Question: How did the CAA modify and expand upon the Mental Health Parity and Addiction Equity Act (MHPAEA)?
Short Answer: The CAA added a new MHPAEA requirement for group health plans to make available to the DOL, HHS, and IRS a comparative analysis of the design and application of non-quantitative treatment limitations (NQTLs) on the plan’s mental health or substance use disorder benefits.
General Rule: The Mental Health Parity and Addiction Equity Act (MHPAEA)
The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) was enacted in 2008 as a sweeping overhaul of prior mental health parity laws. MHPAEA generally provides that financial requirements (such as coinsurance and copays) and treatment limitations (such as visit limits) imposed on mental health or substance use disorder (MH/SUD) benefits cannot be more restrictive than the predominant financial requirements and treatment limitations that apply to substantially all medical/surgical benefits within its set classification. In addition, MHPAEA prohibits separate treatment limitations that apply only to MH/SUD benefits.
The six classifications of benefits under MHPAEA for comparison of MH/SUD vs. medical/surgical are: 1) inpatient, in-network; 2) inpatient, out-of-network; 3) outpatient, in-network; 4) outpatient, out-of-network; 5) emergency care; and 6) prescription drugs.
MHPAEA NQTLs: MH/SUD Parity with Medical/Surgical
The MHPAEA provides that group health plans and insurance carriers may not impose a non-quantitative treatment limitations (NQTL) with respect to MH/SUD benefits 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 applying the NQTL to MH/SUD benefits in the classification are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in applying the limitation to medical/surgical benefits in the same classification.
This analysis does not focus on whether the final result is the same for MH/SUD benefit as for medical/surgical benefits. Rather, the analysis focuses on ensuring the underlying processes, strategies, evidentiary standards, and other factors for MH/SUD benefits are in parity, comparable, and applied no more stringently than for medical/surgical benefits.
Examples of NQTLs include:
- Medical management standards limiting or excluding benefits based on medical necessity or medical appropriateness, or based on whether the treatment is experimental or investigative;
- Formulary design for prescription drugs;
- Network tier design;
- Standards for provider admission to participate in a network, including reimbursement rates;
- Plan methods for determining usual, customary, and reasonable charges;
- Fail-first policies or step therapy protocols;
- Exclusions based on failure to complete a course of treatment; and
- Restrictions based on geographic location, facility type, provider specialty, and other criteria that limit the scope or duration of benefits for services provided under the plan or coverage.
The DOL provides a useful list of warning signs for where a plan’s NQTLs require additional analysis to determine MHPAEA compliance.
New CAA Requirement Under MHPAEA: Comparative Analysis Documentation
The Consolidated Appropriations Act, 2021 (CAA) expands upon the MHPAEA by requiring group health plans and insurance carriers that offer both medical/surgical benefits and MH/SUD benefits, and that impose NQTLs on MH/SUD benefits, to perform and document a comparative analysis of the design and application of the NQTLs.
Prior to the CAA, the Departments’ materials recommended that plans analyze NQTLs and document the analysis as a best practice. The CAA now expressly requires that plans conduct and document the comparative analysis of the design and applicable of NQTLs. Therefore, this process is no longer a best practice—it is required.
New CAA Requirement Under MHPAEA: Comparative Analysis Disclosure
The CAA requires group health plans and insurance carriers that offer both medical/surgical benefits and MH/SUD benefits, and that impose NQTLs on MH/SUD benefits, to make their comparative analysis of the design and application of NQTLs available to the Departments (DOL/HHS/IRS) or applicable state authorities upon request. This requirement to submit such documentation upon request took effect February 10, 2021 (45 days after enactment of the CAA).
The comparative analysis documentation must include the following information:
- The specific plan or coverage terms or other relevant terms regarding the NQTLs and a description of all MH/SUD and medical or surgical benefits to which each such term applies in each respective benefits classification;
- The factors used to determine that the NQTLs will apply to MH/SUD benefits and medical or surgical benefits;
- The evidentiary standards used for the factors identified, when applicable, provided that every factor shall be defined, and any other source or evidence relied upon to design and apply the NQTLs to MH/SUD benefits and medical or surgical benefits;
- The comparative analyses demonstrating that the processes, strategies, evidentiary standards, and other factors used to apply the NQTLs to MH/SUD benefits, as written and in operation, are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, and other factors used to apply the NQTLs to medical/surgical benefits in the benefits classification; and
- The specific findings and conclusions reached by the plan or issuer, including any results of the analyses that indicate that the plan or coverage is or is not in compliance with the MHPAEA requirements.
The Tri-Agency MHPAEA FAQs clarify that a general statement of compliance, coupled with a conclusory reference to broadly stated processes, strategies, evidentiary standards, or other factors is insufficient to meet this CAA requirement. For an analysis to be sufficient, it must contain a detailed, written, and reasoned explanation of the specific plan terms and practices at issue, and include the bases for the plan’s or carrier’s conclusion that the NQTLs comply with the MHPAEA. Q/A-2 breaks this out into nine elements of required content for an analysis to be treated as sufficient.
Group health plans and insurance carriers also will need to be prepared to make available documents that support the analysis and conclusions of their NQTL comparative analysis, including any documents and other information relevant to the factors used to determine the application of an NQTL and the evidentiary standards used to define the factors identified.
