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Insights on Employee Benefits and Executive Compensation
Mental Health Parity and Addiction Equity Act
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Code § 4980D and Violations of the NQTL Analysis Requirement Under the Proposed MHPAEA Regulations

by | Sep 21, 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.

The proposed regulations establish a formal structure for how the Departments will enforce the requirement that plans and issuers comply with their obligations to provide a nonquantitative treatment limitation (NQTL) analysis on request. The structure includes the following steps:

  • Plans and health insurance issuers must provide the NQTL analysis within 10 business days of receipt of the request.
  • If the Departments determine that the NQTL analysis is deficient, upon notification, the plan/issuer has 10 business days to furnish any additional information to the Departments.
  • If the Departments determine that the NQTL analysis is deficient, plans/issuers must also undertake corrective actions and resubmit to the Departments a compliant NQTL analysis no later than 45 calendar days after notification of a noncompliant NQTL analysis.
  • If the plan or issuer remains out of compliance following the 45-calendar-day corrective action period, the plan or issuer must notify the plan participants of the plan’s/issuer’s noncompliance within seven calendar days of the receipt of the final determination of noncompliance.
  • The plan or issuer must also provide a copy of the notice to the Department of Labor or Health and Human Services, any service provider involved in the claims process and any fiduciary responsible for deciding benefit claims within the same seven calendar days.

These are not the only remedies or sanctions, however. Internal Revenue Code (Code) Section 4980D generally imposes a nondeductible excise tax of $100 per day per affected individual for failure to comply with Code Chapter 100, group health plan requirements. Noncompliant plans must self-report the Section 4980D excise tax on Form 8928. MHPAEA amends the Code, the Employee Retirement Income Security Act and the Public Health Service Act. The provisions amending the Code are in Section 9812, which is in Chapter 100. Thus, Code Section 4980D applies to violations of MHPAEA, including the requirement to prepare and provide NQTL analyses upon request.

According to a 2023 report to Congress, the Department of Labor alone sent some 182 requests, none of which were initially compliant. Shouldn’t all these plans (and many others) be self-reporting violations and paying excise taxes under Section 4980D? The proposed regulation takes up 117 pages of the Federal Register. Section 4980D is mentioned only once in a footnote. The accompanying text says merely that “plan sponsors are generally responsible for ensuring compliance and could, in certain circumstances, be liable for penalties for any violations.”

The application of Section 4980D to MHPAEA is an area that would benefit from regulatory attention and, hopefully, relief. For example, penalties should not at least in our view be enforced against plan sponsors acting in good faith whose NQTL analyses are initially deficient but are brought into compliance.



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The ‘Data Evaluation Requirement’ for NQTLs Under the Newly Proposed MHPAEA Regulations

by | Sep 7, 2023 | , ,

Last week’s post examined the “no more restrictive” requirement that would apply to non-quantitative treatment limitations (NQTLs) set out in recently proposed regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA). (Our description of the proposed regulations is available here.) The proposed regulations deal principally with NQTLs, which are non-numeric benefit coverage limits that must be no more restrictive for mental health and substance use disorder (MH/SUD) benefits than for medical surgical (M/S) benefits. We previously claimed that “if adopted in final form [the proposed regulations] would vastly complicate compliance by group health plans and health insurance issuers with an already challenging set of mental health parity rules.” Our views have not changed.

The proposed regulations would, if adopted, impose a series of new requirements on NQTLs that include a “data evaluation requirement.” This new requirement would provide that the plan or issuer designing and applying an NQTL collect and evaluate relevant data to assess the impact of the NQTL on access to MH/SUD and M/S benefits. The plan or issuer would also consider whether the NQTL, in operation, complies with the mental health parity rules. The specific type, form, and manner of data collection and evaluation will be the subject of future guidance. (A technical release accompanied the proposed regulations, described here, which invites comment and suggests a possible, narrow safe harbor.)

The proposed regulations establish two new network-related rules governing NQTLs:

  • For NQTLs not involving network composition, a material difference in the metrics/data gathering for the NQTL as applied to MH/SUD and M/S benefits would be considered a strong indicator of a violation.
  • For NQTLs involving network composition, a violation is deemed to occur if the relevant data shows material differences in access to in-network MH/SUD benefits as compared to in-network M/S benefits.

