Some quick background: Way back in July 2023, the Biden Administration released proposed regulations intended to increase access to “mental health and substance use disorder” (MH/SUD) benefits through increased compliance with the Mental Health Parity law.
As described in my October 2023 blog post, How Proposed Mental Health Parity Regulations Could Impact Access to Benefits, these proposed regulations focused exclusively on “Non-Quantitative Treatment Limitations” (NQTLs) (such as “prior authorization,” “concurrent review” and other “utilization management tools”) that insurance carriers and self-insured health plans impose on MH/SUD benefits, requiring plans/carriers to ensure that the NQTLs imposed on MH/SUD benefits are comparable to the NQTLs imposed on “medical and surgical” (M/S) benefits.
According to the proposed regulations, to remain compliant with the Mental Health Parity law, plans/carriers would be required to comply with a number of newly developed mathematical tests – and satisfy various definitions – used to determine whether an appropriate level of comparability is indeed present.
As Stated, the Final Regulations Are Here
At long last, the final regulations were released on September 9, more than a year after the proposed regs were initially released. Importantly, the Biden Administration opted against finalizing one of the mathematical tests called the “Substantially All” test. The employer, labor and insurance carrier communities explained to the Administration how burdensome and unworkable the “Substantially All” test was in its proposed form, and these stakeholders are generally pleased that the Administration listened and took into consideration their concerns.
However, there are other tests and definitions that the Administration ultimately finalized that the employer, labor and insurance carrier communities believe are near impossible to operationalize. There are also questions that the Federal Departments exceeded their statutory authority with many of the finalized requirements, which could invite a lawsuit, especially now that courts cannot defer to the Federal Departments’ interpretation of the law when developing regulations.
Decoding the Final Regulations
It is important to take note that the final regulations include two different sets of legal requirements that must be satisfied, with two different sets of consequences for failing to satisfy each of these respective legal requirements. What I mean here is this:
Rule #1: “Benefit Coverage Requirements”
The final regulations set forth a 2-Part Test for determining whether greater restrictions (here, NQTLs) are being designed and applied to MH/SUD benefits (including NQTLs related to MH/SUD “Network Composition”) as compared to NQTLs designed and applied to M/S benefits (including NQTLs related to M/S “Network Composition”).
Under Test #1 of this 2-Part Test (called the “Design and Application Requirements”), a plan/carrier must consider whether any “processes,” “strategies,” “evidentiary standards” or other “factors” used in designing and applying the NQTL to MH/SUD benefits are comparable to, and are applied no more stringently than, those utilized in designing and applying NQTLs to M/S benefits. The “Design and Application Requirements” also include a “prohibition on discriminatory factors and evidentiary standards” wherein plans/carriers are prohibited from relying upon any “factor” or “evidentiary standard” if the information, evidence, sources or standards on which the “factor” or “evidentiary standard” are based discriminate against MH/SUD benefits as compared to M/S benefits.
Under Test #2 of this 2-Part Test (called the “Relevant Data Evaluation Requirements”), a plan/carrier must collect and evaluate “relevant data” in a manner reasonably designed to assess the impact of the NQTL on relevant “outcomes” related to access to MH/SUD benefits and M/S benefits. And, to the extent the “relevant data” shows “material differences” in access to MH/SUD benefits as compared to M/S benefits, plans/carriers must take “reasonable action” to address any “material differences” in access to remain compliant with the law.
There is also a new standard that requires plans/carriers to provide “meaningful benefits” for MH/SUD benefits measured by comparing coverage for a “core treatment” for MH/SUD benefits relative to a “core treatment” for M/S benefits. In general, a “core treatment” for a MH/SUD condition or disorder is a standard treatment or course of treatment, therapy, service or intervention indicated by generally recognized independent standards of current medical practice.
If the Federal Departments determine that a plan/carrier does NOT comply with these “Benefit Coverage Requirements,” the Departments can require the plan/carrier to STOP imposing the NQTL on MH/SUD benefits (including those NQTLs related to “Network Composition”), which could have significant financial consequences for a plan/carrier with respect to the plan’s/carrier’s continued coverage of MH/SUD benefits.
