The Department of Health and Human Resources (HHS), the Department of the Treasury, and the Department of Labor (DOL) (collectively, “the Departments”) have proposed regulations that could significantly impact plans in complying with mental health parity requirements. The proposed rules include details on the needed data collection requirements to assess the impact of Non-Quantitative Treatment Limitations (NQTLs) on the ability of participants to access mental health benefits. The DOL has also released a “Technical Release” on the data collection requirements. This alert discusses the main provisions of the proposed rules and the Technical Release.

The proposed regulation can be found at 2023-15945.pdf (govinfo.gov) and the Technical Release can be found at Technical Release 2023-01P | U.S. Department of Labor (dol.gov).

Action Required Now: Plan sponsors should review the regulations and decide whether they want to comment.

Comments Due Date: Comments are due by October 2, 2023.

Comments must be submitted by mail¹ or electronically at: https://www.regulations.gov.

Background

The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), as amended by the Patient Protection and Affordable Care Act (the Affordable Care Act), generally requires that group health plans and health insurance issuers offering group or individual health insurance coverage ensure that the financial requirements and treatment limitations on mental health or substance use disorder (MH/SUD) benefits they provide are no more restrictive than the predominant financial requirements and treatment limitations that apply to substantially all medical and surgical (M/S) benefits. 

For financial and quantitative treatment limitations, “substantially all” M/S benefits in a classification is defined as applying to at least two-thirds (2/3) of the benefits in the classification. Similarly, the definition of “pre-dominant” is defined as the level that applies to more than one-half of the M/S benefits in that classification subject to the financial or quantitative treatment limitation. These determinations are made separately for each type of requirement or treatment limitation and by the six classifications of benefits: (1) in-patient, in-network; (2) out-patient, in-network; (3) in-patient, out-of-network; (4) out-patient, out-of-network; (5) emergency care; and (6) prescription drugs. 

The Departments last issued final regulations in 2013. Subsequent guidance was issued by the Departments in 2020 including but not limited to FAQs, sub-regulatory guidance, and a “MHPAEA self-compliance” tool.

The Consolidated Appropriations Act, 2021 (the CAA) amended the law to provide that plans were expressly required to perform and document their comparative analysis of the design and application of NQTLs. Furthermore, the CAA required that the comparative analysis be provided to the Departments upon request.² The proposed rules reflect the Departments’ review (pursuant to the CAA) of the comparative analyses that have been made by plans. The Departments’ review indicated deficiencies and weaknesses in the analyses being made by plans. The latest report to Congress on the agencies’ review can be found at MHPAEA Comparative Analysis Report to Congress, July 2023 | U.S. Department of Labor (dol.gov).

Proposed Rules

The proposed rules could result in substantial changes on how plans interpret the regulatory requirements that apply to NQTLs.  Pending any changes adopted into the final regulations, the proposed requirements apply for plan years beginning or after January 1, 2025.

Meaningful Benefits

The proposed regulations clarify that a plan providing any benefits for a mental health condition or substance use disorder in any classification of benefits must provide meaningful benefits for treatment for that condition or disorder in each such classification where benefits are provided for M/S conditions in the classification.

The proposed regulations revise and add to the definitions, including new definitions of evidentiary standards, processes, and strategies.

NQTLs - In General

The proposed regulations could significantly impact how plans determine if they pass the NQTL parity requirements. A three-part test is proposed for evaluation of NQTLs. Plans are not allowed to apply a NQTL to MH/SUD benefits unless all three-parts of the test are met, as follows:

Part 1: Substantially All / Predominant Test - To apply an NQTL to MH/SUD benefits, the NQTL must also apply to two-thirds of the medical surgical benefits (as measured by dollars) in that classification. In addition, the NQTL cannot be more restrictive, as written or in operation, than the predominant NQTL applied to all M/S benefits in the same classification. For example, if the plan applies a concurrent review requirement for some inpatient M/S hospital stays after 3 days and for others after 7 days, and the 7 days requirement is applied most often, the concurrent review for MH/SUD cannot be applied at fewer than 7 days.

The Departments request comments on the approaches used for the substantially all and predominant tests, given that there are significant differences between financial and quantitative treatment limits and NQTLs. They also solicit comments on the interaction with these requirements and other statutory requirements prohibiting certain NQTLs on M/S benefits (such as the prohibition of prior authorization on minimum hospital stays after childbirth).

Cheiron Observation:  Plan sponsors may want to review the potential impact on their plan and consider commenting on the above requirements.