The proposed regulations would make compliance depend on outcomes. This position represents a significant shift in, if not an outright reversal of, existing law. Under the 2013 final MHPAEA regulations, outcomes are not determinative of compliance. Rather, comparability turns on the application of processes, strategies, evidentiary standards and other design-based factors. Compliance under current law thus turns on an examination of inputs, not outcomes. While the proposed regulations include exceptions for professional medical/clinical standards and for standards to detect fraud, waste and abuse, the preamble to the proposed regulations advises that “these exceptions should be narrowly tailored.”



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The ‘No More Restrictive’ Requirement for NQTLs Under the Proposed MHPAEA Regulations

by | Aug 29, 2023 | , ,

We previously reported on proposed regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA). If adopted in final form, these regulations would vastly complicate compliance by group health plans and health insurance issuers with an already challenging set of mental health parity rules.

The proposed regulations deal principally with non-quantitative treatment limitations (NQTLs), i.e., non-numeric benefit coverage limits that must be no more restrictive for mental health and substance use disorder (MH/SUD) benefits than for medical surgical (M/S) benefits. Examples of NQTLs include prior authorization requirements, concurrent review, standards for provider admission, Rx formulary design, and fail-first policies or step therapy protocols.

The proposed regulations set out new requirements on NQTLs that include a three-part test consisting of a “no more restrictive” requirement, a “design and application” requirement and a “data evaluation requirement.” There is also a new meaningful benefit requirement, under which plans and issuers must provide meaningful benefits for MH/SUD treatment where the plan also provides a corresponding M/S benefit. With perhaps the exception of the “design and application” requirement, each of these requirements represents a major new compliance obligation on the part of plans and issuers.

This blog post focuses on the “no more restrictive” requirement. Future posts will examine the other requirements.

MHPAEA regulates aggregate lifetime and annual dollar limits, financial requirements, and treatment limitations. (The Affordable Care Act bars lifetime and annual dollar limits on essential health benefits (EHBs). Under MHPAEA, plans and issuers may not be able to impose lifetime and annual dollar limits on MH/SUD benefits that are not EHBs.) Treatment limitations are subdivided into quantitative treatment limitations (QTLs) (e.g., number of days or visits covered) and NQTLs.

The 2013 final MHPAEA regulations apply numerical standards testing to financial requirements and QTLs. These final regulations also adopted six classifications of benefits for this purpose: inpatient, in-network; inpatient, out-of-network; outpatient, in-network; outpatient, out-of-network; emergency care; and prescription drugs. To comply, a financial requirement or QTL imposed on an MH/SUD benefit must be no more restrictive than the predominant financial requirement or QTL that applies to substantially all M/S benefits in a classification. For this purpose:

  • Substantially all” means that the financial limitation or QTL applies to at least two-thirds of all M/S benefits in the classification; and
  • “Predominant” means the level of financial requirement or QTL that applies to more than one-half of the M/S benefits in the relevant classification.

The 2013 final regulations largely rely on a subjective analysis of the processes, strategies, evidentiary standards, and other factors used in the application of NQTLs. The proposed regulations retain this subjective standard and layer on a quantitative “no more restrictive” requirement. As proposed, NQTLs would be subject to numerical standards testing similar to the current law testing that applies to financial requirements and NQTLs. While the “substantially all” prong would not change, some minor modifications would be made to the “predominant” prong. Under the proposed regulations, when testing NQTLs, the term “predominant” [...]

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Treasury, DOL and HHS Issue Landmark Mental Health Parity Proposed Rule

by , and | Aug 8, 2023 | , ,

The US Departments of the Treasury, Labor, and Health and Human Services (the Departments) recently issued much-anticipated proposed regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA) to better ensure that health plans allow access to mental health or substance use disorder benefits as easily as medical or surgical benefits. The proposed regulations reiterate the Departments’ focus on mental health parity and underscore the importance of compliance for health plan sponsors. They also come after many plans have been subject to audit by the Departments which focused heavily on MHPAEA compliance, leaving plan sponsors frustrated at the lack of guidance and inconsistent application of MHPAEA.

Read more here.



