The Consolidated Appropriations Act, 2021 (the "CAA") was signed into law on December 27, 2020. The CAA imposes a substantial new requirement that a group health plan perform and document its compliance with the Mental Health Parity and Addiction Equity Act ("MHPAEA"). Specifically, group health plans must generate a comparative analysis of the plan's mental health, substance use disorder ("MH/SUD"), and medical/surgery ("M/S") nonquantitative treatment limitations to demonstrate the plan does not impose less favorable benefit limitations on MH/SUD treatments. As of February 10, 2021, group health plans are required to produce the comparative analysis to state regulators, federal regulators, and participants upon request.
The MHPAEA provides that financial requirements (i.e., quantitative treatment limits), such as coinsurance and copays, cannot be more restrictive or applied in such a way that makes it more difficult for participants to receive treatment for MH/SUD than M/S benefits. The same requirements exist for nonquantitative treatment limitations ("NQTLs") such as prior authorization, step therapies, or distance standards. Ensuring that NQTLs are not being improperly applied with respect to MH/SUD is an inherently more difficult endeavor than measuring a quantitative treatment; a copayment obligation is readily, and easily, measured and compared. If the MH/SUD copay is more expensive than the M/S copay, it is simple to determine that an impermissible benefit limitation in violation of MHPAEA has occurred. The CAA aims to allow for easier enforcement of the MHPAEA with respect to NQTLs by requiring plans to show their work, both in design and application, with respect to their use of NQTLs in limiting treatments for MH/SUD.
There are six classifications of NQTLs that must be separately considered when drafting the comparative analysis: inpatient (in and out-of-network), outpatient (in and out-of-network), emergency care, and prescription drugs. Each of these six different classifications must separately meet the NQTL parity test. The comparative analysis, considering each of the six classifications, must contain:
- Plan Terms: The specific plan terms regarding NQTLs and a description of all MH/SUD and M/S benefits to which the NQTLs apply in each classification.
- Factors: The factors used to determine that NQTLs should apply to MH/SUD and M/S benefits.
- Evidentiary Standards: The standards used for the factors and the evidence relied upon to design and apply the NQTLs to MH/SUD and M/S benefits.
- Comparative Analyses: An analysis 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, those used to apply the NQTLs to M/S benefits in the classification.
- Findings: Findings and conclusions the plan reached.
A failure to provide the analysis upon request (or providing an analysis that reveals noncompliance with the MHPAEA) may result in $100 per day penalties per affected individual, possible general ERISA penalties, or civil litigation (both public and private). Should the Department of Labor ("DOL") determine that the plan is not MHPAEA-compliant, the plan has 45 days to rectify the issue and produce a new comparative analysis. As further evidence that MHPAEA enforcement is going to be a priority, the CAA requires the DOL to require a noncompliant plan to notify all individuals enrolled in the plan that its coverage is not MHPAEA-compliant. The CAA further requires the DOL to generate an annual public report of noncompliant plans. This public report must be submitted to Congress and include the name of the plan and/or issuer.
The CAA only requires the DOL to request 20 comparative analyses per year. This small number of required requests does not adequately convey the urgency upon group health plans to draft the comparative analysis: as noted above, participants and state regulators are also entitled to the comparative analysis upon request. A participant complaint to the DOL regarding a plan's failure to provide the analysis is likely to get the DOL's attention.
Indeed, while it is unclear how many comparative analyses requests the DOL has made in practice, there is concrete evidence that they are focused on MHPAEA compliance generally. A recent $15 million settlement with UnitedHealth Insurance and affiliates (Walsh v. United Behavioral Health, E.D.N.Y. No. 1:21cv04519) included $2 million in ERISA penalties for MHPAEA violations. Simply put, if a group health plan has not been proactive regarding the comparative analysis when it receives a request for its production, it may already be too late. The plan would of course have 45 days to produce the analysis but producing such a draft in a relatively short amount of time would be difficult (and perhaps prohibitive) for many self-insured plans.
For a fully insured plan, the insurance carrier will generally be responsible for generating the comparative analysis, as plan design and claims processing largely remain under the carrier's purview. A self-funded plan will require the plan sponsor to draft the comparative analysis. It appears that many third-party administrators are unwilling to produce the comparative analysis, which places a heavy burden on self-funded plan sponsors. In any event, the self-funded group health plan remains responsible for assuring the plan's compliance with the MHPAEA. It would be prudent for self-funded group health plan sponsors to work with counsel in drafting their comparative analysis.
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