September 11, 2023

Overview and Next Steps for Employer Plan Sponsors

MHPAEA remains a key enforcement priority for regulators. The 2023 report to Congress details the significant investment of resources the Departments have put toward enforcement, particularly with respect to the NQTL comparative analyses where the Departments far exceeded the minimum required number of investigations required by statute.

Although these are currently proposed rules, the NPRM would substantially increase the compliance requirements for employer plan sponsors to evaluate and certify their MHPAEA compliance. Employer plan sponsors should continue to perform and document comparative analyses of their plans’ design and application of NQTLs, using the NPRM as a reference for the contents of the comparative analyses until the rules are finalized. Similarly, employer plan sponsors should perform and maintain documentation of NQTL processes and how NQTLs are applied to both MH/SUD and M/S benefits to ensure plans can demonstrate compliance. With the increased complexity on evaluating NQTLs compliance outlined in the NPRM, employer plan sponsors should discuss MHPAEA compliance with legal counsel and your health plan carriers/vendors and/or third-party administrators (TPAs)to determine responsibility for the various aspects of MHPAEA compliance should the plan be subject to a DOL/EBSA investigation.

Employer plan sponsors may also want to consider whether to submit public comments to either the NPRM and/or the Technical Release related to NQTLs for network composition and the proposed enforcement safe harbor. The comment deadline for both the NPRM and Technical Release is October 2, 2023.

Beyond the final rules and additional regulatory and sub-regulatory guidance, the Departments are anticipated to update the MHPAEA Self-Compliance Tool, as the current version predates the CAA ’21 and thus does not include information related to the comparative analysis requirements. Business Group on Health also continues to advocate for additional to assist employer plan sponsors comply with their MHPAEA compliance obligations, building off our prior efforts in 2022. The Business Group will continue to monitor future developments and keep our members informed of ongoing enforcement and regulatory efforts.

Below, we summarize the potential changes to employer plan sponsors’ MHPAEA compliance obligations outlined in the proposed rules and the Technical Release, as well as review the key takeaways from the enforcement reports. Business Group on Health also discussed this latest MHPAEA guidance on our August 2023 Regulatory and Compliance Update webinar.

Detailed Summary of MHPAEA Proposed Rules and Enforcement Reports

Enacted in 2008, group health plans and health insurance issuers (issuers) are required under MHPAEA to ensure that financial requirements (FRs), quantitative treatment limitations (QTLs), and nonquantitative treatment limitations (NQTLs) – i.e., any provision limiting the scope or duration of benefits that is not a QTL – on mental health and substance use disorder (MH/SUD) benefits are no more restrictive than those on medical/surgical benefits (M/S). This is commonly referred to as the plan providing MH/SUD benefits “in parity with” M/S benefits. The Departments issued final regulations interpreting and implementing MHPAEA in 2013.

The CAA ’21 instituted a new requirement that group health plans perform and document comparative analyses of the design and application of NQTLs, with group health plans required to make these comparative analyses available in certain circumstances beginning February 2021. The Departments released FAQs about MHPAEA and CAA ’21 Part 45 to provide guidance on the new comparative analyses requirements. The law required that the Departments review and investigate a minimum of 20 group health plans’ comparative analyses per year and submit their findings in an annual report to Congress. The first report to Congress was issued in January 2022. CAA ’21 required the Departments to issue additional guidance regarding the comparative analysis requirements by June 2022.

Notice of Proposed Rulemaking

After a lengthy delay, the Departments proposed significant changes to the MHPAEA regulations in the NPRM, which would significantly expand the compliance requirements on group health plans and issuers – particularly with respect to the NQTLs comparative analysis requirements. If finalized, the proposed rules would take effect on January 1, 2025. Public comments to the NPRM are due by October 2, 2023

Substantially All/Predominant Test

Design and Application of NQTLs

The second part of the new test is a requirement that plans and issuers cannot impose an NQTL in any classification unless, under the terms of the plan as written and in operation, any processes, strategies, evidentiary standards, or other factors used in designing and applying the NQTL to MH/SUD benefits in the classification are comparable to – and are applied no more stringently than – those applicable to M/S benefits in the classification. The plan or issuer must also ensure that no factor or evidentiary standard discriminates against MH/SUD benefits as compared to M/S benefits. The Departments consider independent professional medical or clinical standards, and standards related to fraud, waste, and abuse to be exceptions to this requirement.

