Reconciling Mental and Physical Health Benefits

Today I want to give you a closer look at a story that fell, in my opinion, pretty under the radar when it happened given the impact it could have on plans, providers, and patients. 

Mental health parity statutes require, very generally, that health plans must provide the same level of coverage for mental health and substance use disorder benefits as they do for medical and surgical benefits.  So for example, if a plan has a $30 copay for a doctor’s visit for a cold, it should also have the same copay for a mental health visit.

If there’s a limit to the number of times you can visit the physical therapist per year (and who hasn’t hit that if you’re over 30 years of age) there shouldn’t be a lower limit for mental health.  The basic federal law addressing this was the Mental Health Parity and Addiction Equity Act, which was passed in 2008, followed by a couple of final rules implementing the provisions. 

The most recent final rule was in 2024 under President Biden, and reportedly quote “put some teeth into the 2008 act.”  This finalized standards for determining network composition and out-of-network reimbursement rates, added protections against non-quantitative treatment limitations – or NQTLs – in coverage, specified that benefits had to be meaningful, and prohibited plans from using biased information and sources when designing and applying a treatment limitation.  At the time, a representative from the American Hospital Association(AHA) praised the regulations as necessary for guidance in reducing administrative burden for providers.

This past May, however, the Departments of Labor, HHS, and the Treasury announced that they will no longer enforce the 2024 final rule and will be conducting a reexamination of each department’s “enforcement approach” to the Mental Health Parity laws more generally. The final 2024 rule is the subject of a lawsuit by the ERISA Industry Committee (ERIC) which argues that the new rule is arbitrary and beyond the scope of the departments’ authority. 

The departments have asked that the litigation be paused as they reevaluate the 2024 rule and consider whether to issue a notice of proposed rulemaking which, they say, will either rescind or modify the 2024 final rule.  They will not enforce any part of the rule until a court decision is released-and for 18 months thereafter. 

The departments also suggested states take the same approach as the feds by not enforcing the 2024 final rule if they’ve passed mirroring versions.

States have been generally considered the main enforcers of mental health parity laws, as they’re responsible for state-regulated plans and have often expanded their state laws beyond the federal law to meet the needs of their citizens.  As of earlier this year, noncompliance has been “widespread” according to a Department of Labor (DOL) report filed with Congress in January, even though the report noted that plans were quickly fixing problems.

Many states passed their own parity laws before the 2024 rule.  But a handful have adopted regulations or laws reflective of this 2024 rule.  And regardless of which version they’ve passed, states often take enforcement seriously. Georgia’s attorney general, for example AG announced just this Friday that 22 insurers in the state are being slapped with fines totaling $20 million for over six thousand violations of Georgia’s 2022 law. 

What does this mean for the future? As I mentioned, this non-enforcement announcement went fairly under the radar back in May.  We haven’t really seen comment on it from the industry, states or health plans.  As the Trump Administration begins to actively reevaluate its approach to mental health parity laws generally, I think we may see a lot more industry discussion on what’s needed and what’s not-as well as states readdressing their own parity laws based on the outcome.  So keep an eye on the news this fall!