On February 10, 2021, group health plan sponsors were given instructions to comply with new documentation requirements under the Mental Health Parity and Addiction Equity Act (MHPAEA). Specifically, group health plans offering both medical and surgical (M/S) benefits and mental health and substance use disorder (MH/SUD) benefits that impose non-quantitative treatment limitations (NQTLs) must conduct and document a detailed comparative analysis of the design and application of the NQTLs (NQTL Analysis). Such NQTL Analysis must be provided to the Departments of Health and Human Services (HHS), Labor (DOL), or Treasury (collectively, the Agencies), as well as plan participants and state authorities, upon request.
For context, an NQTL is any restriction on the scope or duration of a treatment or service that is not expressed numerically. Examples of NQTLs include prior authorization requirements, standards for provider admission to participate in a network, and out-of-network reimbursement rates (plan methods for determining usual, customary, and reasonable charges). We expect that these new requirements will affect most group health plans, and we have already seen clients receive letters from the DOL requesting information and NQTL Analyses under the new requirements.
For self-insured group health plans, the obligation to prepare an NQTL Analysis falls on the plan sponsor. Due to the complexity of preparing an NQTL Analysis, we expect that most sponsors will look to their third-party administrators to prepare the NQTL Analysis.
For fully-insured group health plans, plan sponsors will likely be able to rely on the carrier to prepare the NQTL Analysis.
Plan sponsors should keep in mind that failure to comply with the MHPAEA’s requirements can result in penalties of up to $110 per day for failure to furnish documentation on request, IRS excise taxes of $100 per day, public disclosure of the plan’s noncompliance, and potential litigation.
This article provides an in depth review of the requirements of an NQTL Analysis and several important action items and next steps for plan sponsors.
Comparative Analysis Requirements
The Consolidated Appropriations Act, 2021, amended the MHPAEA to require health plans and issuers to make certain information related to their MHPAEA compliance available to the Agencies upon request, including:
- specific plan or coverage terms or other relevant terms regarding the NQTLs and a description of all M/S benefits and MH/SUD benefits to which each such term applies in each respective benefits classification;
- factors used to determine that the NQTLs will apply to MH/SUD benefits and M/S benefits;
- evidentiary standards used for the factors identified, when applicable, provided that every factor should be defined, and any other source or evidence relied upon to design and apply the NQTLs to MH/SUD benefits and M/S benefits;
- comparative analyses demonstrating that the processes, strategies, evidentiary standards, and other factors used to apply the NQTLs to MH/SUD benefits, as written and in operation, are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, and other factors used to apply the NQTLs to M/S benefits in the same benefits classification; and
- the specific findings and conclusions reached by the plan or issuer, including any results of the analyses that indicate that the plan or coverage is or is not in compliance with the MHPAEA requirements.
Based on Agency guidance, the NQTL Analyses must include a “robust discussion” of all of the following elements:
- A clear description of the specific NQTL, plan terms, and policies at issue.
- Identification of the specific MH/SUD and M/S benefits to which the NQTL applies within each benefit classification and a clear statement as to which benefits identified are treated as MH/SUD and which are treated as M/S.
- Identification of any factors, evidentiary standards or sources, or strategies or processes considered in the design or application of the NQTL and in determining which benefits, including both MH/SUD benefits and M/S benefits, are subject to the NQTL. Analyses should explain whether any factors were given more weight than others and the reason(s) for doing so, including an evaluation of any specific data used in the determination.
- To the extent the plan or issuer defines any of the factors, evidentiary standards, strategies, or processes in a quantitative manner, it must include the precise definitions used and any supporting sources.
- The analyses, as documented, should explain whether there is any variation in the application of a guideline or standard used by the plan or issuer between MH/SUD and M/S benefits and, if so, describe the process and factors used for establishing that variation.
- If the application of the NQTL turns on specific decisions in administration of the benefits, the plan or issuer should identify the nature of the decisions, the decision maker(s), the timing of the decisions, and the qualifications of the decision maker(s).
- If the plan’s or issuer’s analyses rely upon any experts, the analyses, as documented, should include an assessment of each expert’s qualifications and the extent to which the plan or issuer ultimately relied upon each expert’s evaluations in setting recommendations regarding both MH/SUD and M/S benefits.
- A reasoned discussion of the plan’s or issuer’s findings and conclusions as to the comparability of the processes, strategies, evidentiary standards, factors, and sources identified above within each affected classification, and their relative stringency, both as applied and as written. This discussion should include citations to any specific evidence considered and any results of analyses indicating that the plan or coverage is or is not in compliance with the MHPAEA.
- The date of the analyses and the name, title, and position of the person or persons who performed or participated in the comparative analyses.
Plans should be prepared to provide documents that support the NQTL Analysis and conclusions of the NQTL Analysis. However, the necessary supporting information will vary depending on the type of NQTL and the processes, strategies, evidentiary standards, and other factors used by the plan.
Action Items & Next Steps
MHPAEA compliance (particularly concerning NQTLs) has been a high enforcement priority for the DOL in recent years, and this trend is showing no signs of slowing down. We recommend plan sponsors take the following steps to assess their plan’s MHPAEA compliance:
- Plan sponsors should proactively contact their insurance carriers (in the case of fully-insured plans) and third-party administrators (in the case of self-insured plans) to ensure that an NQTL Analysis has been prepared and confirm the steps taken to develop and document the NQTL Analysis.
- Plan sponsors should consider requesting a copy of the NQTL Analysis and supporting documentation from the insurance carrier or third-party administrator to confirm that it complies with the new rules.
- Plan sponsors should also develop a clear process for responding to requests from the Agencies to produce the NQTL Analysis and other compliance-related information.
- Finally, plan sponsors should work with their ERISA counsel and other advisors to develop an internal compliance plan and ensure continued adherence to the MHPAEA’s new (and growing) requirements.
More information about MHPAEA compliance can be found on the DOL’s website and Self-Compliance Tool. If you have any questions about this legal update, please reach out to the MMM Employee Benefits & Executive Compensation Team.