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January 24, 2017
DOL Highlights Growth in MHPAEA Enforcement
By David Slaughter, JD, Senior Legal Editor

The year 2016 was a banner year for mental health parity enforcement, the U.S. Department of Labor (DOL) reported. The agency’s growing efforts to bring group health plans into line with the Mental Health Parity and Addiction Equity Act (MHPAEA) were summarized in a recent DOL release.

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Mental healthOf the 330 health plan investigations closed in the 2016 fiscal year by the DOL’s Employee Benefits Security Administration (EBSA), 191 included MHPAEA compliance audits because they involved plans subject to the MHPAEA, according to FY 2016 MHPAEA Enforcement, a fact sheet that EBSA issued on January 11.

“Of these 191 investigations where MHPAEA applied, EBSA cited 44 violations for MHPAEA noncompliance,” EBSA noted. Most of these violations involved nonquantitative treatment

For group health plans and insurers that cover mental health and substance use disorders (MH/SUDs), MHPAEA requires parity in financial requirements (such as copays) and benefit limitations affecting the scope or duration of treatment. Parity between MH/SUD and medical/surgical coverage must be demonstrated within six categories of benefits.

For financial requirements and quantitative treatment limitations, the 2013 final MHPAEA rule sets out a mathematical formula for determining parity within each of the six categories. But it is the NQTLs that have been more problematic.

Under the rule, “any processes, strategies, evidentiary standards, or other factors” used to apply an NQTL to MH/SUDs must be applied no more stringently than to medical/surgical benefits. In June 2016, the DOL released a list of “warning signs,” plan provisions that, for the agency, are flags of possibly noncompliant NQTLs.

Enforcement Triggers

EBSA conducts compliance reviews in all open cases where MHPAEA applies. Many of these stem from individual plan participants’ complaints, if the violations seem to be systematic.

“Generally, if violations are found, the Investigator requires the plan to remove any offending plan provisions and pay any improperly denied benefits,” the agency noted. “To achieve the greatest impact, Investigators will also seek a global correction, working with the plans’ service providers to find improperly denied claims and correct the problem for other plans as well.”

For example, EBSA investigators worked with several large health insurers to remove impermissible limits such as overly restrictive requirements for a written treatment plan, and overly broad preauthorization requirements. “These global changes have impacted hundreds of thousands of group health plans and millions of participants,” according to the agency.

In addition to these DOL investigations, MHPAEA lawsuits by plan participants are on the rise, and the Internal Revenue Service has the authority to impose excise taxes for violations.

Case Examples

EBSA detailed examples of some of the widespread types of violations it uncovered.

Residential Treatment Exclusions. One fully insured plan in Kentucky excluded residential treatment for participants who failed to complete a course of treatment, even though no comparable requirement applied to medical benefits. As a result of EBSA’s investigation, the insurer removed this language not just from that plan but also from all of its group business in the state—a total of 4,677 insured groups covering 106,814 total participants.

In Texas, EBSA investigated a plan that turned out to exclude residential treatment for substance use disorders, despite covering extended care expenses for medical and surgical benefits in analogous settings such as skilled nursing facilities and hospice home care. EBSA found this disparity to violate MHPAEA because “the plan was unable to demonstrate a process that would permit this exclusion to apply only to benefits for substance use disorders.”

EBSA’s efforts led the plan’s service provider to revise the exclusion—a change that will also be made, where needed, to all other Texas insured products pending state and federal regulators’ approval.

Chronic Disorders/Preauthorization. In California, a fully insured plan excluded treatment of any “chronic behavior disorder” lasting more than 6 months, even though no medical/surgical benefits were restricted because the underlying condition was chronic. The plan also required prior authorization for substance use treatment and nonemergency admissions to MH/SUD treatment facilities.

Without this preauthorization, the participant had to pay the entire cost of treatment, even though in the medical/surgical context a lack of preauthorization never resulted in a full denial of benefits.

After EBSA investigated, the plan removed both the chronic condition restriction and the penalty for failing to get preauthorization. These changes affected 3,489 groups and 363,122 participants.

Written Treatment Plans. In California, EBSA’s regional office encountered a fully insured plan that imposed the following requirements for MH/SUD benefits:

  • A written treatment plan prescribed and supervised by a behavioral health provider;
  • Follow-up treatment; and
  • A requirement that the written plan be for a condition that “can favorably be changed.”

No comparable restrictions applied to medical/surgical benefits. As a result of EBSA’s action, the insurer agreed to remove this impermissible limit not only from the plan under investigation, but from all of its group health plans subject to MHPAEA in California (more than 3,000).

Other Problem Areas

Other problematic treatment limits were highlighted by the DOL, along with the U.S. Departments of Health and Human Services (HHS) and the Treasury, in October 2016 guidance.

One of these frequently asked questions (FAQs) involved a group health plan that would not authorize inpatient, in-network mental health treatment until a plan representative examined the individual in person to determine whether inpatient care was medically necessary. The plan also required preauthorization for inpatient medical/surgical admissions, but conducted that process over the phone.

This practice violates MHPAEA, the agencies indicated, because the preauthorization NQTL is being imposed more stringently for mental health coverage. While a plan could potentially treat certain conditions or treatments differently based on recognized clinical standards, “the MHPAEA regulations do not permit a plan or issuer to apply stricter NQTLs to all benefits for mental health conditions in a classification than those applied to all medical/surgical benefits in the same classification”—such as in-network, inpatient benefits in this instance.

Another FAQ involved a plan that required individuals to try an intensive outpatient program for substance use treatment first, before the plan would cover inpatient treatment. The plan had the same requirement for medical/surgical coverage. However, no intensive outpatient SUD treatment facilities that would meet the plan’s requirement were available in the geographic area, whereas they were available in the medical/surgical context.

This plan’s “fail-first” protocol was not permissible, according to the DOL, HHS, and the Treasury, because it “includes a condition that an individual cannot reasonably satisfy,” and the lack of access applies only to MH/SUD benefits. As a result, “the fail-first requirement is, in operation, applied more stringently with respect to MH/SUD benefits than medical/surgical benefits.”

Additional Resources

David Slaughter David A. Slaughter, JD, is a Senior Legal Editor for BLR’s Thompson HR products, focusing on benefits compliance. Before coming to BLR, he served as editor of Thompson Information Services’ (TIS) HIPAA guides, along with other writing and editing duties related to TIS’ HR/benefits offerings. Mr. Slaughter received his law degree from the University of Virginia and his B.A. from Dartmouth College. He is an associate member of the Virginia State Bar.

Questions? Comments? Contact David at for more information on this topic

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