Frequently Asked Questions

The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) is a federal law requiring health plans to apply similar financial and treatment limits to mental health/substance use disorder benefits and medical surgical benefits.  

MHPAEA was amended by the Consolidated Appropriations Act of 2021.

At a high level, mental health parity says that if a group health plan covers medical/surgical benefits and also covers either mental health or substance use disorder benefits, the plan may be subject to the requirements under the Mental Health Parity Act (MHPA) and the Mental Health Parity and Addiction Equity Act (MHPAEA). In other words, these rules don’t mandate that mental health or substance use treatments be covered, but instead says that if they are covered then they must be covered in the same manner as medical and surgical benefits.

The Mental Health Parity and Addiction Equity Act (or MHPAEA) requires generally that benefits not be more restrictive for mental health and substance use disorder (MH/SUD) benefits than for medical and surgical benefits.

As of February 10th, 2021 plan sponsors must perform a detailed and ongoing, Comparative Analysis containing a “robust discussion” of all sponsored plans to ensure benefits parity between Medical/Surgical benefits versus Mental Health/Substance Use Disorders.

Parity means that financial cost-sharing requirements for mental health/substance use disorder benefits (such as deductibles, copayments, coinsurance, and out-of-pocket limitations) must be comparable to those for medical surgical. Parity also applies to rules regarding care management (authorization for treatment) and treatment limitations.

Although benefits may differ across plans, parity requires that the processes related to plan benefit determinations be comparable. The ACA contributed to parity by eliminating annual and lifetime dollar limits for mental health/substance use disorder benefits.

Group health plans that offer mental health and/or substance use disorder (MH/SUD) benefits must provide parity between such benefits offered under the plan regarding:

• Financial requirements
• Treatment limitations
• Aggregate lifetime and dollar limits

Prior to MHPAEA, plans were able to limit expenses related to mental health based on the number of visits and to exclude out-of-network mental health expenses.

Yes.

MHPAEA requires that insurers meet mental health parity standards in two areas: quantitative limits and non-quantitative limits.

• Plans must apply comparable financial requirements (such as copay, coinsurance, deductible) for mental health/substance use disorder and medical surgical care.
• The number of outpatient visits or inpatient days covered must be comparable for mental health/substance use disorder and medical surgical care.  
• Prior authorization requirements for mental health/substance use disorder services must be comparable to or less restrictive than those for medical surgical services.

These standards are applied according to classifications of benefits:

• Inpatient / in-network
• Inpatient / out-of-network
• Outpatient / in-network
• Outpatient / out-of-network
• Emergency care
• Prescription drugs

MHPAEA applies to all mental health/substance use disorder diagnoses that are covered by a health plan. However, a health plan is allowed to specifically exclude certain diagnoses – whether those diagnoses are considered to be in the medical surgical or mental health/substance use disorder treatment area. Any exclusions based on diagnosis must be contained in your plan’s Summary of Benefits (SOB) or Certificate of Coverage. If you are unsure, contact your insurance company.

Most group health plans (and insurers) offering MH/SUD benefits.

No exemptions for churches.

Small Employer Exemption

• Employers with less than 50 employees, after applying control group rules
• Small employers are not exempt if they purchased an insured product with essential health benefits, as was required under ACA

MHPAEA protections extend to most health plans, including self-insured and fully insured:

• Individual health plans issued on and off the Health Insurance Marketplace
• Large group health plans, including private and public-sector employers with more than 50 employees (certain self-insured governmental plans may opt-out).

The Patient Protection and Affordable Care Act (ACA) requires small group plans to provide mental health/substance use disorder benefits. Any plan that offers mental health/substance use disorder coverage must comply with MHPAEA.

No.  All group health plan sponsors of both fully-insured and self-funded plans must consider the requirements of the Mental Health Parity and Addiction Equity Act and the Patient Protection and Affordable Care Act (ACA).

Self-insured plan: Employer/plan sponsor is responsible.

• Plan sponsors will need to rely upon vendors for information but they hold the ultimate responsibility

Fully-insured plan: Employer/plan sponsor and insurance carrier share responsibility

Not likely.

Your TPA will likely provide you with information regarding how they apply various NQTLs, but they are not likely to perform this analysis on all the other vendors and pieces of your plan. Further, they are not likely to provide you with the full “show your work” documentation that is required under MHPAEA.

