On September 9, 2024, the Departments of Health and Human Services, Labor, and Treasury issued the regulation, “Requirements Related to the Mental Health Parity and Addiction Equity Act,” updating the 2013 regulation implementing the Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008. At its foundation, MHPAEA bars most health insurance plans from discriminating against mental health and substance use disorder (MH/SUD) benefits when compared to medical and surgical (med/surg) benefits, requiring that:

“the treatment limitations applicable to such mental health or substance use disorder benefits are no more restrictive than the predominant treatment limitations applied to substantially all medical and surgical benefits covered by the plan (or coverage) and there are no separate treatment limitations that are applicable only with respect to mental health or substance use disorder benefits.”

The final rule considered input from 9,503 comments received on an earlier proposed rule, first published in July 2023. The final rule differed from the proposed rule in a number of ways, in some cases addressing concerns from health insurers and employers by giving more flexibility or clarity. The final rule:

Adheres closely to statutory text. Throughout the final rule, each new provision finalized is closely tied to specific statutory provisions. In several instances, the Departments changed their approach from the proposed rule to more closely follow relevant statutes. This is likely designed to signal close compliance with the recent Supreme Court decision in Loper Bright overturning Chevron deference.

Defines key terms in parity compliance. The rule further defines “treatment limitations” as well as “processes, strategies, evidentiary standards, and other factors.” This provides greater clarity for compliance and eliminates potential loopholes. The rule also offers more specific examples of each, including specifying that the list of example non-quantitative treatment limitations (NQTLs) is meant to not be exhaustive. The final rule defines “treatment limitations” as:

“Limits on benefits based on the frequency of treatment, number of visits, days of coverage, days in a waiting period, or other similar limits on the scope or duration of treatment. Treatment limitations include both quantitative treatment limitations, which are expressed numerically (such as 50 outpatient visits per year), and nonquantitative treatment limitations (such as standards related to network composition), which otherwise limit the scope or duration of benefits for treatment under a plan or coverage.”

Some of the examples of NQTLs include:

1. “Medical management standards (such as prior authorization) limiting or excluding benefits based on medical necessity or medical appropriateness, or based on whether the treatment is experimental or investigative;
2. Formulary design for prescription drugs;
3. For plans with multiple network tiers (such as preferred providers and participating providers), network tier design;
4. Standards related to network composition, including but not limited to, standards for provider and facility admission to participate in a network or for continued network participation, including methods for determining reimbursement rates, credentialing standards, and procedures for ensuring the network includes an adequate number of each category of provider and facility to provide services under the plan or coverage;
5. Plan or issuer methods for determining out-of-network rates, such as allowed amounts; usual, customary, and reasonable charges; or application of other external benchmarks for out-of-network rates.”

Enhances parity protections. The final rule clarifies that NQTLs must be comparable in their design and applied no more stringently between MH/SUD and med/surg. The additional focus on the design of NQTLs as well as their application builds on the earlier 2013 regulations. The final rule differs from the proposed rule, which used a four-part mathematical test for assessing NQTL compliance. With the final rule, the Departments sought to balance the concerns of industry with the goals of MHPAEA.

Promotes equity as the foundation. The final rule does not allow reliance on “discriminatory factors and evidentiary standards” in the design of a NQTL, which includes those that are “biased or not objective in a manner that discriminates” against MH/SUD care. Factors are discriminatory if, “based on all the relevant facts and circumstances, they systematically disfavor access or are specifically designed to disfavor access to mental health or substance use disorder benefits as compared to medical/surgical benefits.” For example, a seemingly neutral NQTL, but that is based on historical claims data not compliant with parity, would violate this provision of the final rule.

Advances a data-driven approach. The final rule requires health plans and issuers to create and implement a data analysis plan to assess how each NQTL impacts access to MH/SUD care. This includes a determination of whether each NQTL causes “material differences” in access, based on an analysis in which may consider “the terms of the NQTL at issue, the quality or limitations of the data, causal explanations and analyses, evidence as to the recurring or non-recurring nature of the results, and the magnitude of any disparities.” Where the plans and issuers find that a NQTL causes material differences in access, they must take reasonable action to ensure compliance. This differs from the proposed rule by allowing plans and issuers more discretion about what data they collect and how they analyze and define material differences, rather than proposing a particular analytic approach and threshold. It also closely references the MHPAEA statute, noting, “If a plan or issuer is aware of information that suggests a potential violation of MHPAEA, the statute requires the plan or issuer to address such potential violations as necessary to satisfy its obligation to ensure that the NQTLs comply with the substantive requirements of the statute.”

