As many of you know, the Department of Labor (DOL) released their much-anticipated Mental Health Parity and Addiction Equity Act (MHPAEA) Final Rules last month. Many of the more significant updates to the requirements don’t take effect until a plan’s renewal on/after January 1, 2026, but a few notable items will begin applying in just a few months, once a plan renews on/after January 1, 2025. These provisions include a new fiduciary certification, a codified termination of the MHPAEA opt-out opportunity for non-Federal governmental plans, and both new and revised definitions for relevant terms.
As a brief refresher, all group health plans subject to the MHPAEA need to maintain up-to-date analyses of how their plan develops and applies its nonquantitative treatment limitations (NQTLs) and establish if those NQTLs are designed and applied in parity between medical/surgical (M/S) benefits and mental health/substance use disorder (MH/SUD) benefits. For plans subject to ERISA, the new rules now require a plan’s fiduciary to certify within this analysis that they have (1) engaged in a prudent process for selecting a vendor to complete this analysis and (2) monitored their vendor as they complete the analysis.
In most cases, the employer, as the plan sponsor and administrator, will be the designated fiduciary responsible for performing these duties and certifying that they have done so. So, what does the certification of a prudent process of selection and subsequent monitoring of service providers look like?
Well, here’s what the final rule states:
“For this purpose, DOL expects that a plan fiduciary making such a certification will, at a minimum, review the comparative analysis prepared by or on behalf of the plan with respect to an NQTL applicable to mental health and substance use disorder benefits and medical/surgical benefits; ask questions about the analysis and discuss it with service providers, as necessary, to understand the findings and conclusions documented in the analysis; and ensure that a service provider responsible (in whole or in part) for performing and documenting a comparative analysis provides assurance that, to the best of its ability, the NQTL and associated comparative analysis complies with the requirements of MHPAEA and its implementing regulations.”
In other words, the DOL expects fiduciaries to review the comparative analysis their vendor has prepared, develop an understanding of the findings, and ask their service provider to assure that, to the best of its ability, the report they prepared complies with the MHPAEA’s requirements.
However, these details in the final rule predominantly address how fiduciaries should monitor a vendor once they’ve made their selection. We can look to a preexisting Information Letter from the DOL for more insight into how a fiduciary should first prudently choose a vendor for completing their NQTL analysis. To do so in a prudent manner, fiduciaries should:
These recommendations indicate that fiduciaries should essentially take a “due diligence” approach to selecting a vendor for their comparative analysis. This may involve soliciting bids from multiple service providers so that the fiduciary can choose one that is qualified, will provide a compliant, high-quality report, and assesses a reasonable fee for the service.
We have put together different recommendations for how plan fiduciaries can approach this fiduciary certification requirement based on the group’s insurance type:
Federal and non-Federal governmental plans were originally permitted to annually opt-out of compliance with the MHPAEA and the NQTL comparative analysis requirement that the Consolidated Appropriations Act of 2021 subsequently introduced. However, the Consolidated Appropriations Act of 2023 included a sunset provision to that option for self-funded state and local (aka non-Federal) governmental plans. Such plans that weren’t collectively bargained could not newly opt-out of compliance after December 28, 2022, and any existing opt-outs that expired after June 26, 2023 could not be renewed. On the other hand, self-funded non-Federal governmental plans that had multiple collective bargaining agreements of different lengths with opt-outs that (1) were already in place as of December 29, 2022 and (2) were not set to expire on/after June 27, 2023 could renew those opt-outs until the last collective bargaining agreement expired. The final rule codifies these provisions into the federal regulations.
Previously, the regulations permitted plans to define what does or does not qualify as a medical condition or surgical benefit according to “generally recognized independent standards of current medical practice,” which could include the most current version of the International Classification of Diseases (ICD) or State guidelines. The final rule removes the reference to State guidelines, requiring plans to first reference the ICD when establishing these parameters. If the ICD doesn’t speak to a condition/procedure’s status, the plan should then define it according to applicable Federal and State law.
Similarly, plans could formerly reference State guidelines, the most current version of the IDC, or the most current version of the Diagnostic and Statistical Manual of Mental Disorders (DSM) to establish whether a condition/disorder did or did not qualify as a mental health condition or substance use disorder. The updated definitions for mental health condition and substance use disorder within the final rule require plans to first establish this by referencing specific sections of the most current DSM or ICD. If these resources don’t address a particular condition/disorder, plans should then reference applicable Federal and State law.
The final regulations provide new definitions with examples for various components of NQTL design and application, including “processes,” “strategies,” “evidentiary standards,” and “factors.” These additions will likely be most beneficial for those carriers, TPAs, and other vendors that complete NQTL analyses, though they also provide more clarity around the nuances of NQTLs for employers that are closely involved in their plan’s design.
These 2025 changes will have a more significant impact on some employers than others. Employers that are generally in compliance with current MHPAEA requirements and that have already prepared a comparative analysis may not notice too much of a difference, other than that the comparative analysis will now need to include a fiduciary certification. However, we encourage employers with non-compliant plan designs and claims processes or that have yet to complete a comparative analysis to take steps to comply sooner rather than later, including by securing a qualified vendor (as applicable) to complete a comparative analysis. MZQ Consulting will be updating our MHPAEA comparative analysis product in accordance with the requirements outlined in the final rule by the required deadlines. For more information about our QTL and NQTL services, please reach out to engage@mzqconsulting.com.
