New Mental Health Rule Introduces Employer Benefit Parity Test

The Biden administration is poised to issue a final rule toughening mandates for employer-sponsored health plans to provide mental health and substance abuse coverage on par with their traditional medical benefits.

“Mental health care is health care,” President Joe Biden said in a statement. “But for far too many Americans, critical care and treatments are out of reach.”

The rule will be released Monday (RIN: 1210-AC11) by the Departments of Labor, Health and Human Services, and the Treasury, and will require detailed analyses from employers with self-insured plans to determine whether their mental health benefits comply with the Mental Health Parity and Addiction Equity Act.

“It shouldn’t be harder for you to find a provider that can treat your eating disorder than it is to find a provider who can treat your ulcer,” DOL Assistant Secretary for Employee Benefits Security Lisa Gomez said Friday on a call with reporters. “But the truth is that it is different. It is harder.”

Employer plans will be forced to address their use of “non-quantitative treatment limitations” that affect parity between physical and mental health coverage, including “prior authorizations” that require insurer approval before treatment. The rule also eliminates an exemption for non-federal government health plans. Employer groups opposed the draft rule in August 2023 on the grounds that compliance would be difficult and expensive.

The final rule delays enforcement dates for some plan design provisions from 2025 to 2026, and differs from the original proposal in several ways, according to senior administration officials. The rule tweaks how plans can measure network adequacy, and gives them more flexibility in measuring the impact of prior authorizations.

The administration also eliminated a safe harbor for rooting out fraud that provider groups and a coalition of blue states had alleged could be easily manipulated by insurance companies. A senior official said plans would still be given the opportunity to explain any deviations from the new requirements and would work with plans to comply.

Support and Opposition

Officials also said they hope the requirements will help incentivize plans to recruit more providers to their networks through better pay and fewer treatment barriers. Employer groups have pointed to the nation’s shortage of mental health providers as a broader hurdle to reaching parity in coverage.

“Beyond current behavioral health provider shortages, the sputtering talent pipeline of mental and behavioral health professionals must be tackled,” the Chamber of Commerce wrote in comments on the proposed rule.

Several employer groups expressed support for the concept of mental health parity but asked the departments to drop a provision that aimed to simplify and restrict mental health limitations by mandating that plans could only use the most common type of limitation that applied to “substantially all” of its medical and surgical benefits.

“We understand that some may be of the view that less medical management is always beneficial for participants – but based on our members’ experience providing benefits for many millions of Americans, we want to emphasize that is not the case,” the American Benefits Council wrote in a comment letter after the proposed rule was released. “Medical management is not applied to undermine access to care. We have heard directly from our plan sponsor members that medical management is driven by quality concerns, not cost concerns.”

Some opponents have even said the rule would lead employers to drop mental health coverage altogether, a concern echoed by House Education and the Workforce Committee Chairwoman Virginia Foxx (R-N.C.) in an Aug 1 letter calling for the Biden administration to abandon the rule completely.

“For over a year, we’ve been telling the Biden-Harris administration that these rules will not work,” Foxx said in a statement Monday. “They are too vague and burdensome; they overregulate instead of allowing health plans to build robust networks; and they will increase premiums for employees already facing high health care costs.”

Foxx’s letter also raised the concern that the regulations overstep the agencies’ authority following the the US Supreme Court’s decision in Loper Bright Enterprises v. Raimondo. The June 28 opinion eliminated the Chevron doctrine, under which courts deferred to reasonable agency interpretations of ambiguous statutes.

A senior official told reporters that the administration believed the rule was “consistent with all applicable law.”

The Consolidated Appropriations Act of 2021 required plans to perform comparative analyses to ensure parity between mental and physical health benefits. Reports to Congress from the agencies crafting the rule in July 2023 and January 2022 found that many plans are out of compliance with the NQTL documentation requirements.

The reports knocked employers for imposing unequal treatment limitations and failing to perform sufficient comparisons between their mental health and physical health coverage.