Editor’s Note: The Mental Health Parity and Addiction Equity Act (MHPAEA) prohibits health plans and health insurance coverage from applying more stringent treatment limitations or financial requirements on mental health and substance use disorder (SUD) treatments than they do for physical illnesses. Mental health parity has become an increasingly critical challenge for health plans, partly driven by the exploding opioid crisis that is dominating headlines and making SUDs and mental health problems a central issue in the national healthcare debate.
In a recent webinar, Manatt examined mental health parity and its effects on health plans and state regulators from multiple perspectives—regulatory, policy and litigation. The program provided multifaceted insights into a full range of key topics—from defining requirements to developing compliance practices to analyzing the latest lawsuits that are shaping MHPAEA’s implementation. In the first part of our article summarizing the webinar, below, we provide an overview of MHPAEA and a detailed look at state insurance regulators’ role. Watch for part 2 of our article in our November “Health Update,” focusing on insurer compliance and recent MHPAEA litigation. To view the full webinar free on demand, click here. To download a free copy of the presentation, click here.
The Increasing Focus on Mental Health Parity
Four key issues are fueling the growing interest in mental health parity:
1. The opioid epidemic and the 21st Century Cures Act have led both the U.S. Department of Labor and state insurance regulators to intensify their scrutiny of plan compliance.
2. Federal and state guidance have emphasized the breadth of health plan operations that could create parity concerns.
3. Plan participants have brought lawsuits challenging the standards by which plans cover mental health and substance use disorder (SUD) care.
4. Health plans have struggled to operationalize parity analysis, particularly as it affects Non-Quantitative Treatment Limitations.
What Is MHPAEA?
Sponsored by Paul Wellstone and Pete Domenici, MHPAEA prevents group health plans and health insurer issuers that provide mental health or SUD benefits from imposing less-favorable limitations on those benefits than on medical/surgical benefits. It covers two key categories of treatment limitations. The first is Quantitative Treatment Limitations (QTLs), which are standards that set numeric limits, such as 50 outpatient visits per year. The second is Non-Quantitative Treatment Limitations (NQTLs), such as prior authorization, fail-first protocols (restricting coverage of expensive therapies until patients have already failed treatment with lower-cost alternatives), provider network size and medical necessity standards.
State Insurance Regulators’ Role in Compliance: Ramping Up Oversight
Both the federal government and states are increasing their oversight of mental health parity. The opioid epidemic is partly responsible for the focus on parity, but there are other factors as well.
State Departments of Insurance (DOIs), along with state attorneys general, are leading efforts at the state level to increase access to SUD and mental health services, relying on both MHPAEA and related state laws. DOI actions are based on consumer complaints, although many regulators have found that the average consumer doesn’t understand what parity really is and is not equipped to identify and report parity violations. In addition to consumer complaints, there is a growing body of data calls, market conduct examinations and other regulatory actions to document parity violations and concerns that warrant further investigation.
Parity Is a High-Profile Issue for the NAIC
Parity is a key issue for the National Association of Insurance Commissioners (NAIC)—the association of the chief insurance regulators from the 50 states, Washington, D.C., and the five U.S. territories. At NAIC’s August 2019 annual meeting in New York City, two major health committees spotlighted presentations from provider and consumer advocacy groups detailing parity priorities for insurance regulators. At the same meeting, the full NAIC body approved a new market conduct handbook chapter on mental health parity. Relatively spare, the chapter is already causing advocates to push for additional oversight through the handbook and other mechanisms.
States have varying levels of legal authority over parity and also differ in how they exercise their enforcement authority. Many states have incorporated federal MHPAEA standards into state law. Others have enacted their own state laws. Some states rely heavily on market conduct exams. Others rely on a continuum of escalating inquiries, starting with targeted inquiries and then building up to market conduct exams, if necessary.
With such wide variations across states, a key issue to watch is whether a consensus will emerge at NAIC on exam procedures or other regulatory guidance for assessing parity compliance. At this point, different regulators would provide different answers to questions around what parity means and how it should be addressed.
Examples of State Enforcement Efforts
When discussing state enforcement efforts, regulators refer to “front-end” form reviews and “back-end” investigations. Front-end reviews focus on rate and form approvals. They involve taking a close look at how insurer contracts cover mental health and SUD issues. Some states have been conducting deep reviews over many years, while others have just started to intensify their review processes. Mississippi and North Carolina are examples of states that recently hired consultants to advise them on how to upgrade their rate and form approval processes.
Back-end reviews rely on investigations, including data calls and market conduct exams, to assess claims handling and other issues around operational compliance. Minnesota and New Hampshire are examples of states that have collected robust data from carriers and supplemented it with data from their All Payer Claims Databases (APCDs) to give them multiple perspectives on what is truly going on in the field. A number of other states are now beginning to engage in similar activities.
What Are Regulatory Actions Uncovering?
Regulatory actions are uncovering parity concerns. Pennsylvania often is considered a leader in the parity space, because it has examined all of its six major carriers for compliance with the Affordable Care Act (ACA) and the MHPAEA requirements that have been incorporated into the ACA’s essential health benefit requirements—and parity has emerged as a leading problem area. Pennsylvania has already published two exams—both of which found parity violations. Several other exams are in process, with results expected soon. The next steps in the exam process will be for agreement on a corrective action plan to remedy past violations and minimize the potential for future violations. Some states also focus on penalties—but most regulators are more interested in ensuring that problems are addressed and don’t recur in the future.
Other examples of states conducting rigorous reviews include:
- Rhode Island, which has a rigorous annual form review process and also is conducting market conduct exams to assess operational compliance. The state has its exam reports for its major carriers on its web site.
- Colorado, which rejected 11 market conduct exams conducted by an outside firm last year, because they did not do an adequate job of investigating potential parity violations.
In total, 40 states have taken action to address parity compliance through data calls, investigations, examinations or other regulatory initiatives. Some states also are supplementing their standard exam procedures with more detailed compliance tools being developed by medical experts.
How Do Regulators View Compliance Tools?
In any area of insurance regulation with a lot of activity, there are entrepreneurs who offer tools for improving compliance to the insurers and regulators—and we see that area heating up now in the mental health parity arena. Typically, regulators defer to insurers on what tools they may choose to use. That is especially true in areas where best practices and standards are still evolving. There are exceptions to this rule, such as when states may require insurers to use a particular tool for a specific function, such as collecting data in a uniform way to allow “apples-to-apples” comparisons.
Insurer attestations are a tool that regulators use at times to clarify insurer obligations at an operational level, such as performing comparative analyses of NQTLs. Regulators and insurers, however, have varying views about the value of attestations and how much should be disclosed from the insurer’s perspective.
As of now, parity enforcement approaches are still a work in progress and are likely to be sorted out through a combination of regulatory actions and court decisions. Again, the key issue to watch is whether a consensus emerges among state regulators on exam procedures or other guidance for measuring parity compliance.
Note: Watch for part 2 of our summary of our “Understanding Mental Health Parity” webinar in the November “Health Update,” focusing on insurer compliance and recent MHPAEA litigation.