Mental health parity self-assessment FAQs

The following frequently asked questions (FAQs) address an existing mental health parity testing requirement for employers sponsoring self-insured medical coverage and proposed changes to those requirements. The FAQs are intended to enable employers to make an informed business decision about when to conduct testing.

Frequently Asked Questions

1. What is the NQTL assessment, when should it be completed, and by whom?
   
   Group health plans subject to the Mental Health Parity Addiction and Equity Act (“MHPAEA”) must perform an NQTL assessment for any non-quantitative treatment limitations (“NQTLs”) imposed on mental health/substance use disorder (“MH/SUD”) benefits. Insurance carriers must satisfy this requirement for fully insured medical plans. The compliance obligation generally belongs to the employer as the plan sponsor for self-insured medical coverage.
   
   
2. What’s an NQTL? In a nutshell, NQTLs involve behind-the-scenes plan administration practices, and include processes, strategies, evidentiary standards, and other factors used in determining whether a benefit should be covered (i.e., plan gatekeeping requirements, such as preauthorization/precertification, fail first protocols, and medically necessary standards).
   
   Many TPAs represent that they: (i) have completed the assessment for their fully insured book of business and self-insured clients may rely upon this; or (ii) promise to provide the required NQTL assessment when a client receives a request from a federal or state Agency to produce it.
   
   For now, we recommend against relying solely on an NQTL assessment compliance effort by any TPA. The U.S. Departments of Labor and Health & Human Services (the “federal Agencies”) have conducted hundreds of NQTL audits over the past couple of years, which included many reviews of the various compliance efforts by each of the major TPAs (i.e.,Blue Cross Blue Shield Companies, UnitedHealthcare, Cigna, and Aetna). To date, the federal Agencies have not found any of these efforts to adequately comply with the requirements. The compliance efforts by the medical TPAs continue to evolve. We believe they will become sufficient eventually, but we are skeptical that this will occur anytime soon.
   
   Self-insured employers should consider engaging third-party parity testing vendors to complete necessary testing (with coordination from TPAs to get required information) until the TPAs can offer a compliant solution. Please contact your MMA client team for more information.
   
   
3. If an employer completes testing but the requirements later change, is additional testing required?
   
   A self-insured medical plan is already subject to the existing NQTL assessment requirement if it applies any NQTLs on MH/SUD benefits. An employer (as plan sponsor) in this situation is out of compliance without a current assessment and at risk in the event of an audit. Recently published Proposed Mental Health Parity Regulations place employers in a tricky situation and are the reason for these FAQs. We addressed the proposed rules in detail in an earlier Alert. Please note that the proposed rules must become final to be enforceable.
   
   As written, the proposed rules will require the NQTL assessment to include new mathematical calculations to demonstrate the plan satisfies the parity rules. Our two vetted vendors will not include these calculations in testing prior to a final rule. This means that employers who conduct testing now (as required) will need to conduct testing again for additional fees once the rules become final. Both vendors provide a limited discount for employers who engage the vendor to conduct testing annually.
   
   The vendors MMA has engaged to perform the NQTL assessment feel it is an annual requirement. The Compliance COE disagrees and believes federal Agency guidance indicates that an existing NQTL assessment remains current until there is: (i) a material change to plan design or administration; (ii) a known material change to plan utilization; or (iii) a change in the parity rules that affects the NQTL assessment. Unfortunately, the proposed rules will result in a change to the NQTL assessment if they become final as currently written. We believe the proposed rules could go into effect as early as 2025.
   
   
4. What are the potential risks if an employer decides to hold off on required testing and wait for the rules to be finalized?
   
   We understand that many employers who have not performed testing will be reluctant to pay for an NQTL assessment under the current rules only to pay for testing again within a year or so despite making no changes to their plan(s). Employers in this situation may prefer one of the following alternatives instead:
   
   · Waiting until the final rules appear to complete an NQTL assessment; or
   · Doing nothing and waiting for the TPAs to develop an approach the federal Agencies deem compliant.
   
   Both alternatives are effectively a gamble that the federal Agencies will not audit the employer’s medical plan in the meantime. For most employers, the risk of an audit is low, but it is not zero (see also Risk Factors). Given the increased enforcement activity in this area and federal Agency statements that they will be less forgiving in the future, we recommend employers consult their legal counsel before choosing one of these alternatives. The potential exposure is very high and can include a significant investment of time, reprocessing claims, civil penalties, and substantial legal fees.
   
   Risk Factors: Large employers may find themselves at higher risk for federal Agency enforcement activity. Similarly, employers sponsoring plans with design limitations that are on the federal Agencies’ radar also carry a greater risk of enforcement action. Examples include plans that provide autism benefits but exclude or significantly limit ABA therapy treatment and plans that provide eating disorder benefits but exclude nutritional counseling.