Final Rule Issued Under Mental Health and Substance Use Disorder Coverage

On September 9, 2024, the long-awaited final rule regarding the Mental Health Parity and Addiction Equity Act (“MHPAEA”) was officially released. This legislation prevents group health plans that offer mental health and substance use disorder (“MH/SUD”) benefits from imposing stricter coverage limitations on these benefits than those applied to medical and surgical (“M/S”) benefits. Additionally, the Consolidated Appropriations Act of 2021 (“CAA”) mandates that group health plans conduct and document comparative analyses of nonquantitative treatment limitations (“NQTLs”) to ensure they comply with MHPAEA standards. The new rule requires plan sponsors to assess participant access to MH/SUD benefits and, if necessary, adjust their plans to enhance access.

Many provisions of this final rule will take effect for plan years starting January 1, 2025, while certain requirements that necessitate significant changes in plan administration will be delayed until plan years beginning on or after January 1, 2026.

It is crucial for plan sponsors to understand the extensive compliance obligations introduced by the final rule and the new requirement for fiduciaries to certify that they are acting prudently in adhering to MHPAEA standards.

Key Changes Effective in 2025

The final rule introduces several important changes that will be effective for plan years starting January 1, 2025:

• Defining MH/SUD Conditions: Group health plans will be required to categorize whether a condition or disorder falls under mental health or substance use disorder, in line with the most recent editions of the International Classification of Diseases or the Diagnostic and Statistical Manual of Mental Disorders (“DSM”).
• Enhancing Access to MH/SUD Care: Plans must gather and analyze data to identify any significant disparities in access to MH/SUD benefits compared to M/S benefits due to NQTL applications. Findings from this analysis will pinpoint areas needing updates for compliance. Plans cannot utilize restrictive medical management techniques or narrow networks that hinder access to MH/SUD benefits relative to M/S benefits.
• NQTL Comparative Analysis Requirement: Plans are now obligated to conduct a comparative analysis to assess the impact of NQTLs on both the written and operational aspects of their plans. This includes evaluating standards related to network composition, reimbursement rates for out-of-network services, and utilization and management strategies.
• Clarification of Key Terms: The final rule clarifies the definitions of medical/surgical benefits, mental health benefits, and substance use disorder benefits by eliminating references to state regulations. Consequently, plans cannot use state insurance requirements to justify any limitations on their benefits. The rule also introduces definitions for relevant terms related to NQTL design and application.
• Elimination of the MHPAEA Opt-Out: The final rule removes the option for state and local government group health plans to opt out of MHPAEA compliance as of December 29, 2022.

Changes Effective in 2026

Some provisions of the final rule will not take effect until plan years beginning on or after January 1, 2026. These include:

• Meaningful Benefits Standard: If a plan offers any benefits for mental health or substance use disorders within a specific classification, it must provide meaningful benefits, including core treatments, across all classifications where core treatments are available for M/S conditions.
• Prohibition on Discriminatory Practices: Plans will be prohibited from employing factors and evidentiary standards that discriminate against MH conditions and SUDs in the design or application of NQTLs.
• Outcomes Data and Revised NQTL Standards: Plans must ensure that NQTLs are not more restrictive for MH/SUD benefits than for M/S benefits within the same classification. The rule introduces two metrics to assess NQTL restrictiveness: design/application and data evaluation.

The Departments plan to release further guidance and update the MHPAEA self-compliance tool to provide additional clarity on the data collection and evaluation required to meet comparative analysis obligations. Plan sponsors are encouraged to continue following the comparative analysis requirements set forth in the CAA and the final rule.

Key Components of NQTL Comparative Analysis

According to the final rule, a group health plan cannot impose any NQTL that is more restrictive on MH/SUD benefits than the predominant NQTL applied to substantially all M/S benefits in the same classification.

The NQTL comparative analysis must include the following elements:

1. A description of the NQTL, specifying which benefits are subject to it.
2. Identification and definition of the factors and evidentiary standards used in designing or applying the NQTL.
3. An explanation of how these factors influence the design or application of the NQTL.
4. Demonstration of comparability and stringency regarding the design and application of the factors and evidentiary standards, including a comparison of how the NQTL affects MH/SUD and M/S benefits.
5. A demonstration of comparability and stringency in practice, including required data, evaluations of that data, explanations for any significant access differences, and descriptions of actions taken to address these differences.
6. Findings and conclusions.

While the proposed rule included mathematical tests for determining compliance with the “substantially all” and “predominant” tests, these were not included in the final rule, likely due to the complexities involved and potential legal challenges.

Plans must maintain a current NQTL Comparative Analysis report that can be provided within ten business days of a request from the Departments of Labor, Health and Human Services, the Treasury, or any plan participant. Given that the comparative analysis requirement has been in effect since February 2021, extensions are unlikely to be granted.

Consequences of Noncompliance

If a group health plan is deemed noncompliant with NQTL comparative analysis requirements, the relevant Department may prevent the plan from enforcing the NQTL for MH/SUD benefits until it demonstrates compliance or rectifies the violation. Upon receiving a final noncompliance determination, plans must inform all participants and beneficiaries, along with service providers involved in the claims process, within seven business days. Affected service providers must evaluate whether claims adjudication adjustments are necessary to align with the final determination.

Additional Fiduciary Responsibilities for ERISA Plans

For ERISA-covered plans, the comparative analysis must be certified by a fiduciary confirming that a prudent process was followed in selecting a service provider for conducting and documenting the analysis related to any NQTLs.

Self-funded group health plans are accountable for creating the NQTL Comparative Analysis, while insurers typically prepare the analysis for fully insured plans. However, this analysis is not usually included in the administrative service agreements between third-party administrators and self-funded plans. Often, third-party administrators may decline to conduct the comparative analysis, which can leave self-funded plan fiduciaries seeking other service providers to complete the task.

Selecting a compliant service provider can be challenging, as not all will perform a thorough analysis that meets final rule requirements. Some providers may not certify that their analyses comply with MHPAEA standards. To meet fiduciary obligations, plans should engage service providers willing to certify their compliance. If a provider is unable to provide this certification, the plan fiduciary should consult experienced employee benefits counsel to ensure the report’s compliance. Our firm is equipped to analyze the adequacy of comparative analyses performed by third parties and assess overall plan compliance with MHPAEA requirements.