Final Mental Health Parity Rule Spurs Loper Bright Legal Threat

Changes in a final rule aimed at strengthening mental health coverage weren’t enough to win over industry groups subject to the new requirements, with one employer group signaling that it’s willing to sue.

The rule (RIN: 1210-AC11) released Monday from the Health and Human Services, Labor, and Treasury departments requires health plans to conduct detailed analyses of their mental health benefits amid a national surge in mental health needs and an ongoing shortage of mental health providers.

Lawsuits to block regulations pose a greater threat to the administration in the wake of the US Supreme Court’s June decision in Loper Bright Enterprises v. Raimondo, which overturned the longstanding Chevron doctrine of deferring to agencies’ reasonable interpretations of ambiguous laws.

The Biden administration walked back some of the original proposal’s requirements for employers and plan sponsors, but industry groups still insist that complying with the rule is too difficult.

The ERISA Industry Committee, or ERIC, has warned of potential legal action, saying the rule “goes far beyond Congress’s clear intent.”

“As ERIC evaluates this rule and assesses the implications for its member companies, we will consider all possibilities to prevent further harm to employers offering behavioral health benefits, and the employees and families who count on them – up to and including litigation,” the group said in a statement.

Administration officials Sept. 6 said they were confident the rule is “consistent with all applicable law.”

ERIC Senior Vice President of Health Policy Melissa Bartlett specifically pointed to two areas of the rule she said could potentially violate the Loper Bright decision, because they’re not outlined in the underlying statute.

One is the rule’s “meaningful benefits” standard, which says that a plan’s mental health benefits offered in any classification must be on par with medical and surgical benefits of the same classification. The other is a provision requiring plans to address “material differences” between its mental and physical benefits.

“As we review the rule, we’ll have greater insights into its consequences and ERIC’s next steps,” Bartlett said in a statement.

Crowell & Moring LLP counsel Alice Hall-Partyka, who represents health-care companies, said she also expects to see lawsuits over the rule.

“In the wake of Loper Bright we’re seeing a lot of rules being challenged and a different standard being applied to rules generally,” she said.

Creating ‘New Blanks’

Supporters of the rule say it’s needed to ensure access to mental health care and substance use disorder treatment.

“Mental illnesses are closely linked to physical health problems, such as diabetes, stroke, and heart disease,” said House Committee on Education and the Workforce ranking member Bobby Scott (D-Va.). “Conversely, chronic physical illnesses can increase the risk of mental illnesses.”

The rule creates new standards around “non-quantitative treatment limitations,” like “prior authorizations” that require patients to obtain approval from health plans for a drug or service.

“The challenge anytime you fill in the blanks is that often you create new blanks,” said Shawn Griffin, president and CEO of accreditation company URAC.

The final rule omits a mathematical test the administration previously proposed that would have required health plans to compare their spending on medical and surgical benefits to spending on mental health benefits.

The rule does, however, maintain the general requirement that plans cannot impose restrictions on mental health coverage that exceed the predominant restriction used in two-thirds of its medical and surgical benefits.

The test could preclude plans from imposing treatment limitations altogether, said Hall-Partyka, though the elimination of the math test makes things easier. The calculation didn’t make sense when “non-quantitative treatment limitations are non-quantitative in nature,” she said.

“It’s really hard to think about how you apply that test,” she said.

But the tweak may not be enough to satisfy employers or insurance companies. America’s Health Insurance Plans, the Association for Behavioral Health and Wellness, the Blue Cross Blue Shield Association, and ERIC released a joint statement Monday saying the rule will raise costs and reduce access.

“Instead of expanding the workforce or meaningfully improving access to mental health support, the final rule will complicate compliance so much that it will be impossible to operationalize, resulting in worse patient outcomes,” the group said.