Relevant Data Evaluation

The third part of the new test would require plans and issuers to collect, evaluate, and consider the relevant data in a manner reasonably designed to assess the impact of NQTLs on access to MH/SUD and M/S benefits. The NPRM identifies different elements of this requirement.

• Required use of outcomes data: When designing and applying an NQTL, a plan or issuer must collect and evaluate outcomes data in a manner reasonably designed to assess the impact of the NQTL on access to MH/SUD benefits. Examples of relevant data include number and percentage of claim denials and data related to network composition standards. The Departments indicate they may specify in future guidance the type, form, and manner of collection and evaluation for the data.
• Material differences in outcomes data: The Departments indicate that to the extent the relevant data show material differences in access to MH/SUD benefits compared to M/S benefits, the Departments would consider these material differences to be a “strong indicator” of noncompliance. In these instances, plans and issuers must take reasonable action to correct material differences and document any corrective action. The NPRM does not provide guidance on how “material differences” would be defined, but the Departments solicit feedback.

The Departments consider independent professional medical or clinical standards, and standards related to fraud, waste, and abuse to be exceptions to this requirement.

Meaningful Benefits

The NPRM would also require plans and issuers to provide “meaningful benefits” for the treatment of a particular MH/SUD condition in each classification of benefits, as determined in comparison to the M/S benefits provided in the classification. Although the Departments do not define “meaningful benefits” – and the Departments request comments – the NPRM provides some examples to illustrate how plans and issuers can comply. These include examples pertaining to applied behavioral analysis (ABA) therapy for autism spectrum disorder (ASD) benefits and for benefits relating nutritional counseling services and eating disorders.

NQTL Comparative Analyses

The NPRM outlines the six necessary elements that must be included in the comparative analysis of each NQTL imposed under the plan:

• 1 | A description of the NQTL;
• 2 | Identification and definition of the factors considered or relied upon to design or apply the NQTL;
• 3 | A description of how the factors are used in the design and application of the NQTL;
• 4 | A demonstration of how the factors are comparably applied, as written and in operation;
• 5 | Findings and conclusions indicating the plan is, or is not, compliant, including any actions the plan or issuer has taken (or intends to take) to address potential areas of noncompliance; and
• 6 | For ERISA plans, a certification by one or more named fiduciaries that they have reviewed the comparative analysis and whether they found it to be in compliance with the content requirements of the rules.

The proposed rules would also formalize the following submission requirements for comparative analyses:

• Initial request: Plan or issuer would have 10 business days to provide the comparative analysis upon request.
• Insufficiency letter: After a comparative analysis is deemed to be insufficient, the plan or issuer would have 10 business days to provide the additional requested information.
• Initial determination of noncompliance: Upon an initial determination of noncompliance, the plan or issuer must respond within 45 calendar days to specify and demonstrate the actions plan or issuer will take to bring the plan or coverage into compliance, providing additional comparative analyses as needed.

If DOL/EBSA or HHS/CMS makes a final determination of noncompliance, the plan or issuer would be required to notify all enrolled participants and beneficiaries that the plan or coverage has been determined to be noncompliant within seven calendar days. The proposed rules outline the required elements of this notice and specify that a copy must be provided to DOL/EBSA or HHS, and any relevant service providers involved in the claims process. The NPRM also indicates that DOL/EBSA and HHS/CMS may direct the plan or issuer not to impose a NQTL unless and until the plan or issuer demonstrates compliance or takes appropriate action to remedy a violation.

Technical Release

In conjunction with the NPRM, the Departments issued a Technical Release that outlines principles and seeks comment to inform future guidance on the proposed rules related to network composition data. The technical release outlines a data-driven approach the Departments are considering using to evaluate plans and issuers’ compliance with the network composition NQTLs. The Departments indicate they are considering four specific types of data that plans and issuers would be required to collect and evaluate as part of their NQTL comparative analyses for network composition: (i) out-of-network utilization; (ii) percentage of in-network providers actively submitting claims; (iii) time and distance standards; and (iv) provider reimbursement rates.

