Understanding the new Mental Health Parity and Addiction Equity Act (MHPAEA) regulations: What plan sponsors need to know

Background

MHPAEA requires group health plans that cover MH/SUD benefits to do so in parity with covered medical and surgical (M/S) benefits. Plans cannot impose:

• Quantitative treatment limitations (QTLs), which include deductibles or limits on the number of visits; or
• Nonquantitative treatment limitations (NQTLs), which include medical management standards (such as medical necessity requirements) and standards for network participation, 

on MH/SUD benefits that are more restrictive than those limitations that apply to M/S benefits in the same classification. Although MHPAEA has been in effect since 2008, in 2021 Congress passed the Consolidated Appropriations Act of 2021, which mandated that plan sponsors perform a comparative analysis of any NQTLs imposed on MH/SUD benefits.

The Departments issued proposed regulations related to NQTLs and the new comparative analysis requirements in 2023, and the final rules generally adopt these proposed rules with some modifications. The final rules:

• Establish a meaningful benefit standard for MH/SUD benefits;
• Require group health plans to conduct a two-part analysis to determine NQTL parity, including a requirement to proactively review and evaluate relevant plan data;
• Formalize the requirements applicable to a plan’s NQTL comparative analysis;
• Clarify who may receive the comparative analysis upon request and the timelines for disclosure; and
• Require ERISA plan fiduciaries to certify that they have engaged in a prudent selection and monitoring process with respect to any service provider who prepares the plan’s comparative analysis.

Final rules

Meaningful Benefits Standard. While the final rules do not require the coverage of any particular MH/SUD benefit, effective in plan years beginning on or after January 1, 2026, if a group health plan offers MH/SUD benefits in any one of six benefit classifications, it must provide “meaningful benefits” for that MH/SUD condition in each classification in which the plan covers M/S benefits. A plan offers meaningful benefits if it covers a “core treatment” (a standard, widely recognized treatment or intervention) for the MH/SUD condition in each classification where the plan also covers core treatments for M/S conditions. It is possible that there may be litigation challenging this new standard, as MHPAEA was not intended to mandate benefit coverage.

NQTL Standards. The 2023 proposed rules would have required plans to demonstrate that an NQTL applied to at least two-thirds of M/S benefits in the same classification before it could apply to MH/SUD benefits. The final rules eliminate this mathematical test, and instead impose a two-part analysis for NQTLs:

• Plan Design and Application Requirement: Group health plans must ensure that the processes, strategies, evidentiary standards, and factors used to design and apply an NQTLs that applies to MH/SUD benefits is comparable to, and not more stringent than, the NQTL that applies to M/S benefits. While this requirement is not new, beginning with plan years starting on or after January 1, 2026, the final rules also ban the use of discriminatory factors and evidentiary standards in designing NQTLs. To the extent the design or application of an NQTL discriminates against MH/SUD benefits, the plan must take steps to correct the biased information, evidence or sources relied upon, and document those corrective steps in the comparative analysis.
• Data Collection Requirement: For plan years beginning on or after January 1, 2026, group health plans must also collect and evaluate relevant data to ensure that, in operation, NQTLs for MH/SUD benefits are not more restrictive than those for M/S benefits. Material differences identified in the reviewed data would be a strong indicator of a MHPAEA violation, and would require the plan sponsor to take reasonable actions to address those differences. As part of this data collection requirement, group health plans also must review data related to network composition (such as in-network and out-of-network utilization rates) and take reasonable steps to correct material differences between MH/SUD and M/S benefits. The Departments noted that this could include efforts to add providers to networks, increasing provider compensation or telehealth offerings, and outreach to providers. Again, this evaluation and any corrective actions must be documented in the comparative analysis.

Comparative Analysis. Group health plans that impose any NQTLs on MH/SUD benefits must perform and document a comparative analysis of how each NQTL is designed and applied. The final rules require that the comparative analysis contain, at a minimum, six content elements, including identifying each NQTL, defining the factors and standards used to design the NQTL, demonstrating that the NQTL complies with MHPAEA, and findings and conclusions. The Departments have made it clear that they expect the comparative analysis to include detailed information and a robust analysis of the NQTLs. 

Fiduciary Certification. The 2023 proposed rules would have required ERISA plan fiduciaries to certify that their comparative analysis complied with MHPAEA. While the final rules have pared back this requirement, for plan years beginning on or after January 1, 2025, ERISA plan fiduciaries still must certify that they have engaged in a prudent process to select a service provider to prepare the analysis, monitored that service provider, reviewed the comparative analysis, and discussed it with their service providers to understand its findings and conclusions. In addition, ERISA plan fiduciaries must ensure that any service provider who performs the comparative analysis provides reasonable assurance that the plan’s NQTLs and related comparative analysis comply with MHPAEA.

Comparative Analysis Disclosure. The final rules confirm that a group health plan’s comparative analysis must be provided to a requesting agency within 10 business days of the request. In addition, group health plans must provide the comparative analysis to participants and beneficiaries, similar to plan documents or summary plan descriptions, within 30 days of request. Plans must also provide the comparative analysis as part of the relevant documents related to an adverse MH/SUD benefit determination. If plan sponsors have not yet completed their comparative analysis, they should do so as soon as possible so that they are prepared to respond to these types of requests. 

Enforcement. In the event of a final determination of noncompliance with MHPAEA, the Departments have the authority to require a group health plan to remove the NQTL until the plan is able to demonstrate compliance. Group health plans also will be required to notify all participants that the plan violates MHPAEA, and provide participants and beneficiaries with information on how a claim for benefits that applied the impermissible NQTL can be reprocessed.

Next Steps

The final rules are complex, and require group health plan sponsors to conduct significant additional analysis to determine compliance with MHPAEA. As the final rules will require assistance from TPAs and other service providers, plan sponsors should review their vendor contracts, and potentially request amendments to ensure these service providers will provide the necessary compliance assistance. Plan sponsors also should review their plan’s written NQTL analysis to determine what updates might be needed to comply with the final rules, and discuss what changes their service providers intend to make to bring these reports into compliance. Finally, plan sponsors should take a closer look at how they are taking fiduciary responsibility for compliance with MHPAEA, including reviewing their formal fiduciary governance structures.

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