Preview of April Compliance Guide: Mental Health Parity and Addiction Equity Act

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The Mental Health Parity and Addiction Equity Act of 2008 (“MHPAEA”) requires group health plans to ensure that financial requirements and treatment limitations applicable to mental health and substance use disorder (“MH/SUD”) benefits are no more restrictive than the requirements or limitations for medical/surgical benefits. Recently, the Departments of Labor (“DOL”) and Health and Human Services (“HHS”) have increased their enforcement efforts on group health plan compliance with MHPAEA. While parity sounds like a simple concept, it can take a great deal of effort for group health plans to ensure compliance. Employers committed to becoming destination workplaces must keep pace with evolving legislative and regulatory initiatives that may pose risks to meeting cost targets, developing strategic benefits and compensation programs, and attracting and retaining top talent. As a trusted advisor, Arthur J. Gallagher & Co. will help you navigate the ever-changing landscape of employee benefits compliance issues. Hop aboard as we travel through some crucial compliance action items related to MHPAEA.

1. Stay on track with MHPAEA compliance.

A benefits plan subject to MHPAEA must determine whether it treats MH/SUD benefits and medical/surgical benefits equally with respect to six classifications: (1) inpatient, in-network; (2) inpatient, out-of-network; (3) outpatient, in-network; (4) outpatient, out-of-network; (5) emergency care; and (6) prescription drugs. For example, a plan must compare its copayments for inpatient, out-of-network medical benefits with its copayments for inpatient, out-of-network mental health benefits. Have you recently reviewed your plan’s benefits for compliance with MHPAEA’s classification requirements?

2. Sound the horn on financial and quantitative limitations.

Under MHPAEA, a group health plan that offers medical/surgical benefits and MH/SUD benefits may not impose greater financial requirements (e.g., copayments, coinsurance) or quantitative treatment limitations (“QTLs”) (e.g., limits on the number of visits covered) on the MH/SUD benefits than the “predominant” (more than half) financial requirements or QTLs imposed on “substantially all” (at least two-thirds) of the medical/surgical benefits in the same classification. For example, if a 20% coinsurance rate applies to at least two-thirds of all in-patient, out-of-network medical/surgical benefits, then it applies to “substantially all medical/surgical benefits” for the classification of in-patient, out-of-network benefits. The determination is further complicated by the need to project the benefits expected to be paid in a given category. However, MHPAEA permits a plan to use any reasonable method to make that projection. Has your organization completed a cost projection to understand the impact of its financial and quantitative limitations?

3. Apply the brakes on dissimilar non-quantitative treatment limitations.

A group health plan cannot impose non-quantitative treatment limitations (“NQTLs”) (non-numerical limits on the scope or duration of benefits for treatment) on MH/SUD benefits in any classification unless, under the terms of the plan as written and in operation, any process, strategy, evidentiary standard, or other factor is comparable to, and is applied no more strictly than the factors used in applying limitations on medical/surgical benefits in the same classification. For instance, a group health plan that requires preauthorization for all inpatient MH/SUD services but does not have the same preauthorization requirement for all inpatient medical/surgical services likely violates MHPAEA. Do your plan’s non-quantitative limitations meet MHPAEA’s parity standards?

4. Don’t get flagged down by blanket preauthorization requirements for MH/SUD benefits.

One red flag for MHPAEA compliance is a blanket preauthorization requirement for all MH/SUD benefits, but only a preauthorization requirement for certain medical/surgical benefits. For example, if a plan requires preauthorization for all MH/SUD treatments, but requires preauthorization only for inpatient surgery, then the plan very likely violates MHPAEA. Further, preauthorization requirements must be reviewed on the basis of the six MHPAEA classifications and parity achieved within those classifications. Have you determined whether your plan’s preauthorization requirements apply more strictly to MH/SUD benefits than to medical/surgical benefits?

5. Avoid getting derailed on fail-first protocols for MH/SUD benefits.

Under a fail-first protocol, a plan could require that an individual demonstrate that he or she did not show any recovery progress before coverage would be approved for a more intensive treatment protocol. Having such a requirement only for some MH/SUD benefits, but not for any medical/surgical benefits is likely to raise a concern under MHPAEA. For example, a plan that will only cover intensive outpatient treatment for MH/SUD when a patient has not achieved progress with less frequent non-intensive outpatient treatment imposes a fail-first protocol. If no similar requirement exists in the same classification of medical/surgical benefits, then the plan likely violates MHPAEA. Unfortunately, fail-first protocols are not always clearly expressed in benefit summaries. Have you reviewed any fail-first protocols with your third-party administrator or carrier to determine if MH/SUD benefits are treated differently than medical/surgical benefits?

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Compliance is a journey, not a destination.

As a trusted advisor, Arthur J. Gallagher & Co. has developed this Compliance Guide series to help you map a path through employee benefits compliance issues as part of an overall compliance plan. Employers should carefully evaluate their health and welfare plans to determine if they are in compliance with both federal and state law. If you have any questions about one or more of the compliance destinations listed above, or would like additional information on how Gallagher constantly monitors laws and regulations impacting employee benefits in order to support employers in their compliance efforts, please contact your Gallagher Benefit Services representative.

This is a preview of the April Compliance Guide. If you would like the full version of the Compliance Guide or would like additional information on how Gallagher constantly monitors laws and regulations impacting employee benefits and supports employers in their compliance efforts, please contact your Gallagher Benefit Services representative or contact us online.

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The intent of this analysis is to provide you with general information. It does not necessarily fully address all your organization’s specific issues. It should not be construed as, nor is it intended to provide, legal advice. Questions regarding specific issues should be addressed by your organization’s general counsel or an attorney who specializes in this practice area.