Biden Administration Issues Proposed Reg to Clarify and Enforce Mental Health Parity Requirements (August 3, 2023) - McDermott+

Biden Administration Issues Proposed Reg to Clarify and Enforce Mental Health Parity Requirements (August 3, 2023)

Biden Administration Issues Proposed Reg to Clarify and Enforce Mental Health Parity Requirements

McDermottPlus is pleased to bring you Regs & Eggs, a weekly Regulatory Affairs blog by Jeffrey Davis.

Click here and check the box at the bottom of the page to subscribe to future blog posts.

August 3, 2023 – Another week, a lot more regs! Last week, the US Departments of Health and Human Services, Treasury and Labor (the Departments) released a proposed reg related to mental health parity requirements for health plans. This week, the Centers for Medicare & Medicaid Services released annual final payment regs for different facility types that will become effective on October 1, 2023 (the start of fiscal year 2024). The largest of these regs is the Medicare Hospital Inpatient Prospective Payment System final reg, which was released Tuesday afternoon. We are still digging our way through that reg, and Regs & Eggs will have that covered next week. In the meantime, this week’s Regs & Eggs focuses on the mental health parity proposed reg. And to help me break that one down, I’m bringing in my colleague, Rachel Stauffer.

The Mental Health Parity and Addiction Equity Act (MHPAEA), which passed in 2008, prohibits health plans from implementing more restrictive coverage policies for mental health and substance use disorder services than for medical or surgical services. The MHPAEA includes both quantitative and non-quantitative requirements. Quantitative requirements are related to patient cost-sharing arrangements (deductibles, co-payments, coinsurance, annual or lifetime dollar limits), and non-quantitative requirements include treatment limitations such as prior authorization. The law doesn’t require health plans to cover mental health services, but if plans do cover these services, they must treat them the same way they treat other services.

Since the MHPAEA passed, subsequent laws have expanded the types of health plans that are subject to the mental health parity requirements. Although most plans now must meet these requirements, the Departments have heard from diverse stakeholders that some health plans are not abiding by the requirements and are putting into place more restrictive measures for mental health and substance use disorder services. In the Departments’ view, these restrictive policies can make it more difficult and expensive for patients to access mental health and substance use disorder treatment. With mental health and substance use disorders on the rise, the Departments wish to ensure that the MHPAEA is working as intended.

To that end, the Departments propose to take the following steps:

  • Clarify definitions. The Departments would clarify various definitions found within the MHPAEA to ensure that stakeholders know with certainty what constitutes mental health benefits versus medical and surgical benefits. The Departments also would state, as a fundamental rule, that “A group health plan that provides both medical/surgical benefits and mental health or substance use disorder benefits may not apply any financial requirement or treatment limitation to mental health or substance use disorder benefits in any classification that is more restrictive than the predominant financial requirement or treatment limitation of that type applied to substantially all medical/surgical benefits in the same classification.” The proposed reg offers specific examples of the types of quantitative policies that are and are not allowed.
  • Provide additional information related to non-quantitative treatment limitations. Since non-quantitative policies can be trickier to define, the Departments include a non-exhaustive list of these policies, including the following:
    • Medical management standards (such as prior authorization) limiting or excluding benefits based on medical necessity or medical appropriateness, or based on whether the treatment is experimental or investigative
    • Formulary design for prescription drugs
    • Preferred providers or network tier design
    • Provider Network Standards Plan methods for determining out-of-network rates, such as allowed amounts; usual, customary and reasonable charges; or application of other external benchmarks for out-of-network rates
    • Refusal to pay for higher-cost therapies until it can be shown that a lower-cost therapy is not effective (also known as fail-first policies or step therapy protocols)
    • Exclusions based on failure to complete a course of treatment
    • Restrictions based on geographic location, facility type, provider specialty and other criteria that limit the scope or duration of benefits for services provided under the plan.

If health plans wish to design and apply a non-quantitative treatment limitation, the Departments propose to require health plans to collect and evaluate relevant data to assess the impact of the policy on access to mental health and substance use disorder benefits and medical/surgical benefits, and then analyze whether the limitation, in operation, complies with the MHPAEA.

  • Strengthen enforcement of the MHPAEA. Based on the aforementioned data assessment, the health plan must come up with a strategy to correct any deficiencies it finds in the treatment limitation. Specific actions a health plan could take include contracting with a broad range of available mental health and substance use disorder providers, expanding telehealth arrangements as appropriate to manage regional shortages, helping enrollees find in-network providers, ensuring that the plan’s service providers reach out to treating professionals and facilities to see if they will enroll in the network, and ensuring that network directories are accurate and reliable.

The Departments would reserve the right to request this analysis. If the Departments find a health plan to be out of compliance with the MHPAEA, they would give the health plan 45 days to develop a corrective action plan. If the Departments, upon receiving the corrective action plan and following up with the health plan, make a final determination that the health plan is not in compliance with the MHPAEA, the health plan would be required to notify all participants and enrolled beneficiaries that the plan had been determined to not be in compliance. This notice must state the following: “Attention! Department of the Treasury has determined that [insert the name of group health plan] is not in compliance with the Mental Health Parity and Addiction Equity Act.”

While the health plan would still be expected to come into compliance after issuing this notice, the Departments do not propose any financial penalties or other long-term consequences for non-compliance. The Departments may not have the legal authority to issue such penalties.

While the reg does not make any specific new telehealth proposals, the Departments reiterate that they expect plans to treat telehealth benefits the same way they treat those benefits when provided in person. The Departments also seek comment on how telehealth can be used to enhance access to mental health and substance use disorder treatment. The questions they ask in this comment solicitation are in response to the flexibilities provided during the COVID-19 public health emergency that ended in May 2023. Telehealth stakeholders should evaluate their ability to comply with mental health and substance use disorder requirements in a virtual environment and consider commenting accordingly.

All in all, this proposed reg is a signal that the Biden Administration is committed to enforcing the mental health parity requirements and cracking down on what it believes to be non-compliance on the part of health plans. If this new reg is finalized, the question on some stakeholders’ minds may be whether the reg has teeth without financial penalties. We will have to wait and see!

Another question this reg could raise is how to address other types of services that health plans might try to make more restrictive. In other words, the issue of parity isn’t limited to mental health and substance use disorder services versus medical services. There are many examples of patients with various diseases or conditions that could find themselves in plans with limited coverage for the particular medication or treatment that the patient may need. A perceived lack of parity in healthcare coverage in general could be something that either the Biden Administration or Congress explores further.

Until next week, this is Jeffrey (and Rachel) saying, enjoy reading regs with your eggs.


For more information, please contact Jeffrey Davis. To access the full archive of Regs & Eggs, visit the American College of Emergency Physicians.

To subscribe to Regs & Eggs, please CLICK HERE.