Health Benefits Advisor for Employers

Determining Compliance with the Mental Health Parity and Addiction Equity Act (MHPAEA) and Mental Health Parity Act (MHPA) Provisions in Part 7 of ERISA

Does the plan comply with the mental health parity provisions for parity within nonquantitative treatment limitations?

• Yes
• No

Nonquantitative treatment limitations include:

• Medical management standards limiting or excluding benefits based on medical necessity or medical appropriateness, or based on whether the treatment is experimental or investigative;
• Formulary design for prescription drugs;
• Standards for provider admission to participate in a network, including reimbursement rates;
• Plan methods for determining usual, customary, and reasonable charges;
• Refusal to pay for higher-cost therapies until it can be shown that a lower-cost therapy is not effective (also known as fail-first policies or step therapy protocols); and
• Exclusions based on failure to complete a course of treatment.

This is an illustrative, nonexhaustive list. See 29 CFR 2590.712(c)(4)(ii).

A plan may not impose a nonquantitative treatment limitation with respect to mental health or substance use disorder benefits in any classification (such as inpatient, out-of-network) unless under the terms of the plan, as written or in operation, any processes, strategies, evidentiary standards, or other factors used in applying the limitation to mental health benefits in the classification are comparable to and applied no more stringently than the processes, strategies, evidentiary standards or other factors used in applying the limitation with respect to medical/surgical benefits in the classification, except to the extent that recognized clinically appropriate standards of care may permit a difference. See 29 CFR 2590.712(c)(4)(i).

• An example of a permissible nonquantitative treatment limitation would be a plan requirement that participants obtain prior approval that a course of treatment is medically necessary for out-patient, in-network medical/ surgical and mental health benefits. The plan denies payment for any medical/surgical or mental health treatments that did not have prior approval. See 2590.712(c)(4)(iii).
• An example of an impermissible nonquantitative treatment limitation would be a plan requirement that participants obtain prior approval that a course of treatment is medically necessary for out-patient, in-network medical/surgical and mental health benefits. The plan denies payment for mental health treatments that did not receive prior approval. However, for medical/surgical benefits that did not have prior approval, the plan pays for the treatments at a 25 percent reduction in benefits the plan would otherwise pay. See 2590.712(c)(4)(iii).

Tip: Do not focus on results. Look at the processes used in applying nonquantitative limitations to mental health and medical/surgical benefits to determine that there are not arbitrary, discriminatory differences and that any differences in processes are based on recognized, clinically appropriate standards.