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Behavioral Health Parity for Employer Sponsored Group Health Plans

With increasing regulatory scrutiny and litigation by employees against employer sponsored group health plans, now would be a good time to find out if your employer sponsored group health plan is compliant with behavioral health parity rules.

MHPAEA and the Consolidated Appropriations Act, 2021

In 2008, the U.S. Congress passed the Mental Health Parity and Addiction Equity Act (MHPAEA). This law requires large group health plans that cover mental health and/or substance use disorder benefits to provide access to those benefits in a similar manner as the plan provides access to medical/surgical benefits.

In 2010, the Affordable Care Act (ACA) expanded the scope of MHPAEA also to apply to certain individual and small group health plans.

The Departments of Health and Human Services, Labor, and Treasury (Tri-Agencies) along with state Departments of Insurance were tasked with MHPAEA enforcement, and the Tri-Agencies issued final regulations in 2014 implementing the law.

In December 2020, the U.S. Congress acted again, this time passing the Consolidated Appropriations Act, 2021 (2021 CAA) which requires, among many other things, that group health plans perform and document a comparative analysis of how the plan complies with the MHPAEA’s rules regarding certain coverage limitations placed on mental health or substance use disorder benefits.

The 2021 CAA requires the Tri-Agencies to audit a certain number of health plans each year and to report the results of such audits annually to Congress. Any health plan that is determined to be in violation of MHPAEA will be publicly named and required to take corrective action including notifying all individuals enrolled in the plan of the noncompliance.

Why Should Employers Care?

Importantly, MHPAEA places the requirement to comply with the law on the sponsor of the group health plan. This means that, in the case of an employer sponsored group health plan, the employer is responsible for ensuring that its health benefit plan complies with MHPAEA.

While employers may previously have relied upon their Third-Party Administrator (TPA) to ensure compliance with various health plan laws, not all TPAs are able or willing to provide a comparative analysis when the Tri-Agencies come knocking. This is because the comparative analysis is extremely difficult to create, and will vary based on the specific plan benefits that the group health plan chooses to cover.

Some TPAs are providing employer sponsored group health plans with a generic analysis that the TPA developed for its fully insured group health plans (where the TPA is acting as the insurer and is liable for compliance under the law). However, in the Tri-Agencies’ first report to Congress on the results of audits undertaken pursuant to the 2021 CAA, the Tri-Agencies made clear that such generic analysis are not sufficient, identifying such responses as “non-responsive comparative analysis.”

The Tri-Agencies had not made any final conclusions of MHPAEA violations at the time the report was published. However, they did highlight that not a single plan that was audited provided a sufficient comparative analysis as required by the 2021 CAA. The Tri-Agencies also appealed to Congress for additional enforcement authority including the ability to issue fines against group health plans for parity violations.

Litigation

Historically, the Department of Labor (DOL) through its MHPAEA regulatory authority, audited employer group health plans for MHPAEA compliance and worked with those plans on corrective action where compliance issues were identified. The results of those audits were provided to Congress in a “fact sheet” that did not identify the plan or name of the plan sponsor that was noncompliant.

Under the 2021 CAA, that information will be made public. This is an important change because employees have been increasingly active in bringing lawsuits against employer group health plans with suspected MHPAEA violations.

Now, employees will be armed with an opinion from the DOL that their employer plan was not in compliance with the federal law and a notice from their employer plan notifying the employee of the plan’s noncompliance. This could cause significant issues to employers defending against such lawsuits. Because the 2021 CAA does not provide a remedy for employees, they have an incentive to seek a remedy in court for unpaid claims that they believe were improperly denied because their plan was in violation of MHPAEA.

What Can Employers Do?

While the current employer risk of regulatory penalties or litigation may still be relatively low, because the DOL recognizes that developing a good comparative analysis is very difficult, it is, nevertheless time for employers to begin to get prepared.  

First, talk to your TPA to find out what support the TPA can provide in developing the comparative analysis that you will need to provide to the DOL upon request.  This may be something that you want to negotiate when you renew your contract with the TPA. It may also be necessary to hire an independent consultant group to work with the TPA to document a sufficient comparative analysis for your employer sponsored group health plan.

You may also want to consult legal counsel to review the comparative analysis or specific limitations to identify any MHPAEA concerns so that any compliance issues can be corrected prior to a DOL investigation or litigation.

Darci M. Smith
410-576-4153 • dsmith@gfrlaw.com