As we addressed in our recent LawFlash covering the Consolidated Appropriations Act, 2021 (Act), the Act includes several requirements to enhance group health plan transparency. One provision we wanted to further highlight relates to the new requirements to show compliance with the Mental Health Parity and Addiction Equity Act (Mental Health Parity). These new rules will require plan sponsors to take steps to comply and possibly follow up with their third-party administrators (TPAs) to ensure compliance.
More specifically, the Act requires group health plans that offer both medical and surgical benefits and mental health or substance use disorder benefits that impose nonquantitative treatment limitations (NQTLs) (e.g., medical management standards, formulary design for prescription drugs, fail-first policies or step therapy protocols) on mental health or substance use disorder benefits to perform and document comparative analyses of the design and application of NQTLs. The analyses must include the following:
- The specific plan or coverage terms or other relevant terms regarding the NQTLs and a description of all mental health or substance use disorder and medical or surgical benefits to which each such term applies in each respective benefits classification.
- The factors used to determine that the NQTLs will apply to mental health or substance use disorder benefits and medical or surgical benefits.
- The evidentiary standards used for the factors identified above when applicable, provided that every factor shall be defined, and any other source or evidence relied upon to design and apply the NQTLs to mental health or substance use disorder benefits and medical or surgical benefits.
- The comparative analyses demonstrating that the process, strategies, evidentiary standards, and other factors used to apply the NQTLs to mental health or substance use disorder benefits, as written and in operation, are comparable to and are applied no more stringently than the processes, strategies, evidentiary standards, and other factors used to apply the NQTLs to medical or surgical benefits in the benefits classification.
- The specific findings and conclusions reached by the group health plan with respect to the health insurance coverage that indicate the group health plan is or is not in compliance.
The comparative analyses must be made available to a state authority, the secretary of the US Department of Labor (DOL), or the secretary of the US Department of Health and Human Services (HHS) beginning 45 days after the enactment of the Act, but only upon request from those agencies. This means a plan sponsor should be prepared to produce the comparative analyses on or after February 10, 2021, if it is requested, and therefore plan sponsors should consider planning their compliance strategy now. While it’s possible that the agencies may start to request analyses from plan sponsors at any time, we expect that it will not likely happen prior to additional guidance being issued. The Act provides that guidance must be issued within the next 18 months to address these new Mental Health Parity transparency provisions.
Compliance with Mental Health Parity and, particularly, the imposition of NQTLs have been part of subregulatory guidance in recent years, and we have also seen the DOL request that group health plans demonstrate compliance with Mental Health Parity on audit. Plan sponsors now have a statutory obligation to ensure the comparative analyses are performed and should follow up with their TPAs and take steps internally, as necessary, to ensure they are ready to demonstrate compliance with these new requirements.
Please do not hesitate to reach out to us if you have any questions about any of the new requirements under the Act.