Strengthening Mental Health Parity: New Rules Enhance Compliance and Network Adequacy Under MHPAEA

Beginning January 1, 2025, insurance companies will be required to demonstrate that their reimbursement practices for mental health services are on par with those for medical and surgical services.  Recently, the Departments of Health and Human Services, Labor and Treasury (the “Departments”) issued their final rules regarding the nonquantitative treatment limitation (NQTL) comparative analysis required under the Mental Health Parity and Addiction Equity Act (MHPAEA). The Departments note the final rules reflect thousands of comments they received after publishing their proposed rules last August 2023. They remark that through these rules they “aim to further MHPAEA’s fundamental purpose – to ensure that individuals in group health plans or group or individual health insurance coverage who seek treatment for covered MH conditions or SUDs do not face greater burdens on access to benefits for those conditions or disorders than they would face when seeking coverage for the treatment of a medical condition or a surgical procedure. These final rules are critical to addressing barriers to access to MH/SUD benefits.”

Rules Background

For background, the MHPAEA requires small group and individual plans to provide meaningful benefits for covered mental health conditions and substance use disorders in each classification where they provide medical/surgical benefits. While not required to provide behavioral health coverage, large-group plans and self-insured employer health plans that choose to cover behavioral health care are required to ensure parity between behavioral health benefits and other health benefits.

The final rules strengthen compliance requirements for health plans under the MHPAEA, specifically relating to non-quantitative treatment limitations (NQTLs) – the methods and processes utilized by health plans to manage benefits other than through quantitative limits. It requires that plans and issuers implement certain compliance processes to ensure that the processes, strategies, evidentiary standards, and other factors used in applying NQTLs to mental health and substance use disorder (MH/SUD) benefits are comparable to those used for medical/surgical benefits, and not more restrictive.

In general, the final rules are effective for plan years beginning on or after January 1, 2025, but there are some provisions that do not take effect until 2026. Legal challenges to the scope of the final rule are widely anticipated, but at this time it is unclear how those challenges might impact the effective dates.

More on Rules

Plans that provide benefits for a mental health or substance use disorder condition in any relevant classification have to provide “meaningful benefits” for that condition in every classification where medical/surgical benefits are provided. Under the final rules, benefits will not be “meaningful” unless they cover “core treatments” for that condition, meaning “a standard treatment or course of treatment, therapy, service, or intervention indicated by generally recognized independent standards of current medical practice.”

An example considers a plan that provides benefits through a health maintenance organization (HMO) and that does not cover the full range of medical/surgical benefits, including core treatments, in the outpatient, out-of-network classification. In this scenario, the plan is not obligated to provide meaningful benefits for mental health or substance use disorders in that classification. However, in any classification in which the plan does provide meaningful medical/surgical benefits, it plan must ensure that meaningful mental health and substance use disorder benefits are also offered.

Regarding NQTLs, since 2022, plans have been required to have—and to provide to U.S. regulators upon request—written comparative analyses demonstrating that the processes, strategies, evidentiary standards, and other factors used to apply an NQTL (such as prior authorization or a fail-first requirement) to mental health/substance abuse benefits are comparable to and applied no more stringently than those used to apply that same NQTL to medical/surgical benefits.

The departments made a couple of significant changes in the final rules. First, a plan fiduciary will be required to attest that he or she has engaged in a prudent process to select a qualified service provider to perform and document the comparative analysis.

Second, the departments bulked up the requirements for operational compliance. Under the final rules, a comparative analysis will have to document the outcomes that resulted from the application of the NQTL to mental health/substance abuse disorder and medical/surgical benefits, including an explanation of why any material differences in access were not caused by the NQTL.

Additionally, the final rules require plans to collect and evaluate data to assess the impact of NQTLs on access to mental health and substance use disorder benefits. As in the proposed rules, relevant data includes the number and percentage of claim denials and any other data relevant to the NQTL required by state law or private accreditation standards.

Under the final rules, if relevant data is temporarily unavailable, the plan must explain, in its comparative analysis, the absence of the data and detail how it will be collected and analyzed in the future. Further, plans will have to provide a “reasoned justification” for a conclusion that there is no data that can reasonably assess the NQTL’s impact, and documentation of any additional safeguards or protocols used to ensure the NQTL complies with MHPAEA. The final rules also introduce a facts-and-circumstances test for when relevant data suggests that the NQTL contributes to material differences in access to mental health and substance use disorder benefits compared to medical/surgical benefits, resulting in an NQTL testing failure.

The final rules also demonstrate an increased focus by the departments on network adequacy for mental health and substance use disorder providers. Plans are required to collect and evaluate relevant data to assess the aggregate impact of NQTLs on access to mental health benefits. Relevant data includes utilization rates, network adequacy metrics, and provider reimbursement rates benchmarked to a reference standard. If the data suggests a material difference in access to mental health and substance use disorder providers, the plan must take action to comply with parity requirements, including (1) strengthening efforts to recruit mental health and substance use disorder providers, (2) expanding telehealth options under the plan, (3) assisting plan enrollees in finding available in-network mental health and substance use disorder providers, and (4) ensuring that provider directories are accurate and reliable.

Finally, the final rules also provide guidance on when factors and evidentiary standards may be discriminatory against mental health or substance use disorder benefits. Factors and evidentiary standards are discriminatory if, based on all relevant facts and circumstances, they systemically disfavor access or are specifically designed to disfavor access to mental health or substance use disorder benefits compared to medical/surgical benefits. If a plan takes steps to correct, cure, or supplement the factors or evidentiary standards, the factors or standards will not be considered biased or not objective.