In Highly Anticipated Mental Health Parity Guidance, DOL and CMS Identify Noncompliant Plans and Insurers by Name

Practical Law Legal Update w-040-2222 (Approx. 9 pages)

In Highly Anticipated Mental Health Parity Guidance, DOL and CMS Identify Noncompliant Plans and Insurers by Name

by Practical Law Employee Benefits & Executive Compensation

Need for Mental Health-Related Benefits

The 2023 report discusses the ongoing mental health crisis in the US, which was compounded by the COVID-19 pandemic. Because of this crisis, the Departments observed, access to mental health and substance use disorder (MH/SUD) benefits is especially critical.

The DOL noted in the report that the Employee Benefits Security Administration (EBSA) presently devotes almost 25% of its enforcement program work to MHPAEA/NQTL issues. As an enforcement strategy, the DOL continues to prioritize potential violations by plan service providers (including some of the largest in the US) that may affect multiple plans nationwide.

2023 Report to Congress

The Departments' 2023 report is intended to satisfy a MHPAEA provision requiring the DOL to submit a report to Congress addressing MHPAEA compliance. The 2023 report is also the Departments' second installment of an annual report to Congress (as required under the Consolidated Appropriations Act, 2021 (CAA-21)) addressing CAs for NQTLs. CAs are an expansive disclosure requirement for plans and insurers that:

Was added under the CAA-21 (enacted on December 27, 2020).
Became effective on February 10, 2021.

Regarding the Departments' first CA-related report, see Legal Update, In 2022 MHPAEA Report, DOL Highlights Robust Enforcement of CAA-21 and Widespread Noncompliance.

For more information on the CAA-21 and MHPAEA, see Practice Notes:

Overview of Comparative Analyses Requirements

Under the CAA-21, plans and insurers offering coverage that provides both medical/surgical (M/S) benefits and MH/SUD benefits (and that impose NQTLs) must complete and document detailed CAs addressing how any NQTLs are designed and applied. Specifically, plans and insurers must make available to the federal and state agencies on request:

The specific plan or coverage terms (or other relevant terms) regarding NQTLs that apply to the plan or coverage, along with a description of all MH/SUD benefits to which each term applies in each of the six benefits classifications that are used—under MHPAEA implementing regulations—to assess mental health parity compliance (see Practice Note, Mental Health Parity: Overview: Six Classifications of Benefits).
The factors used in determining that the NQTLs apply to M/S or MH/SUD benefits.
Evidentiary standards used for the factors (with definitions for each factor) and any other source or evidence relied on to design and apply the NQTLs to M/S or MH/SUD benefits.
The CAs used to determine that the processes, strategies, evidentiary standards, and other factors for applying the NQTLs to MH/SUD benefits (as written and in operation) are comparable to and applied no more stringently than the processes, strategies, evidentiary standards, and other factors used to apply NQTLs to M/S benefits in a classification (see Practice Note, Mental Health Parity: Overview: Six Classifications of Benefits).
The specific findings and conclusions reached by the plan or insurer (including the results of any CAs) concerning whether the coverage complies with MHPAEA's requirements.

For more information, see Practice Note, Mental Health Parity Requirements Under the CAA-21: Comparative Analysis Content Requirements Under FAQ Guidance.

Additional Enforcement Priorities

In its 2022 Report to Congress, the DOL concluded that every initially submitted CA it reviewed was deficient in some way. The DOL also identified the following four NQTLs as enforcement priorities:

Preauthorization requirements for in-network and out-of-network (OON) inpatient services.
Concurrent care review for in-network/OON inpatient and outpatient services.
OON provider reimbursement rates.
Provider network admission and participation criteria, including reimbursement rates.

For more information, see Article, 2022 MHPAEA Report Addresses Noncompliance with Mental Health Parity Rules.

In the 2023 report, the DOL noted that it has added two new priorities:

Exclusions of key MH/SUD treatments, for example:
- nutritional counseling for eating disorders; and
- medication-assisted treatment (MAT) and medications for opioid use disorder (MOUD) (see Nonquantitative Treatment Limitation (NQTL) Compliance Considerations Under MHPAEA Checklist).
Network adequacy standards for MH/SUD providers.

Once Again, No Initially Submitted Comparative Analyses Were Compliant

The 2023 report covers the second CA-related reporting period, which ran from November 1, 2021, through July 31, 2022. During this time, the DOL sent 25 letters to employer-sponsored group health plans requesting CAs. (The DOL requested fewer CAs during this second reporting period due to ongoing reviews that were carried over from the first reporting period.) Also, some aspects of the 2023 report include enforcement statistics for the entire 18-month period for which plans and insurers have been required to make CAs available on request (that is, beginning in February 2021).

