Written by Juliana Reno, Lisa A. Tavares, Ryann M. Aaron, George E. Constantine and Janice M. Ryan from Venable LLP on October 24, 2024
The government recently issued final rules on the Mental Health Parity and Addiction Equity Act (MHPAEA). The rules require most employers—including most nonprofits—to take action by January 1, 2025.
Background
An employer’s group health plan is not required to offer mental health or substance use disorder (MH/SUD) benefits. However, if the employer’s plan does offer MH/SUD benefits, those benefits must be in parity with the plan’s medical and surgical (Med/Surg) benefits. The new rules require plans to have a document—a “comparative analysis”—that assesses whether there is parity with respect to the plan’s “nonquantitative treatment limitations” (NQTLs). For example, it would be problematic if a plan required pre-authorization for inpatient admissions for mental health or substance abuse treatment but not for other treatments, like back surgery.
Applicability
- MHPAEA applies only to plans that offer Med/Surg benefits and are not “excepted benefit” plans. In general terms, this means MHPAEA applies to major medical plans, not to stand-alone vision or dental plans, and not to account-based plans like health flexible spending accounts.
- If an employer’s major medical plan is fully insured: The insurance company is responsible for preparing the NQTL comparative analysis. The employer will be able to rely on that analysis and will not have to prepare its own. However, because employers are required to monitor their service providers, employers must inquire as to the status of the analysis and should request a copy.
- If an employer’s major medical plan is self-funded: The employer is responsible for the NQTL comparative analysis. Few if any employers are able to conduct the analysis—the employer will need to engage a service provider and will also need the cooperation of their third-party administrator. Employers who have not yet obtained the required analysis (or have not engaged a service provider to prepare the analysis) should contact benefits counsel as soon as possible.
Fiduciary Certification
Under the final rules, at least one plan fiduciary must certify that he or she has engaged in a prudent process to select a qualified service provider to prepare the NQTL comparative analysis. The fiduciary must also certify that the fiduciary has engaged in a process to monitor the service provider’s performance. The process for the fiduciary should include, at a minimum, asking questions about the analysis and discussing it with the service provider to understand the findings and conclusions. The fiduciary should ensure that the service provider represents that the analysis complies with MHPAEA. For calendar-year plans, the fiduciary certification is required by January 1, 2025. For non-calendar year plans, the fiduciary certification is required as of the first day of the plan year that begins in 2025.
Time Frames
The final rules establish new—and very short—time frames for plans to respond to the government’s request for an NQTL comparative analysis. A plan must provide the analysis to the government within 10 business days after such a request. If the government deems the analysis to be insufficient, the government will request additional information, which the plan must provide within 10 business days. If the government concludes that the plan has failed to comply with the NQTL comparative analysis requirements, then within 45 calendar days, the plan must provide the government with a corrective action plan and an additional comparative analysis. If the government finally determines that the plan is non-compliant, then within 7 business days, the plan must notify all plan participants and beneficiaries of that determination.
Key Takeaways
- Employers with fully insured major medical plans should contact the insurance company to request a copy of the NQTL comparative analysis
- Employers with self-funded major medical plans who have not yet conducted or arranged for an NQTL comparative analysis should contact their benefits counsel as soon as possible
- Employers who have already obtained an NQTL comparative analysis should:
- Contact the service provider who performed the analysis to discuss whether it satisfies the requirements under the final rules
- Review the analysis and engage in a discussion with the service provider to understand the findings and conclusions
- Ensure that at least one plan fiduciary certifies in writing that the fiduciary engaged in a prudent process to select the service provider and has monitored the service provider’s performance
