial requirements and treatment limitations applicable to mental health or substance use disorder (MH/SUD) and medical or surgical (M/S) benefits. Treatment limitations include nonquantitative treatment limitations (NQTLs). Under the 2013 final MHPAEA regulations, a group health plan (or health insurance coverage) must not impose an NQTL with respect to MH/SUD benefits in any classification unless:

Any processes, strategies, evidentiary standards or other factors used in applying the NQTL to MH/SUB benefits in the classification are comparable to the processes, strategies, evidentiary standards or other factors used in applying the limitation with respect to M/S benefits in the same classification.

(“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 retain this rule, relabeling it as the “design and application” requirement. The 2013 final MHPAEA regulations use—but do not define—the terms, “processes,” “strategies,” “evidentiary standards” or “other factors.” Citing the need to “provide clarity to plans and issuers” and to help them properly apply the law’s rules governing NQTL requirements, the Departments now propose to define these other terms as follows:

Processes: Processes are actions, steps or procedures that a group health plan uses to apply an NQTL. This includes actions, steps or procedures established by the plan as requirements for a participant or beneficiary to access benefits, such as through actions by a participant’s or beneficiary’s authorized representative or a provider or facility. Examples include:
- Procedures to submit information to authorize coverage for an item or service prior to receiving the benefit or while treatment is ongoing (including requirements for peer or expert clinical review of that information);
- Provider referral requirements; and
- The development and approval of a treatment plan.

Strategies: Strategies are practices, methods or internal metrics that a plan considers, reviews or uses to design an NQTL. Examples include:
- The development of the clinical rationale used in approving or denying benefits;
- Deviation from generally accepted standards of care;
- The selection of information deemed reasonably necessary to make a medical necessity determination;
- Reliance on treatment guidelines or guidelines provided by third-party organizations; and
- Rationales used in selecting and adopting certain threshold amounts, [...]
  
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The Proposed MHPAEA Regulations’ ‘Meaning of Terms’ Part One: Benefits

by Alden Bianchi | Sep 26, 2023 | Employee Benefits, Health and Welfare Plans, Mental Health Parity and Addiction Equity Act

The purpose of MHPAEA is to ensure that participants and beneficiaries in a group health plan or in group health insurance coverage that includes mental health or substance use disorder benefits are not subject to greater restrictions when seeking these benefits than when they seek medical/surgical benefits under the terms of the plan or coverage. Thus, how the terms “medical or surgical benefits,” “mental health benefits” and “substance use disorder benefits” are defined is of paramount importance. Under current law, any condition defined by the plan or coverage as being or as not being a medical/surgical condition, mental health condition or substance use disorder, respectively, must be defined to be consistent with generally recognized independent standards of current medical practice. These standards include the Diagnostic and Statistical Manual of Mental Disorders, the most current version of the International Classification of Diseases or state guidelines.

In the preamble to the proposed regulations, the Departments cite two problems with the existing definitions:

There appears to be some confusion about what it means for a definition of a mental health condition or substance use disorder to be ‘‘consistent with’’ generally recognized independent standards of current medical practice.
Plans and issuers sometimes rely on state law standards that may not be applicable to the plan or coverage at issue to classify a condition as medical or surgical in nature, which is more properly treated as a mental health or substance use disorder benefit. For example, a self-funded plan may seek to rely on state insurance law definition despite the fact that state insurance does not apply to self-funded plans.

According to the Departments, some plans had classified applied behavior analysis (ABA) therapy for the treatment of autism spectrum disorder (ASD) as a medical or surgical benefit. Noting that ABA therapy is now considered one of the primary treatments for children with ASD, the proposed regulations make clear that ASD is a mental health condition. The Departments also point to nutrition counseling as one of the primary treatments for eating disorders, which Congress previously identified as mental health conditions in the 21st Century Cures Act.

What constitutes medical or surgical benefits, mental health benefits and substance use disorder benefits is important both for substantive compliance and for purposes of preparing the nonquantitative treatment limitation (NQTL) comparative analyses. Among other things, comparative analyses must identify “all mental health or substance use disorder benefits and medical/surgical benefits to which the [NQTL] applies,” including a list of which benefits are considered mental health or substance use disorder benefits and which benefits are considered medical/surgical benefits.

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