Closes potential loopholes. The proposed rule suggested exceptions to NQTL compliance requirements for “independent professional medical or clinical standards” and “fraud, waste, and abuse measures.” The final rule does not allow any exceptions to the NQTL compliance requirements. Instead, independent professional medical or clinical standards and fraud, waste, and abuse measures can be taken into consideration as part of NQTL analysis.

Focuses attention on network adequacy. The final rule requires assessment of the aggregate impact of all NQTLs on access to MH/SUD care, in addition to examining the impact of each individual NQTL on relevant outcomes. This acknowledges that NQTLs may interact in ways to limit access that may not be identifiable from each individual NQTL, and keeps attention focused on the overall goal of equitable access. The final rule differs from the proposed rule, which suggested a special rule for network adequacy. In the discussion of the final rule, the Departments note that they changed approaches in response to comments citing operational and legal concerns. The final rule also does not require a particular approach to analyzing data around network adequacy, such as reimbursement data.

Ensures meaningful coverage at all levels. The final rule implements a requirement that, if a plan provides any benefit for a MH/SUD condition, it must provide “meaningful benefits” for that condition in every benefit classification in which med/surg benefits are provided (e.g., inpatient care or outpatient office visits). A meaningful benefit includes  “a core treatment,” i.e., “a standard treatment or course of treatment, therapy, service, or intervention indicated by generally recognized independent standards of current medical practice.” This provides additional clarity about what is expected for coverage at every level of benefit under parity.

Enhances transparency of compliance. Plans and issuers are required to provide all comparative analysis upon request to the Departments, states, and consumers experiencing treatment limitations. For self-insured employers, all beneficiaries are entitled to request the comparative analyses. These analyses must include:

1. “a description of the NQTL;
2. the identification and definition of the factors used to design or apply the NQTL;
3. a description of how factors are used in the design or application of the NQTL;
4. a demonstration of comparability and stringency, as written;
5. a demonstration of comparability and stringency, in operation; and
6. findings and conclusions.”

Enforces penalties for non-compliance. The final rule clarifies the authority of the Departments and states to require remedies for non-compliance, including stopping NQTLs from being imposed. The final rule also notes that oversight will be a collaborative process – Departments will work with plans and issuers to find ways to address potential issues with compliance, rather than taking a strictly punitive approach.

Provides time to achieve compliance. While many provisions of the proposed rule take effect on Jan 1, 2025, the final rule acknowledges that some parts will take plans and issuers more time. For implementing “the meaningful benefits standard, the prohibition on discriminatory factors and evidentiary standards, the relevant data evaluation requirements, and the related requirements in the provisions for comparative analyses,” plans and issuers have until Jan 1, 2026.

Expands parity protections to more plans. Previously, self-funded non-Federal governmental plans could opt out of MHPAEA compliance, until a recent change in law. The final rule implements this legal change and provides a framework for parity implementation with these plans. This expands parity protections to an estimated 120,000 additional people.

Considers challenges facing employers. The final rule contains a number of considerations for self-insured employers in working with third-party administrators (TPAs) to help them achieve parity compliance with minimal additional burden. This includes considerations about how to engage TPAs in getting required data, as well as sharing compliance reporting obligations and liability for non-compliance. The Departments also signaled interest in continuing to work with employers to ease the burden of compliance and improve coordination with TPAs.

Aligns definitions with clinical science. In defining “mental health” (MH) and “substance use disorder” (SUD), the rule uses the International Classification of Diseases (ICD) and the Diagnostic and Statistical Manual of Mental Disorders (DSM), removing any non-clinical considerations from the definition. Importantly, this makes it clear that eating disorders and autism spectrum disorders fall within the definition of MH/SUD for parity compliance.

The final rule ultimately creates a powerful path forward for further parity implementation, while acknowledging concerns from plans and issuers.