Proposed New Requirements for Mental Health Parity and Addiction Equity Act

The Internal Revenue Service, the Employee Benefits Security Administration, and the Centers for Medicare & Medicaid Services are seeking public comment on proposed changes to regulations underpinning key parts of federal law relating to how health issuers and group health plans provide coverage for mental health and substance use disorder services.

Proposed Federal Rulemaking

On July 25, 2023, the Internal Revenue Service (Treasury), the Employee Benefits Security Administration (Labor), and the Centers for Medicare & Medicaid Services (HHS), together known as the “Tri-Agencies,” issued a notice of proposed rulemaking (“NPRM”) with amendments to regulations implementing the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (“MHPAEA”).  The NPRM (118 pages) was published in the August 3, 2023 Federal Register and provides a 60-day comment period, which will close as of October 2, 2023.

Application Date – if finalized

If finalized, the revised regulations will be applicable to health plans that include benefits for mental health/substance use disorder (“MH/SUD”) services as of their first plan year beginning on or after January 1, 2025.

Background

The NPRM proposes new regulations regarding the nonquantitative treatment limitation (“NQTL”) comparative analyses requirements under MHPAEA, which were most recently amended by the Consolidated Appropriations Act, 2021 (“CAA, 2021”).

Generally, an NQTL is a limitation on the scope or duration of benefits for treatment.  The MHPAEA regulations prohibit a plan from imposing NQTLs on MH/SUD benefits in any benefit classification unless, under the terms of the plan as written and in operation, any processes, strategies, evidentiary standards, or other factors used in applying the NQTL to MH/SUD benefits in a benefit classification are comparable to, and are applied no more stringently than, those used in applying the limitation with respect to medical/surgical benefits in the same benefit classification.

For further background on NQTLs, you may review this DOL publication.  Also, in 2020, the Tri-Agencies published another excellent resource – the Self-Compliance Tool for the Mental Health Parity and Addiction Equity Act (MHPAEA).  The “Self-Compliance Tool” may be updated in the coming months in light of the review experience the Tri-Agencies have gained under CAA, 2021.

As noted, the NQTL requirements under MHPAEA were most recently amended by CAA, 2021.  One of the requirements of CAA, 2021 was that Tri-Agencies would annually select 20 plans for MHPAEA – NQTL review and report their findings to Congress.  Since the passage of CAA, 2021, the Tri-Agencies have provided two reports to Congress.  The most recent report to Congress was released on July 25, 2023, the same date as the release of the NPRM.  The NPRM appears to address areas of NQTL educational and regulatory enforcement in light of the Tri-Agencies’ annual reviews over the past two years, as reflected in their Reports to Congress.

Key Areas of Focus of the NPRM

The regulatory changes proposed by the NPRM are significant.  Among the key areas addressed by the NPRM are the following:

1. “Substantially All / Predominant” Test
   Under the NPRM, the financial benefit testing process (“Substantially All / Predominant” two-step test) would be required to apply to NQTLs. To this point, the two-step test has been required only for quantitative treatment limits (“QTLs) under MHPAEA.  Under the NPRM, plan member cost share components, such as deductible, coinsurance, and co-payments impacted by NQTLs would be subject to the two-step test.  The Tri-Agencies have added new examples in the NPRM to facilitate education in applying the proposed new rules.  In anticipation of finalization of the NPRM, plan sponsors should confirm plan NQTLs have been identified and corresponding NQTL comparative analyses have been prepared in the event a request is received from one of the Tri-Agencies since the timeframe for response is very short (10 business days).

2. Outcome’s Data
   Under the NPRM, claims data will be required to confirm actual operation of the plan’s written NQTLs is compliant with NQTL requirements. From a review of the NPRM, it appears the initial focus of the Tri-Agencies will be on Prior Approval/Utilization Management processes, provider network composition, and provider reimbursement levels.

3. NQTL Contents
   The NPRM adds new content requirements for NQTL comparative summaries and how those summaries are to be produced to the requesting regulator. The Tri-Agencies have reported that plans have been typically unprepared and unable to meet NQTL production timelines established in CAA, 2021 (10 business days).  The NPRM will require inclusion in NQTL comparative summaries of a detailed explanation of how the “Substantially All / Predominant” two-step test is satisfied.  Also, the NPRM will require that NQTL comparative analyses submitted by or on behalf of plans subject to ERISA must be certified by one or more plan fiduciaries.

4. MHPAEA Opt-Out - Self-Funded Non-Federal Government Plans
   Under the NPRM, HHS is seeking to amend regulations regarding the sunset of MHPAEA opt-out for self-funded non-federal government plans. Under the NPRM, no new opt outs would be permitted on or after June 27, 2023.

Technical Guidance

In conjunction with the NPRM, the Tri-Agencies issued Technical Guidance focused on enhancing provider network composition and reimbursement of MH/SUD services compared with medical/surgical services.  The Technical Guidance is intended to address barriers of patients in finding in-network MH/SUD providers who are accepting new patients.

Next Steps

Comments submitted on the NPRM will be posted as received at https://www.regulations.gov.  We will monitor the comments. More importantly, we will provide an update if the NPRM is finalized and a similar summary of the final rule.  In the meantime, you may contact us with questions regarding the NPRM or MHPAEA in general.