The Biden administration’s new parity rule puts health plans and regulators on the same page when it comes to parity enforcement.
In many instances, that’s quite literally the case.
Finalized on Sept. 9, the new rule focuses on updated requirements for health plans to generate reports comparing how they treat behavioral health benefits compared to physical health benefits. It also requires that plans deliver those reports to state and federal regulators, while directing plans to take action if there are manifest disparities between the benefit types.
The proposed rule was well received by behavioral health advocates. Reactions to it largely take the rule as a win. However, the final rule did change somewhat from the proposed version. The proposed rules were released in July 2023.
While far from a panacea, the new rule articulates greater objectivity when it comes to questions of parity. In a way, the move is something of a representation of a wide push for objectivity in behavioral health generally.
“The first step in any analysis is understanding data and understanding where the gaps are,” Harry Ritter, CEO of the digital therapist enablement platform Alma, told Behavioral Health Business. “To the extent that these incremental regulatory requirements create a greater onus [for] payers to provide that reporting in a way that’s transparent, … I think that’s a positive step in the right direction.”
The rule spells out that group and individual health plan “limitations imposed on mental health and substance use disorder benefits are no more restrictive than the predominant treatment limitations imposed on substantially all medical/surgical benefits.”
It also requires that health plans conduct comparative analyses between behavioral and physical health benefits. It spells out how to conduct the analyses and mandates they be made available to the federal government and state regulatory agencies.
The final rule also specifically ends the ability of self-funded, non-federal governmental plans to opt out of MHPAEA compliance.
Specifically, the final rule targets nonquantitative treatment limitations (NQTL). These are processes such as prior authorizations, medical management techniques, provider network compositions and determinations for out–of-network payment rates.
Why this matters
The federal government has had rules meant to prevent health plans from disfavoring behavioral health benefits for just over 30 years. The first parity-related bill was introduced in Congress in 1992.
Now-former Sen. Pete Domenici (R-N.M.) sponsored the successfully passed Mental Health Parity Act of 1996 (MHPA). However, many behavioral health advocates were disappointed in the measure “because of its limited scope,” according to one history of parity efforts at the federal level.
The next major development of parity legislation saw the arrival of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA). On Oct. 3, 2008, then-Pres. George Bush signed it into law as part of the Emergency Economic Stabilization Act of 2008.
But since then, advocates have long complained that health plans were skirting its requirements and that the federal government lacked the oversight and accountability elements to bring MHPAEA to life.
“For too long, the existing rules to implement the federal parity act have been too weak,” David Lloyd, chief policy officer for the nonprofit mental health advocacy group Inseparable, told BHB. “Plans have been largely able to sidestep a lot of the requirements through clever word choice and semantic arguments.
“By focusing on data, we really can help bring that accountability in a way that I think everyone should welcome because it puts all insurers on a level playing field.”
Lloyd added that not all payers have skirted their parity obligations. But those who have not done so have been disadvantaged relative to those that have.
With resolution on the topic of NQTLs, there is the potential that their removal from the provider-payer discourse will create greater space for other issues, such as increasing access to care.
“The effects of provider payments have to be part of that conversation, but there also needs to be discussion about increasing availability with existing providers,” Dr. Shawn Griffin, president and CEO of accreditation body URAC, told BHB. “I hope that this final rule helps to drive more problem solving with all groups cooperating around the table and less finger-pointing.”
Still, the American Medical Association, a powerful lobbying and professional association for physicians, highlighted the frustration of many provider organizations since the passage of MHPAEA.
It said that the law lacked, and this final rule gave it, “the teeth to protect patients from health insurance company actions that unfairly and too-often discriminatorily restrict access to mental health and substance use disorder care,” Dr. Bruce Scott, president of the American Medical Association, said in a statement.
“Health plans have violated MHPAEA for more than 15 years, and this final rule is a step in the right direction to protect patients and hold health plans accountable for those failures,” Scott continued.
The apparent lack of parity is pointed to as holding the behavioral health industry back on many fronts. Some see value-based care as not having a realistic business case without true parity. Many tie parity to the behavioral health provider shortage.
How the new rule changed
The final rule removed a key provision that payer entities criticized during its comment period.
It eliminated a quantitative test for individual NQTLs. They could not be applied to behavioral health benefits unless they applied to at least two-thirds of the physical health benefits in a comparable classification of care under the proposed rule.
The final does not implement this test for NQTLs. Regulators borrowed this rule from previous parity regulations. Historically, the two-thirds test applied to quantitative treatment limits and financial provisions. The final rule leaves this test in place.
It also no longer includes exemptions to NQTL parity when it comes to fraud, waste and abuse and “impartially applied independent professional medical or clinical standards.”
Some worried that payers would be able to continue to use NQTLs that disfavor behavioral health benefits under those exemptions, Lloyd said. Those revisions related to fraud and clinical standards have been worked into the test for analyzing NQTL parity.
Looking forward with parity
The rules will come into effect in stages. The rule will apply to group health plans on and after Jan. 1, 2025, and the year after for individual health plans.
The final rule establishes that “meaningful benefits” for behavioral health conditions must cover “core treatment for that condition.” This applies to all of the federal classifications of care for which the plan covers physical health conditions. These rules are effective at the start of 2026.
The 2026 start date also applies to the provisions that forbid NQTLs for behavioral health being based on “discriminatory factors,” data collection and evaluation requirements, as well as comparative analysis.
While likely beneficial, the final rule is not likely to fundamentally change the landscape of behavioral health on its own.
“We believe that placing compliance restrictions on health plans without addressing the provider shortage and appointing availability issues of both medical and behavioral providers will not fully address the purpose behind the parity rule,” Carlos Lindo, senior vice president of legal and compliance for Lucet, told BHB.
Projections for the supply of behavioral health clinicians relative to the demand highlight a huge shortfall. Data from the U.S. Health Resources & Services Administration (HRSA) shows that the behavioral health clinician workforce will shrink by 15,000 by 2035. By that time, about 53% of demand for services will be met by the workforce.
While the true impact of the new parity rules remains to be seen, they could not be more relevant to the cost of health care. The increasing demand for service has translated into greater use of benefits. Overall utilization of behavioral health is up about 18% compared to prepandemic levels, according to data by Trilliant Health.
“For those of us who are mental health advocates, these utilization trends are fantastic news,” Ritter said. “But that does create questions that these payers have to better think about in terms of how to price their plans and take that utilization and price it into their actuarial work.”
Reflecting the thoughts of many behavioral health advocates, Ritter wonders how the federal government will use the reports and data generated by the final rule. He added the government needs to use the new rule to create a dialogue between providers and payers about access and utilization.
“I do think that starts with transparency and data and discussion,” Ritter said.
Companies featured in this article:
Alma, American Medical Association, Inseparable, Lucet, URAC
