Mental Health Parity: A Guide for ComplianceSpring 2017 – Articles For Your Benefit
Mental health parity continues to be an area rich with enforcement activity and continued regulation. While the final regulations were promulgated almost four years ago, the Departments of Labor, Treasury and Health and Human Services (collectively, the “Departments”) continue to release FAQs further clarifying the regulations and compliance documents aimed at helping health plans avoid noncompliance. However, many employer-sponsored plans continue to be unaware of the extent of the requirements or rely on their vendors to ensure compliance. With the recent bipartisan passage of the 21st Century Cures Act, aiming to enhance enforcement efforts, plan sponsors must be vigilant of the parity requirements as the Department of Labor’s enforcement activity will only continue to increase.
Passed in 1996, the Mental Health Parity Act (MHPA) required annual or lifetime dollar limits on mental health benefits to be no less than the limits on medical/surgical benefits. The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) expanded on MHPA and required that plans offering mental health or substance abuse disorder benefits offer them in parity with medical/surgical benefits. The regulations issued by the Departments separated the limitations into two categories: quantitative and non-quantitative.
For quantitative treatment limitations, such as cost-sharing or numerical treatment limits, any limitation on mental health/ substance use disorder (MH/SUD) benefits must be no more restrictive than the predominant financial requirements or quantitative treatment limitations applied to substantially all medical/surgical benefits covered by the plan. According to the regulations, in order to apply a quantitative limit on a MH/SUD benefit, the general limitation, such as a copayment, must apply to at least two-thirds of all medical/surgical benefits in the classification. The specific limitation, for example $25, must apply to more than 50% of the medical/surgical benefits either as a single amount or in combination with higher cost-sharing amounts.
For non-quantitative treatment limitations (NQTLs), such as prior authorizations or fail-first protocols, any processes, strategies, evidentiary standards or other factors used in applying NQTLs in MH/SUD benefits must be comparable to, and applied no more stringently than, those used with respect to medical/surgical benefits.
When reviewing for parity, plans must review the benefits and limitations within the following six categories. If a plan offers MH/SUD benefits in any of the six categories, the plan must offer benefits in all six: (1) inpatient, in-network; (2) inpatient, out-of-network; (3) outpatient, in-network; (4) outpatient, out-of-network; (5) emergency care; and (6) prescription drugs.
While the focus is often on federal regulatory enforcement activity, participants are turning to the courts to enforce parity requirements under ERISA’s civil enforcement provisions. In one case, a federal district court in Illinois denied a health plan’s motion to dismiss stating that excluding residential treatment centers for mental health services but not for other medical conditions would violate MHPAEA since no other similar exclusion was used for medical/surgical benefits. In another case, the federal district court in Oregon determined that a developmental disability treatment exclusion, which in practice excluded certain autism treatments, applied only to mental health conditions. Since it did not also apply to medical/surgical treatments, the exclusion ran afoul of MHPAEA.
Checklist for Compliance
In light of the increased regulatory and judicial activity, plan sponsors should review their health plans for compliance with MHPAEA. The following checklist should assist plan sponsors when conducting the compliance review.
Review service agreements with vendors, including TPAs and PBMs:
What is the vendor’s responsibility for compliance?
What is the vendor doing to ensure compliance with MHPAEA?
Is the vendor required to notify the plan sponsor if they discover a MHPAEA violation?
Is the vendor contractually liable to correct the violations at its expense?
Does the agreement limit the vendor’s liability for MHPAEA?
Review the quantitative calculations
Who is responsible for performing the calculations?
If the vendor, is it using plan-specific data?
Is the test considering each type of cost-sharing, e.g., coinsurance, copayments?
Is there documentation of the calculations?
For prescription drugs, when assigning drugs to different tiers, are reasonable factors applied without regard to whether the drug is used to treat MH/SUD conditions?
- If a plan has a deductible, does it encompass both MH/SUD and medical/surgical benefits?
- Review the NQTLs
Are there written policies for determining which services receive medical management (e.g., prior authorizations)?
In practice, are a higher percentage of MH/SUD benefits subject to medical management?
Regarding formularies, does the TPA/PBM use fail-first protocols (step therapy) or apply additional requirements in order to receive MH/SUD prescription drugs?
Are residential treatment services, including those for eating disorders, categorized consistently, with respect to both quantitative treatment limitations and NQTL, in one of the six categories? Are there blanket preauthorization requirements on residential treatment services?
How does the TPA determine which providers are in-network?
Are the criteria for a provider to be in-network more stringent for MH/SUD providers?
- Determine who is responsible for responding to any participant or contracting provider requests for disclosures (vendor, plan sponsor)
- Are they aware of the responsibility and the requirements?
- Is the information easily accessible and written in a format easily understood by a participant?
- When was the last time the plan tested for compliance with MHPAEA? Has the plan design, cost-sharing or utilization changed requiring additional testing?