On July 25, 2023, the Departments of Labor, Health and Human Services, and the Treasury (the “Departments”) proposed rules designed to strengthen the Mental Health Parity and Addiction Equity Act’s (“MHPAEA”) goal of ensuring people seeking treatment for mental health and substance use disorders (“MH/SUD”) face no greater barriers to accessing care than those seeking treatment for medical and surgical (“M/S”) conditions.

The new regulations focus primarily on nonquantitative treatment limitations (“NQTL”) through (1) the application of rules implementing new NQTL comparative analysis requirements, including the evaluation of standards related to network composition, out-of-network reimbursement rates, and prior authorization NQTLs; (2) amendments to existing NQTL standards, which would require plans and issuers to collect and review outcomes data to assess the impact of NQTLs on access to MH/SUD benefits and M/S benefits; and (3) amendments and additions to existing examples of the application of MHPAEA rules for NQTLs. The proposed regulations also include rules to implement the sunset provision for self-funded, non-Federal governmental group health plans to opt-out of compliance with certain MHPAEA requirements, as provided in the 2023 Consolidated Appropriations Act (“CAA”).

In the preamble of the proposed rules, the Departments note that recent reports to Congress on MHPAEA compliance found that almost all plans and issuers audited for MHPAEA compliance failed to demonstrate compliance with the law’s obligations in response to initial requests for NQTL comparative analyses. The proposed rules intend to encourage compliance with respect to the design and application of NQTLs, while prioritizing limitations that reflect independent professional medical standards or guard against fraud, waste and abuse.

MHPAEA generally requires group health plans and health insurance issuers offering group or individual coverage to ensure that financial requirements and treatment limitations applicable to MH/SUD benefits are no more stringent than those applied to M/S benefits. Under current MHPAEA rules, a health plan or issuer may apply NQTLs to MH/SUD benefits only if the processes, strategies evidentiary standards, or other factors used in applying the NQTLs to MH/SUD benefits are comparable to, and are applied no more stringently than, the processes, strategies evidentiary standards, or other factors used in applying the NQTL to M/S benefits. To further compliance with NQTL requirements, the rules propose a number of changes to existing regulations and seek to offer clear guidance to plans and issuers on how to comply with the MHPAEA. These changes include the following:

  • The proposed rules incorporate new and revised definitions of key terms, such as the terms “medical or surgical benefits,” “mental health benefits,” “substance use disorder benefits,” “processes,” “strategies,” “evidentiary standards,” and “factors.”
  • New requirements for plans and issuers that apply NQTLs with respect to MH/SUD benefits prohibit NQTLs unless (1) the NQTL is no more restrictive as applied to MH/SUD benefits than to M/S benefits (the no more restrictive requirement); (2) the plan or issuer satisfies requirements related to the design and application of the NQTL (the design and application requirement); and (3) the plan or issuer collects, evaluates, and considers the impact of relevant data on access to MH/SUD benefits relative to access to M/S benefits; and subsequently takes reasonable action as necessary to address any material differences in access shown in the data to ensure compliance with MHPAEA (the relevant data evaluation requirement). The final requirement includes collection of the number and percentage of relevant claims denials, as well as other data relevant to the NQTL as required by State law or private accreditation standards.
  • The rules propose a modified, non-exhaustive list of NQTLs, drawing from NQTLs that have been the subject of comparative analyses reviewed by the Departments. The Departments also reaffirm that the standards governing how a network is constructed and defined are critical limitations on the availability of benefits under a plan or coverage, and thus are subject to the requirements applicable to NQTLs. Accordingly, the modified list of NQTLS includes standards related to network composition, such as methods for determining reimbursement rates, standards for provider and facility admission to participate in a network, credentialing standards, and network adequacy procedures.
  • Further, the proposed rules include a special rule for NQTLs related to network composition. A plan or issuer categorically fails to meet MHPAEA requirements if relevant data show material differences in access to in-network MH/SUD benefits as compared to in-network M/S benefits in a classification.
  • The proposed rules expand upon the 2021 CAA’s requirement for plans and issuers that offer both M/S and MH/SUD benefits and impose NQTLs on MH/SUD benefits to perform and document a comparative analysis of the design and application of said NQTLs. The proposed rules would require that a comparative analysis include, at a minimum, six specific elements: (1) a description of the NQTL; (2) the identification and definition of the factors used to design or apply the NQTL; (3) a description of how factors are used in the design or application of the NQTL; (4) a demonstration of comparability and stringency, as written; (5) a demonstration of comparability and stringency in operation; and (6) findings and conclusions.
  • If a plan or issuer receives a final determination of noncompliance from the Departments with respect to a NQTL based on failure to meet NQTL comparative analysis documentation requirements, continued application of the NQTL would violate MHPAEA, as would the plan or issuer’s failure to provide a sufficient comparative analysis.
  • Finally, the proposed rules implement the sunset provision set forth in the 2023 CAA which, with a limited exception for certain collectively bargained plans, eliminates the ability of self-funded, non-Federal governmental group health plans to opt-out of compliance with MHPAEA requirements on or after December 29, 2022. And, no such opt-out election expiring 180 days after the date of the enactment of the 2023 CAA may be renewed.

The Departments’ proposal has been officially published in the Federal Registrar as of August 3, 2023, with the period for public comments expiring October 2, 2023. We are closely monitoring developments associated with the proposed rules. In the interim, group health plans and health insurance issuers are encouraged to review current plan language and comparative analysis processes in anticipation of new restrictions.