The Mental Health Parity and Addiction Equity Act (MHPAEA)

The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) is a federal law that generally prevents group health plans and health insurance issuers that provide mental health or substance use disorder (MH/SUD) benefits from imposing less favorable benefit limitations on those benefits than on medical/surgical benefits. Prior to the passage of MHPAEA, the Mental Health Parity Act of 1996 (MHPA) provided that large group health plans cannot impose annual or lifetime dollar limits on mental health benefits that are less favorable than any such limits imposed on medical/surgical benefits. MHPAEA preserves the MHPA protections and added significant new protections, such as extending the parity requirements to substance use disorders.

MHPAEA generally provides that financial requirements (such as coinsurance and copays) and treatment limitations (such as visit limits) imposed on MH/SUD benefits cannot be more restrictive than the predominant financial requirements and treatment limitations that apply to substantially all medical/surgical benefits in a classification. In addition, MHPAEA prohibits separate financial requirements and treatment limitations that apply only to MH/SUD benefits. MHPAEA also imposes several important disclosure requirements on group health plans and health insurance issuers.

Although the law requires a general equivalence in the way MH/SUD and medical/surgical benefits are treated with respect to annual and lifetime dollar limits, financial requirements and treatment limitations, MHPAEA does NOT require group health plans or health insurance issuers to cover MH/SUD benefits. However, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively referred to as the “Affordable Care Act”) builds on MHPAEA and requires coverage of mental health and substance use disorder services as one of ten essential health benefit (EHB) categories in non-grandfathered individual and small group plans.

Section 203 of Title II of Division BB of the Consolidated Appropriations Act, 2021 (CAA, 2021), enacted on December 27, 2020, amended MHPAEA, in part, by expressly requiring group health plans and health insurance issuers offering group or individual health insurance coverage that offer both medical/surgical benefits and MH/SUD benefits and that impose non-quantitative treatment limitations (NQTLs) on MH/SUD benefits to perform and document their comparative analyses of the design and application of NQTLs. Further, beginning 45 days after the date of enactment of the CAA, 2021, these plans and issuers must make their comparative analyses available to the Departments or applicable State authorities, upon request.

2013 MHPAEA Regulation

A final regulation implementing MHPAEA was published in the Federal Register on November 13, 2013. The regulation is effective January 13, 2014 and generally applies to plan years (in the individual market, policy years) beginning on or after July 1, 2014. See http://www.gpo.gov/fdsys/pkg/FR-2013-11-13/pdf/2013-27086.pdf for the full text of the final regulation. This followed an interim final regulation, which was published in the Federal Register on February 2, 2010 and generally applies to plan years beginning on or after July 1, 2010. See http://edocket.access.gpo.gov/2010/pdf/2010-2167.pdf - Opens in a new window for the full text of the regulation.

The final regulation applies to non-Federal governmental plans with more than 50 employees, and to group health plans of private employers with more than 50 employees. It also applies to health insurance coverage in the individual health insurance market. It does not apply to group health plans of small employers (except as noted below in connection with the EHB requirements). Like the statute, it does not require group health plans to provide MH/SUD benefits. If they do, however, the financial requirements and treatment limitations that apply to MH/SUD benefits cannot be more restrictive than the predominant requirements and limitations that apply to substantially all of the medical/surgical benefits.

The provisions of the regulation include the following:

1. The substantially all/predominant test outlined in the statute must be applied separately to six classifications of benefits: inpatient in-network; inpatient out-of-network; outpatient in-network; outpatient out-of-network; emergency; and prescription drug. Sub-classifications are permitted for office visits separate from all other outpatient services, as well as for plans that use multiple tiers of in-network providers. The regulation includes examples for each classification. Additionally, although the regulation does not require plans to cover MH/SUD benefits, if they do, they must provide MH/SUD benefits in all classifications in which medical/surgical benefits are provided.
2. The regulation requires that all cumulative financial requirements, including deductibles and out-of-pocket limits, in a classification must combine both medical/surgical and MH/SUD benefits in the classification. The regulation includes examples of permissible and impermissible cumulative financial requirements.
3. The regulation distinguishes between quantitative treatment limitations and nonquantitative treatment limitations. Quantitative treatment limitations are numerical, such as visit limits and day limits. Nonquantitative treatment limitations include but are not limited to medical management, step therapy and pre-authorization. There is an illustrative list of nonquantitative treatment limitations in the regulation. A group health plan or coverage cannot impose a nonquantitative treatment limitation with respect to MH/SUD benefits in any classification unless, under the terms of the plan (or coverage) as written and in operation, any processes, strategies, evidentiary standards, or other factors used in applying the nonquantitative treatment limitation to MH/SUD benefits in the classification are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in applying the limitation with respect to medical surgical/benefits in the classification. The final regulation eliminated an exception that allowed for different nonquantitative treatment limitations “to the extent that recognized clinically appropriate standards of care may permit a difference.”
4. The regulation provides that all plan standards that limit the scope or duration of benefits for services are subject to the nonquantitative treatment limitation parity requirements. This includes restrictions such as geographic limits, facility-type limits, and network adequacy.

