Summary
The Departments of the Treasury, Labor, and Health and Human Services have published final regulations under the Mental Health Parity and Addiction Equity Act that prohibit group health plans and health insurers from imposing nonquantitative treatment limitations that place greater restrictions on benefits for mental health and substance use disorders than for medical and surgical benefits.
The Upshot
- The rules apply to health plans and policies that cover both medical and surgical expenses and mental health and substance use disorder expenses.
- The rules prohibit discrimination in nonquantitative treatment limitations, such as prior authorization requirements and network composition.
- Health plan sponsors and health insurers are required to conduct and document an analysis that compares the nonquantitative treatment limitations that apply to mental health and substance use disorder benefits to those that apply to medical and surgical benefits.
The Bottom Line
Health plan sponsors and health insurers need to take action to comply with the final regulations, which take effect generally for plan years beginning in 2025, with some of the newer and more detailed requirements delayed one year. However, the statutory requirements, on which the regulations are based, are already in effect and the government is auditing some plans every year.
Practical Pointers for Compliance with New MHPAEA Regulations
The Departments of the Treasury, Labor, and Health and Human Services have jointly issued final regulations on the nonquantitative treatment limitation (NQTL) requirements under the Mental Health Parity and Addiction Equity Act (MHPAEA). The much-anticipated rules draw extensively from the regulations that the departments proposed last year and address the comparative analysis that group health plan sponsors and insurers need to conduct to demonstrate that their plans do not use NQTLs that place greater restrictions on access to benefits for mental health and substance use disorders than for medical and surgical benefits.
While there is no legal obligation for many plans to offer mental health benefits, those that voluntarily choose to offer such coverage must now contend with the complex regulatory requirements set forth in these final rules. This advisory provides practical guidelines for compliance. For a brief outline of the NQTL requirements, please click here.
Identify responsible parties and gather information. Consider who will be responsible within your organization to address compliance with the NQTL requirements and the extent to which that responsibility will be delegated to a third-party vendor. As explained below, the answer will depend on whether your coverage is fully-insured or self-funded.
Practical Pointer: If you sponsor an insured health plan, the insurance carrier will be required to meet the NQTL requirements. However, your plan has an independent requirement to satisfy the NQTL requirements. Accordingly, you should confirm in writing (preferably as part of your contract) that the insurance carrier is meeting its responsibilities under the MHPAEA, including the comparative analysis obligation, in a manner applicable to your plan. This will help ensure that your plan will not face liability due to the insurer’s failure to comply with these obligations.
Practical Pointer: If you sponsor a self-funded health plan, you may seek to make your third-party administrator and other applicable vendors responsible for meeting the MHPAEA, including the NQTL comparative analysis requirement. In our experience, they will often decline to assume full responsibility for conducting and documenting the comparative analysis. You should, however, require them (preferably as part of your contract) to provide information needed to conduct the analysis. For those third-party claims administrators that also sell fully-insured coverage, you may be able to require them to provide the comparative analysis that they conducted for their insured business. You should then consider whether you will engage a consultant to review and analyze that information or whether you will seek to do so internally.
Practical Pointer: Be careful whom you select to assist in the comparative analysis. Document their selection and review and oversee their work. You will be required to provide an assessment of any reviewers or consultants you have engaged as experts. If your plan (insured or self-funded) is subject to the Employee Retirement Income Security Act (ERISA), one or more fiduciaries will need to certify that they have followed a prudent process in the selection of vendors to conduct and document the comparative analysis and in monitoring those vendors.
Review the information provided and process of review. The process that you follow is important. As noted, if your plan is subject to ERISA, you will have a fiduciary obligation to monitor the process for completion of the comparative analysis.
Practical Pointer: If you receive a comparative analysis applicable to your vendor’s insured business, consider if it may serve as a model for your own analysis. Many self-funded plans model themselves after insured products. Work with any other vendors whom you engage to help with the analysis. Consider if there are any differences between the benefits provided through your self-insured plan and the insured plan that need to be addressed. Confirm that all applicable NQTLs applicable to your plan are accounted for.
Practical Pointer: Ask questions where the analysis seems incomplete or otherwise unsatisfactory. Require the vendor to provide updates that it makes to its insured plan analysis.
Practical Pointer: Review the evaluation of outcomes data. If there is a disparity that is unfavorable to mental health and substance use disorder benefits for an NQTL, consider if the disparity is material and, if so, whether it is explained. For example, review whether the NQTL has been developed and applied through the use of objective, unbiased standards and factors. Evaluate the data used in conducting the analysis. Does it reflect your plan’s experience? Is it drawn from your plan or a broader sample space? Is it of a size and quality to be reliable? Do any outliers skew the data results?
Practical Pointer: Assess how processes and outcomes will be compared in situations where the administration of mental health and substance use disorder benefits are carved out to a different vendor or subcontractor.
Practical Pointer: Ask if your insurers/third-party administrators have previously been audited and the status/outcomes of that audit. Find out the extent to which auditors have approved or disapproved benefit design features or any of their operations. Evaluate how that affects your own plan’s design and operations.
Gain appropriate understanding of the rules. Particularly if your plan is self-funded, fiduciaries will need to have a sufficient understanding of the rules to assess your plan’s compliance with the NQTL requirements and to review the work of vendors that prepare or assist in the preparation of the comparative analysis.
Practical Pointer: You should learn enough about the rules to be able to identify NQTLs, engage one or more service providers to assist with the comparative analysis, and especially if your plan is subject to ERISA, monitor and review the work of those service providers and ask appropriate questions.
Practical Pointer: You will want to have enough knowledge to identify issues yourself or to engage with your service provider with regard to those issues. You will need to be able to make appropriate decisions to implement corrective action measures. You should document the measures that you have taken or are taking to rectify any problems.
Provide comparative analysis on request. You will have 10 business days to produce a comparative analysis upon request by one of the departments. Other timing requirements apply once a government auditing process has begun.
Practical Pointer: The rules require a comparative analysis to be conducted and documented regardless of whether a government official ever asks for it. 10 business days leaves little time to produce the comparative analysis unless it is ready or very far advanced.
Practical Pointer: Based on reports about audits that the government has conducted in prior years, it is unlikely that your comparative analysis will satisfy a government auditor in every respect on initial review. Be prepared to supplement the documentation that you have provided and alert your vendors that more information may be required.
Practical Pointer: Be prepared to take corrective actions with regard to NQTLs as needed for compliance.
Pay attention to effective dates. The statutory requirements are already in effect, and DOL audits have been in progress for several years. The new final regulations generally apply to plan years beginning on or after January 1, 2025. However, some of the requirements presenting the most difficulties under the comparative analysis will not take effect before plan years beginning in 2026.
Practical Pointer: You should take appropriate measures to have in place a comparative analysis that is as complete as possible and that demonstrates your commitment to meeting MHPAEA rules. If you do not have a comparative analysis in place, you should not rely on the delayed effective date for certain regulatory provisions to defer compliance efforts. Conducting and documenting this analysis takes time. Government auditors are required to conduct audits every year and will be looking for compliance with the rules as they are in effect.
Practical Pointer: Many insurers and other vendors have continued to upgrade their responses to the NQTL requirements and will need to do so to meet the revised requirements. Even if you have obtained information from them in the past, you will want to seek updated information and revise your analysis.
Practical Pointer: You should take reasonable measures to keep your comparative analysis up to date with plan changes and, at least reasonably, with changes in outcomes data.
Practical Pointer: Be prepared for more active enforcement of the MHPAEA rules, particularly in 2026. Stay alert for changes that may come about because of additional guidance, election results, or potential judicial challenges.
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