Some benefit brokers have very good internal compliance departments so this option should be considered. At the same time, this analysis is complex and and requires ongoing updates.

Currently we are not seeing any brokers willing to take on this work.

Not many will opt for this alternative because it is a lot of complex work, but you could do it yourself.  The DOL and HHS have created a comprehensive self-compliance guide. 

Check it out here.

If requested by a federal agency, the plan will have 45 days in which to provide additional analysis or specify the actions it will take to correct the violation.

If the agency makes a final determination that the plan is out of compliance, the plan will be required to notify all enrollees of the noncompliance within seven days of the determination.

DOL reports its findings to with applicable state officials.

No.  However, if you offer MH/SUD coverage in any of the six classification of benefits (below), you must offer MH/SUD in all of the categories:

1. Inpatient, in-network;
2. Inpatient, out-of-network;
3. Outpatient, in-network;
4. Outpatient, out-of-network;
5. Emergency care; and
6. Prescription drugs.

State and federal regulators and plan members. The marketplace is anticipating providers who feel they are underpaid will likely counsel their patients to request this analysis to capture additional payments with the threat of regulatory enforcement.

This is a common practice in today’s marketplace by some providers.

Yes.  In fact the DOL has prepared a model form for plan members to request information so they can determine whether their plan’s NQTLs are at parity.  View this form here.

Such information may be provided as a document independent of other communication items, and may be provided in hard copy or via URL hyperlink website address.

Do(s)

• Prepare a detailed and thorough analysis
• Follow the content requirements provided by guidance
• Include data, processes, and strategies utilized
• Provide evidence and a well-reasoned conclusion

Don’t(s)

• Be vague and provide a cursory or general compliance statement
• Offer documents to review (instead of a detailed report)
• Disregard the content requirements and other guidance provided
• Provide explanation without comparison
• Assume the carrier or TPA is compliant

Generalized statements about compliance without detailed supporting explanations and evidence is not sufficient.

In past investigations relating to NQTLs, the Departments have observed the following practices and procedures, which plans and issuers should avoid in responding to requests for comparative analyses because they are insufficient:

1. Production of a large volume of documents without a clear explanation of how and why each document is relevant to the comparative analysis
2. Conclusory or generalized statements, including mere recitations of the legal standard, without specific supporting evidence and detailed explanations
3. Identification of processes, strategies, sources, and factors without the required or clear and detailed comparative analysis
4. Identification of factors, evidentiary standards, and strategies without a clear explanation of how they were defined and applied in practice
5. Reference to factors and evidentiary standards that were defined or applied in a quantitative manner, without the precise definitions, data, and information necessary to assess their development or application
6. Analysis that is outdated due to the passage of time, a change in plan structure, or for any other reason.

The DOL was very disappointed by the information they received by plan sponsors during audits in terms of their compliance with MHPAEA. As we all know, there is a huge focus on mental health and substance abuse in our county. The goal of this additional requirement is to bring plans into compliance with rules that truthfully have been around since 2008.

Compliance requires plan sponsors to “show their work” in a comprehensive analysis of both how the plan is written and how the plan operates.  Plans must show how the processes, strategies and evidentiary standards apply to plan operations and ensure that MH/SUD is criteria for benefits are not applied more stringently for MH/SUD.

This includes analysis of both Quantified Treatment Limitations (QTLs) and Non-Quantified Treatment Limitations (NQTLs).

The simple answer is all vendors providing Analysis should be performed.  This would include all:

• All TPAs and PBMs
• Networks, including participating provider requirements and reimbursements rates
• Analysis of provider reimbursement rates comparative to peer specialty providers as well as compared to standard Medicare reimbursements for a schedule of procedure codes
• Case management providers
• Behavioral health solutions
• Direct contracting agreements with providers
• Wellness and disease management program compliance incentives
• Any other solution which might limit the benefits offered under your offered plans

QTLs can be measured numerically. Health insurers generally cannot impose a financial requirement (such as copays, coinsurance, deductible) or a QTL (such as the number of outpatient visits or inpatient days covered) on mental health/substance use disorder benefits that are more restrictive than the financial requirement or QTL that apply to most – but not all – medical surgical benefits in the same classification.

For example: It’s acceptable to impose a $20 copay for a mental health visit and a $10 copay for a primary care visit, as long as the copay for most of the medical surgical services covered by your plan is $20 or more.

