The Proposed MHPAEA Regulations’ ‘Meaning of Terms’ Part Two: Processes, Strategies, Evidentiary Standards and Other Factors

By on October 2, 2023

This post continues our investigation of proposed regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA) issued by the US Departments of Labor, Health and Human Services and the Treasury (the Departments). Our previous MHPAEA content is available here. In Part One, we examined the proposed regulations’ definitions of “medical or surgical benefits,” “mental health benefits” and “substance use disorder benefits.” The proposed regulations would, if adopted, make minor (albeit important) clarifications to these terms, which were previously defined in the 2013 final MHPAEA regulations. This post explains other terms defined in the proposed regulations that, while used in the 2013 final rules, regulators did not previously define. MHPAEA generally requires parity between a group health plan’s and health insurance issuer’s financial requirements and treatment limitations applicable to mental health or substance use disorder (MH/SUD) and medical or surgical (M/S) benefits. Treatment limitations include nonquantitative treatment limitations (NQTLs). Under the 2013 final MHPAEA regulations, a group health plan (or health insurance coverage) must not impose an NQTL with respect to MH/SUD benefits in any classification unless:

  • Any processes, strategies, evidentiary standards or other factors used in applying the NQTL to MH/SUB benefits in the classification are comparable to the processes, strategies, evidentiary standards or other factors used in applying the limitation with respect to M/S benefits in the same classification.

(“Classifications” for this purpose include inpatient, in-network, inpatient, out-of-network, outpatient, in-network, outpatient, out-of-network, emergency care and prescription drugs.) The proposed regulations retain this rule, relabeling it as the “design and application” requirement. The 2013 final MHPAEA regulations use—but do not define—the terms, “processes,” “strategies,” “evidentiary standards” or “other factors.” Citing the need to “provide clarity to plans and issuers” and to help them properly apply the law’s rules governing NQTL requirements, the Departments now propose to define these other terms as follows:

  • Processes: Processes are actions, steps or procedures that a group health plan uses to apply an NQTL. This includes actions, steps or procedures established by the plan as requirements for a participant or beneficiary to access benefits, such as through actions by a participant’s or beneficiary’s authorized representative or a provider or facility. Examples include:
    • Procedures to submit information to authorize coverage for an item or service prior to receiving the benefit or while treatment is ongoing (including requirements for peer or expert clinical review of that information);
    • Provider referral requirements; and
    • The development and approval of a treatment plan.
  • Strategies: Strategies are practices, methods or internal metrics that a plan considers, reviews or uses to design an NQTL. Examples include:
    • The development of the clinical rationale used in approving or denying benefits;
    • Deviation from generally accepted standards of care;
    • The selection of information deemed reasonably necessary to make a medical necessity determination;
    • Reliance on treatment guidelines or guidelines provided by third-party organizations; and
    • Rationales used in selecting and adopting certain threshold amounts, professional protocols and fee schedules.
  • Evidentiary standards: Evidentiary standards are any evidence, sources or standards that a group health plan considered or relied upon in designing or applying a factor with respect to an NQTL, including specific benchmarks or thresholds. Evidentiary standards may be empirical, statistical or clinical in nature. Examples include:
    • Sources acquired or originating from an objective third party, such as recognized medical literature, professional standards and protocols, and published research studies;
    • Payment rates for items and services (such as publicly available databases of the “usual, customary and reasonable’’ rates paid for items and services);
    • Clinical treatment guidelines;
    • Internal plan data; and
    • Benchmarks or thresholds, such as measures of excessive utilization, cost levels, time or distance standards, or network participation percentage thresholds.
  • Factors: Factors are all information, including processes and strategies (but not evidentiary standards), that a group health plan considered or relied upon to design an NQTL, or to determine whether or how the NQTL applies to benefits under the plan. Examples include:
    • Provider discretion in determining a diagnosis or type or length of treatment;
    • Clinical efficacy of any proposed treatment or service;
    • Licensing and accreditation of providers;
    • Claim types with a high percentage of fraud;
    • Quality measures;
    • Treatment outcomes;
    • Severity or chronicity of condition;
    • Variability in the cost of an episode of treatment;
    • Variability in cost and quality;
    • Elasticity of demand; and
    • Geographic location.

The 2013 final MHPAEA regulations treated “processes,” “strategies,” “evidentiary standards” and “other factors’’ as having overlapping meanings, with ‘‘other factors’’ being a catch-all. The proposed regulations’ approach is more granular and nuanced. Under the proposal, “processes’’ relate to the application of an NQTL, while ‘‘strategies’’ relate to their design. (Plans and issuers would, however, be prohibited from relying upon any factor or evidentiary standard if it discriminates against MH/SUD benefits as compared to M/S benefits.) Evidentiary standards are not themselves considered factors; rather, they are considered or relied upon in designing or applying a factor. This invites the question: What happens when a plan or issuer only relies upon a single evidentiary standard to design or apply an NQTL? (The Departments have invited comments on this point.) The preamble to the proposed regulations provides the following examples to illustrate the interaction of these definitions under which a plan might rely on various combinations of processes, strategies, evidentiary standards and other factors in designing and applying a prior authorization NQTL for in-network, non-hospital-based, inpatient/residential facilities for nonemergency M/S or MH/SUD treatment.

  • The strategies used by the plan to design the NQTL could include the “development of the clinical rationales the plan used in determining when to approve or deny benefits for the facility, and the composition of the staff of the plan that chose what information would be deemed necessary to determine whether a participant or beneficiary has an immediate, clinically valid need for treatment at the facility.”
  • The processes the plan used in applying the NQTL could include the “specific steps a participant or beneficiary (or their authorized representative, including their provider or the facility) would need to take to obtain prior authorization, such as obtaining a written treatment plan. These processes and strategies would also be considered factors, as would the licensing and accreditation requirements for non-hospital-based, inpatient/residential facilities and the severity or chronicity of a patient’s condition when they are seeking treatment at such a facility.”
  • The evidentiary standards used to design or apply the factors would include the “benchmarks or thresholds the plan uses to inform the number of days of treatment at the facility that would be authorized at one time, as well as published research studies on the efficacy of the treatment in this particular facility setting.”
Alden Bianchi
Alden J. Bianchi is an experienced Employee Benefits and Executive Compensation lawyer who advises corporate, not-for-profit, governmental and individual clients on a broad range of executive compensation and employee benefits matters, including qualified and non-qualified retirement plans, health and welfare plans. Read Alden Bianchi's full bio.




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