Mental Health Parity (MHPAEA): Compliance and NQTL Analysis

What MHPAEA Requires

The Mental Health Parity and Addiction Equity Act, enacted in 2008 and significantly strengthened by the CAA in 2021, prohibits group health plans from imposing more restrictive financial requirements or treatment limitations on mental health and substance use disorder benefits than on comparable medical/surgical benefits.

Parity does not require plans to cover MH/SUD benefits — but if a plan covers them, the coverage must be on par with medical/surgical benefits. The comparison is made within benefit classifications: inpatient in-network, inpatient out-of-network, outpatient in-network, outpatient out-of-network, emergency care, and prescription drugs.

Quantitative Treatment Limitations

Quantitative Treatment Limitations (QTLs) are numerical limits on benefits — visit limits, day limits, and dollar limits. These are the most straightforward parity requirements to evaluate.

• Visit limits: If the plan limits outpatient medical/surgical visits (e.g., 60 physical therapy visits per year), it cannot impose a more restrictive limit on outpatient MH/SUD visits.
• Day limits: If the plan covers 30 inpatient days for medical/surgical conditions, it must cover at least 30 inpatient days for MH/SUD conditions.
• Dollar limits: Annual and lifetime dollar limits on MH/SUD benefits are prohibited if comparable medical/surgical benefits do not have equivalent limits.
• Frequency limits: Limits on how often a service can be provided must be no more restrictive for MH/SUD than for comparable medical/surgical services.

Non-Quantitative Treatment Limitations

Non-Quantitative Treatment Limitations (NQTLs) are the most complex and most frequently violated aspect of MHPAEA. NQTLs are any limitation on the scope or duration of benefits that is not expressed as a number. They include:

• Prior authorization requirements: If prior auth is required for inpatient MH/SUD admissions, it must also be required for comparable inpatient medical/surgical admissions.
• Step therapy: If step therapy (fail-first protocols) is required for MH/SUD medications, comparable requirements must apply to medical/surgical medications.
• Network composition: If the plan uses a narrower network for MH/SUD providers than for medical/surgical providers, this may be an NQTL violation.
• Reimbursement rates: If the plan reimburses MH/SUD providers at lower rates than comparable medical/surgical providers, this may affect network adequacy and constitute an NQTL.
• Geographic limitations: More restrictive geographic access requirements for MH/SUD than for medical/surgical care.
• Fail-first policies: Requiring less intensive treatment before covering more intensive MH/SUD treatment when no comparable requirement exists for medical/surgical care.

The CAA NQTL Comparative Analysis Requirement

The Consolidated Appropriations Act of 2021 added a significant new requirement: plans must perform a written comparative analysis of the NQTLs applied to MH/SUD benefits versus comparable medical/surgical benefits. This analysis must be available to the DOL, state regulators, or plan participants upon request — within 10 business days.

The comparative analysis must include: (1) the specific NQTLs applied to MH/SUD benefits; (2) the factors used to determine the NQTLs; (3) the evidentiary standards used; (4) the comparative analysis demonstrating parity; and (5) the findings and conclusions.

• Self-funded plan sponsors cannot delegate this obligation to their TPA or carrier — the plan sponsor is responsible for ensuring the analysis is performed and documented.
• The analysis must be updated whenever the plan design changes in a way that affects MH/SUD benefits.
• Engaging a parity compliance consultant or ERISA attorney to perform the analysis is strongly recommended — the technical requirements are complex.
• If the analysis reveals a parity violation, the plan must correct it prospectively and document the correction.

Enforcement and Liability

MHPAEA enforcement has intensified significantly since the CAA's passage. The DOL, HHS, and state insurance regulators are all actively enforcing parity requirements. Private lawsuits by plan participants are also increasing.

• DOL enforcement: The DOL's Employee Benefits Security Administration (EBSA) conducts parity audits as part of its health plan enforcement program. Plans selected for audit must produce the NQTL comparative analysis within 10 business days.
• State enforcement: Many states have enacted their own parity laws that apply to fully-insured plans and, in some cases, self-funded plans. State enforcement is increasingly active.
• Private lawsuits: Plan participants can sue under ERISA Section 502(a) for parity violations. Courts have awarded significant damages and attorney's fees in parity cases.
• Corrective action: When the DOL finds a parity violation, it typically requires the plan to correct the violation prospectively and may require retroactive payment of denied claims.