The Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008 is a federal law that prevents group health plans and health issuers that provide mental health and/or substance use benefits from imposing less favorable limitations on those benefits when compared to similar medical/surgical benefits. The law originally applied to group health plans and group health insurance coverage and was later expanded to apply to individual health insurance coverage.
Although group health plans and health insurers made quantitative design changes over the years to comply with the MHPAEA, the COVID-19 pandemic highlighted that these changes often did not translate into operations. As the demand for mental health and substance use disorder benefits have grown exponentially, plan participants are discovering that the changes made to their group health plan coverage is lacking.
In response to the crisis and to gain a better handle of the situation, the Biden-Harris Administration amended the MHPAEA through the Consolidated Appropriations Act (CAA) of 2021 to require plan sponsors to take a closer look at the operational component of their plans. The amendment requires that plan sponsors perform and document a comparative analysis of non-quantitative treatment, such as medical necessity determinations, pre-certification requirements, and the criteria used to designate medical providers as in-network providers.
The comparative analysis must:
- Identify the non-quantitative treatment limitations, the benefits to which they apply, and the factors and evidentiary standards or strategies considered in the design or application of the limitations.
- Explain whether there is any variation in applying a guideline or standard between mental health/substance use disorder benefits and medical/surgical benefits, and if so, why.
The requirement to perform the comparative analysis had an effective date of February 10, 2021. The law requires the analysis be provided to the DOL upon request, as well as to any plan participants that ask to see it.
Although the DOL has not historically used its enforcement powers to pursue potential violations of mental health parity coverage requirements, the DOL’s Employee Benefits Security Administration (EBSA) confirmed that the Biden administration is making mental health parity enforcement a priority. In the fall of 2021, the Acting Assistant Secretary for EBSA, Ali Khawar stated, “Plans and insurance companies cannot place special hurdles in the paths of workers and their families when they seek mental health and substance use disorder benefits. The law requires parity between these benefits and medical benefits. We are committed to vigorously enforcing the law’s requirement and making sure workers in need of help are treated fairly.”
On January 28, 2022, the Departments of Labor, Health and Human Services, and the Treasury issued a report on the MHPAEA to Congress indicating that health plans and health insurance issuers are failing to deliver parity for mental health and substance use disorder benefits to those they cover. The report also highlighted the departments’ recent emphasis on greater enforcement, guidance on how to correct those failures, and recommendations to strengthen consumer protections and enhance the departments’ enforceability. Additionally, the DOL has created a self-compliance tool and is beginning to issue audit requests asking for a comparative analysis.
Even more recently and going even further, President Biden vowed to “transform mental health and substance use disorder coverage.” To accomplish this and put more teeth into crack down efforts, he included $14.6 billion in DOL discretionary funding in his 2023 budget proposal unveiled to Congress on March 28, 2022. One area this additional funding would cover is the authorization to fine employee group health plans that cannot or will not offer proof that their mental health care and substance use disorder coverage meets federal requirements.
The additional budget is not necessarily a given, but with Congress expressing concern over mental health parity as well, it will likely propose the required legislation to enact Biden’s budgetary plans, including the $275 million set aside for a 10-year period of enforcement. The budget’s appendix states the funding would increase capacity for the agency to perform audits related to mental health and substance abuse (including investigating reimbursement rates as non-quantitative treatment limitations) and take action against non-compliant actors. These enhanced oversight and compliance efforts would increase the number of large group market health plans and issuers that are complying with the mental health parity requirements under the Mental Health Parity and Addiction Equity Act. Additionally, the budget includes authorization for EBSA to assess civil monetary penalties for parity violations.
The proposed budget also sets aside funding:
- For states to enforce mental health parity requirements
- To lower costs for federal employees, military veterans, and seniors
- For additional funding for community health centers
- To enhance state Medicaid reimbursement for mental health and substance use disorder programs
- For more funding to increase the number of mental health care providers serving those on Medicaid
The time for plan sponsors to act is now.
This means obtaining assurance from service providers that the plan complies with the federal mental health parity law and ensuring that non-quantitative treatment limitations comparative analysis documentation is readily available.
If you have questions about how to do this analysis and create the necessary documentation, we are happy to help. Contact us by email or call us directly at (410) 971-7910.
About the Authors:
Matthew B. Dubnansky, CPA, CGMA | Partner
Matt leads our national healthcare assurance and risk consulting practice. He is a forward thinking leader who works with plan sponsors across North America to better manage and oversee their plan benefit administration. He is also a published author and speaks on various topics at industry leading conferences. Matt provides clarity to simplify an otherwise complex healthcare system, focus to concentrate resources on what matters most, and actionable insights to optimize health plan administration.
Adam C. Meier, CPA, CEBS, GBA, RPA | Manager
Adam primarily provides consulting services to jumbo local and national self-funded health and welfare plans. He is an industry thought leader who serves on local boards and international committees for the International Society of Certified Employee Benefit Specialists. Adam has experience managing complex engagements and creating value for health and welfare plans by delivering proven solutions that mitigate operational and compliance risk, hold insurance companies accountable, and recover claim overpayments.