A plan or issuer must always use appropriate and sufficient data to perform the analysis in compliance with applicable Actuarial Standards of Practice.

See ACA Implementation FAQs Part 34, Q3, available at here.

Yes.

“Show your work” requirements involves actuarially projecting forward expected claims subject to QTLs in 6 different claim categories and one sub-category.

Then the analysis must show the math of how two compliance tests (Predominant and Substantially All tests) are applied to each category.  Requires actuarial work to determine expected claims.

NQTLs are processes, strategies, evidentiary standards, or other criteria that limit the scope or duration of benefits for services provided under the plan. Certain utilization reviews, prior authorization and plan provisions may only be applied to mental health/substance use disorder benefits if they are comparable to or less restrictive than those for medical surgical services.

NQTLs include, but are not limited to:

• Medical management standards limiting or excluding benefits based on medical necessity, medical appropriateness, or based on whether the treatment is experimental or investigative (including standards for concurrent review).
• Formulary design for prescription drugs.
• Network tier design.
• Fail-first policies or step therapy protocols. For example: Refusal to pay for higher-cost therapies until it can be shown that a lower-cost therapy is not effective.
• Exclusions based on failure to complete a course of treatment.
• Restrictions based on geographic location, facility type, provider specialty, and other criteria that limit the scope or duration of benefits for services provided under the plan or coverage.

It is important to note that the NQTL provisions referred to above are not prohibited outright; but are prohibited if they are applied more stringently to mental health/substance use disorder benefits than to medical surgical benefits.

Documentation must include the following type of items:

• Terms — the specific plan and coverage terms on NQTLs for MH/SUD and M/S benefits and a description of these benefits, including which of the six parity classifications contains the benefit (i.e. inpatient in network, outpatient in network, Inpatient Out-of-Network, Out Patient out-of-network, Emergency Care, and Pharmacy)
• Evidentiary standards —the evidentiary standards and any other sources on which the plan relied to back up the factors used to design the NQTL and justify its application to a benefit (see chart below for examples)
• Factors —the factors used to determine that the NQTLs should apply to the benefits
• Comparative analysis —a separate analysis of each NQTL for benefits in each classification “demonstrating that the processes, strategies, evidentiary standards and other factors used to apply the NQTLs” to MH/SUD benefits (in written terms and plan operations) are “comparable to and applied no more stringently” than those used to apply NQTLs to M/S benefits
• Findings and conclusions —the results of the comparative analysis giving the plan’s or issuer’s specific findings on what is and is not in compliance with the parity law

It is important to note that the NQTL provisions are not prohibited outright; but are prohibited if they are applied more stringently to mental health/substance use disorder benefits than to medical surgical benefits.

A list of potential warning signs has been issued by the DOL and HHS.  Access this document here.  Note, a warning sign does not mean there is a compliance issue with your plan.  Regardless, as a plan sponsor you still have a requirement to perform and keep up to date your comparative analysis.

The Department of Labor (via the Employee Benefit Security Administration, EBSA) for private company plan sponsors, and they have begun to request this analysis as a part of any review of an employer.  This is similar to how they review 5500 documents, plan documents, etc.

For public employers, such as governmental entities, Health and Human Services is tasked with enforcement.

Yes.  View this guidance here.

EBSA receives an inquiry from a plan member who believes their mental health or substance use disorder benefits were improperly denied or limited.  EBSA then investigates.

Providers who feel they are underpaid will counsel their patients to request this analysis, in an attempt to trap plans that haven’t performed them, and somehow compel additional payment with threat of regulatory enforcement.

Member’s lawsuits is the largest potential for liability and should be discussed with your insurance provider to see if coverage can be extended under an existing fiduciary liability policy. 

If you plan has parity violations which are no corrected, plan members can sue the plan sponsor under ERISA.

The new comparative analysis requirement and guidance is a process whereby QTL(s) and NQTL(s) can be identified and corrected before they impact plan members.

Plans sponsors can be fined up to $100/per day per member for non-compliance.

Global enforcement by the DOL via their “Global Corrections” approach could be devastating to a plan vendor.  The DOL audits one of your clients and finds they are not compliant and it is linked back to some operation your company provides for their plan. The DOL then audits ALL of your clients.