Seyfarth Synopsis: On January 17, 2025, the U.S. Departments of Treasury, Labor and Health and Human Services (the “Agencies”) released its annual report to Congress assessing compliance with statutory mental health parity requirements under the Mental Health Parity and Addiction Equity Act (“MHPAEA”). On the same day, a federal lawsuit was filed against the Agencies challenging the recently published final rule governing MHPAEA compliance (the “Final Rule”).
Each year since the passage of the Consolidated Appropriations Act, 2021, the Agencies have published a report to Congress detailing widespread noncompliance with the MHPAEA rules governing non-quantitative treatment limitations (“NQTLs”), providing examples of problematic NQTLs, and outlining related corrective actions enforced by the Agencies. This year was no different. In January, the Agencies’ annual report to Congress identified common NQTLs and how to address them, focusing primarily on certain key priority areas such as mental health and substance use disorder benefit exclusions, prior authorization requirements, and network composition issues. For example:
- Network Adequacy and Composition. A plan’s participant usage of out-of-network mental health/substance use disorder benefits was significantly higher than participant usage of out-of-network medical/surgical benefits, triggering additional investigation. The DOL reviewed standards used to measure access to providers, how the plan assessed network adequacy, the plan’s network provider reimbursement levels, and how the plan historically addressed network inadequacies. The plan committed to ensuring more comparable access and taking significant steps toward actively monitoring network composition and resolving any disparities/gaps by providing live support to help participants find in-network providers, paying for out-of-network care when in-network is not available, targeted provider recruitment, measuring progress to close gaps, expanding telehealth, expanding supplemental networks, and regularly soliciting proposals from various networks.
- ABA Therapy. A plan’s exclusion of ABA therapy to treat autism spectrum disorder in outpatient/in-network and outpatient/out-of-network classifications was found to be a problematic NQTL since the plan covered autism spectrum disorder generally and did not apply any comparable exclusion to medical/surgical conditions in the same benefit classifications. Additionally, a plan’s exclusion of ABA therapy for treatment of autism spectrum disorder after age 18 was found to be a problematic NQTL. In both instances, the plan removed the exclusion and re-adjudicated related claims.
- Speech Therapy. A plan’s exclusion of benefits for speech therapy to treat mental health conditions in all benefit classifications was a problematic NQTL since the same exclusion was not applied to speech therapy for medical/surgical conditions. Plan removed the exclusion and reviewed claims to determine if any participants or beneficiaries were adversely affected (the plan found none).
- EAP Utilization. A plan’s requirement that participants utilize an employee assistance program provider before seeking treatment for any mental health/substance use disorder condition, but only required participants to contact the employee assistance program for certain medical/surgical conditions, was a problematic NQTL. The plan removed this requirement and the plan informed participants that they could receive mental health/substance use disorder benefits without first using the employee assistance program.
- Nutritional Counseling. A plan’s exclusion of nutritional counseling to treat mental health conditions across all benefit classifications was problematic since nutritional counseling was covered for medical/surgical conditions. The plan removed the nutritional counseling exclusion for mental health/substance use disorders conditions. The DOL also reviewed claims to ensure no participants or beneficiaries were adversely affected.
- Prior Authorization. A plan’s prior authorization approvals for elective outpatient mental health/substance use disorder services were only valid for 6-month timeframes, which was a problematic NQTL since there was no similar limitation on prior authorization approval for medical/surgical benefits in the same classification. The plan added the timeframe limitation to medical/surgical benefits in the same classification.
These examples highlighted in the report to Congress reflects the Agencies’ current enforcement priorities under MHPAEA. Additionally, one theme throughout the report was the Agencies’ frustration with plans’ and issuers’ inability to explain or draw conclusions showing how they comply with the requirements under MHPAEA, particularly relating to network adequacy and composition.
A New Challenge to the Mental Health Parity Final Rule
Almost simultaneously, the ERISA Industry Committee initiated a legal challenge against the MHPAEA Final Rule issued in September 2024 (and outlined in this prior alert). The complaint seeks to invalidate certain provisions in the Final Rule, arguing that the requirements create a benefit mandate, pose unreasonable and unnecessary burdens on plans and fiduciaries, exceed regulatory authority (relying on Loper Bright), and are generally vague and arbitrary. The lawsuit specifically challenges the following provisions of the Final Rule:
- The requirement to provide “meaningful benefits” for a mental health/substance use disorder condition in all classifications in which medical/surgical benefits are provided.
- Evaluation of a plan’s compliance with MHPAEA on the basis of a “material difference in access.”
- The requirement for a plan fiduciary to execute a “fiduciary certification,” certifying that the fiduciaries hired a qualified service provider to perform and document the comparative analysis.
- The written comparative analysis requirements.
Key Takeaways for Employers
Given that the rules are currently in effect, employers should continue to work towards compliance with the requirements under MHPAEA and relevant rules despite the developing new legal challenge and the change in administrations. The case will take time to reach resolution, and the slew of executive orders from the administration have not yet included any pronouncements on enforcement of MHPAEA.
In the meantime, the NQTLs and corrective actions identified in the report to Congress can be instructive to plan sponsors as they work through identifying their own NQTLs under each plan design. The report has real life examples of potentially problematic limits and how to resolve them.
Of course, Seyfarth will closely monitor legal developments that may impact compliance requirements, including the federal lawsuit challenging the Final Rule and the recent change in administration, and will provide meaningful updates as they become available.
