Understanding the Employer Impact of New Final Rules on Mental Health and Substance Use Coverage

The Mental Health Parity and Addiction Equity Act (MHPAEA) was enacted in 2008 to ensure that group health plans and health insurance issuers do not impose stricter financial requirements and treatment limitations on mental health and substance use disorder (MH/SUD) coverage than on medical and surgical benefits.

Recently, the Consolidated Appropriations Act of 2021 amended the MHPAEA to strengthen its mandates and introduce stricter compliance measures for employers and insurers. On September 9, 2024, three federal agencies — the U.S. Departments of Health and Human Services, Labor, and the Treasury — released final rules to implement these amended regulations.

Impact on Self-Funded Plans

The impact of these final rules on employers largely hinges on whether you sponsor a self-funded or fully insured health plan. Let’s start with self-funded plans.

In a self-funded plan, the employer assumes financial responsibility and risk for paying claims. If this describes your organization, you’ll face new, stringent requirements to ensure that your MH/SUD benefits are as accessible as your medical and surgical benefits. Key areas of focus include nonquantitative treatment limitations (NQTLs)—nonmonetary restrictions that can affect the scope or duration of benefits. Examples of NQTLs include:

• Prior authorization
• Medical necessity criteria
• Step therapy or "fail-first" requirements
• Reimbursement rates

To demonstrate the adequacy of your NQTLs, you will need to conduct comparative analyses. This involves documenting processes, adhering to evidentiary standards, and explaining the factors used in applying NQTLs. Ultimately, you will also need to present real-world outcomes, such as the number and percentage of claim denials for MH/SUD services compared to medical/surgical services.

Additionally, there is a network adequacy requirement, meaning your network of providers for MH/SUD services must be as comprehensive as your medical/surgical network.

Once the final rules take effect, data collection will become essential. You’ll need to assess how your NQTLs impact access to MH/SUD services, calculating various metrics such as utilization rates. If you identify discrepancies in network adequacy, you’ll be required to take corrective action—like adding more MH/SUD providers or expanding telehealth options. Noncompliant plans may face penalties.

Impact on Fully Insured Plans

For those with fully insured health plans, where an insurance company takes on financial responsibility for claims, the situation is somewhat less burdensome but still requires attention. While your insurer must comply with the final rules—conducting comparative analyses of NQTLs and submitting reports to federal agencies—you, as the plan sponsor, still hold partial responsibility. This includes:

• Creating and maintaining a plan design that meets acceptable NQTL standards
• Collaborating with your insurer to ensure parity between MH/SUD and medical/surgical benefits

Selecting a reputable insurer is also a critical responsibility.

One concern voiced by employers and insurers is that the increased administrative demands on insurance companies may raise their costs, potentially leading to higher premiums for customers.

Developing Your Compliance Strategy

Most of the final rules will apply for plan years beginning on or after January 1, 2025. However, certain provisions won’t take effect until plan years starting on or after January 1, 2026. While legal challenges could delay these effective dates, it’s crucial for employers—regardless of whether they sponsor self-funded or fully insured plans—to collaborate with professional advisors now. Familiarizing yourself with the MHPAEA and the new final rules is essential for developing an effective compliance strategy.