The Technical Release also states that the Departments are considering an enforcement safe harbor with respect to NQTLS related to network composition for plans and issuers that meet or exceed data-specific standards identified in future guidance. Satisfying the enforcement safe harbor would indicate that the network composition data provides sufficient evidence that participants and beneficiaries would have comparable access to in-network MH/SUD and M/S providers.

The Departments are requesting public comments on the two components outlined in the Technical Release by due October 2, 2023.

Report to Congress

The Departments issued the 2023 MHPAEA Comparative Analysis Report to Congress describing the Tri-Agencies’ enforcement efforts related to the NQTL comparative analyses required by CAA ’21. As the second annual report (the first was issued in January 2022), the 2023 report focuses on the Departments’ enforcement activity during the second year of implementation of the comparative analyses requirements.

The report to Congress illustrates how MHPAEA remains a top enforcement area for the Departments. During the second reporting period (November 2021 through July 2022), DOL/EBSA requested comparative analyses from more than 180 plans and issuers across 102 investigations, examining more than 450 total NQTLs (270 unique NQTLs). During the reporting period, EBSA issued 138 insufficiency letters, requesting additional information and identifying deficiencies – the most common of which included:

• Failure to submit upon request, or had not completed, the NQTL comparative analysis;
• Inability to identify and adequately describe the factors used or how they applied;
• Inability to demonstrate how or if the factors were comparably applied to MH/SUD benefits and to M/S benefits;
• Failure to explain how an NQTL applied in operation; and
• Failure to demonstrate that, in operation, the NQTL was comparably applied to MH/SUD benefits and M/S benefits.

Although DOL/EBSA issued 53 initial determination letters finding MHPAEA violations, the report outlines the steps plans and issuers took to implement corrective action plans in response. DOL/EBSA identified three plans who received final determination letters of noncompliance during the reporting period. As required by CAA ’21, the 2023 report identifies these plans and issuers by name. This was the first report that identified noncompliant plans and issuers by name, as the 2022 report indicated that NQTL comparative analyses investigations were in-progress at that time.

The report also identifies the DOL/EBSA and HHS/CMS’ ongoing enforcement priorities. DOL/EBSA has six identified priority areas. The four priority areas identified in the 2022 report to Congress remain as focus areas for the Agency, with two areas newly added in this 2023 report:

• 1 | Prior authorization requirements for in-network and out-of-network inpatient services;
• 2 | Concurrent care review for in-network and out-of-network inpatient and outpatient services;
• 3 | Standards for provider admission to participate in a network, including reimbursement rates;
• 4 | Out-of-network reimbursement rates (methods for determining usual, customary, and reasonable charges;
• 5 | Impermissible exclusions of key treatments for mental health conditions and substance use disorders (e.g., ABA therapy for ASD; medication assisted treatment (MAT); nutritional counseling for eating disorders) [newly added in 2023 report]; and
• 6 | Adequacy standards for MH/SUD provider networks [newly added in 2023 report]

HHS/CMS has two similar overall enforcement priorities as well: prior authorization and concurrent review.

Enforcement Activity

Along with the CAA ’21-required report to Congress, the Departments published the FY 2022 MHPAEA Enforcement Fact Sheet. Released annually since 2015, the fact sheet summarizes the Departments’ enforcement activity in each fiscal year (FY). The FY 2022 fact sheet details the enforcement activity from the prior FY separate from the NQTL comparative analysis reviews. In 2022, DOL/EBSA cited 18 MHPAEA violations across 11 investigations, which included violations related to impermissible number of nutritional counseling visits, higher copays for in-network outpatient MH/SUD benefits, separate treatment limitation for ABA therapy for ASD, and impermissible prior authorization requirements for residential treatment for MH/SUD benefits.

• DOL/EBSA: MHPAEA Self-Compliance Tool (note: the current version predates CAA ’21)
• FAQs About MHPAEA and the CAA '21 Part 45
• Business Group on Health: Regulatory & Compliance Update, August 2023

If you have questions, comments, or concerns about these or other regulatory and compliance issues, please contact us.

We provide this material for informational purposes only; it is not a substitute for legal advice.

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