News

On September 9, 2024, the tri-agencies of the Departments of Treasury, Labor, and Health and Human Services (collectively, the Departments) issued the highly anticipated final rules addressing how employer-sponsored group health plans provide mental health and substance use disorder benefits in compliance with the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).

The Departments finalize with some changes the proposed rules regarding the nonquantitative treatment limitation (NQTL) comparative analyses and other implementing regulations under MHPAEA. As a reminder, plans that provide mental health and/or substance use disorder (MH/SUD) benefits cannot impose more rigorous (i.e., less favorable) benefit limitations on those benefits than on medical/surgical (M/S) benefits. Further, employer-sponsored group health plans are required to perform and document comparative analyses of the design and application of their quantitative treatment limitations and NQTLs to demonstrate the MH/SUD benefits available under the plan are provided in parity with the M/S benefits available under the plan. For a background discussion of the proposed rules and surrounding guidance, see our previous client alert here.

Below is a high-level summary of some of the most important elements of the final rules:

• NQTL Comparative Analysis is Statutorily Required. The final rules codify the requirement that health plans and issuers must conduct comparative analyses to measure the impact of NQTLs. The final rules note that a comparative analysis must contain (at a minimum) the six-content elements set forth in the final rules. The Departments have not clarified whether a sample or model analysis will be available.
• Request and Review Process Clarified. The final rules describe the steps the Departments will follow to request and review a plan’s NQTL comparative analysis.
• Tight Timing Requirements Remain Applicable to Comparative Analysis Request. The final rules confirm that plans and issuers must provide their comparative analyses to the relevant Secretary within 10 business days (or any additional period of time specified by the relevant Secretary) following receipt of a request. The Departments emphasize and remind plans and issuers that they are statutorily obligated to perform and document their NQTL comparative analysis without first waiting for a request from a Secretary.
• Deadlines are Approaching. The final rules apply to group health care plans beginning on January 1, 2025, except for the meaningful benefits standard, the prohibition on discriminatory factors and evidentiary standards, the relevant data evaluation requirements, and the related requirements in the provisions for comparative analyses, which will begin to apply on January 1, 2026.
• Certification by Plan Fiduciaries are Required. The final rules require the NQTL comparative analysis to include a certification by one or more named fiduciaries of the plan that they have engaged in a prudent process to select one or more qualified service providers to perform and document the NQTL comparative analysis and have satisfied their duty to monitor those service providers performance and documentation of the comparative analysis.
• Opt-Out for Government Plans has been Sunset. The final rules implement the sunset provision no longer allowing self-funded health plans sponsored by state and local governments to opt out of compliance with MHPAEA, as adopted in the Consolidated Appropriations Act, 2023.

The following changes were adopted as it relates to the substance of the NQTL comparative analysis:

• Design and Application Requirements.  Generally, a plan or issuer is required to examine the processes, strategies, evidentiary standards, and other factors used in designing and applying an NQTL to MH/SUD benefits in a benefit classification to ensure they are comparable to, and are applied no more stringently than, those used in designing and applying the limitation with respect to M/S benefits in the same classification. The final rules also prohibit plans from using discriminatory information, evidence, sources, or standards that systematically disfavor or are specifically designed to disfavor access to mental health and substance use disorder benefits when designing NQTLs. Whether information, evidence, sources, or standards are biased or not objective is based on all the relevant facts and circumstances.
• Defined Terms. The final rules amend the definitions of “medical/surgical benefits,” “mental health benefits,” and “substance use disorder benefits” by removing reference to state guidelines and add new definitions for the terms “evidentiary standards,” “factors,” “processes,” and “strategies” with several examples of each.
• No Less Restrictive Requirement. The final rules reinforce that plans and issuers cannot impose NQTLs (such as prior authorization and other medical management techniques, standards related to network composition, or methodologies to determine out-of-network reimbursement rates) for MH/SUD benefit in any classifications that are more restrictive than the predominant NQTL that applies to substantially all M/S benefits in the same classification. For this purpose, a plan or issuer must satisfy both the design and application requirements and the relevant data evaluation requirements.
  • Note, the final rules do not require application of the mathematical tests to determine whether an NQTL applies to "substantially all" M/S benefits and the "predominant" NQTL that applies to M/S benefits as had been set forth in the proposed rules.
• Relevant Data Evaluation Requirements. The final rules require plans and issuers to collect and evaluate relevant data in a way that is reasonably designed to assess the impact of each NQTL on relevant outcomes related to access to MH/SUD benefits and M/S benefits, and then carefully consider any impacts. For NQTLs related to network composition standards specifically, a plan or issuer must collect and evaluate relevant data in a manner reasonably designed to assess the aggregate impact of such NQTLs on relevant outcomes related to access to MH/SUD benefits and M/S benefits. However, the final rules are flexible in permitting plans and issuers to determine what data should be collected and evaluated for a particular NQTL and provide examples of relevant data for all NQTLs and additional relevant data for NQTLs related to network composition standards.
• Material Differences and Reasonable Action. Where the relevant data evaluation suggests that an NQTL is contributing to “material” differences in access to MH/SUD benefits as compared to M/S benefits, the final rules require plans to take reasonable action, as necessary, to address those material differences. Differences in access are generally considered material if, based on all relevant facts and circumstances, the difference in the data suggests that the NQTL is likely to have a negative impact on access to MH/SUD benefits as compared to M/S benefits.
• Meaningful Benefits Standard. The final rules require that, if a plan or coverage provides any mental health condition or substance use disorder in any classification of benefits, it must provide meaningful benefits for that condition or disorder in every classification in which meaningful M/S benefits are provided. Whether the benefits provided are meaningful is determined by comparing to the benefits provided for M/S conditions in the same classification.
• Fraud and Abuse.  The final rules clarify how fraud and abuse measures will be treated and eliminate references to “waste” as overly broad. In particular, NQTLs that are designed or applied, based on, or related to fraud and abuse measures will be subject to the design and application requirements and the relevant data evaluation requirements.

As anticipated, these final rules are incredibly dense and complex. Given the complexity, plan fiduciaries should revisit their current efforts and evaluate improving and aligning those efforts with the final rules. While the enforcement of certain plan design provisions will be delayed, as alluded above, the Departments are expecting plans and issuers to comply with the general ongoing requirements, including conducting and documenting a sufficient NQTL comparative analysis. Michael Best stands ready and able to assist plan fiduciaries to address the challenges presented by these new rules.