Court documents reveal the Trump Administration intends to rework the much-extolled parity rule issued by the Biden administration.

The administration’s future plans remain unclear. Attorneys representing the U.S. Department of Health and Human Services, the Treasury Department and the Department of Labor asked a federal court to hold a lawsuit challenging the Biden-era parity rule in abeyance until it issues new rules on the matter.

“The departments have informed undersigned counsel that they intend to reconsider the 2024 Rule at issue in this litigation, including whether to issue a notice of proposed rulemaking rescinding or modifying the regulation,” the filing states.

Filed May 9, a few days ahead of a key deadline for the government to indicate whether or not it would defend the rule in court, the request for abeyance also indicates that the Trump administration will not enforce portions of the rule that apply to health plans with plan years starting in 2025 and 2026.

The document states that attorneys for the Trump administration informed the plaintiff, the ERISA Industry Committee, better known as ERIC, on April 25 that it would issue the non-enforcement policy and would “reexamine the Departments’ current [parity] enforcement program more broadly.”

However, the departments didn’t finalize their non-enforcement policy until May 8, according to the document. The request also said that the department would publicize the policy. A Behavioral Health Business review of the Treasury, Labor and Health and Human Services Department websites found no such document — nor is the document in the Federal Registry or regulations.gov. 

“Because the departments do not intend to enforce parts of the rule and have indicated that they intend to reconsider the regulation challenged in this litigation, the government respectfully submits that it would be appropriate to place this case in abeyance pending the completion of that reconsideration process,” the document reads. “Abeyance will greatly conserve party and judicial resources because the department’s reconsideration and potential rescission or modification of the rule will likely bear on the issues presented in this case and potentially obviate the need for further litigation.”

ERIC filed suit to challenge the parity rule — finalized by the Biden administration in September 2024 — on Jan. 17., just days before President Donald Trump was inaugurated.

“Despite extensive efforts to work with the previous administration, the final rule requirements are wholly unworkable, and litigation became the only path to protecting employees and their access to quality, affordable benefits,” ERIC President and CEO James Gelfand said in a statement. “We are pleased that the Trump Administration has responded to the lawsuit, will not penalize employers under the rule while the case is pending, and is reconsidering the rule to address the concerns ERIC expressed throughout the regulatory process.”

Gelfand also said he sees the abeyance motion and notice of potential new rules on parity as an acknowledgement by the Trump administration that the Biden-era rules lacked clarity and challenged employers’ ability to provide behavioral health benefits.

That the lawsuit was filed was not a surprise to legal experts. ERIC synthesized several arguments that the health insurance industry, which opposed the rule, made during the rulemaking process. In brief, the lawsuit contends that the three agencies exceeded the directives laid out by Congress in federal law, especially The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) as well as the Administrative Procedures Act.

The potential impact on parity rules

Bragg Hemme, a shareholder and attorney at the health care law firm Polsinelli, told BHB that it’s unknown how the Trump administration will respond regarding potential rulemaking, a sentiment that several subject matter experts shared.

However, Hemme notes that cuts to behavioral health-related funding and the elimination of behavioral health-specific functions in the redesign of the U.S. Health and Human Services shows that behavioral health is not a priority for the Trump administration as it was for the Biden administration.

“It’s unclear where on any priority list for the government at this point where parity sits,” Hemme said.

At the very least, the nonenforcement of the parity rule and the potential elimination of the rule put the industry back in the pre-Biden parity rule regulatory environment. Given the lack of clarity on the matter, it’s unclear how the Trump administration will rework, or even if it will rework, parity rules to fit its priorities.

The federal government was under a deadline, May 12, to indicate whether or not it would defend the rule in court. The news of this regulatory priority without corresponding rulemaking disclosure coming through a court filing was likely tied to this pressure in the case, further suggesting it’s not a top priority for the three departments named in the lawsuit, Hemme said. ERIC filed its challenge in the U.S. District Court for the District of Columbia.

“We have to wait and see what’s going to come out in the wash because we don’t have any hints as to what [the Trump administration is] doing,” Hemme said.

Even with the present pause of the rule, challenges built into health plans and their administration may keep people from getting behavioral health services they need and may otherwise be entitled to, David Lloyd, chief policy officer at Inseparable, told BHB.

“Insurance practices are one of the main barriers to Americans’ access to the treatment they need,” Lloyd said. “We think it’s important that the administration, in considering what they are going to do, makes sure they are holding health plans accountable so people can get the mental health services that they need and, frankly, they are already paying for.”

The filing hinted that the Trump administration’s pending actions would stay close to what was passed in the 2021 Consolidated Appropriations Act, which became law under the Trump administration. That includes language that certain health plans are required to perform comparative analyses demonstrating that health plan practices don’t apply non-qualitative treatment limitations (NQTLs) more stringently in behavioral health than physical health.

“The Consolidated Appropriations Act of 2021 is still the law and also must be implemented faithfully,” Nathaniel Counts, the chief policy officer for The Kennedy Forum, told BHB.

In short, the 2021 appropriations act amended MHPAEA to specify how health plans are to demonstrate compliance with NQTL parity and how the departments are to gather and assess those reports.

Counts notes that behavioral health is a cogent issue for employers, health plans and elected officials alike as overall behavioral health worsens in the U.S. What’s more, additional research finds that spending on behavioral health leads to community impacts. A report by McKinsey finds that every $1 spent on behavioral health interventions translates to between $5 and $6 in economic benefit.

Hemme also said that she would expect some kind of action in 90 days. In granting the motion, the court requires the parties to report to the court every 90 days, specifically instructing the Trump administration to “report on the progress of Defendants’ reconsideration of the rule at issue.”