Employers that are having trouble explaining why their mental health coverage for employees differs from medical coverage aren’t going to get sympathy from the Department of Labor.

The DOL began auditing employer-sponsored health plans in April for compliance with the Consolidated Appropriations Act enacted in December 2020, which requires the plans to analyze and document why they provide mental health benefits that differ from other medical benefits.

Employer attorneys and lobbyists say they are ill-equipped to provide the analysis. The information should come from the administrators, typically part of health insurance companies, that design and run the plans, they say.

But Ali Khawar, the principal deputy assistant secretary for DOL’s Employee Benefits Security Administration, isn’t buying it. The Mental Health Parity and Addiction Equity Act, which requires parity with medical coverage, was enacted in 2008, he said.

“This isn’t a new requirement,” he said in an interview. The agency has issued regulations and a significant amount of guidance on what companies should be doing to document their justification for any discrepancies between mental health and medical-surgical benefits, he said. “The fact that now it’s a documented requirement, I don’t really see that as changing all that much.”

Top Priority

Ensuring that health plans comply with the mental health parity laws is a top priority for the Biden administration, Khawar said. That may result in companies scrambling to get the analysis they need from the administrators that run their plans.

“I don’t think I can understate the priority we’re putting on this issue,” Khawar said. “This is really one of our highest enforcement priorities. And certainly in the health area, I would call this our highest enforcement priority.”

The mental health parity law “is intended to help people who are suffering or who have mental health conditions or substance abuse disorders and who need help,” Khawar said. “Really, it is well past time for us to start seeing that the promise of parity is being met.”

Most health plan sponsors are employers, many of which provide coverage for employees regulated by the federal government under the Employee Retirement Income Security Act (ERISA).

Treatment Limits

At issue is a document explaining the factors used to justify so-called non-quantitative treatment limitations (NQTLs) on mental health coverage that differ from limits imposed for medical and surgical benefits. Those limits differ from quantitative limits that can be more easily measured, such as limits on the number of visits covered for a particular treatment.

A common example of a non-quantitative treatment limit is requiring approval before covering a treatment or drug, known as prior authorization.

Khawar didn’t have details on the number of health plans that have been queried to provide the documentation, saying it is early in the agency’s efforts to check compliance. “We are going to our existing inventory of cases and identifying where we think there may be an issue, and we are reaching out to those plans,” he said.

Plans that aren’t in compliance may be required to notify their participants that they are not meeting the law.

The DOL also plans to educate the public about the requirements health plans must meet under the mental health parity law, Khawar said.

Further, he said, if companies believe that health insurers they work with aren’t complying with the law, they should report that to the DOL. But, he added, “It’s pretty troubling to me that people in May of 2021 are saying that they’re having trouble ensuring that their analysis is documented for a legal requirement that’s been on the books for 10 years.”

Looking at Limits

Mental health parity rules require plans to look at why they imposed limits on mental health services, Kim Wilcoxon, a partner in the Cincinnati office of Thompson Hine LLP, said in an interview. “We have to look at the strategies that we used to develop the limit; the factors that we considered; the evidence that we reviewed,” she said. Those factors shouldn’t be more stringent than what is considered for medical and surgical coverage, she said.

The concept is “admirable, but difficult for a lay employer to complete,” Wilcoxon said. “Much of the thought process that goes into these limitations is actually done by an insurance company, a third-party administrator,” she said.

Plan administrators that pay claims typically design company health plans and have medical expertise to identify areas “to make sure we’re not paying for something that’s not medically necessary,” Wilcoxon said.

“We just have not yet seen analyses that would satisfy the requirements of the DOL’s requests,” Wilcoxon said.

The EBSA and other agencies issued guidance April 2 on complying with the requirements of the new law regarding the limits for mental health coverage.

Liability for plan administrators who fail to meet mental health parity requirements is unclear, according to many who work on the issue. However, a March 5 decision from the U.S. District Court for the Northern District of California in Jane Doe v. United Behavioral Health has gotten attention because it finds the plan administrator liable for not meeting the law instead of the company sponsoring the plan.

United Behavioral Health Case

The court ruled that United Behavioral Health, which manages behavioral health services for insurer UnitedHealthcare, violated the mental health parity law by denying coverage for applied behavior analysis therapy for autism for a participant in a plan sponsored by technology company Wipro Ltd., which has offices throughout the U.S. and was not a party to the suit.

“We are committed to ensuring our members have the mental health support they need, when they need it, as part of our broader commitment to accessible, quality care,” a company spokesman said in an email. Because the case is ongoing, the company has no additional comments, he said.

“With respect to employer-sponsored coverage that is self-funded, it is almost always the case that these plans are administered by the same companies that underwrite insurance,” Meiram Bendat, founder and president of Psych Appeal and the attorney who represented the plaintiff in the United Behavioral Health case, said in an interview.

“The third-party administrators, or claims administrators, are really the de facto administrators of these plans, because they really do manage the day-to-day operations of these plans,” approving coverage, making decisions about reimbursements, and creating medical provider networks, Bendat said.

“My sense is that employers really need to hammer down on the claims administrators to articulate the non-quantitative treatment limitations that are applied,” Bendat said. The administrators already do that with their fully insured health plans, he said.

At an April 15 hearing held by the House Education and Labor Committee’s health subcommittee, Bendat called for enactment of the Parity Enforcement Act (H.R. 1364), introduced by Rep. Donald Norcross (D-N.J.), which would create new civil penalties for employer health plans or health insurers for violating the mental health parity law. Currently employers bear sole liability.

Many practices involving the limits aren’t dependent on plan language, but instead rely on policies used by plan administrators, Bendat said.

Variety of Requirements

Plan administrators may impose a variety of requirements for prior authorization, Bendat said. Administrators may impose utilization reviews more frequently or stringently for in-patient mental health treatments than for in-patient medical treatments, which makes it more difficult to get benefits approved, he said.

Plan documents typically just specify that some services require prior authorization “and leave it up to the claims administrators to do what they see fit,” Bendat said.

“Employers don’t design NQTLs,” James Gelfand, senior vice president for health policy for the ERISA Industry Committee (ERIC), which represents large employers on employee benefit policies, said in an interview.

“We have behavioral health vendors who help us to design those in a way to ensure that they are in compliance with parity rules,” Gelfand said.

ERIC supported the provision of the Consolidated Appropriations Act requiring plan sponsors to document the limits, he said.

However, “in the last five months, there has been kind of a mad scramble from the employers to take possession of this information,” Gelfand said.

“We assumed the vendors have always had this information, and now they just need to hand it over to us so that we have it for when the government or a patient comes knocking,” Gelfand said. “Getting information from any of the vendors has been a much longer and more complicated process than was initially imagined,” he said.

The DOL’s position “was that employers essentially should already have had this data, which was news to us,” Gelfand said. “They were of a mind that we should have already had it; if our vendors had it, then we should be able to get it from them immediately. They weren’t sympathetic to this issue of it taking time and negotiations, etc.”

It will be important to see how the DOL treats the issue, Gelfand said. “It may turn out that as the audits have actually started, that the vendors are going to pick up the case, and everything will be fine. But that’s the best case scenario, and we get paid to worry about the worst case scenario.”