Top Reasons Why Health Plans Fail Mental Health Parity Compliance

Payers have not improved their execution of the mental health parity compliance assessment, the Department of Labor’s Employee Benefits Security Administration (EBSA) recently reported to Congress.

EBSA conducted a review from April 16, 2021 to October 31, 2021 that assessed 156 payers on their non-quantitative treatment limitations, a parity compliance measure that often poses challenges to payers. 

A non-quantitative treatment limitation (NQTL) is a restriction on mental health treatment that is not numeric—for example, the requirement to acquire a prior authorization for treatment—as opposed to a quantitative treatment limitation, such as the number of outpatient treatment days that a health plan would cover.

What EBSA discovered did not paint payers in a good light.

“The report’s findings clearly indicate that health plans and insurance companies are falling short of providing parity in mental health and substance-use disorder benefits, at a time when those benefits are needed like never before,” Secretary of Labor Marty Walsh explained in a press release. 

Out of all of the comparative analyses that EBSA received, not a single payer provided all of the information that the review requested in the initial submission.

As a result, the administration sent out 80 letters to payers requesting more information. Twelve of the letters went to payers that had already received a letter from EBSA notifying them that they had submitted insufficient information and seeking the requested details.

EBSA still has not announced any final determinations. However, after this back and forth with payers, EBSA accrued enough information to find 30 health plans in non-compliance on a total of 46 NQTLs.

Three major issues stood out to EBSA as the administration assessed NQTL compliance.

First, the administration found that many health plans and issuers were not prepared for compliance.

Officially, payers had between December 27, 2020 and February 10, 2021 to collect compliance information for new NQTL restrictions as requested in the Consolidated Appropriations Act of 2021.

But four out of every ten payers asked for an extension after EBSA requested compliance information in April 2021. EBSA responded to time extension requests by offering resources such as frequently asked questions and the self-compliance tool, which the administration has offered to payers in past conflicts over parity compliance.

Second, the initial comparative analyses perpetuated a historic trend of providing insufficient data due to five types of errors.

Some comparative analyses failed to provide information on the benefits, classifications, or plan terms related to the NQTL. Others failed because payers did not explain their NQTLs' designs or applications, the details or standards were not well-defined, or stringency was not properly assessed. Lastly, some analyses failed because payers did not exhibit parity.

There were several prevalent reasons behind why these comparative analyses failed.

In some cases, payers did not perform a comparative analysis before designing their NQTLs, so the NQTLs were unlikely to meet EBSA’s standards. 

There were also problems with the substantiveness of payers’ reports. Payers often lacked sufficient evidence for their decisions regarding how they implemented their NQTLs. EBSA received many analyses that outlined mental health benefits and medical or surgical benefits in two adjoining columns but provided no further details.

When plans did provide evidence, they sometimes failed to offer any context for the accompanying materials, leaving EBSA to try to decipher the connection between the documents and the NQTLs. Some payers failed to explain how the NQTL impacted their benefits.

Thoroughness was a significant issue in the comparative analyses. EBSA requires that all factors related to the NQTLs must be clearly defined, but payers failed to accomplish this in a number of ways.

Some analyses acknowledged that there were unaddressed factors but did not name or explore those factors. Others only addressed a portion of the NQTL and did not consider the NQTL holistically.

“For instance, several comparative analyses for out-of-network reimbursement rates failed to identify or compare all the specific methodologies used within the relevant benefit classifications, including methodologies used by third-party pricing entities,” the report shared.

Payers also provided analyses that did not respond to the requested NQTL or that were were outdated or irrelevant.

Analyses often failed to demonstrate clearly how certain parts of an NQTL’s design were applied or how the NQTL was compliant in its application of that design.

Finally, despite lack of preparation and a range of errors that led to a fragmentary picture of the NQTLs and their applications, EBSA found that some plans could receive an initial determination even for an incomplete analysis. Hence, 30 plans have already received initial determinations of non-compliance.

As EBSA continues the determinations, the administration recommended changes to Congress that would enhance enforcement of the mental health parity compliance law, promote access to coverage, and standardize compliance regulations.

“Access to mental and behavioral health support is critical as the COVID-19 pandemic continues to impact so many lives across the country,” Secretary of Health and Human Services (HHS) Xavier Becerra said in the press release.

“Unfortunately, as today’s report shows, health plans and insurance companies are falling short of providing access to the treatment many working families need. We are committed to working with our federal partners to change this and hold health plans and insurance companies accountable for delivering more comprehensive care.”