Enhanced Mental Health Parity Requirements under the Consolidated Appropriations Act

The year-end COVID-19 relief legislation, signed into law on December 27, 2020, included enhanced mental health parity requirements for employers under the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). The section titled “Strengthening Parity in Mental Health and Substance Use Disorder Benefits” (MHSUD) requires employer health plans and insurers to perform comparative analyses to ensure their compliance with the non-quantitative treatment limits (NQTLs) on mental or substance use disorder benefits.

The MHPAEA requires health plans and insurers to provide mental health benefits that are equal to the medical and surgical benefits offered to plan participants. However, mental health parity issues often remain in some employer plans because DOL is statutorily precluded from directly enforcing MHPAEA against insurance companies who are often adjudicate claims for self-insured employers. The new requirements aim to close the payment gaps that remain between mental health and medical and surgical benefits.

Beginning February 10, 2021, the new legislation requires employer health plans and health insurance insurers to:

• Perform and document a comparative analysis of the design and application of the NQTLs that apply to medical/surgical and MHSUD benefits.
• Provide the analysis and applicable information to federal and state authorities, upon request, within 45 days after enactment. The analyses must include:
  1. The terms of each NQTL; and
  2. The factors used to determine whether the NQTLs apply to MHSUD benefits or medical/surgical benefits as well as the evidentiary standards used to design and apply the NQTLs to specific benefits. These standards cannot be more stringent than the limitations on medical or surgical benefits.
• Provide the enforcing agency with further information upon request. In cases where the information provided does not meet the above requirements, the employers and insurers may be required to submit a corrective action plan. If compliance is still not met, enrollees must be notified of the failure to comply.

Takeaway: The enhanced mental health parity requirements will increase the burden on employers to ensure their health plans and third-party administrators are compliant with MHPAEA. The U.S. Department of Labor recently updated its online self-compliance tool to assist employers. Employers should follow-up with their third-party administrators to ensure they are prepared to demonstrate their health benefits meet the compliance standards.