Mental Health Compliance Report Issued To Congress Spoiler Alert – Plans All Fail – Employee Benefits & Compensation

Mental Health Compliance Report Issued To Congress Spoiler Alert – Plans All Fail – Employee Benefits & Compensation

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Seyfarth Synopsis: The Mental Health Parity
and Addiction Equity Act (MHPAEA) requires group health plans and
insurers to cover treatments for mental health and substance use
disorders in a manner that is equitable to the plans’ coverage
of medical and surgical treatments. Exactly how that is
accomplished and how compliance is proven have been the subject of
prescriptive yet ambiguous guidance for several years. The agencies
seemingly have been as frustrated as plan sponsors when trying to
unearth what plans are, in fact, covering. And, the uncertainty in
the area has resulted in numerous lawsuits from legal providers and
participants against plans and insurers.

Recently, the Departments of the Treasury (“Treasury
Department”), Labor (“DOL”), and Health and Human
Services (“HHS”) (the “Departments”) released
their second report to Congress on plans compliance with MHPAEA, as
well as new proposed regulations and a technical release seeking
input from stakeholders.

The voluminous nature of the Department actions make it
unwieldy for us to cover them all in a single alert. So, instead we
will break down the guidance for you in a series of three alerts
focused on:

This alert focuses on the congressional report.

The Consolidated Appropriations Act of 2021 (CAA), added a
provision to MHPAEA that requires plans and issuers to perform and
document comparative analyses of the design and application of
their non-quantitative treatment limitations (NQTLs) to demonstrate
parity between MH/SUD and M/S benefits. These NQTL analyses must be
provided to the Departments upon request. The Departments are also
required to report to Congress annually on the results of these
NQTL comparative analyses. In January of 2022, the first report to
Congress indicated that every NQTL analysis reviewed was in some
way insufficient when it was initially submitted to DOL’s
Employee Benefits Security Administration (EBSA).

Along with the Proposed Regulations, the Departments released
their second report to Congress (2023 Report). The 2023 Report
discusses common deficiencies and, as required by the CAA, the
identity of each plan and issuer that received a final
determination of non-compliance. Finally, the 2023 Report contains
illustrative examples of impermissible NQTLs imposed on MH/SUD
benefits and the resulting enforcement action.

Enforcement Priorities

The January 2022 Report to Congress detailed four areas of NQTL
enforcement priority. Subsequently, the DOL added two additional
areas of priority based on their experience during the first
reporting period. The six priority areas currently include:

  1. prior authorization requirements for in-network and
    out-of-network inpatient services;

  2. concurrent care review for in-network and out-of-network
    inpatient and outpatient services;

  3. standards for provider admission to participate in a network,
    including reimbursement rates;

  4. out-of-network reimbursement rates (methods for determining
    usual, customary, and reasonable charges);

  5. impermissible exclusions of key treatments for mental health
    conditions and substance use disorders (NEW since the January 2022
    Report); and

  6. adequacy standards for MH/SUD provider networks (NEW since the
    January 2022 Report).

EBSA’s Approach to Enforcement

For all NQTL areas, EBSA develops investigative leads through
review of plan documents and examination of plan operations among
EBSA’s open health case inventory. EBSA also gathers leads from
other sources, such as state and federal regulatory partners, media
reports, private litigation, participant or beneficiary complaints,
professional associations, and patient advocacy groups.

The 2023 Report states that EBSA has focused on violations that
stem from the actions of large service providers or third party
administrators (TPAs) that affect hundreds or thousands of plans.
Correction requires the TPA to change its impermissible practices
and notify all plan clients to make the necessary changes at the
plan level. This focus on TPAs makes sense, not only because of the
number of plans affected, but because it is the TPAs that have the
information necessary to do the NQTL analysis. Unfortunately, many
TPAs will not agree to perform the NQTL analysis for their
self-funded plan clients.