Upon review, the DOL concluded that:

None of the initially submitted CAs for the second reporting period fully satisfied the requirements for these disclosures.
Several CAs remained deficient, despite multiple rounds of insufficiency letters.
Many of the CAs suffered from the same deficiencies highlighted in the Departments' 2022 report, thereby falling "far short" of MHPAEA's requirements.

In particular, the 2023 report identified the following common examples of noncompliance:

Plans and insurers being unprepared to submit CAs when requested by DOL.
Failures to adequately explain how:
- factors were applied when deciding which benefits were subject to an NQTL; and
- NQTLs were applied in operation.
Failures to show:
- how NQTLs were applied to MH/SUD versus M/S benefits; and
- that NQTLs for MH/SUD and M/S benefits were operationally comparable.

In addition, the report noted that even when operational data was included, CAs often failed to explain numerical inputs, methodologies, or calculations for the data being summarized.

An appendix to the report further describes the most common deficiencies in submitted CAs.

However, the Departments also noted some encouraging results. For example, more than 100 plans, service providers, and insurers made NQTL-related prospective changes to their plans, which expanded participants' access to MH/SUD benefits. One plan, for instance, stopped using its employee assistance program (EAP) as a gatekeeper—meaning that participants will access MH/SUD benefits directly going forward (see Practice Note, Employee Assistance Program (EAP) Compliance).

Initial Determinations of Noncompliance

For the covered reporting period, the DOL issued 22 initial determinations of noncompliance, 14 of which were due to plans not having a CA or failing to provide a sufficient CA after being informed of the deficiencies. Since February 2021, the DOL has issued initial determinations of noncompliance for a total of 53 plans.

NQTLs for which DOL made initial noncompliance determinations during the reporting period included, among others:

Limits or exclusions for applied behavioral analysis (ABA) treatment or other services to treat autism spectrum disorder (ASD).
Prior authorization requirements.
Exclusions of medication-assisted treatment of opioid use disorder.

For more information, see Practice Note, Mental Health Parity: Nonquantitative Treatment Limitations (NQTLs): Experimental or Investigative Treatments: Autism Spectrum Disorder (ASD).

DOL Final Noncompliance Determinations Identify Three Plans By Name

The DOL issued final determinations of noncompliance to three plans in the 2023 report. Regarding one of the plans, for example, the DOL requested a CA relating to the plan's prior authorization requirement for inpatient MH/SUD benefits. Although the plan provided a CA, the information regarding MH/SUD benefits and M/S benefits was prepared by two separate claims processors. The service providers used different factors when designing the NQTL, and the CA failed to compare and contrast these factors and other information used by the service providers.

The three plans—which were identified by name in the report—were required to notify all covered participants that the plans did not comply with MHPAEA.

Corrective Action Plans Addressed NQTLs

In response to the initial noncompliance determination letters, DOL received 32 corrective action plans (CAPs) from plans and insurers. Other plans and insurers, meanwhile, indicated that they were making prospective changes to their NQTLs. These changes included removing:

Exclusions for:
- ABA treatment;
- services provided by opioid treatment programs;
- MH/SUD treatment at residential facilities;
- telehealth benefits;
- drug testing related to certain MH/SUD conditions; and
- inpatient services for SUDs unless the entire course of treatment was completed.
A prior authorization requirement for certain outpatient MH/SUD benefits.
A requirement that participants use an EAP before accessing MH/SUD benefits (see Practice Note, Employee Assistance Program (EAP) Compliance).

Other corrections included:

Modifying plan document language and disclosures (including notice to participants and beneficiaries of change to plan terms) (see Practice Note, Summaries of Material Modifications (SMMs) for ERISA Health Plans).
Amendments to plan operational practices or claims processing procedures.
Adding coverage for formerly excluded benefits.
Reducing the scope of an NQTL's applicability concerning MH/SUD benefits.
Submitting updated CAs to resolve deficiencies identified by the Departments.
Reprocessing claims that were impacted by improper NQTLs.

The DOL emphasized that it obtained many of these corrections without taking the more severe step of issuing a noncompliance determination.

Examples of NQTL Corrections

The 2023 report describes several examples of corrections involving improper NQTLs. For instance, one self-insured plan:

Provided coverage for M/S-oriented benefits at residential treatment facilities (including skilled nursing facilities).
Excluded MH/SUD benefits at residential treatment facilities without explaining its rationale for this distinction in the plan's CA.

After the DOL issued an initial determination letter informing the plan that this arrangement was an improper NQTL, the plan:

Removed the exclusion.
Reprocessed previously denied claims involving MH/SUD claims at residential treatment facilities.

