New Proposed MHPAEA Rule Builds on NQTL Comparative Analysis Standards

On July 25, 2023, the U.S. Departments of Labor, Treasury, and Health and Human Services (the “Tri-Agencies”) released long awaited proposed regulations (the “Proposed Rule”) and a Technical Release, which together propose new requirements for comparative analyses of nonquantitative treatment limitations (“NQTL”) under the Mental Health Parity and Addiction Equity Act of 2008 (“MHPAEA”).  On the same day, the Tri-Agencies released their annual report to Congress on implementation of MHPAEA, as required under the Consolidated Appropriations Act, 2021 (“CAA 2021”). 

The Tri-Agencies are soliciting comments on the Proposed Rule, which will be due sixty days after the Proposed Rule’s forthcoming publication in the Federal Register, as well as comments on the Technical Release, due on October 2, 2023. 

The Proposed Rule

The Proposed Rule provides additional clarification regarding the standards the Tri-Agencies will apply in reviewing NQTL comparative analyses under MHPAEA.  Much of this builds on standards already applied – either expressly or tacitly – by the Tri-Agencies when reviewing comparative analyses submitted to date.

The most significant developments in the Proposed Rule are:

1. Requirement for Outcomes Data – The Proposed Rule now explicitly acknowledges that data analysis is mandatory for NQTL comparative analyses to demonstrate “comparability and stringency in operation.” Earlier MHPAEA guidance stated that “similar or dissimilar outcomes between [mental health and substance use disorder (“MH/SUD”)] benefits and medical/surgical [(“M/S”)] benefits ... are NOT determinative of compliance,” but noted that disparate outcomes could be a “warning sign” of “potential operational parity noncompliance.” The new Proposed Rule makes clear that analysis of “relevant data” is now a required part of a comparative analysis.
   

   Although the Proposed Rule does not specifically define “relevant data,” it states that relevant data includes, but is not limited to, the number and percentage of claims denials and any other data required by state law or private accreditation standards.  In addition, as part of the Proposed Rule’s focus on network adequacy, relevant data for NQTLs related to network composition standards includes, but is not limited to, in-network and out-of-network utilization rates, network adequacy metrics, and provider reimbursement rates.  The Technical Release specifically solicits comments on how these categories of data should be considered in NQTL analyses regarding network adequacy.

   If the relevant data demonstrates “material differences” between access to MH/SUD benefits as compared to M/S benefits, “the differences will be considered a strong indicator” that the plan violates MHPAEA, and the plan must “take reasonable action to address the differences in access as necessary” and document the action taken.  The Proposed Rule then creates a “special rule” for relevant data for NQTLs related to network composition, which states that “material differences” between access to MH/SUD benefits and M/S benefits are violations, in operation, of MHPAEA.  However, the Proposed Rule also solicits comments on what circumstances could “properly mitigat[e] materially different access” data.
   
   

2. Applying the “predominant” and “substantially all” tests to NQTLs – The Proposed Rule brings the NQTL requirements more closely in line with the statutory MHPAEA requirement by applying to NQTLs the “predominant” and “substantially all” tests that have been used for quantitative treatment limitations (“QTLs”). Specifically, the Proposed Rule would now require that an NQTL for MH/SUD benefits cannot be more restrictive, as written or in operation, than the predominant (most frequent) NQTL applied to substantially all (two-thirds) M/S benefits in the same classification.  The “predominant” and “substantially all” tests will be measured for NQTLs similarly to how they are measured for QTLs.
   
   
3. Comparability in Design and Application of NQTLs – The Proposed Rule makes clear that processes, evidentiary standards, or other factors for MH/SUD benefits must be comparable to, and applied no more stringently, than those for M/S benefits in both design and application. This concept was already implicit in the review of “as written” and “in operation” MHPAEA compliance, but it is now even more express in the Proposed Rule.
   
   
4. Standards Consistent with Generally Recognized Standards of Care – While the Proposed Rule retains flexibility in the standards applied, the Proposed Rule makes clear that, in distinguishing MH/SUD and M/S benefits, plans and issuers must apply standards consistent with generally recognized independent standards of current medical practice.
   