EBSA achieved corrections at various stages of its NQTL review
process. The stages include asking initial questions about an NQTL,
issuing an initial request for comparative analysis, and issuing an
initial determination of non-compliance. Appropriate correction
depends on the NQTL and may include one or more of the

  • complete removal of an NQTL;

  • changes to plan document language and disclosures, along with
    notification to participants and beneficiaries of the change in
    plan terms;

  • amendments to plan practices or claims processing

  • addition of coverage for previously excluded benefits;

  • reduction in the scope of an NQTL’s application to MH/SUD

  • submission of a complete and sufficient comparative analysis,
    cured of identified deficiencies;

  • re-adjudication of claims affected by an impermissible NQTL,
    with payment of claims wrongfully denied because of the NQTL;

  • notice to participants and beneficiaries of an opportunity to
    submit previously unsubmitted claims that will now be accepted for

Examples of NQTL Corrections

  1. Residential Treatment – A self-funded plan covering
    over 800 participants excluded MH/SUD benefits at residential
    treatment facilities but covered benefits at M/S residential
    treatment facilities, such as skilled nursing facilities and stroke
    rehabilitation programs. The plan removed the exclusion and
    reprocessed previously denied MH/SUD residential treatment claims.
    MH/SUD residential treatment will be covered by the plan going

  2. EAP Gatekeeper – EBSA has found that some plans have
    erected barriers to access MH/SUD benefits under the group health
    plan by requiring participants to use EAPs before a participant can
    access MH/SUD benefits, when there is no comparable requirement to
    access M/S benefits under the group health plan. The plan ended the
    practice of using the EAP as a gatekeeper for MH/SUD benefits. It
    removed the NQTL from plan documents and issued new membership
    cards with amended information allowing participants to contact
    MH/SUD providers directly without going through the EAP.

  3. Telehealth – A self-funded plan excluded MH/SUD
    benefits provided via telephone, email, or internet. The plan did
    not have any similar restrictions on M/S benefits. The plan removed
    the impermissible NQTL and provided access to MH/SUD telehealth
    benefits, notifying participants of the change in plan terms.

  4. Pre-authorization – The service provider removed the
    prior authorization requirement for intermediate outpatient
    services for M/S conditions but did not change the prior
    authorization requirement for outpatient MH/SUD services. The
    service provider acknowledged that it had not applied the factors
    comparably, submitted a corrective action plan, and changed its
    claims processing system to remove the prior authorization
    requirement for intensive outpatient MH/SUD benefits.

  5. Medication-Assisted Treatments – A large self-funded
    plan covering over 22,000 participants excluded treatment for
    opioid use disorder with methadone (which must be provided through
    an opioid treatment program) but covered methadone to treat M/S
    conditions. The plan took corrective action by removing the
    impermissible exclusion and reprocessing and paying all claims that
    had been wrongfully denied because of the exclusion.

  6. ABA Therapy – A self-funded plan covering more than
    2,500 participants excluded benefits for applied behavior analysis
    (ABA) therapy to treat autism spectrum disorder (ASD) despite
    generally providing benefits for ASD. The plan removed the ABA
    therapy exclusion.

Sufficiency/Insufficiency of Responses

In its second year of CAA implementation, according to the 2023
Report, EBSA has not seen a marked improvement in the sufficiency
of the initial comparative analyses received. The same deficiencies
and trends noted in the January 2022 Report are still commonly
reflected in comparative analyses reviewed during the second
reporting period.

The 2023 Report states that, during the most recent reporting
period, none of the comparative analyses initially submitted were
sufficient to demonstrate compliance. This is not surprising.
Although employers with self-funded plans try to comply with the
MHPAEA requirements, they are struggling with preparation of the
NQTL analysis. It is difficult to find TPAs, consultants or vendors
willing to do the analysis and the ones who will, tend to be
extremely expensive. Then, as pointed out in the 2023 Report, the
analyses are insufficient. The information needed to perform the
NQTL analysis lies with the TPAs for self-funded plans and the TPAs
should be performing the analyses.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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