2024 MHPAEA Regulations

On September 9, 2024, the U.S. Departments of Health and Human Services (HHS), Labor, and the Treasury (collectively, the Departments) released new final rules implementing MHPAEA. The final rules amend certain provisions of the existing MHPAEA regulations and add new regulations to set forth content requirements and timeframes for responding to requests for NQTL comparative analyses required under MHPAEA, as amended by the CAA, 2021.

These final rules aim to further MHPAEA’s fundamental purpose – to ensure that individuals in group health plans or group or individual health insurance coverage who seek treatment for covered MH conditions or SUDs do not face greater burdens on access to benefits for those conditions or disorders than they would face when seeking coverage for the treatment of a medical condition or a surgical procedure. These final rules are critical to addressing barriers to access to MH/SUD benefits.

Among other things, these final rules:

• Make clear that MHPAEA protects plan participants, beneficiaries, and enrollees from facing greater restrictions on access to MH/SUD benefits as compared to medical/surgical benefits.
• Reinforce that health plans and issuers cannot use NQTLs applicable to MH/SUD benefits that are more restrictive than the predominant NQTLs applied to substantially all medical/surgical benefits in the same classification. Examples of NQTLs include prior authorization requirements and other medical management techniques, standards related to network composition, and methodologies to determine out-of-network reimbursement rates.
• Require plans and issuers to collect and evaluate data and take reasonable action, as necessary, to address material differences in access to MH/SUD benefits as compared to medical/surgical benefits that result from application of NQTLs, where the relevant data suggest that the NQTL contributes to material differences in access.
• Codify the requirement in MHPAEA, as amended by the CAA, 2021, that health plans and issuers conduct comparative analyses to measure the impact of NQTLs. This includes evaluating standards related to network composition, out-of-network reimbursement rates, and medical management and prior authorization NQTLs.
• Prohibit plans and issuers from using discriminatory information, evidence, sources, or standards that systematically disfavor or are specifically designed to disfavor access to MH/SUD benefits as compared to medical/surgical benefits when designing NQTLs.
• Implement the sunset provision for self-funded non-Federal governmental plan elections to opt out of compliance with MHPAEA.

Applicability of MHPAEA

MHPAEA originally applied to group health plans and group health insurance coverage and was amended by the Affordable Care Act to also apply to individual health insurance coverage. HHS has jurisdiction over public sector group health plans (referred to as “non-Federal governmental plans”), while the Departments of Labor and the Treasury have jurisdiction over private sector group health plans.

MHPAEA does not apply directly to small group health plans, although its requirements are applied indirectly in connection with the Affordable Care Act’s EHB requirements. The Protecting Affordable Coverage for Employees Act amended the definition of small employer in section 1304(b) of the Affordable Care Act and section 2791(e) of the Public Health Service Act to mean generally an employer with 1-50 employees, with the option for states to expand the definition of small employer to 1-100 employees. The Employee Retirement and Income Security Act and the Internal Revenue Code also define a small employer as one that has 50 or fewer employees. (Some states may have mental health parity requirements that are stricter than federal requirements.)

Employment-related group health plans may be either “insured” (purchasing insurance from an issuer in the group market) or “self-funded.” The insurance that is purchased, whether by an insured group health plan or in the individual market, is regulated by the State’s insurance department. Group health plans that pay for coverage directly, without purchasing health insurance from an issuer, are called self-funded group health plans. Private employment-based group health plans are regulated by the Department of Labor. Non-Federal governmental plans are regulated by HHS. Contact your employer’s plan administrator to find out if your group coverage is insured or self-funded and to determine what entity or entities regulate your benefits.