Author: Shelly Hodges-Konys, CBC, Director of Compliance
Health and welfare plan sponsors are juggling a full plate when it comes to compliance obligations. The Consolidated Appropriations Act (CAA), passed at the end of 2020, adds to those obligations for insurers and self-funded plan sponsors under the Mental Health Parity and Addiction Equity Act (MHPAEA) requiring group health plans to provide an analysis comparing the nonquantitative treatment limitations (NQTL) applied to mental health and substance abuse benefits and medical and surgical benefits offered under the plan. The new rule and enforcement by the Department of Health and Human Services (HHS) and the Department of Labor (DOL), took effect on February 10, 2021. And, while many of us were focused on implementing COBRA subsidies under the American Rescue Plan Act, the DOL, HHS, and the Department of Treasury (the Agencies) issued FAQs on April 2, 2021, to help group health plans further understand their compliance obligations.
If your plan is fully insured, the carrier is primarily responsible for compliance with MHPAEA. If you are self-insured, the employer is the party responsible for MHPAEA as well as the party responsible for preparing the comparative analysis, although your TPA will need to assist in your completion of it. As a reminder, small employers that had an average of not more than 50 employees on business days during the prior calendar year are generally exempt from the provisions of the MHPAEA.
Background and Guidance
The MHPAEA prohibits group health plans from imposing more stringent benefit limitations or medical management criteria on mental health and substance abuse benefits than those applicable to similar medical or surgical benefits under the plan. The new comparative analysis is designed to create compliance and to assist the Agencies with investigation and enforcement of the parity requirements.
A full analysis of a plan’s nonquantitative treatment limitations should include a thorough review of the following nine (9) key areas:
- A clear description of the specific NQTL, plan terms, and policies at issue.
- Identification of the specific mental health or substance abuse disorder and medical/surgical benefits to which the NQTL applies within each benefit classification, and a clear statement as to which benefits identified are treated as mental health or substance abuse disorder and which are treated as medical/surgical.
- Identification of any factors, evidentiary standards or sources, or strategies or processes considered in the design or application of the NQTL and in determining which benefits, including both mental health or substance abuse disorder benefits and medical/surgical benefits, are subject to the NQTL. Analyses should explain whether any factors were given more weight than others and the reason(s) for doing so, including an evaluation of any specific data used in the determination.
- To the extent the plan or issuer defines any of the factors, evidentiary standards, strategies, or processes in a quantitative manner, it must include the precise definitions used and any supporting sources.
- The analyses, as documented, should explain whether there is any variation in the application of a guideline or standard used by the plan or issuer between mental health or substance abuse disorder and medical/surgical benefits and if so, describe the process and factors used for establishing that variation.
- If the application of the NQTL turns on specific decisions in the administration of the benefits, the plan or issuer should identify the nature of the decisions, the decision-maker(s), the timing of the decisions, and the qualifications of the decision-maker(s).
- If the plan’s or issuer’s analyses rely upon any experts, the analyses, as documented, should include an assessment of each expert’s qualifications and the extent to which the plan or issuer ultimately relied upon each expert’s evaluations in setting recommendations regarding both mental health or substance abuse disorder and medical/surgical benefits.
- A reasoned discussion of the plan’s or issuer’s findings and conclusions as to the comparability of the processes, strategies, evidentiary standards, factors, and sources identified above within each affected classification, and their relative stringency, both as applied and as written. This discussion should include citations to any specific evidence considered and any results of analyses indicating that the plan or coverage is or is not in compliance with MHPAEA.
- The date of the analyses and the name, title, and position of the person or persons who performed or participated in the comparative analyses.
In addition to the complete FAQs provided by the Agencies, available here, the DOL has drafted an MHPAEA Self-Compliance Tool available here to assist employers as well. The Self Compliance provides detailed actions and recommendations that plans should take to assess their NQTLs. Further, the FAQs state 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 analysis requirement.
A plan must provide a copy of its comparative analysis to the DOL or an applicable State agency upon request and employers subject to ERISA must also provide copies to plan participants and beneficiaries within 30 days of a request. The DOL is also mandated to audit at least 20 group health plans a year for compliance. Initially, the DOL expects to focus its enforcement efforts on:
- 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).
Employer Action Items
Self-funded plan sponsors who have not done so already should take steps to comply as soon as possible. Employers should take the following actions to comply with the CAA’s comparative analysis requirement:
- Familiarize yourself with the DOL’s Self-Compliance Tool and request the applicable vendor(s) provide detailed information on the MHPAEA compliance criteria as outlined in the Tool.
- Review and analyze the information received from vendors to ensure it addresses the nine (9) data elements required and that there are no discrepancies in the parity between medical/surgical and mental health and substance abuse.
- Organize the information into a document for purposes of responding to requests from plan participants or the DOL.
- Determine who is contractually responsible for MHPAEA compliance under the terms of the applicable services agreement with your third-party administrator and any carved-out services provided to the plan (i.e. pharmacy benefits administrators, medical management vendors, etc.).
- Engage legal counsel or other outside experts to analyze the data and evaluate whether the plan's NQTLs comply as necessary.
If you have additional questions, please contact your HORAN Account Manager or Client Specialist.
The information contained in this document is informational only and is not intended as, nor should it be construed as legal or accounting advice. Neither HORAN nor its consultants provide legal, tax nor accounting advice of any kind. We make no legal representation, nor do we take legal responsibility of any kind regarding regulatory compliance. Please consult your counsel for a definitive interpretation of current statutes and regulations and their impact on you and your organization.