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Legal Update

Aug 18, 2023

Mental Health Compliance Report Issued to Congress Spoiler Alert – Plans All Fail

By: Nancy Chawla, Ben Conley, Caroline Pieper, Joy Sellstrom, and Joel Wilde
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Seyfarth Synopsis: The Mental Health Parity and Addiction Equity Act (MHPAEA) requires group health plans and insurers to cover treatments for mental health and substance use disorders in a manner that is equitable to the plans' coverage of medical and surgical treatments. Exactly how that is accomplished and how compliance is proven have been the subject of prescriptive yet ambiguous guidance for several years. The agencies seemingly have been as frustrated as plan sponsors when trying to unearth what plans are, in fact, covering. And, the uncertainty in the area has resulted in numerous lawsuits from legal providers and participants against plans and insurers. 

Recently, the Departments of the Treasury ("Treasury Department"), Labor ("DOL"), and Health and Human Services ("HHS") (the "Departments") released their second report to Congress on plans compliance with MHPAEA, as well as new proposed regulations and a technical release seeking input from stakeholders. 

The voluminous nature of the Department actions make it unwieldy for us to cover them all in a single alert. So, instead we will break down the guidance for you in a series of three alerts focused on:

This alert focuses on the congressional report. 

The Consolidated Appropriations Act of 2021 (CAA), added a provision to MHPAEA that requires plans and issuers to perform and document comparative analyses of the design and application of their non-quantitative treatment limitations (NQTLs) to demonstrate parity between MH/SUD and M/S benefits.  These NQTL analyses must be provided to the Departments upon request. The Departments are also required to report to Congress annually on the results of these NQTL comparative analyses. In January of 2022, the first report to Congress indicated that every NQTL analysis reviewed was in some way insufficient when it was initially submitted to DOL’s Employee Benefits Security Administration (EBSA).

Along with the Proposed Regulations, the Departments released their second report to Congress (2023 Report).  The 2023 Report discusses common deficiencies and, as required by the CAA, the identity of each plan and issuer that received a final determination of non-compliance. Finally, the 2023 Report contains illustrative examples of impermissible NQTLs imposed on MH/SUD benefits and the resulting enforcement action.

Enforcement Priorities

The January 2022 Report to Congress detailed four areas of NQTL enforcement priority. Subsequently, the DOL added two additional areas of priority based on their experience during the first reporting period. The six priority areas currently include:

  1. prior authorization requirements for in-network and out-of-network inpatient services;
  2. concurrent care review for in-network and out-of-network inpatient and outpatient services;
  3. standards for provider admission to participate in a network, including reimbursement rates;
  4. out-of-network reimbursement rates (methods for determining usual, customary, and reasonable charges);
  5. impermissible exclusions of key treatments for mental health conditions and substance use disorders (NEW since the January 2022 Report); and
  6. adequacy standards for MH/SUD provider networks (NEW since the January 2022 Report).

EBSA’s Approach to Enforcement

For all NQTL areas, EBSA develops investigative leads through review of plan documents and examination of plan operations among EBSA's open health case inventory. EBSA also gathers leads from other sources, such as state and federal regulatory partners, media reports, private litigation, participant or beneficiary complaints, professional associations, and patient advocacy groups.

The 2023 Report states that EBSA has focused on violations that stem from the actions of large service providers or third party administrators (TPAs) that affect hundreds or thousands of plans. Correction requires the TPA to change its impermissible practices and notify all plan clients to make the necessary changes at the plan level.  This focus on TPAs makes sense, not only because of the number of plans affected, but because it is the TPAs that have the information necessary to do the NQTL analysis.  Unfortunately, many TPAs will not agree to perform the NQTL analysis for their self-funded plan clients.

Corrections

EBSA achieved corrections at various stages of its NQTL review process. The stages include asking initial questions about an NQTL, issuing an initial request for comparative analysis, and issuing an initial determination of non-compliance. Appropriate correction depends on the NQTL and may include one or more of the following:

  • complete removal of an NQTL;
  • changes to plan document language and disclosures, along with notification to participants and beneficiaries of the change in plan terms;
  • amendments to plan practices or claims processing procedures;
  • addition of coverage for previously excluded benefits;
  • reduction in the scope of an NQTL's application to MH/SUD benefits;
  • submission of a complete and sufficient comparative analysis, cured of identified deficiencies;
  • re-adjudication of claims affected by an impermissible NQTL, with payment of claims wrongfully denied because of the NQTL; or
  • notice to participants and beneficiaries of an opportunity to submit previously unsubmitted claims that will now be accepted for processing.

Examples of NQTL Corrections

    1. Residential Treatment - A self-funded plan covering over 800 participants excluded MH/SUD benefits at residential treatment facilities but covered benefits at M/S residential treatment facilities, such as skilled nursing facilities and stroke rehabilitation programs. The plan removed the exclusion and reprocessed previously denied MH/SUD residential treatment claims. MH/SUD residential treatment will be covered by the plan going forward.
    2. EAP Gatekeeper - EBSA has found that some plans have erected barriers to access MH/SUD benefits under the group health plan by requiring participants to use EAPs before a participant can access MH/SUD benefits, when there is no comparable requirement to access M/S benefits under the group health plan. The plan ended the practice of using the EAP as a gatekeeper for MH/SUD benefits. It removed the NQTL from plan documents and issued new membership cards with amended information allowing participants to contact MH/SUD providers directly without going through the EAP.
    3. Telehealth - A self-funded plan excluded MH/SUD benefits provided via telephone, email, or internet. The plan did not have any similar restrictions on M/S benefits. The plan removed the impermissible NQTL and provided access to MH/SUD telehealth benefits, notifying participants of the change in plan terms.
    4. Pre-authorization - The service provider removed the prior authorization requirement for intermediate outpatient services for M/S conditions but did not change the prior authorization requirement for outpatient MH/SUD services. The service provider acknowledged that it had not applied the factors comparably, submitted a corrective action plan, and changed its claims processing system to remove the prior authorization requirement for intensive outpatient MH/SUD benefits.
    5. Medication-Assisted Treatments - A large self-funded plan covering over 22,000 participants excluded treatment for opioid use disorder with methadone (which must be provided through an opioid treatment program) but covered methadone to treat M/S conditions. The plan took corrective action by removing the impermissible exclusion and reprocessing and paying all claims that had been wrongfully denied because of the exclusion.
    6. ABA Therapy - A self-funded plan covering more than 2,500 participants excluded benefits for applied behavior analysis (ABA) therapy to treat autism spectrum disorder (ASD) despite generally providing benefits for ASD. The plan removed the ABA therapy exclusion.

Sufficiency/Insufficiency of Responses

In its second year of CAA implementation, according to the 2023 Report, EBSA has not seen a marked improvement in the sufficiency of the initial comparative analyses received. The same deficiencies and trends noted in the January 2022 Report are still commonly reflected in comparative analyses reviewed during the second reporting period.

The 2023 Report states that, during the most recent reporting period, none of the comparative analyses initially submitted were sufficient to demonstrate compliance.  This is not surprising.  Although employers with self-funded plans try to comply with the MHPAEA requirements, they are struggling with preparation of the NQTL analysis.  It is difficult to find TPAs, consultants or vendors willing to do the analysis and the ones who will, tend to be extremely expensive.  Then, as pointed out in the 2023 Report, the analyses are insufficient. The information needed to perform the NQTL analysis lies with the TPAs for self-funded plans and the TPAs should be performing the analyses.