Part 2: Design and Application Test - The processes, strategies, evidentiary standards, or other factors used in designing and applying an NQTL to MH/SUD benefits must be comparable to, and applied no more stringently than, those applied to M/S benefits in the classification. Information is considered to discriminate against MH/SUD benefits if it is biased or not objective in a manner that results in less favorable treatment for those benefits. An example provided in the proposed regulations is the use of data from a time prior to MHPAEA or when the plan was in violation of the MHPAEA.

The proposed regulation does provide that impartially applied generally recognized independent professional medical or clinical standards (as defined in the regulation) and standards reasonably designed to detect or prevent fraud, waste, and abuse (as defined in the regulation) are not considered to discriminate against mental health or substance use disorder benefits.

Part 3: Required Use of Outcomes Data - A plan must collect and evaluate relevant data in a manner reasonably designed to assess the impact of the NQTL. It must act upon the results of what the data shows such that both tests would be in compliance based upon the data.

Technical Release

The technical release describes the data that the Departments would require plans to collect and evaluate as part of the comparative analysis of NQTLs. In order to properly respond to the increased focus on network composition and adequacy, four types of data may be required (summarized in the chart below):

The Departments are soliciting comments on many aspects of the data elements described in the Technical Release and ask more than 100 questions.  In particular, comments are requested on what challenges that plans might face in providing the data elements, including how the challenges can be mitigated, and how the Departments can assist in obtaining the data.  Additionally, comments are requested whether information technology system changes or builds would be required, the estimated cost, and the time required.

Cheiron Observations: Plan sponsors may have to rely on their M/S and MH/SUD network vendors to provide some or all of the data above. However, the departments have stated that the responsibility of the NQTL analysis for self-insured plans is with the plan sponsor (see details below). Plan sponsors may want to consider a contractual requirement with their vendors to provide the necessary information. Plans may want to submit comments upon the challenges and costs that they would face if the final rules require the collection of the data elements described.

Despite providing significantly more details, many unanswered questions remain. For example:

• Are claims to be organized by number of claims submitted, allowed amounts, plan paid, or billed amounts?
• If claims are by dollar amount, how are large claims handled?
• Are providers counted by Tax ID Number (TIN) of provider organization or by their National Provider ID (NPI)?
• How are providers who are in the network for fewer than the six months to be handled?
• Do the distance and time target metrics vary by county?
• Are primary care providers excluded since they are supposed to identify all problems including behavioral health patient needs?
• Can counties with fewer than a certain number of participants be excluded?

If left up to the reporting plan sponsor to answer these questions, those using specialized vendors for MH/SUD services will have more challenges to ensure consistency in consolidating the required reports between M/S and MH/SUD vendors and care management firms.

NQTL Analysis Requirements

The proposed regulations add a new analysis for each of the six benefit classifications to specifically addressing the content requirements of a comparative analysis of the NQTLs applicable to MH/SUD benefits vs. M/S benefits. In addition to the comparative analysis, each plan must prepare a written list of all NQTLs imposed under the plan and a general description of any information considered or relied upon by the plan in preparing the comparative analysis for each NQTL. The written list and general description must be provided to the named fiduciaries of the plan who are required to review the findings or conclusions of each comparative analysis.

In addition, the proposed regulation makes it clear that the analysis of the six NQTL benefit classifications must include a demonstration of comparability and stringency in operation. An explanation of any methodology and underlying data used to demonstrate the compliance of the NQTL as well as an evaluation of the outcomes from the application of the NQTL must be included. The proposed regulations have specifics of what is to be included with respect to the findings and conclusions of the comparative analyses, which include a reasoned and detailed discussion of the findings and conclusions.

Finally, the proposed regulations require the comparative analysis to include a certification by the named fiduciary who reviewed the analysis and attests to whether or not they found that the analysis is in compliance with the content requirements.

Cheiron Observations:  It is not clear what would be accepted as a “reasoned and detailed discussion of the findings and conclusions.”

The requirement for a named fiduciary to review the analysis and certify that it complies with the content requirements is a significant development that puts trustees and other fiduciaries at risk for a failure to make sure the comparative analysis complies with the new requirements.

Cheiron consultants can assist with comments or your compliance with health plan requirements.

Cheiron is an actuarial consulting firm that provides actuarial and consulting advice. However, we are not attorneys, accountants, or clinicians. Accordingly, we do not provide legal services, tax advice, or medical advice.

¹ Methods to submit a comment on the Proposed Rule, see below:

1. Electronically: https://www.regulations.gov – then, Follow the “Submit a comment” instructions.
2. By mail. You may mail written comments to the following address ONLY: Office of Health Plan Standards and Compliance Assistance, Employee Benefits Security Administration, Room N-5653, U.S. Department of Labor, 200 Constitution Avenue, NW, Washington, DC 20210, Attention: 1210-AC11.

² See the Cheiron Health Alert of March 3, 2021.