The U.S. Departments of Treasury, Labor, and Health and Human Services have recently released final regulations regarding nonquantitative treatment limitations (NQTL) under the Mental Health Parity and Addiction Equity Act (MHPAEA Act). These highly anticipated rules expand on last year’s proposed regulations and focus on the comparative analysis that group health plan sponsors and insurers must perform. The goal is to ensure that their plans do not impose more restrictive access to mental health and substance use disorder benefits than they do for medical and surgical benefits.
While offering mental health coverage is not mandatory for many plans, those that voluntarily include it must comply with the new, complex regulatory standards laid out in these final regulations. This advisory provides key compliance tips. We recommend utilizing an NQTL Compliance & Testing firm to assist with reviewing and documenting each NQTL Analysis.
1. Identify Key Responsibilities and Gather Information
Determine who within your organization will be in charge of addressing NQTL compliance, and whether third-party vendors will take on any of this responsibility. This will depend on whether your coverage is fully insured or self-funded.
Action Step:
- For insured plans, the insurance carrier must meet the NQTL requirements. However, your plan still has an independent obligation to ensure these requirements are met. Confirm in writing (preferably as part of your contract) that the insurer is fulfilling its obligations under the MHPAEA, including the comparative analysis requirement. This will help shield your plan from liability if the insurer fails to comply.
Action Step:
- For self-funded plans, you may want to hold your third-party administrator (TPA) or other vendors accountable for meeting the MHPAEA, including performing the NQTL comparative analysis. Often, TPAs will not assume full responsibility for conducting the analysis, but you can require them (preferably through a contract) to provide the necessary data for conducting it. If your TPA also provides fully-insured coverage, they may already have a comparative analysis that can be adapted for your self-funded plan. You should consider whether to review this internally or engage a consultant for the analysis.
Action Step:
- Choose your consultant or expert carefully when selecting someone to help with the comparative analysis. Document your process for selecting and overseeing the vendor’s work. ERISA fiduciaries must certify that they followed a prudent process in selecting and managing these vendors.
2. Review and Process Information Carefully
The process by which you conduct the comparative analysis matters. If your plan is subject to ERISA, you will have a fiduciary duty to oversee the process and ensure the analysis is completed properly.
Action Step:
- If you receive a comparative analysis from your vendor’s insured plan, it could serve as a template for your own. Many self-funded plans base their designs on insured products, so collaborate with your vendors to identify any necessary adjustments to the analysis.
Action Step:
- If parts of the analysis seem incomplete or unclear, ask for clarification or additional data from the vendor.
Action Step:
- Pay attention to the evaluation of outcomes data. If the analysis shows a disparity that could disadvantage mental health or substance use disorder benefits, determine if it’s significant. For instance, check whether the NQTL was developed using objective, unbiased standards and whether the data accurately reflects your plan’s experience.
Action Step:
- If mental health benefits are carved out to a separate vendor or subcontractor, ensure that processes and outcomes are consistently evaluated across different vendors.
Action Step:
- Ask your insurer or TPA whether they have undergone prior audits and what the results were. Understanding past audit findings can help you evaluate your plan’s current compliance status.
3. Understand the Rules and Monitor Compliance
It’s crucial for fiduciaries, especially those overseeing self-funded plans, to understand the rules enough to assess compliance with NQTL requirements and to review the work done by vendors.
Action Step:
- Gain enough knowledge about the regulations to identify NQTLs, work with service providers on the comparative analysis, and if your plan is ERISA-covered, monitor the service provider’s work. Ask the right questions to ensure the analysis is thorough.
Action Step:
- Be equipped to spot any issues and decide on corrective actions when necessary. Document any corrective measures you take or plan to take.
4. Provide the Comparative Analysis Upon Request
Under the new rules, you must be ready to present your comparative analysis within 10 business days if requested by the relevant departments. Other timelines apply once a government audit is initiated.
Action Step:
- Ensure that the comparative analysis is conducted and documented ahead of time. Ten business days is a short window to provide the analysis unless it’s already prepared.
Action Step:
- Based on past audit experiences, it’s likely that your comparative analysis may not meet every expectation during the first review. Be prepared to provide additional documentation and inform your vendors that more details may be needed.
Action Step:
- Be ready to take corrective actions if any NQTLs need adjustments to ensure compliance.
5. Pay Attention to Effective Dates
The statutory requirements are in effect now, and audits have been ongoing for several years. The new regulations will apply to plan years starting on or after January 1, 2025. However, certain provisions related to the comparative analysis won’t take effect until plan years beginning in 2026.
Action Step:
- Ensure you have a thorough comparative analysis ready that demonstrates your commitment to MHPAEA compliance. Don’t rely on the delayed effective dates to postpone compliance. Preparing and documenting the analysis takes time, and government audits are already happening.
Action Step:
- Insurers and other vendors will need to update their responses to meet the revised requirements. Even if you’ve obtained information from them in the past, request updated documentation to revise your analysis.
Action Step:
- Keep your comparative analysis current with plan updates and any significant changes in outcomes data.
Action Step:
- Prepare for more stringent enforcement of the MHPAEA regulations, particularly in 2026. Stay updated on any new guidance, election results, or legal challenges that may impact the rules.