   
5. Specific Description, Definition, and Application of Factors, Sources, and Evidentiary Standards – The Proposed Rule clarifies the trend in Tri-Agency enforcement toward requiring greater specificity in definition of factors, sources, and evidentiary standards, including requiring in comparative analyses specific descriptions of thresholds applied, how and by whom decisions are made, and circumstances that warrant deviation from those standards.
   
   
6. Tight Timelines – The Tri-Agencies propose to codify in regulation the tight deadlines they have been applying for requests for plan comparative analyses – specifically, that no more than 10 business days will be allowed to provide comparative analyses or responses to insufficiency letters, and that extensions will be limited and left to the discretion of the enforcement agency.
   
   
7. Disclosures of Non-Compliance – The Proposed Rule also for the first time provides guidance on the content required for disclosures to members if a plan receives a final determination of non-compliance with MHPAEA. Such disclosures must include a disclosure that the plan is non-compliant, a summary of corrective changes and an explanation of how the beneficiary can get a claim re-processed.  Also, the Proposed Rule allows the Tri-Agencies to direct the plan or issuer not to impose the NQTL unless and until the plan and issuer demonstrates compliance or remedies the violation.

Technical Release

The Tri-Agencies issued their Technical Release concurrently with the public inspection version of the Proposed Rule to set out additional principles and solicit specific comments regarding the use of data in comparative analyses regarding network adequacy, as well as a “potential enforcement safe harbor” for network adequacy measurement under MHPAEA.

Building on the Proposed Rule, the Technical Release notes that the Tri-Agencies consider four categories of network adequacy-related data to be particularly relevant: out-of-network utilization rates; the percentage of in-network providers “actively submitting claims;” time and distance to access network providers; and reimbursement rates. The Tri-Agencies have solicited comments on how exactly those data categories should be considered in comparative analyses.

Additionally, the Technical Release noted that the Tri-Agencies “intend to create an enforcement safe harbor with respect to NQTLs related to network composition for plans and issuers that meet or exceed specified data-based standards identified in future guidance.”  Although this would be the first enforcement safe harbor of its kind, the network data called for in the Technical Release likely could be difficult to measure and track.  The Tri-Agencies noted that the safe-harbor criteria could include standards related to the categories of data previously found to be relevant, but the Tri-Agencies did not provide any concrete guidance as to what those criteria may be. They only noted that the yet-to-be-developed criteria would set a “high bar” and would be evaluated and updated on an ongoing basis.

Annual Report to Congress

The Tri-Agencies’ annual report to Congress on MHPAEA enforcement also provides useful guideposts for plans.  For one, the report notes that between February 2021 and July 2022, the Departments of Labor and Health and Human Services:

1. 1. issued more than 200 letters requesting comparative analyses for 740 NQTLs;
   2. issued more than 170 letters identifying insufficiencies in comparative analyses for more than 330 NQTLs;
   3. issued nearly 70 initial determinations finding that more than 90 NQTLs violated MHPAEA; and
   4. issued 8 final determination letters finding that 10 NQTLs violated MHPAEA.

The Tri-Agencies observed that “many comparative analyses remained deficient, even after multiple insufficiency letters,” indicating that the Departments of Labor and Health and Human Services remain active in their enforcement, and that plans that fail to have comparative analyses at the ready do so at their peril.

The Tri-Agencies also provided insight into areas of particular risk and enforcement.  These include:

1. 1. “Impermissible exclusions,” which the Tri-Agencies defined to mean “exclusions of ABA therapy to treat autism spectrum disorder, medication-assisted treatment and medications for opioid disorder, urine drug testing . . . , and nutritional counseling to treat mental health conditions such as eating disorders”;
   2. NQTLs related to network adequacy, particularly provider network composition and participation standards; and
   3. Prior authorization and concurrent review requirements, including “exclusions of specific treatments for certain conditions in the prescription drug classification.”

Upcoming Regulatory Activity

As plans continue to digest and comment on the Proposed Rule, Technical Release, and annual report, additional guidance from the Tri-Agencies may also be in the works.  The day after the Proposed Rule was released for public inspection, the Department of Labor’s Assistant Secretary for Benefits Security stated, during an American Bar Association webinar, that the Department was working on more guidance regarding NQTL analyses.  The Proposed Rule, Technical Release, and annual report, and potential additional forthcoming guidance demonstrate that MHPAEA compliance and enforcement remain front of mind for regulators and plans alike.