In another example, the DOL noted that some plans had automatically directed participants with MH/SUD claims to the plan's EAP provider, who served as a gatekeeper to either:

Direct the individuals to the plan's EAP counselors.
Refer the individuals to providers in the plan's network for MH/SUD treatments.

However, no such EAP gatekeeping function was applied regarding M/S benefits.

After the DOL issued the plan an initial compliance determination, the plan ended its EAP gatekeeping practice and removed the improper NQTL from its plan.

CMS MHPAEA Enforcement

The 2023 report also addresses enforcement results from the Centers for Medicare and Medicaid Services (CMS), which (regarding MHPAEA) has jurisdiction over non-federal governmental group health plans and insurers in three "direct enforcement" states. CMS's reporting period, as reflected in the 2023 report, covered the period from December 1, 2021, through September 1, 2022. Within that period, CMS sought a total of 21 CAs from six non-federal governmental plans and five insurers (in some instances, CMS requested multiple CAs from a plan sponsor or insurer). CMS's review of these CAs focused on the following NQTLs:

Prior authorization treatment limits.
Concurrent review treatment limits.
Prescription drug exclusions for specific treatments for certain conditions.

As with the DOL, CMS reported that all of the initially submitted CAs were insufficient.

Final Determinations of Noncompliance

According to the report, CMS issued final determinations of noncompliance to five plans. The plans—which were identified by name—were required to:

Notify all covered participants (within seven days of the final determination letter date) that their plans or coverage were not MHPAEA-compliant.
Take certain corrective actions and provide proof to CMS that these actions were completed.

Regarding insufficient CAs, for example, some insurers were required to take the corrective action of:

Providing sources and evidentiary standards for measuring/determining how factors were applied in NQTL cost-benefit analyses.
Furnishing medical coverage policies and external guidelines used in applying NQTLs.

CMS Final Noncompliance Determinations Identify Five Plans By Name

CMS identified five plans or insurers that received final determination of noncompliance. All of the plan or insurers that received final determinations had failed to provide adequate information and supporting documentation in their CAs.

One insurer, for example, failed to provide an adequate CA—including a lack of sufficient bases for how factors were identified and used in designing and applying prior authorization NQTLs. (For instance, one factor applied in applying coverage NQTLs was that a treatment was for treatment-resistant conditions and—as a result—was not viewed as a first-line treatment for a condition.) This lack of information prevented a determination of whether the factors were comparable to (and not applied more stringently than) those for NQTLs concerning M/S benefits.

A mapping document later furnished by the insurer failed to clarify how the various factors were applied and weighed. In addition, the insurer:

Offered conflicting responses concerning the use of quantitative data in making prior authorization recommendations.
Failed to provide sufficient information about the use of other additional factors.

In response, CMS asked the insurer to complete corrective actions that included providing a better mapping document and additional supporting information for one of the factors identified.

The insurer completed CMS's requested corrective actions and furnished adequate information (in a revised CA) to address the noncompliance issues. Although no further MHPAEA concerns were noted regarding the coverage at that point, the insurer did receive a final determination of noncompliance and, for that reason, was identified by name in the 2023 report.

Another plan sponsor that received a final determination ultimately terminated the subject plan.

Proposed Regulations Would Expand NQTL Requirements

As noted, the Departments also issued proposed regulations that would amend MHPAEA's regulatory requirements. Among other changes, the Departments' proposals would:

Update current definitions (and add new ones) addressing core concepts for NQTL compliance.
Provide specific examples to clarify that plans and issuers cannot use more restrictive prior authorization and other medical management techniques for MH/SUD benefits.
Include standards addressing network composition for MH/SUD benefits and factors for determining OON reimbursement rates for MH/SUD providers.
Require plans and insurers to collect and review outcomes data and address significant differences in access to MH/SUD benefits relative to M/S benefits, including to ensure that there are not significant access-related differences related to network composition standards.
Reflect the requirement that plans and insurers complete meaningful CAs to measure the effect of NQTLs (for example, evaluating standards governing network composition, OON reimbursement rates, and prior authorization NQTLs).

Practical Impact

Although noting some minor improvement in CA compliance (relative to the initial reporting period), the Departments' 2023 report makes clear that plan sponsors, insurers, service providers, and other advisors still have a long way to go in CA preparedness for their NQTLs. The 2023 report—the first in which the Departments publicly "named names" regarding CA compliance (or lack thereof) may serve as an impetus for plans and insurers to prepare required documentation concerning NQTLs. On the other hand, many in the regulated community had hoped the Departments' latest MHPAEA guidance would include a detailed model CA that would provide a clearer sense of the Departments' expectations for this documentation.

In Highly Anticipated Mental Health Parity Guidance, DOL and CMS Identify Noncompliant Plans and Insurers by Name | Practical Law