Final Rule for Mental Health Parity Requirements

3.5 minute read

On September 9, 2024, the Departments of Labor, Health and Human Services, and the Treasury (Departments) released a final rule to strengthen the Mental Health Parity and Addiction Equity Act (MHPAEA). The rule ensures private health coverage for mental health and substance use disorder (MH/SUD) benefits is no more restrictive than for medical/surgical (M/S) benefits. It adds protections against restrictive nonquantitative treatment limitations (NQTLs) and requires group health plans and insurers to evaluate and adjust NQTLs based on data. This rule applies to plans starting January 1, 2025, with certain requirements effective January 1, 2026.

MHPAEA

MHPAEA mandates equal coverage for M/S and MH/SUD benefits in group health plans. The parity requirements apply to:

• Financial requirements, such as copayments, deductibles, and coinsurance;
• Quantitative treatment limitations, such as day or visit limits; and
• NQTLs, which often restrict benefits through measures like prior authorization, step therapy, and network admission standards.

MHPAEA's parity requirements apply to health plans from employers with over 50 employees. Due to an Affordable Care Act reform, small group market plans must also comply with federal parity for MH/SUD benefits.

The Consolidated Appropriations Act of 2021 requires health plans and insurers to compare NQTLs for M/S and MH/SUD benefits, providing a detailed, written explanation to demonstrate compliance with MHPAEA.

Compliance Problems

The Departments have received complaints that health plans and issuers often restrict access to mental health and substance use disorder benefits more than medical or surgical care. This is particularly evident in the design and application of NQTLs. Consequently, people face greater barriers in accessing MH/SUD benefits. The final rule aims to strengthen MHPAEA’s requirements and guide health plans and issuers on compliance.

Final Rule’s Changes

To comply with the final rule’s requirements, health plans and issuers must:

• Determine if a condition is an MH or SUD in line with the latest International Classification of Diseases or Diagnostic and Statistical Manual of Mental Disorders;

• Provide meaningful benefits, including core treatments, for all covered MH and SUD conditions in every classification where M/S benefits are offered;
• Avoid using factors and standards that discriminate against MH conditions and SUDs;
• Collect and assess outcomes data, and take necessary actions to address disparities in access to MH/SUD benefits versus M/S benefits; and
• Provide documented comparative analyses with specific elements to the Departments, applicable state authority, or individuals upon request.

NQTL Data Requirements

Under the final rule, a plan or issuer cannot impose any NQTL on MH/SUD benefits that is more restrictive than the predominant NQTL on M/S benefits in the same classification. Plans must collect and evaluate data to assess the impact on access to MH/SUD and M/S benefits. If data shows a significant negative impact on MH/SUD access, it indicates a potential MHPAEA violation. Plans must then take action to address and ensure compliance.

Comparative Analysis of NQTLs

The final rule sets minimum standards for developing comparative analyses to ensure NQTLs comply with MHPAEA requirements. Plans covering both M/S and MH/SUD benefits with NQTLs must document a comparative analysis. This analysis must include:

1. Description of the NQTL and benefits subject to it;

2. Identification and definition of design factors and evidentiary standards;

3. Explanation of how these factors are applied;

4. Demonstration of comparability and stringency as written;

5. Demonstration of comparability and stringency in operation, including data evaluation and actions to address differences; and

6. Findings and conclusions.

Issuers and third-party administrators typically prepare these analyses for employer-sponsored health plans. For ERISA-covered plans, a plan fiduciary must also certify they have engaged in a prudent process and monitored their service providers.

Effective Date

The final rule applies to group health plans and insurance coverage starting January 1, 2025, while provisions for meaningful benefits, anti-discrimination standards, outcomes data, and related analysis start January 1, 2026.

Download the bulletin for more details.