DOL Issues Long Awaited Mental Health Parity Guidance

Plan sponsors, insurers, and third-party administrators should pay close attention to the new guidance to facilitate health plan compliance with complex nonquantitative treatment limitation comparative analyses requirements.

On July 25, 2023, the Department of Labor (DOL), Department of the Treasury (Treasury), and Health and Human Services (HHS) (the Departments) issued a proposed rule on how to comply with the nonquantitative treatment limitations (NQTL) comparative analyses requirements enacted under the Consolidated Appropriations Act, 2021 (CAA). The requirement for health plans to perform and document their comparative analyses of the design and application of NQTLs became effective February 10, 2021, and the DOL has been aggressively enforcing the requirement through extensive, multi-year health plan investigations over the last few years. In addition to the proposed rule, the new guidance issued also includes:

  • 2023 MHPAEA Comparative Analysis Report to Congress (the 2023 Report) – As required by the CAA, this second report summarizes the Departments’ NQTL enforcement efforts during the second year of implementing the CAA, including a discussion of common insufficiencies and identification of plans and issuers that received a final determination of non-compliance.
  • Fact Sheet on FY 2022 MHPAEA Enforcement– The fact sheet summarizes enforcement results for cases closed by the DOL’s Employee Benefits Security Administration (EBSA) and HHS’s Centers for Medicare and Medicaid Services (CMS) in fiscal year 2022. The Fact Sheet includes a separate Appendix:  MHPAEA Guidance Compendium citing the Departments’ guidance applicable to the categories of violations noted in the Fact Sheet. 
  • DOL Technical Release 2023-01P – This technical release requests public comments on proposed data collection and evaluation requirements for NQTLs related to the sufficiency of mental health care provider networks.

Below we highlight some of the findings from these enforcement efforts. Future blogposts will provide more detail and analysis of the other guidance documents and their implications, including the proposed rule and the 2023 Report.

The Parity and Written NQTL Comparative Analysis Requirements

The Mental Health Parity and Addiction Equity Act (MHPAEA) generally requires group health plans to ensure that the financial requirements and treatment limitations imposed on mental health or substance use disorder (MH/SUD) benefits provided under the plan are no more restrictive than those on medical or surgical benefits. These mental health parity requirements are not new and apply to both: (i) quantitative treatment limitations, such as number of visits; and (ii) non-quantitative treatment limitations (NQTLs), such as prior authorization requirements, concurrent review, drug formulary design, standards for provider admissions, and exclusions of specific treatments for certain conditions.

The 2013 regulations under the MHPAEA require that plans not impose an NQTL with respect to mental health and substance use disorder 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 mental health and substance use disorder 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. The CAA established several new requirements intended to facilitate compliance with the parity requirements:

  • Group health plans that impose NQTLs on MH/SUD benefits are required to perform comparative analyses and document these analyses in writing, to demonstrate that such NQTLs are in parity with those imposed on medical/surgical benefits.
  • Group health plans must provide the written comparative analysis upon request to the Departments, a state regulator, or to a plan participant or beneficiary and the Departments are required to investigate plans’ and issuers’ compliance efforts, following CAA-prescribed enforcement deadlines (45 days to respond to a final notice of noncompliance, and only 7 days to notify affected participants if the DOL determines this final response falls short).
  • The Departments must issue an annual report to Congress detailing its findings on mental health parity enforcement, including the identity of each plan or insurer receiving a determination of noncompliance.

Exhaustive Investigations Have Become the Norm

Both the DOL and HHS have ramped up their enforcement activity and significantly increased staffing for enforcing NQTL provisions since the CAA became effective. As noted in the 2023 Report, between February 2021 and July 2022, the DOL sent 182 letters across 102 investigations, and requested comparative analyses for over 450 NQTLs. Similarly, between February 2021 and September 2022, HHS sent 26 letters to plans/issuers requesting comparative analyses for 44 NQTLs across 24 plans and issuers.

In our experience working with plan sponsors and service providers, the DOL can undertake an extensive review of a health plan’s NQTLs in an investigation, often requiring multiple rounds of questions and detailed responses with voluminous and detailed supporting documentation including policies, data files, and detailed claims analysis. Often, detailed responses are due within a short timeframe. The process typically requires coordination between multiple stake holders (e.g., plan sponsor, plan administrator, TPA or insurer, internal and external legal counsel, claims review teams, and medical experts that developed the plans’ standards).

