The government has published a new set of FAQs (FAQ 45) elaborating on the enhanced compliance requirements of The Consolidated Appropriations Act of 2021 (CAA) relative to the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).
The CAA requires the government to be more proactive in its enforcement efforts with respect to non-quantitative treatment limitations (NQTLs) imposed by health plans and health insurance issuers on the treatment of mental health or substance use disorder (MH/SUD) benefits[1]. For a review, read our February 15, 2021 blog post.
The MHPAEA prohibits issuers and plans from imposing an NQTL on MH/SUD benefits unless the strategies, evidentiary standards, or other factors used in applying the NQTL to those benefits are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in applying NQTLs to medical/surgical benefits.
The CAA did not change any of the rules governing NQTLs; neither did it make any changes in the recommended protocols for analyzing whether a plan’s NQTLs pass muster under the MHPAEA.
However, the CAA did:
- elevate to the statutory level the obligation of plans and issuers to actually conduct a meaningful analysis of how they apply NQTLs to MH/SUD benefits compared to medical/ surgical benefits; and
- authorize – mandate, actually – the government to examine plans and issuers for compliance with the MHPAEA’s NQTL rules and take corrective measures in those cases where the plan or issuer has not been able to produce adequate proof of compliance.
The new FAQs address three key concepts in the last paragraph:
- “Meaningful analysis”
- “Adequate proof of compliance” and
- “Corrective measures.”
1. Meaningful Analysis
“Meaningful analysis” means the analytical steps set forth in the Self-Compliance Tool. These steps are detailed and technical, requiring a thorough understanding of the plan’s terms, but also requiring specialized medical and statistical knowledge. It is likely most sponsors of self-insured health plans do not have the in-house expertise to conduct the level of analysis contemplated by the rules.
Of course, many of those plan sponsors have hired third-party vendors to handle the administration of precertification and concurrent review of MH/SUD treatments and post-treatment adjudication of MH/SUD claims. The question is: have those third parties have undertaken the requisite level of analysis to support their benefit decisions?
Sponsors of self-insured health plans should promptly confirm with the relevant third-party administrators that they will be able to provide proof of compliance with the MHPAEA should the government ask for it.
Some employers have carved out their Mental Health/Substance Use Disorder (MH/SUD) benefits and use a separate vendor for those benefits compared to the one they use to administer their medical/surgical benefits. This presents an interesting problem: the rules call for a comparison between the NQTLs applied to the former and the NQTLs applied to the latter. It appears that employers with MH/SUD “carve-out arrangements” will need to find a way to get their various administrators to talk to each other.
2. Adequate Proof of Compliance
Even if a plan has complied with required processes for MHPEA compliance, the government may find those efforts lacking. In particular, the government is using the issuance of FAQ 45 to call out specific practices, frequently encountered, that will not satisfy the requirements of the MHPAEA. These include:
- Production of a large volume of documents without a clear explanation of how and why each document is relevant to the comparative analysis;
- Conclusory or generalized statements, including mere recitations of the legal standard, without specific supporting evidence and detailed explanations;
- Identification of processes, strategies, sources, and factors without the required or clear and detailed comparative analysis;
- Identification of factors, evidentiary standards, and strategies without a clear explanation of how they were defined and applied in practice;
- Reference to factors and evidentiary standards that were defined or applied in a quantitative manner, without the precise definitions, data, and information necessary to assess their development or application; or
- Outdated analysis due to the passage of time, a change in plan structure, or for any other reason.
When verifying with vendors, plan sponsors should be wary of vague or general statements of compliance. The government will view as “insufficient proofs of compliance” those that are unfocused, or lacking in clarity, detail, or precision. Sponsors may wish to insist on assurances that expressly disavow reliance on the practices identified by the government as inadequate.
Item 6 above highlights the importance of ensuring that your analysis reflects the most current version of your plan.
The time to conduct the required analysis was yesterday. Effectively immediately, the government can require a plan to produce documented evidence of its NQTL analysis.
The government is likely to select plans for compliance audits by way of receipt of complaints. From this perspective, every denied claim for MH/SUD benefits is a potential complaint to the Department of Labor.
3. Corrective Measures
- If the Department determines that the plan’s documentation is inadequate, the plan will receive 45 days to produce additional proof of compliance.
- If the Department still unsatisfied, it will require the plan to send a notice within 7 days to all plan participants stating that the plan does not comply with MHPAEA. Feel free to think of this as a “please sue me” letter.
The consequences of having to send notification of non-compliance to all participants can be far worse than any fine or sanction the government might impose. A class action requiring a plan to re-adjudicate several years’ worth of MH/SUD claims promises to be messy and expensive.
FAQ 45 includes a reminder for ERISA plans that the government is not the only one that can ask for proof of compliance. Under existing ERISA rules, plan participants may also request that plans produce all the materials that the government could ask for under the FAQs.
The bottom line: employers should take steps now to ensure they are ready for any inquiries that may come their way.
[1] NQTLs are benefit limitations that are not normally expressed numerically (such as limits on days of treatment or dollar amounts of benefits). Examples of NQTLs include: medical management techniques, application of medical necessity rules, network and formulary design, methods for determining reasonable and customary charges, and step-therapy requirements.