Upcoming Mental Health Parity Rule Could Impact How Payers Demonstrate Compliance to Feds

The Biden Administration is preparing to release proposed rules that impact how payers demonstrate mental health parity to federal regulators.

The move marks another step toward resolving the disparity between how payers treat behavioral health and physical health benefits by bringing them in line with recently enacted reporting mandates.

Yet little is known about the proposed rule. What is known about the rule shows that it would largely ensure compliance with the law and other rules that are already on the books. 


“Regardless of what proposed rules are released and what rules might eventually be finalized, there’s a long way to go, even [with] enforcing the existing requirements,” David Lloyd, chief policy officer for the Kennedy Forum, told Behavioral Health Business. 

The U.S. Department of Labor submitted a to-be-published proposed rule that amends and updates the enforcement of the Mental Health Parity and Addiction Equity Act (MHPAEA). The last time the federal government updated its rules enforcing the parity law was in 2014.

The proposed rule is not yet available. A public listing shows that the Department of Labor submitted the proposed rule to the White House’s Office of Management and Budget (OMB) on July 10. The OMB is the last stop before proposed rules are published, according to policy experts.


Public documents from the federal government hint at what might be in the rule and why MHPAEA enforcement rules are being updated.  

“There have been a number of legislative enactments related to MHPAEA since [the] issuance of the 2014 final rules, including the 21st Century Cures Act, the SUPPORT Act, and the Consolidated Appropriations Act, 2021,” the Department of Labor previously said. “This rule would propose amendments to the final rules and incorporate examples and modifications to account for this legislation and previously issued guidance and to take into account experience with MHPAEA in the years since the rules were finalized.”

In a separate online setting, the Department of Labor emphasized that the pending proposed rule would include changes from the Consolidated Appropriations Act 2021 (CAA 2021).

What the CAA did to mental health parity laws

Parity has been a lobbying quest for the behavioral health industry for decades.

Congress passed the MHPAEA in 2008, and it became effective in 2009. The Mental Health Parity Act of 1996 (MHPA) came before that. However, behavioral health advocates have said for years that the executive branch doesn’t have the latitude to enforce parity regulations. 

At the end of 2020, Congress passed the CAA 2021. Among several other initiatives, it mandated that certain health insurance plans that fell under the purview of the Department of Labor conduct analyses that compare mental health benefits and physical health benefits for nonquantitative treatment limits (NQTLs). 

“What we’re talking about here are not necessarily co-payments or treatment limitations, not the numbers,” Damien Myers, a partner with the law firm Nixon Peabody, told BHB. “What we’re talking about is nonquantitative stuff, like how is medical necessity being applied? How is prior authorization being applied across a benefit plan or an insurance policy? Are those being applied in parity?”

But the law was vague on how the analysis should be put together. This has also been a point of frustration for payers

Myers said the Department of Labor released a “self-compliance tool” that did not help demonstrate compliance with parity laws regarding NQTLs.

The CAA 2021 also called for several federal departments — the Department of Labor, Health and Human Services Department and Department of the Treasury — to investigate compliance with the requirements to conduct comparative analysis. The agencies issued their findings in January 2022.

The report panned the health insurance industry. None of the initial responses from the payers contained enough information to assess them for mental health parity, the report states.

“That report was very critical, and they said in that report that they were likely to undertake rulemaking on the parity act,” Lloyd said.

That accelerated political interest in Congress’s efforts to address parity issues. A few months later, President Joe Biden made several aspects of behavioral health regulatory reform a part of his self-described unity agenda. Congressional efforts included the introduction of a bill that ultimately failed to allow better enforcement of the MHPAEA.

Yet, the clarity payers sought from the Department of Labor on NQTLs is only now arriving on the scene.

What’s next?

The OMB does not have a deadline to release proposed rules. Once the proposed rule is published in the Federal Register, it will be open for public comment.

That period for public comment can range from 30 to 180 days. The longer time frame is for more complicated rules. They could be extended. Then, the Department of Labor will assess the comments and potentially adjust the rule. This might lead to further delays or consideration by the Department of Labor, depending on the volume and quality of comments from the public.

The Drug Enforcement Administration delayed its proposed rule for telehealth and controlled substance prescribing until November following a voluminous and severe backlash against the austere regulations. The rule was published in February.

The comment period will likely garner wide interest for advocates and businesses in both the health plan and health care provider segments. However, it’s not the type of regulation that captures public attention in the same way that the DEA’s proposed telehealth rule did, Myers said.

After any adjustments, the proposed rule would go into effect at a prescribed time.

The Kennedy Forum’s Lloyd told BHB that the proposed rules could also include underlying rules related to treatment limitations set out in MHPAEA. The act’s provisions on parity were very general, leaving room for the Labor Department to address other aspects of mental health parity that were part of the rulemaking process a decade ago. 

“There is a range of options that the administration could, in theory, take to carry out the statutory provisions of the federal parity act,” Lloyd said.

The proposed rules would clarify just one aspect of mental health parity at the federal level. While the proposed rules will help the federal government monitor health plans, a major sea change in parity should not be expected.

Myer points out that, while mental health reform may be a priority in some segments of the federal government, these proposed rules were explicitly called for in a bill signed into law over 2.5 years ago.

But there are also “low-hanging fruit” opportunities to address mental health parity enforcement, Lloyd said.

State insurance departments, which share authority in enforcing mental health parity regulations, have failed to do so with limited exceptions. Strengthening state engagement on the matter would accelerate the enforcement of existing regulations.

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