On April 2, 2021, the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury (collectively, the “Departments”) confirmed that group health plan sponsors must be prepared now to provide specific proof, upon request by the Departments, that the plan complies with the federal mental health parity rules.

New Documentation and Reporting Requirements. The new guidance expands on the recent amendments to the Mental Health Parity and Addiction Equity Act of 2008 (the “Mental Health Parity Act” or “Act”) made by the Consolidated Appropriations Act, 2021.

These amendments require group health plans to perform and document a comparative analysis that shows that the “non-quantitative treatment limitations” (for example, pre-authorization requirements, medical management standards, and network tier design) imposed by the plan comply with the Mental Health Parity Act. The comparative analysis, along with detailed documentation supporting the analysis, must be made available to the Departments upon request.

While the Mental Health Parity Act already requires group health plans to provide parity between medical/surgical benefits and mental health and substance use disorder benefits, the recent amendments to the Act create more formal documentation and reporting rules with respect to these requirements. In other words, what was once recommended by the Departments as a “best practice” has now become a legal compliance obligation.

Detailed Analysis and Supporting Evidence Required. According to the new guidance, plan sponsors must be prepared to submit a detailed report and supporting documentation showing compliance with the Act. Conclusory or generalized statements without specific supporting evidence and detailed explanation will not be acceptable.

The guidance also clarifies that plan participants have the right to receive this information from the plan under ERISA’s existing disclosure requirements.

Consequences of Noncompliance. Effective immediately, the Departments may request the comparative analysis from a plan sponsor in response to a participant complaint or in “any other instances in which the [Department] determines appropriate.”  If the Department ultimately determines that the plan is not in compliance with the Act, the plan sponsor will be required, within 7 days of that finding, to notify all plan participants of the Department’s determination.

Recommended Next Steps. Plan sponsors will want to begin discussing the new mental health parity requirements with their plan service providers as soon as possible. Questions to ask include:

• What non-quantitative treatment limitations is the plan currently imposing with respect to mental health and substance use disorder benefits?
  • Note that some of these limitations may not be obvious from the face of the plan documents. For example, if certain therapy treatments are denied based on “medical necessity” standards or “experimental/investigational” exclusions, what specific criteria are being used to apply these plan provisions to the therapy? And are they different from the criteria applied to medical and surgical benefits?

• Has a compliance analysis under the Mental Health Parity Act ever been performed with respect to the plan? If so, have there been any significant changes to the plan since that time?

• What services and assistance will the plan service providers make available with respect to these new requirements (particularly for plans that have never been tested for compliance or need to update prior testing)? When will these services be made available, and is there an additional cost for these services? 

Plan sponsors may also wish to use the Self-Compliance Tool maintained by the DOL to assess their compliance with the Mental Health Parity Act.

For additional information, please contact your Employee Benefits and Executive Compensation counsel at Smith, Gambrell & Russell, LLP.