Final Rule under MHPAEA Clarifies NQTL Comparative Analysis Requirement

On September 23, 2024, the Departments of Labor, Treasury, and Health and Human Services (together, “Departments”) issued a final rule (“Final Rule”) under the Mental Health Parity and Addiction Equity Act (“MHPAEA”). The Final Rule applies to insurers and to insured and self-funded group health plan sponsors.

Among other things, the Final Rule clarifies requirements for the comparative analysis of nonquantitative treatment limitations (“NQTLs”) that has now been required for more than three years. For ERISA plans, the Final Rule also requires a named plan fiduciary to certify that they have engaged in a prudent process to select one or more qualified service providers to perform and document the comparative analysis and that they have satisfied their duty to monitor those service providers with respect to the performance and documentation of the comparative analysis.

The Final Rule is effective for plan years beginning on or after January 1, 2025, with exceptions. The comparative analysis requirement has been in effect since February 10, 2021.

Comparative Analysis Requirement

A group health plan subject to MHPAEA that provides mental health or substance use disorder (“MH/SUD”) benefits is required to perform a comparative analysis if it imposes any NQTL on an MH/SUD benefit. This encompasses most group health plans. NQTLs include, but are not limited to: medical management standards like prior authorization; formulary design; network tier design; network composition standards; methods for determining out-of-network rates; fail-first policies; and restrictions based on geographic location, facility type, or provider specialty.

Next Steps

Plan sponsors of both insured and self-funded group health plans should:

• Arrange for a comparative analysis to be performed. Self-funded plan sponsors should contact the appropriate plan service providers and/or brokers to discuss options for performing the comparative analysis. An analysis could take several months to complete and will require cooperation and information from many parties. Insured plan sponsors should contact their insurers to confirm whether they are performing and furnishing the comparative analysis required to meet plan sponsor’s independent obligations under MHPAEA and the Final Rule. A sponsor with an insurer that is not providing a sufficient analysis should consider finding either an insurer that does provide it or a service provider to perform it for their plan.
• ERISA plan sponsors should be prepared to follow a prudent vendor selection process. For plan years beginning on or after January 1, 2025, a named ERISA plan fiduciary is required to certify that they have engaged in a prudent process to select a qualified service provider to perform and document the comparative analysis. As part of this process, it could make sense to request multiple bids and a sample or redacted analysis from the vendors being considered.
• ERISA plan sponsors should be prepared to monitor the vendors performing the comparative analysis. For plan years beginning on or after January 1, 2025, a named ERISA plan fiduciary is required to certify that they have satisfied their duty to monitor the service providers engaged in the comparative analysis.
• Update insurer, service provider, and vendor contracts to facilitate the process. Some service providers might not be prepared to assist with the comparative analysis or be willing to provide the necessary information in a timely manner, but their information and cooperation can be essential to performing a compliant analysis. Plan sponsors should consider updating their contracts with all applicable insurers, service providers, and vendors to ensure a smooth process both for the initial analysis and any changes or updates that might be necessary in the future.

Enforcement Mechanisms

The comparative analysis requirement can be enforced in several ways, including through statutorily mandated audits by the Departments, and through obligations to provide the analysis upon request to the Departments, applicable State authorities, and to any participant or beneficiary who has received an adverse benefit determination. In addition, according to the Final Rule, ERISA plan participants and beneficiaries are entitled to receive the comparative analysis upon request within 30 days, with penalties of up to $110 per day ($40,150 per year) per request for failure to provide the analysis. This mechanism derives from an interpretation of statutory obligations that are already in place, so plan sponsors could be exposed to these penalties immediately.