Mental Health Parity: What Employers Need to Know for 2025
By Bobbie Jo Aue, Director of Product Development Marketing and Member Services
In the first webinar of our two-part Mental Health Parity and Addiction Equity Act (MHPAEA) series, we discussed the fundamentals of the MHPAEA and how it affects employers. As a recap, the MHPAEA is a federal law that requires group health plans to provide equal coverage for mental health/substance abuse services and medical services. You can read the key takeaways from part 1 or watch the session.
The Alliance hosted a second webinar to go over proposed regulations to the MHPAEA that could affect employers in 2025. John Barlament, Shareholder at Reinhart Boerner Van Deuren, explained the potential updates and what they mean for employers. Keep reading to get the key insights from the presentation. You can also watch the second webinar on-demand.
What are the proposed updates to the Mental Health Parity and Addiction Equity Act?
New regulations to the MHPAEA were proposed in August of 2023 after regulators found that almost all audited plan issuers could not demonstrate compliance with the MHPAEA. With regulators hoping to have final regulations effective for plan years starting 1/1/2025, employers need to begin thinking about how they will prepare to meet these new regulations.
Below are the main proposed changes to the MHPAEA.
ENHANCED DATA COLLECTION AND EVALUATION
New regulations would require plans to collect and evaluate outcomes data and address differences in access to mental health and substance use disorder (MH/SUD) services compared to medical and surgical (M/S) benefits.
MEANINGFUL COMPARATIVE ANALYSIS
These regulations would codify the requirement to conduct meaningful comparative analyses to measure the impact of Nonquantitative Treatment Limitations (NQTLs). This includes evaluating network composition, out-of-network reimbursement rates, and prior authorization NQTLs, ensuring a thorough examination of the impact of NQTLs on plan participants.
There is a three-step process to prove that data-based NQTLs are justified. Typically, all three requirements must be met to impose an NQTL.
- No More Restrictive Requirement – means the NQTL can’t be more restrictive for MH/SUD benefits than it is for M/S.
- Design and Application Requirement – means the plan needs to satisfy the requirements related to the design and application of NQTLs.
- Relevant Data Evaluation Requirement – means the plan collects, evaluates, and considers the impact of relevant data on access to MH/SUD benefits relative to access to M/S benefits. If there are any material differences, the plan must take reasonable action as necessary to address them.
Using our Smarter NetworksSM, The Alliance can help you ensure your network has an equitable range of M/S providers and MH/SUD providers. Reach out to us to learn how our customizable networks can benefit your employees and help ensure your compliance with the MHPAEA.
MEANINGFUL BENEFITS REQUIREMENT
Proposed regulations would require plans offering mental health benefits to provide “meaningful benefits” for both MH/SUD and M/S. This ensures that plans do not provide a broad range of benefits for M/S while limiting MH/SUD benefits.
CERTIFICATION BY A PLAN FIDUCIARY
Proposed regulations would require plans subject to the Employee Retirement Income Security Act (ERISA) to undergo review and certification by a plan fiduciary. This places additional responsibility on plan fiduciaries to guarantee compliance. Employers have a fiduciary responsibility to run their benefit plans in the best interest of plan participants, so it is crucial that they take an active role in ensuring compliance.
NOTIFICATION AND CORRECTIVE ACTION
The regulations would introduce a 45-day corrective action period for plans found to be non-compliant. Plan enrollees would need to be notified within 7 calendar days of noncompliance. This heightened scrutiny and swift action may pose challenges for employers.
How could the updates affect employers?
These regulations would be more stringent than the 2021 MHPAEA requirements and would require employers to substantiate their plan choices with data.
Many employers would not be prepared to submit a detailed analysis of their benefit plans upon request. Employers should start working with their benefit partners now to prepare these analyses, so they are prepared if they need to submit an analysis.
NQTLs, specifically, generally require data to support them. Including language in the Summary Plan Description (SPD) is a good start, but it is not enough. Plans will likely need to create a chart for each NQTL in various settings (e.g., inpatient in-network, inpatient out-of-network, hospital-based, and outside of a hospital). Employers will need to work with their vendors to get the data needed to back up their NQTLs. If an employer is unable to back up their benefit plan design with data, they will have to change it. This is a significant issue because employers may need to make changes to the plan mid-year. Again, it is important for employers to work with their vendors to make sure they’re compliant before new regulations take effect.
How can you reduce risk for your organization?
Given the heightened scrutiny and potential legal consequences, employers must take proactive measures to reduce risks associated with MHPAEA compliance.
ANNUAL PLAN ANALYSIS WITH BENEFIT VENDORS
While previously, employers did not need to review every year unless they changed vendors, under these new provisions, employers may need to review every year. Employers should collaborate with their benefit vendors to conduct a comprehensive analysis annually. This proactive approach ensures that any gaps in both QTL and NQTL approaches are identified and addressed. Employers should document the compliance process step-by-step, ensuring objectivity and fairness between MH and M/S benefits. Employers should also be comfortable pressing their vendors to maintain an unbiased stance.
UPDATE SERVICE CONTRACTS
Plan sponsors must review and update service contracts with Third-Party Administrators (TPAs) and vendors to align with compliance requirements. Clarity in contracts is crucial for ensuring that vendors provide the necessary information to back up benefit plan design decisions.
LEGAL REVIEW
Considering the legal ambiguity surrounding these regulations, employers should perform a comprehensive legal review. No plan sponsor can navigate this review alone; collaborating with vendors, updating service agreements, and looking beyond SPDs are essential steps for compliance.
What’s next for the Mental Health Parity and Addiction Equity Act?
Failure to comply with MHPAEA regulations carries significant penalties, including lawsuits, court orders, and IRS penalties. So, employers must prioritize compliance to ensure the well-being of their employees and their business.
The evolving landscape of MHPAEA regulations requires proactive engagement from employers. By understanding the proposed updates, identifying gaps, collaborating with vendors, and implementing robust compliance measures, organizations can navigate the complex terrain of mental health parity and addiction equity. This not only safeguards the interests of employees and ensures a resilient and compliant health benefits framework, but it also protects the business from legal and financial risk.
If you have questions about your organization’s compliance with the MHPAEA, you can contact John Barlament for assistance.
Bobbie Jo Aue joined The Alliance in 2021 and serves as Director of Product Development where she uses her wealth of experience in network design, implementation, and analysis to better service employer-members and their brokers. Bobbie Jo comes from UMR where she held the role of Director of Customer Solutions – Networks for over 11 years. Other previous positions include Network Administrator/ Contract Manager roles at UMR, Security Health Plan, and Fiserv Health.
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