Keenan Briefings

Briefing

Understanding the MHPAEA: Compliance Guidance and Updates

Since 2021, Keenan has provided information and guidance regarding the federal mandate requiring health plans that provide treatment for mental health and substance use disorders (MH/SUD) to complete a comparative analysis of the non-quantitative treatment limitations (NQTLs) in their plans as they apply to MH/SUDs as well as medical/surgical (M/S) benefits.

That guidance can be found in clients’ biennial compliance letters as well as the briefings and webinars listed below:

• Mental Health Parity and Addiction Equity Act (MHPAEA) Q&A
• Mental Health Parity Final Rules Issued on NQTLs
• 2024 Mid-Year Employee Benefits Compliance Update

Since the Final Rules regarding the Comparative Analysis requirement were issued in September of 2024, many plan sponsors have asked questions regarding compliance. This briefing addresses some of the most commonly asked questions.

Q1: Our employer-provided health plan has never completed a MHPAEA NQTL comparative analysis. Should our plan have been analyzed in 2021? 

Answer: According to the government agencies (DOL, HHS, and Treasury, together the “Departments”) that administer The Mental Health Parity and Addiction Equity Act (MHPAEA), all plans should have been analyzed in 2021. However, there were significant impediments to doing so at the time, including the following:

• Most insurance carriers, TPAs and PBMs had not completed an analysis of their own plans and plan components at that time. Since both fully insured plans and self-funded plans must rely heavily on those parties’ data and analysis, it was extremely difficult in 2021 to obtain the information necessary to complete a Comparative Analysis.
• The Departments’ self-compliance “tool” for completing the Comparative Analysis was extremely difficult for most plans to utilize.
• Relatively few services existed to assist an employer with the analysis, and those services that did exist were expensive.
• For the few plans that were audited for compliance in 2021, the Departments were reportedly routinely allowing employers extensions of time in which to complete the analysis. Some employers preferred to wait and see if they were called upon to produce an analysis.

For all of these reasons, few plans obtained a Comparative Analysis in 2021. In the subsequent years, the Departments have audited about 100-200 plans per year nationwide. In those years, the Departments have not identified a single Comparative Analysis that they found to meet their expectations.

As a result of all these complicating factors, plan sponsors have been slow to comply.

The Departments did not issue Final Rules on this requirement until 2024, and they made some significant changes that impacted employers that had already obtained a Comparative Analysis.

• The Final Rules clarified that plan sponsors with fully insured plans could rely entirely on their insurance carriers for the preparation of the Comparative Analysis.
• The Final Rules confirmed that the Comparative Analysis does not need to be completed annually if no significant changes have been made to the plan. Before this clarification was issued, many vendors were strongly recommending that plans update the written analysis annually.
• The Final Rules clarified what must be included in the Comparative Analysis. Plans that had previously completed a Comparative Analysis will need to check their work against the Final Rule to see if it needs to be supplemented.

Q2: Are there any penalties associated with not doing the analysis?

Answer: The Final Rules clarified that for plans that fail to provide a complete and thorough Comparative Analysis and then fail to correct any insufficiencies within the timeframe required by the applicable agency, the Departments have the power to direct the plan not to impose any NQTL that cannot be adequately shown to be in parity with medical/surgical benefits.

In addition, the plan (or sponsoring employer) could potentially be listed in the Departments’ enforcement report to Congress and may have to notify plan participants with something similar to the following:

"Attention! The [Department of Labor/Department of Health and Human Services/Department of the Treasury] has determined that [insert the name of group health plan or health insurance issuer] is not in compliance with the Mental Health Parity and Addiction Equity Act."

The notice would need to include a summary of the agency's finding of non-compliance and information about how participants can obtain a copy, information for where to direct any questions or complaints, and contact information for the applicable agency. The notice would also be required to include a summary of any changes the plan has made as part of its corrective action plan, including an explanation of any opportunity for a participant to have a claim for benefits reprocessed.

For ERISA plans, there is a risk of civil penalties for failure to provide the analysis within 30 days of request by a plan participant or beneficiary. In California, following the issuance of the Final Rules, the Department of Insurance (CDI) and Department of Managed Health Care (DMHC) have required carriers they regulate to conform to the new requirements and submit their analyses to the State. Initial reviews by the California agencies have found most if not all fully insured plans were out of compliance with the MHPAEA NQTL requirements in at least one way. Several carrier plans were required to recalculate cost-sharing for members after state regulators found the plans had applied cost-sharing for mental health and substance use disorder services that differed from cost-sharing for medical services. These state agencies have also taken enforcement actions against carriers found to be out of compliance with both federal and state behavioral health care laws. This includes taking actions against plans for the wrongful denial of residential treatment for a severe mental health condition, applying cost-sharing out of compliance with parity and failing to provide coverage for the diagnosis and medically necessary treatment of severe mental illnesses. The enforcement actions included fines and corrective actions by the carriers.

Q3: Do plans need to be analyzed and changed to meet the Final Rules before 1/1/2026?

Answer: As noted above, the NQTL Comparative Analysis requirement has been in effect since 2021, and the federal Departments have made it clear that they expect employer plans to currently be in compliance with the statute.

Most provisions in the Final Rules took effect for plan years beginning on or after Jan. 1, 2025. However, the effective date for some of the more complex changes (specifically, the requirement regarding meaningful benefits, the prohibition on discriminatory factors and evidentiary standards, the evaluation of outcomes data, and the heightened Comparative Analysis requirements) will come into play for plan years beginning on or after Jan. 1, 2026.

Meantime, the Final Rules are being challenged in court. On January 17, 2025, the ERISA Industry Committee (ERIC) filed suit in the U.S. Court of Appeals for the DC Circuit asking the court to invalidate the Final Rules. Alternately, the complaint asks the court to invalidate key provisions and prohibit the Departments from implementing or enforcing them. The case challenges the regulatory reach of expansive interpretations of MHPAEA under the 2024 Final Rules, including:

• The "meaningful benefits" provisions, which added a new requirement for plans to provide “core treatments” for all covered MH/SUD conditions;
• The “material differences in access” standard;
• The Comparative Analysis requirements;
• The fiduciary certification requirement; and
• The January 1, 2025, applicability date.

Many benefits lawyers believe the case has merit, especially in light of the Supreme Court’s recent decision in Loper Bright Enterprises v. Raimondo, which ended the deference with which federal courts previously were required to treat agency rules. It would not be surprising if the courts chipped away at the Final Rules in the coming years. In the intervening time, the Trump administration could take independent actions to weaken or delay the Final Rules.

Where does this leave employers? If a Comparative Analysis has not yet been completed for your plans, the most legally compliant and agency-protective choice is to engage a consultant to begin the work before the end of 2025. Keenan has worked with a number of consultants who do this work, and we can help plan sponsors to evaluate and choose one. Keenan can also assist its clients to obtain the information necessary (plan documents, claims data, etc.) for the consultant to complete its work.

Q4: Does the analysis have to be performed every year or only when a new plan is offered or changed? 

Answer: The Comparative Analysis does not need to be performed annually. Under Final Rules, it should be performed when there have been significant changes to the plan.

Keenan is not a law firm and no opinion, suggestion, or recommendation of the firm or its employees shall constitute legal advice. Clients are advised to consult with their own attorney for a determination of their legal rights, responsibilities, and liabilities, including the interpretation of any statute or regulation, or its application to the clients’ business activities.