The Mental Health Parity and Addiction Equity Act (MHPAEA) requires parity between medical/surgical benefits and mental health/substance use disorder (MH/SUD) benefits. The Departments of Labor and Health and Human Services (the “Departments”) have recently issued guidance warning plan sponsors about certain plan provisions that could signal non-compliance with the law. The warning comes at a time when many plan sponsors are facing greater challenges, most notably a significant increase in claims for costly out-of-network care in residential treatment centers and intensive outpatient settings, and may be considering new ways to manage those costs. This Update discusses the “warning signs” document and other recent guidance on the MHPAEA.
The MHPAEA requires that health plans provide parity in two categories:1
In the new “warning signs” document, the Departments highlight plan provisions that, on their face, appear to apply certain requirements only to MH/SUD or differently to MH/SUD. Examples of questionable practices include:
In an enforcement action, plans with some of these “red-flag” provisions will have to be able to provide detailed evidence to substantiate compliance, as noted in the next section.
To support the application of certain medical-management tools (e.g., prior authorization), especially to outpatient MH/SUD care, plan sponsors must follow an evidence-based process. The plan sponsor must first consider neutral factors. Examples include the cost of treatment, high-cost growth, variability in cost and quality, elasticity of demand, provider discretion in determining diagnosis or type or length of treatment, clinical efficacy of treatments, licensing and accreditation of providers, and claims types with a high percentage of fraud. Then, the plan sponsor must apply the selected factors comparably to medical/surgical care and to MH/SUD care and determine which services meet the criteria for application of the medical-management tool.
An example in a recent answer to an FAQ involved a prior-authorization requirement after a patient’s ninth visit for treatment of depression.4 To support the prior-authorization requirement, a plan sponsor would have to demonstrate and document that it did the following:
Recent answers to FAQs have also confirmed that plan sponsors must provide, upon request, the following documentation to participants and their health care providers acting as authorized representatives:5
In addition, criteria for medical necessity determinations must also be provided upon request.6 All of this documentation would also need to be available in any enforcement action initiated by the federal government.
In light of the extensive process required to justify the application of certain medical-management tools to MH/SUD care, plan sponsors that apply such tools to MH/SUD care need to review those tools (as written and in operation) and determine whether their application is consistent with the MHPAEA. If the plan sponsor has not gone through the evidence-based process outlined in this Update to support the application of medical-management tools to MH/SUD care, this effort should be undertaken right away. This process can be more difficult when one entity administers medical/surgical benefits and a separate one administers MH/SUD benefits, because coordination between the two may be lacking.
As part of this process, it would be important to also review the plan’s cost-sharing requirements and other quantitative limits to make sure they continue to comply with the MHPAEA. This is especially important if the plan’s design has changed in recent years and it has been a while since an initial MHPAEA analysis was performed.
Heightened scrutiny of medical-management tools may make it harder for plan sponsors to control the significant increase in claims for costly out-of-network care in residential treatment centers and intensive outpatient settings that many plans are experiencing. However, there are strategies that can be implemented that are permitted by the MHPAEA.
Some types of non-quantitative treatment limits are not highlighted in the “warning signs” document, but nonetheless must be applied comparably to medical/surgical care and MH/SUD. These include formulary design, network tier design, standards for provider admission to the network (including reimbursement rates) and plan methods for determining allowed charges for out-of-network care.
If enforcement issues arise, legal counsel must be involved in addressing them.
Sibson works with trustees and their fund counsel on compliance issues. We can help plan sponsors and their service providers identify medical-management tools being used and obtain the evidence and documentation needed to support their application to MH/SUD care. Related services we provide include analysis of whether cost-sharing requirements and other treatment limits are consistent with the MHPAEA and designing cost-control strategies that are permitted under the MHPAEA, including for addressing any spike in out-of-network utilization.
For more information about how these new rules may affect your plan, please contact your Sibson consultant or the Sibson office nearest you.
1 For background information on the final MHPAEA rule, see Sibson Consulting’s January 22, 2014 Capital Checkup, “Final Rule on the Mental Health Parity and Addiction Equity Act.”
3 For example, if a plan sponsor applies a deductible to MH/SUD care, it must apply a single cumulative deductible to medical/surgical care and MH/SUD care. If the plan has an out-of-pocket limit, expenses incurred for MH/SUD care and medical/surgical care must count toward a single limit.
4 See Question 9 in the answers to FAQs released April 20, 2016.
5 See Question 9 in the answers to FAQs released April 20, 2016.
6 For additional information, see Sibson’s December 16, 2016 Update, “New Guidance on the Mental Health Parity and Addiction Equity Act.”
Update is Sibson Consulting’s electronic newsletter summarizing compliance news. Update is for informational purposes only and should not be construed as legal advice. It is not intended to provide guidance on current laws or pending legislation. On all issues involving the interpretation or application of laws and regulations, plan sponsors should rely on their attorneys for legal advice.
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