Proposed Parity Act Regulations and Guidance May Impose Greater Compliance Requirements for ERISA-Covered Benefit Plans That Provide Mental Health and Substance Use Disorder Benefits

Rob Thomas, Of Counsel

On July 25, 2023, the federal Departments of the Treasury, Labor, and Health and Human Services (the “Departments”) jointly issued over 300 pages of proposed regulations and guidance regarding the Mental Health Parity and Addiction Equity Act (the “Parity Act”) and its requirements—particularly the non-quantitative treatment limitation (“NQTL”) comparative analysis requirements under the Parity Act—which may have significant repercussions for group health benefit plans governed by the Employee Retirement Income Security Act (“ERISA”) that provide benefits for mental health and substance use disorders.[1]   

The Parity Act and NQTL Analyses, Generally

Enacted in 2008, the Parity Act prohibits group health plans that provide benefits for mental health or substance use disorders (“MH/SUD”) from imposing less favorable limitations on those benefits than on other medical or surgical benefits offered by the plan.  By way of example, the financial requirements (like deductibles or co-payments) and treatment limitations that apply to MH/SUD benefits cannot be more restrictive than the predominant financial requirements or treatment limitations that apply to substantially all medical/surgical benefits.  MH/SUD benefits also must not be subject to any separate cost-sharing requirements or treatment limitations that only apply to such benefits and, if a plan provides for out-of-network medical/surgical benefits, it must also do so for MH/SUD benefits (assuming MH/SUD benefits are otherwise provided). 

Regarding treatment limitations, some quantitative treatment limitations, such as the number of covered provider visits, may be relatively easy to compare.  The analysis becomes more difficult for NQTLs, which may include more amorphous limitations like exclusions based on a lack of medical necessity for a particular treatment.  Accordingly, under the Parity Act, plans have been required to engage in an exhaustive comparative analysis of MH/SUD NQTLs to ensure that they are on par with their medical/surgical counterparts, and produce such analyses to applicable federal or state agencies upon request. 

The Departments’ Proposed Regulations

The Departments’ proposed regulations, if passed, would impose additional requirements on plans providing MH/SUD benefits to ensure compliance with the Parity Act, including a requirement to collect and analyze data relating to access to MH/SUD services (which are historically more difficult to obtain) before imposing an NQTL across a care classification.  The regulations similarly would require plans to collect data as to network adequacy and provider reimbursement rates for MH/SUD services in order to address any disparities in in-network services between MH/SUD treatments and other medical/surgical treatments.

Regarding NQTLs, the regulations would impose additional, specific requirements for plans before they can apply an NQTL without violating the Parity Act.  To summarize, in part: 1) Plans will need to collect data to ensure that an NQTL applicable to MH/SUD benefits is not more restrictive than the predominant NQTL that applies to substantially all medical/surgical benefits in the same classification; 2) Plans must ensure that the design and application of a particular NQTL to MH/SUD benefits (including factors considered, evidentiary standards, and other processes) does not result in a discriminatory application to MH/SUD benefits (similar in theory to workplace rules which may have a disparate impact on protected classes under relevant anti-discrimination laws); and 3) Plans must actively collect data to ensure that an NQTL does not negatively impact access to MH/SUD benefits and services, as compared to access to medical/surgical benefits, and must take affirmative steps to rectify any “material differences” which may be found by way of the analyses. 

Note that plans may be excepted from some or all of these requirements if the NQTL at issue is premised on an impartial application of generally recognized independent professional medical or clinical standards, or if the NQTL is reasonably designed to prevent and prove fraud, waste, and abuse, and is narrowly tailored to that purpose.         

Considerations for Colorado Employers

The scope and detail of the proposed regulations are huge, but they are also subject to change by way of the rulemaking process and comments from interested parties.  In any event, the regulations reflect a serious effort by the Departments to even the playing field for MH/SUD benefits and benefit access.  As always, Campbell Litigation is available to assist employers with these and other ERISA benefit-related matters.

[1]https://www.federalregister.gov/public-inspection/2023-15945/requirements-related-to-the-mental-health-parity-and-addiction-equity-act. Interested parties may submit written comments to the Departments for review and consideration either electronically or by mail, but must do so within 60 days after the publication of the regulations within the Federal Register, which is expected to occur on or about August 3, 2023. Once received, the comments will be made available to the public for review.