Compliance Enforcement Highlights

The Fact Sheet on 2022 fiscal year enforcement summarizes the EBSA and CMS enforcement processes, both of which include compliance assistance resources and full-blown investigations, and the results of investigations the agencies closed in fiscal year 2022. The 2023 Report includes extensive information about some of these closed investigations, as well as ongoing investigations. Some highlights from the 2022 fiscal year Fact Sheet and 2023 Report include:

  • EBSA closed 145 health plan investigations (both insured and self-funded plans), citing 18 MHPAEA violations in 11 investigations – the majority of these violations related to NQTLs.
  • CMS closed 13 plan and issuer investigations, citing 7 MHPAEA violations for NQTL comparative analysis review violations.
  • In the 2023 Report, the EBSA identified three plans that have been found noncompliant, noting that those investigations remain open. Separately, CMS identified five plans/issuers that were noncompliant. EBSA noted that, separately, its investigation process resulted in 104 plans agreeing to make prospective changes to the plans addressing 135 NQTLs across 46 investigations.  (In contrast, the 2022 report to Congress noted that none of the plans and insurers investigated had demonstrated sufficient compliance at the time that report was prepared in January 2022, but that no final determinations of noncompliance had been issued yet as the investigations were ongoing.)  Many investigations continue and future reports to Congress likely will identify additional noncompliant plans and issuers.

Some of the noncompliance issues identified include:

  • Correction of a systemic failure to follow the plan document’s substance use disorder benefits provisions, resulting in over $1M of additional claim payments.
  • Investigation of a service provider resulted in the removal of multiple self-funded plans’ blanket preauthorization requirements and the reprocessing of 126 claims resulting in nearly $50K in additional claim payments.
  • Multiple investigations resulted in the removal of impermissible plan terms where a provision was applied to mental health/substance use disorder benefits, but no equivalent requirement was imposed on medical/surgical benefits, including:
    • blanket preauthorization requirements
    • blanket exclusion of residential treatment
    • an exclusion for achieving the maximum therapeutic benefit
    • limitations on nutritional counseling
    • the exclusion of (and limitations imposed on) applied behavior analysis therapy
    • conditioning coverage on showing evidence of progress or evidence of significant improvement.
  • The reduction of copays that were higher for MH/SUD benefits when compared to medical/surgical benefits (resulted in nearly $7K of additional benefits being provided to 66 participants).
  • Failure to provide sufficient information and supporting documentation in the written comparative analysis such that the agencies could not validate whether the processes, strategies, evidentiary standards, and other factors used to apply the NQTL to MH/SUD benefits were comparable to and no more stringently applied than those applied to medical/surgical benefits, as written and in operation.

Take Aways

  • The Departments’ investigations are not limited to a health plan alone and routinely require plan vendors (TPAs and insurers) to provide information and/or reprocess claims.
  • In some instances, lengthy investigations resulted in prospective changes to plan terms, as well as reprocessing claims – including going back multiple years.
  • While the dollar amount involved in reprocessing claims may not have always been significant, in our experience, such claim reprocessing often requires significant administrative resources, as well as communicating the changes to participants and/or providers.
  • Separate from the Departments’ enforcement efforts, plaintiffs’ lawyers continue to pursue mental health parity litigation. While these claims historically have focused on particular plan exclusions or limitations (e.g., applied behavior analysis therapy for autism spectrum disorder treatment, wilderness therapy and addiction therapy), it’s possible that the reports to Congress publicly identifying noncompliant plans and issuers and related participant notifications may trigger broader class action claims in the future.

Next Steps

One piece of guidance not included in this round was an updated version of the 2020 MHPAEA Self-Compliance Tool. While we anticipate this self-compliance tool may be updated in the future, we urge plan sponsors to move forward now with compliance efforts implementing the July 2023 guidance issued.

The material contained in this communication is informational, general in nature and does not constitute legal advice. The material contained in this communication should not be relied upon or used without consulting a lawyer to consider your specific circumstances. This communication was published on the date specified and may not include any changes in the topics, laws, rules or regulations covered. Receipt of this communication does not establish an attorney-client relationship. In some jurisdictions, this communication may be considered attorney advertising.

About Author: Sarah Bassler Millar

Sarah Bassler Millar counsels employer plan sponsors and service providers on the design, implementation, and administration of health and welfare benefits, retirement plans and nonqualified plans. She routinely advises on fiduciary governance matters, including current best practices and the implications of the prohibited transaction rules. When counseling clients, she focuses on identifying solutions that effectively mitigate risks and manage identified compliance issues, while taking into account the client’s employee recruitment and retention goals. Sarah formerly led the firm’s benefits and executive compensation group. View all posts by and

About Author: Dawn Sellstrom

Dawn Sellstrom focuses her employee benefits practice on health and welfare benefits. Dawn advises employers on health and welfare benefits of all types, and on compliance under the Employee Retirement Income Security Act (ERISA), Internal Revenue Code, Health Insurance Portability and Accountability Act (HIPAA), and related federal and state laws and regulations. She has significant experience assisting employers with health care reform strategy and compliance, consumer-driven health care arrangements, and health and welfare plan governance, including plan design and fiduciary responsibilities. View all posts by and

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