Compliance News | January 24, 2025
On January 17, 2025, the Departments of Labor, Health and Human Services (HHS) and the Treasury (collectively the Departments) released the 2024 MHPAEA Report to Congress on recent Mental Health Parity and Addiction Equity Act (MHPAEA) enforcement activities. Later that day, the ERISA Industry Committee (ERIC) filed suit in the U.S. Court of Appeals for the DC Circuit asking the court to invalidate the 2024 final MHPAEA rules or, at a minimum, invalidate key provisions and prohibit the Departments from implementing or enforcing them.
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On December 27, 2020, Congress enacted the Consolidated Appropriations Act, 2021 (CAA), which amended MHPAEA, in part, to require group health plans and health insurers that offer both medical/surgical benefits and mental health/substance use disorder (MH/SUD) benefits and impose nonquantitative treatment limitations (NQTLs) on MH/SUD benefits to perform and document comparative analyses of the design and application of their NQTLs. (We discussed these requirements in our January 14, 2021 insight, which includes examples of NQTLs.)
The comparative analysis requirements became effective on February 10, 2021. Plans and insurers must make their comparative analyses available to the Departments or applicable state authorities, upon request. In addition, participants, beneficiaries and their authorized representatives are also entitled to request comparative analysis information.
On August 3, 2023, the Departments published proposed rules in the Federal Register, which we discussed in our August 1, 2023 insight. The proposed rules generated more than 9,500 comments raising a range of objections, challenges and concerns.
Final MHPAEA rules were published on September 23, 2024, amending the longstanding 2013 final MHPAEA rules and establishing new standards for NQTLs, including implementing the additional documented comparative analyses requirements that were added through the CAA of 2020. We discussed the 2024 final rules in our September 26, 2024 insight. They include staggered applicability dates, with some provisions taking effect for plan years beginning on or after January 1, 2025, and others for plan years beginning on or after January 1, 2026.
Since the CAA of 2020, the Departments are required to provide an annual report to Congress regarding the NQTL comparative analysis requirements in addition to the bi-annual Report to Congress previously required under MHPAEA.
Among other things, the Departments’ 2024 MHPAEA Report to Congress highlights that the DOL and the Centers for Medicare & Medicaid Services combined issued over 50 insufficiency letters with respect to responses related to NQTL compliance, over 30 initial determinations of noncompliance and 3 final determinations of noncompliance. This data combined with information provided in prior reports suggest many comparative analysis inquiries remain pending federal review.
The report is overshadowed by the lawsuit, which calls into question the fundamental approach under the 2024 final rules, characterizing it as a departure from longstanding MHPAEA implementation policies established under the 2013 final rules.
The case challenges the regulatory reach of expansive interpretations of MHPAEA under the 2024 final rules. Key provisions targeted by the lawsuit include:
The case asserts that the regulations are unlawful because they violate the Administrative Procedure Act, exceed the Departments’ statutory authority under MHPAEA and the CAA, violate the Fifth Amendment’s due process clause, and are “arbitrary and capricious.” The lawsuit seeks to permanently prevent the Departments from implementing, administering, acting upon or enforcing the 2024 final rules or challenged provisions. The suit alleges that the 2024 final regulations “threaten the ability of plan sponsors to offer quality, affordable benefits in compliance with the law.”
The new administration is now faced with responding to this lawsuit regarding a regulation that it did not promulgate. Meanwhile, the new administration could take independent actions while the litigation is pending. For example, the new administration could immediately institute enforcement relief by delaying applicability dates or implementing enforcement safe harbors even before resolution of the court action.
Sponsors of group health plans should monitor this litigation while remaining mindful of the statutory requirements. Plans may face another period of good-faith statutory compliance while litigation and rulemaking efforts are revisited.
While regulatory details continue to evolve, plan sponsors should continue to work with their service providers to maintain a current version of documented comparative analysis. If a plan has not already done so, it should ensure it has been reviewed for compliance with provisions of MHPAEA that are not in flux, such as the quantitative treatment limitation rules and certain NQTL concepts that have remained consistent.
While the 2024 MHPAEA Report to Congress may provide insights related to the prior administration’s approach to guidance and enforcement related to MHPAEA, the recent litigation calls much of those efforts into question.
Meanwhile, plan sponsors seeking to prioritize MH/SUD benefits can continue to do so despite debates around MHPAEA compliance considerations. Reviewing MH/SUD benefits and updating with modern benefit designs, adding benefits that may be valuable and/or removing unnecessary restrictions are positive steps plan sponsors can take.
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