The CAA also provides that the Departments will request that the group health plan or insurance carrier submit the comparative analysis for plans that involve potential MHPAEA violations or complaints regarding noncompliance with MHPAEA that concern NQTLs, and any other instances in which the Departments determine appropriate.
The DOL offers a MHPAEA Self-Compliance Tool that is intended to assist plans in this area, including a section on NQTLs that outlines a process for conducting the comparative analysis. The Tri-Agency MHPAEA FAQs provide that plans that have carefully applied the guidance in the Self-Compliance Tool should be in a strong position to comply with the CAA’s requirement to submit the comparative analysis upon request.
New CAA Requirements Under MHPAEA: DOL Enforcement Priorities
According to the Tri-Agency MHPAEA FAQs, the DOL expects to focus on the following four NQTLs in its near-term enforcement efforts:
- Prior authorization requirements for in-network and out-of-network inpatient services;
- Concurrent review for in-network and out-of-network inpatient and outpatient services;
- Standards for provider admission to participate in a network, including reimbursement rates; and
- Out-of-network reimbursement rates (plan methods for determining usual, customary, and reasonable charges).
Group health plans and insurance carriers should also be prepared to make available a list of all other NQTLs for which they have prepared a comparative analysis and a general description of any documentation that exists regarding each analysis. Plans and carriers may be required to submit the analysis for these additional NQTLs. At a minimum, the CAA requires the DOL to conduct at least 20 requests for these MHPAEA comparative analyses per year.
New CAA Requirements Under MHPAEA: Failure to Comply
Where the Departments have reviewed the comparative analysis and any other materials submitted upon request from a group health plan or insurance carrier and determined that the plan or carrier is not in compliance with MHPAEA, the plan or carrier must submit additional comparative analysis information that demonstrates compliance within 45 days after the initial determination of noncompliance.
If the Departments make a final determination that the group health plan or insurance carrier is still not in compliance after this 45-day corrective action period, the plan or carrier is required to notify all covered individuals within seven days of the final determination that the plan does not comply with the MHPAEA. The Departments will also share the findings with state authorities.
New CAA Requirements Under MHPAEA: Employer Action Items
Employers with fully insured medical plans will look to the insurance carrier as directly responsible for compliance with the new CAA MHPAEA requirements. Employers can confirm with the carrier that the carrier has completed the required comparative analysis and will provide the necessary documentation to the Departments upon request.
Employers sponsoring self-insured medical plans will generally rely on the TPA to complete the required comparative analysis to satisfy the new CAA MHPAEA requirements. Because the TPA is not directly responsible under the law, MHPAEA compliance—and particularly addressing these new CAA comparative analysis documentation and disclosure requirements—should be a point of emphasis going forward in TPA agreements.
As with most technical aspects of group health plan compliance, employers sponsoring a self-insured medical plan will appropriately expect these obligations to be delegated to TPAs because of their insight into the plan’s claims administration procedures and, in almost all cases, their delegated status as the plan’s named fiduciary for appeals under 29 CFR §2560.503-1(h)(1). Furthermore, the robust and specialized compliance departments at a TPA are in a far better position to accommodate these types of standardized health plan obligations than most employers.
CAA Title II, Division BB §203:
SEC. 203. STRENGTHENING PARITY IN MENTAL HEALTH AND SUBSTANCE USE DISORDER BENEFITS.
‘‘(B) SECRETARY REQUEST PROCESS.—
‘‘(i) SUBMISSION UPON REQUEST.—The Secretary shall request that a group health plan or a health insurance issuer offering group or individual health insurance coverage submit the comparative analyses described in subparagraph (A) for plans that involve potential violations of this section or complaints regarding noncompliance with this section that concern NQTLs and any other instances in which the Secretary determines appropriate. The Secretary shall request not fewer than 20 such analyses per year.
‘‘(iii) REQUIRED ACTION.—
‘‘(I) IN GENERAL.—In instances in which the Secretary has reviewed the comparative analyses described in subparagraph (A), as requested under clause (i), and determined that the group health plan or health insurance issuer is not in compliance with this section, the plan or issuer—
‘‘(aa) shall specify to the Secretary the actions the plan or issuer will take to be in compliance with this section and provide to the Secretary additional comparative analyses described in subparagraph (A) that demonstrate compliance with this section not later than 45 days after the initial determination by the Secretary that the plan or issuer is not in compliance; and
‘‘(bb) following the 45-day corrective action period under item (aa), if the Secretary makes a final determination that the plan or issuer still is not in compliance with this section, not later than 7 days after such determination, shall notify all individuals enrolled in the plan or applicable health insurance coverage offered by the issuer that the plan or issuer, with respect to such coverage, has been determined to be not in compliance with this section.
Disclaimer: The intent of this analysis is to provide the recipient with general information regarding the status of, and/or potential concerns related to, the recipient’s current employee benefits issues. This analysis does not necessarily fully address the recipient’s specific issue, and it should not be construed as, nor is it intended to provide, legal advice. Furthermore, this message does not establish an attorney-client relationship. Questions regarding specific issues should be addressed to the person(s) who provide legal advice to the recipient regarding employee benefits issues (e.g., the recipient’s general counsel or an attorney hired by the recipient who specializes in employee benefits law).