Rule #2: “NQTL Comparative Analysis Requirements”
The other set of legal requirements apply to the NQTL comparative analysis itself. Here, the final regulations add to the CAA, 2021’s existing NQTL comparative analysis provisions by requiring a plan/carrier to explain – through six “Content Elements” – how and why the plan/carrier satisfies the above described “Benefit Coverage Requirements” in their comparative analysis.
More specifically, the plan/carrier must describe in significant detail whether and how the plan/carrier performed – and is complying with – the 2-Part Test (discussed above), including descriptions and demonstrations of how “processes,” “strategies,” “evidentiary standards” and “factors” are used in designing and applying NQTLs to the MH/SUD benefits, along with whether there are “material differences” in access to MH/SUD benefits compared to M/S benefits, and if so, whether and what “reasonable actions” the plan/carrier is taking to address the “material differences.” Plans/carriers must also explain whether and how they are providing “meaningful benefits” by describing the coverage for the “core treatment” for MH/SUD benefits relative to the “core treatment” for M/S benefits.
Here, if the Federal Departments ultimately determine that the plan’s/carrier’s NQTL comparative analysis does not comply with these “NQTL Comparative Analysis Requirements,” the plan/carrier must send a notification to all plan participants informing them that the Departments have concluded that the plan’s/carrier’s NQTL comparative analysis did not comply with the law, and the plan/carrier must send to the Departments confirmation that this notification was timely sent to participants. The name of the plan/carrier will also be included in the Departments’ Report to Congress on MHPAEA compliance.
The New “Fiduciary Certification” Is Important
The final regulations include an important provision – called the “Fiduciary Certification” – that requires the named fiduciary of a self-insured health plan to include in the plan’s NQTL comparative analysis:
- A statement that the fiduciary has reviewed the NQTL comparative analysis; and
- A “certification” that the fiduciary (a) engaged in a prudent process to select a service provider to perform and document the plan’s NQTL comparative analysis and (b) is continually monitoring this service provider to ensure that the service provider is developing – and has developed – a compliant NQTL comparative analysis for the plan.
With regard to satisfying this “duty to monitor,” the Federal Departments explained what they expect here, noting that – at a minimum – the plan’s fiduciary should:
- Review the NQTL comparative analysis prepared by the service provider.
- Ask questions and discuss the contents of the NQTL comparative analysis with the service provider to understand the findings and conclusions set forth in the analysis.
- Ensure that the service provider gives assurances that – to the best of the service provider’s ability – the NQTL comparative analysis is compliant with the final regulations.
In my opinion, this last action – getting assurances from the service provider that the service provider believes that the NQTL comparative analysis is compliant – is critical. It is advisable that plan fiduciaries require that such assurances are memorialized in writing.
Will the Final Regulations Be Challenged in Court?
This is the $64 million question. As stated, the employer, labor and insurance carrier communities believe that the Federal Departments exceeded their statutory authority and developed tests and definitions through these final regulations that are not grounded in the statute.
By way of example, the “material differences” standard and “meaningful benefit” requirement (both noted above) cannot be found in the statute, and instead, are creatures of the Federal Departments’ own making.
This sets up a scenario where a court of law may find that the Federal Departments “legislated” through regulations, which is effectively a no-no from a legal perspective. And, if courts are no longer permitted to defer to the Federal Departments’ interpretation of a law on account of the Supreme Court invalidating the “Chevron Deference Doctrine” (see my July 2024 blog post, Supreme Court Ruling Will Impact Future Health Care Lawsuits, Regulations and Legislation, for more on the “Chevron Deference Doctrine”), it would not be a surprise if the courts were to invalidate all or a portion of these final regulations.
Having said that though, only time will tell…
The information provided does not, and is not intended to, constitute legal advice; instead, all information and content herein is provided for general informational purposes only and may not constitute the most up-to-date legal or other information. This summary is provided by a consultant to Benefitfocus.com, Inc., and any opinions expressed within do not necessarily reflect those of Benefitfocus.com, Inc. or its affiliates and are not intended to provide specific advice or recommendations for any plan or individual.
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