ErisaALERT 2014-01 Final Rule for Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA)

On November 8, 2013, the Departments of Labor, Health and Human Services, and the Treasury (the Departments) issued final rules on the Mental Health Parity Addiction Equity Act of 2008 (MHPAEA). Concurrently, the Departments posted Frequently Asked Questions related to the final rule.  There is also a question relating to MHPAEA in the latest Frequently Asked Questions Part XVIII. The final rules apply to

• Grandfathered and non-grandfathered group health plans and health insurance issuers offering group health coverage
• Health insurance issuers offering individual health insurance coverage both through the Health Insurance Marketplace (Exchanges) and outside the Marketplace
• Small employers (generally defined as one that has 50 or fewer employees)

In other words, the final rule applies to most employment-based group health plans and to individual health plans with plan years beginning on or after July 1, 2014. Until then, plans and issuers must continue to comply with the interim regulations (see ErisaAlert 2009-04).

MPHAEA does not require plans to offer coverage for mental health/substance abuse (MH/SA) disorders. However, plans that provide coverage for MH/SA disorders may not impose more restrictive financial requirements or quantitative treatment limits than the predominant provisions that apply to medical/surgical benefits available under the plan. “Predominant” is not a subjective term. The interim regulations established a mathematical test (quantitative parity analysis) for the definition of predominant.

A temporary exemption is available for group health plans if the cost of compliance exceeds two percent in the first year and one percent for each subsequent year. Plans that claim the exemption must send a notice to plan participants and beneficiaries and to the appropriate federal agency. The exemption is not effective until 30 days after the notice has been sent.

The Final Rules incorporate most of the interim rules and provide clarifications regarding parity, terminology, non-quantitative treatment limits (NQTLs), the increased cost exemption and employee assistance programs.

Parity

The interim final regulations required a parity analysis on a classification-by-classification basis in six specific classifications of benefits: inpatient in-network; inpatient out-of-network; outpatient in-network; outpatient out-of-network; emergency care and prescription drugs. The Departments established a safe harbor that allows plans and issuers to separate office visits from other outpatient services (sub-classifications) for the purpose financial requirements and treatment limits.

The final regulations maintain the six treatment classifications and sub-classifications for office visits established by the interim final regulations. The final regulations also allow for a sub-classification of tiered networks with more generous cost-sharing for preferred providers. Financial requirements, treatment limits and network tiers must apply without regard to whether the treatment is behavioral or medical/surgical.

Terminology

The final regulations make minor, technical changes to the meaning of medical/surgical benefits, mental health benefits and substance abuse disorder benefits provided in the interim final regulations. The final regulations expand the definitions to include benefits for items as well as services. The final regulations also clarify that medical conditions, surgical procedures, mental health conditions and substance use disorders are defined under the terms of the plan and in accordance with applicable federal and state law.

Nonquantitative Treatment Limits (NQTLs)

NQTLs are limits based on scope and duration (for example, prior authorization, medical necessity or case management) and not frequency or number of treatment sessions. The interim final regulations contained an exception to the NQTL requirements that allowed for differences if recognized clinically appropriate standards of care permit. Commenters raised concerns that this exception may be subject to abuse and recommended that the Departments set clear guidelines as to what constitutes “recognized clinically appropriate standards of care”. In consideration of these comments, the Departments have removed this specific exception. The Departments believe that the underlying rules are sufficient to give plans and issuers flexibility to take into account clinically appropriate standards of care. Such standards are not subject to mathematical parity. However, NQTL standards for behavioral benefits must be comparable to and not more stringent than those with respect to medical/surgical benefits.

The Departments also added two additional examples of NQTLs to the illustrative list: network tier design and restrictions based on geographic location, facility type, provider specialty and other criteria that limit the scope or duration of services provided under the plan.

Increased Cost Exemption

The final regulations provide a change in the manner of calculating costs attributable to MHPAEA to accommodate year-to-year fluctuations that small employers may experience. Plans and issuers must provide a notice to participants and beneficiaries, the departments and the state agency of the plan’s exemption from parity requirements before claiming the cost exemption.

MPHAEA does not apply to retiree-only plans.

Employee Assistance Programs (EAPs)

The final regulations announced that the Departments will amend the excepted benefit regulations to include EAPs if the EAP does not provide significant benefits in the nature of medical care or treatment. This means that EAPs that qualify as excepted benefits will not be subject to MPHAEA regulations. This guidance was issued in the form of proposed regulations on Christmas Eve. We will discuss the proposed regulations in another ErisaALERT.

Employer To-Do List

• If you are not claiming the cost exemption, ensure that you (or your insurer) has conducted the quantitative parity analysis for each of the six classifications of benefits.
• If claiming the cost exemption, become familiar with the cost calculation methodology and notice requirements.
• Meet with your behavioral benefits insurer to review compliance efforts in light of the final regulations.
• Determine whether any variations in NQTLs based on the exception available under the interim final rule continue to be permissible now that the exception has been eliminated in the final regulations.
• Determine if your EAP is an excepted benefit.

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