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Mental Health Parity, Quantitative Treatment Limitations, Employee Assistance Plans and the End of the COVID-19 Emergency

by , , and | Mar 29, 2023 | , ,

The Biden administration has announced its intention to end the COVID-19 National Emergency (NE) and the COVID-19 Public Health Emergency (PHE) on May 11, 2023 (read our series introduction for more information). Among other things:

  • The NE and the PHE modified the rules governing financial requirements and quantitative treatment limitations under the Mental Health Parity and Addiction Equity Act (MHPAEA). The end of the NE and the PHE will require modifications to group health plans’ and health insurance issuers’ MHPAEA testing as it relates to financial requirements and quantitative treatment limits. The NE and the PHE also affect the design and operation of some employee assistance plans (EAPs).
  • The NE and the PHE allowed plan sponsors to expand coverage under excepted benefit EAPs in certain respects without risking their status as the Health Insurance Portability and Accountability Act (HIPAA)-excepted benefits.

MHPAEA 

MHPAEA requires that the financial requirements (such as coinsurance and copays) and quantitative treatment limits (such as visit limits) imposed on mental health or substance use disorder (MH/SUD) benefits cannot be more restrictive than the predominant financial requirements and treatment limitations that apply to substantially all medical/surgical benefits in a particular benefit classification. During the public health emergency period, group health plans and health insurance issuers were permitted to disregard certain items and services related to testing for the detection of SARS-CoV-2, the virus that causes COVID-19, when performing the “substantially all” and “predominant” tests. Absent this relief, the costs of covering COVID-19 testing items and services without cost-sharing would be the amounts allocated to medical/surgical benefits, thereby putting group health plans and health insurance issuers at risk of running afoul of MHPAEA quantitative treatment limits.

From and after the end of the PHE, group health plans and health insurance issuers must include the cost of covering COVID-19 tests, either diagnostic or over-the-counter, or testing-related services, when calculating MHPAEA quantitative treatment limits.

Action Items: Employers should revisit their MHPAEA compliance testing to ensure that the coverage of COVID-19 tests is properly accounted for in applying the relevant quantitative treatment limits. There is, however, no longer a requirement that a group health plan or health insurance issuer cover these services without charge.

EMPLOYEE ASSISTANCE PLANS

The end of the NE and the PHE could have various impacts on EAPs depending on the specific plan design. Employers may, for example, see a spike in the need for mental health support that could be met through EAP services. While the pandemic may be winding down, the mental health impacts of the past three years may continue for by many employees. Employers may need to continue to offer mental health services and resources through their EAPs, and potentially explore expanding mental health services through an EAP or otherwise, to support employees who are struggling with anxiety, depression or other mental health issues related to the pandemic.

Particular attention is required in the case of excepted benefit EAPs. Excepted benefit EAPs do not provide minimum essential coverage for Affordable Care [...]

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4 Tips to Help Benefits Plans Achieve Mental Health Parity

by | Nov 20, 2020 | ,

As federal benefits regulators turn their focus toward plans’ mental health offerings and California lawmakers expand plans’ obligations in that area, now is a great time for employers to ensure their plan approaches mental health treatment the same way as traditional medical care.

In a recent article by Law360, McDermott partner Judith Wethall helps explain the importance of mental health parity in benefits plans.

Access the article.



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Use a Checklist to Avoid LGBTQ Discrimination in Your Benefits Programs

by | Jul 21, 2020 | , , ,

The US Supreme Court ruled June 15 in Bostock v. Clayton County, Ga. that the prohibition against sex discrimination in the workplace under Title VII of the Civil Rights Act covers sexual orientation and gender identity. Title VII applies to employers with 15 or more employees, including part-time and temporary workers.

Following the decision, benefits experts advise that employers review their benefits programs to ensure that lesbian, gay, bisexual, transgender and queer (LGBTQ) employees are treated equally. Employers can use a checklist to find and correct discriminatory language and practices, and thereby reduce the likelihood of being sued under Title VII or other statutes that provide employees with sexual-orientation and gender-identity protections.

Access the full article.



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Final Regulations on the Mental Health Parity and Addiction Equity Act of 2008 and New Affordable Care Act FAQs

by | Nov 22, 2013 |

Final regulations have been issued implementing the Mental Health Parity and Addiction Equity Act of 2008 (Act). The Act generally requires group health plans (or health insurance coverage offered in connection with such a plan) to provide parity between medical and surgical benefits and mental health and/or substance use disorder benefits. Insurers and employers will be required to evaluate the design of their mental health and substance use disorder benefits to ensure that they comply with the final regulations.

To read the full article, click here.



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