Insurers Show Signs of Meeting Mental Health Parity Requirements

Insurers are doing a better job of providing analyses of why they covered mental health care differently from medical claims, an official who represents psychiatrists says.

More than half of insurers in one large state made “good faith efforts” that resulted in “very thorough and comprehensive” analyses of how mental health coverage compared to medical and surgical coverage as required by the Mental Health Parity and Addiction Equity Act (MHPAEA), Tim Clement, director of legislative development for the American Psychiatric Association, said in an interview.

Clement said he couldn’t identify the state due to a nondisclosure agreement, but the state is to issue a report later this year.

The indication of progress comes as the Department of Labor prepares to issue a proposed rule (RIN 1210-AC11) soon that would provide further guidance on how health plans must comply with standards for showing why their mental health coverage differs from other coverage.

Congress passed the landmark mental health law in 2008. Its goal is to make certain that health insurance plans don’t discriminate in their coverage between mental health and substance use disorder benefits and other types of medical and surgical benefits.

However, plans operated by employers have struggled to comply with some of the law’s requirements.

In a January 2022 report to Congress, the departments of Labor, Health and Human Services, and the Treasury faulted health plans for not providing adequate analyses for why nonquantitative treatment limitations, such pre-authorization, differ between mental health and medical coverage.

A second report to Congress is overdue but expected soon, and health plans are hopeful it will find improved compliance.

At a conference held by health insurance trade association AHIP on March 14, Amber Rivers, director of the Employee Benefits Security Administration’s Office of Health Plan Standards and Compliance Assistance in the Department of Labor, said the agency is “currently working on a notice of proposed rulemaking, which will be a more formal way for stakeholders to engage with us on various ideas that we have” on further implementing the mental health parity law.

Rivers also said the next report to Congress is “coming out fairly soon.”

Employers that provide health plans for employees have argued they need better guidance from the Department of Labor to meet the comparative analysis requirements, and they say their plan administrators, typically health insurance companies, are better able to provide the information required since the insurers design the benefits.

“EBSA has heard complaints from stakeholders that there have been issues with obtaining information related to MHPAEA compliance from outside plan administrators and service providers. In general, EBSA will work with both plan sponsors and their service providers to obtain the necessary information to determine whether a plan is in compliance with MHPAEA,” a DOL spokesman said in an email.

Key to Improvement

Clement said the good showing in the state for which he reviewed the health plan analyses is “not transferable across all states and those that are regulated federally.” The federal government regulates self-insured health plans offered by most large employers under the Employee Retirement Income Security Act while state insurance departments oversee individual and fully insured health insurance plans.

“I’m hoping that we’re going to be moving towards that,” Clement said of the state’s strong results.

Health insurers in that state are doing well because “they’ve been working at it for years now,” and they have received technical assistance and support from the state, Clement said. “For a lot of insurers and group health plans across the country,” the comparative analyses are still “pretty new to them,” he said.

A key to the improved comparative analyses “is they explain how and why it is that they’re sure they’re meeting the requirements of the law,” rather than just providing conclusory statements that the plans comply, Clement said.

As an example, Clement said the analyses make it clear that mental health and substance use disorder medications aren’t being subjected to more stringent prior authorization requirements than other types of medicine before coverage is approved. In addition, the analyses show that the percentages of medications subject to prior authorization are often lower than for other medications, and they show that approval rates are often higher, he said.

Quick Turnaround Times

Many insurers of individual and group plans also administer health plans for employers in the self-insured market, Amy Gordon, co-head of the health and welfare employee benefits practice in the Chicago office of law firm Winston & Strawn LLP, said in an interview. Winston & Strawn’s health benefits practice represents hundreds of group health plans sponsored by employers.

“Employers over the last number of years have spent hundreds of thousands of dollars trying to get themselves in a good position, so that if the Department of Labor does come knocking on their door to audit their nonqualified treatment limitation compliance, that they will have at least what they need to respond to the Department of Labor,” she said.

The DOL is seeking fast turnaround times, typically 30 days, when they request more information from plans, she said.

Health plans are grappling with a lack of mental health providers, and they need more specific guidance to comply with the parity requirements, Gordon said.

“There are different categories of care that somebody who is in need of mental health services are going to utilize versus somebody who just broke their leg,” Gordon said.

“It’s not a clear apples-to-apples comparison to medical-surgical,” she said.

Recent events have also prompted the need for more clarification. For example, when the US Supreme Court overturned abortion as a constitutional right in Dobbs v. Jackson Women’s Health Organization in 2022, many employers were looking at ways to provide travel reimbursement for abortions, Gordon said.

“The question was if we don’t also provide these travel benefits to individuals who need to travel for mental health care that might not be readily available in close proximity to their homes or work, are we now violating the mental health parity” rules, Gordon said.

Problems Beyond Sponsors’ Control

Employer sponsors hope the proposed rule will provide more clarity on the mental health standards, Garrett Hohimer, vice president for policy and advocacy with the Business Group on Health, said in an interview. The Business Group on Health represents large employer plan sponsors.

However, there is concern about requirements “that the plan sponsors cannot control,” he said.

Provider shortages constrain coverage, Hohimer said. “I’m guarded against the idea that we’re going to be held responsible” for problems beyond plan sponsors’ control, he said.