Agencies Issue Final Regulations on Mental Health Parity and Addiction Equity Act

On September 23, 2024, the U.S. Departments of Labor (“DOL”), Health and Human Services (“HHS”), and the Treasury (collectively, the “Agencies”) published new final regulations related to the Mental Health Parity and Addiction Equity Act of 2008 (“MHPAEA”) in the Federal Register (the “2024 Final Regulations”).[1] As expected, the 2024 Final Regulations will require significantly more engagement from group health plan sponsors and fiduciaries to ensure all MHPAEA compliance obligations are met.

MHPAEA generally requires a group health plan or health insurance issuer that provides coverage for mental health/substance use disorder (“MH/SUD”) benefits to provide such coverage “in parity” with coverage for medical/surgical (“M/S”) benefits. Plans and issuers must ensure that the financial restrictions, quantitative treatment limitations, and nonquantitative treatment limitations (“NQTL”) imposed on MH/SUD benefits are no more restrictive than those imposed on M/S benefits. The Consolidated Appropriations Act, 2021 added a requirement that plans and issuers draft a “comparative analysis” to demonstrate that NQTLs imposed on MH/SUD benefits are no more restrictive than those imposed on M/S benefits. The 2024 Final Regulations amend and expand upon the existing requirements for a plan or issuer to demonstrate compliance with MHPAEA, with a large focus on the NQTL comparative analysis and participant access to MH/SUD benefits. There are numerous new requirements imposed by the 2024 Final Regulations, and this newsletter highlights a few of them.  Some provisions of the 2024 Final Regulations are effective for plan years beginning on or after January 1, 2025, while other provisions are not effective until plan years beginning on or after January 1, 2026.

The 2024 Final Regulations impose a new standard with respect to NQTLs: effective for plan years beginning on or after January 1, 2025, a plan or issuer may not impose any NQTL on MH/SUD benefits that is more restrictive than the predominant NQTL that applies to substantially all M/S benefits in the applicable classification. This standard may sound familiar, as it has long been the standard imposed on a plan’s financial limitations and quantitative treatment limitations[2]. However, the 2024 Final Regulations instead apply a two-part analysis:[3]

• Part 1: Design and Application requirements
• Part 2: Data Evaluation requirements

Both Part 1 and Part 2 will require extensive discussion of how each NQTL is designed and applied in the comparative analysis. Further, Part 2 (which is effective for 2026) requires plans and issuers to collect and evaluate outcomes data “reasonably designed” to assess each NQTL’s impact on access to MH/SUD benefits. Previously, there has been no requirement for the comparative analysis to discuss outcomes data. For self-insured plans, this data, like most of the information required to complete the comparative analysis, is largely held by the plan’s third-party administrator (“TPA”) and pharmacy benefit manager (“PBM”). Employers who self-insure should consider whether their current administrative services agreements obligate their TPAs and PBMs to assist in preparing the comparative analysis, and if further amendment to the administrative services agreement will be necessary to address the data evaluation requirement.

The 2024 Final Regulations also soften the plan fiduciary certification requirement that was added by the 2023 proposed regulations.  The 2024 Final Regulations require that a named fiduciary of a plan subject to ERISA certify that they have engaged in a prudent process to select qualified service providers to perform and document the comparative analysis and have satisfied the duty to monitor these service providers.[4] For a self-insured plan, the fiduciary will be certifying as to the selection and monitoring of its TPA, PBM, and any other service provider engaged to help with the comparative analysis (e.g., outside legal counsel, consultants). For a fully insured plan, the certification requirement still applies, so the fiduciary must certify with respect to the plan’s insurance carrier. This certification is effective January 1, 2025 and should be maintained with the comparative analysis.

The 2024 Final Regulations establish tight deadlines to respond to DOL requests for the comparative analysis. If the DOL requests the comparative analysis from a plan or issuer, the plan or issuer has 10 business days to respond. Then if the DOL has further questions or concerns, the plan or issuer has 10 business days to respond to that follow-up request. These deadlines highlight the importance of having a submission-ready comparative analysis by January 1, 2025 because given the complexity and breadth of information required in the comparative analysis, preparing the document in 10 business days is generally infeasible.

Plans and issuers who have prepared the NQTL comparative analysis should review and revise the document to ensure it complies with the 2025 provisions of the 2024 Final Regulations by the new year. To the extent an employer with a self-insured plan has not yet requested assistance from its TPA and PBM with respect to preparation of a comparative analysis, the employer should do so. TPAs and PBMs are generally willing to provide a copy of the comparative analysis prepared for their fully insured products, which an employer can revise as appropriate to meet the comparative analysis content requirements for its self-insured plan. But this process can be lengthy and require continuous engagement with the TPAs and PBMs, so it is advisable to begin sooner rather than later. Further, employers with fully insured plans should request a copy of the comparative analysis prepared by their insurance carrier and consider how to review the document in light of the fiduciary certification requirement.

Thinking ahead to 2026, the comparative analysis will need to be updated to address the 2026 provisions of the 2024 Final Regulations. This will again require information from the TPAs and PBMs of self-insured plans and will require fully insured plans to request an updated copy of the comparative analysis from their insurance carriers. Finally, litigation regarding the enforceability of some of these requirements is likely, so as employers plan ahead for 2026, they should also keep an eye on any judicial proceedings related to the 2024 Final Regulations.

If you have any questions regarding this LEGALcurrents, please contact any member of the Employee Benefits and Executive Compensation group.

[1] The 2024 Final Regulations follow the Agencies’ proposed regulations related to MHPAEA published on August 3, 2023. Some, but not all, provisions of the proposed regulations were finalized.  See https://hselaw.com/news-and-information/legalcurrents/agencies-issue-proposed-rules-on-mental-health-parity-and-addiction-equity-act/ for an overview of the proposed regulations from 2023.

[2] The proposed regulations issued by the Agencies in 2023 would have required the application of the mathematical tests based on plan spend that has long applied to financial and quantitative treatment limitations.

[3] Although this standard is effective as of January 1, 2025, the test to prove compliance does not become fully effective until January 1, 2026. For 2025, only Part 1 is effective.

[4] This certification requirements marks a welcome change from the proposed regulations which would have required a named fiduciary to review the comparative analysis and certify whether it found the comparative analysis to comply with the applicable content requirements.