On July 25th, the Biden Administration announced a proposed rule that seeks to strengthen the Mental Health Parity and Addiction Equity Act (MHPAEA) passed in 2008. The law bars insurers from placing more restrictions on mental health coverage (e.g. higher cost sharing or prior authorization) than for medical and surgical benefits. Due to widespread noncompliance with this law, the proposed rule imposes more reporting requirements on payers and requires them to make changes when they are providing inadequate access to care. While the rule is a positive step, the Department of Labor (DOL) still doesn’t have the authority to impose financial penalties on payers failing to comply with the requirements.

The Biden Administration asserts that despite the MHPAEA being in effect for 15 years, insurers often make it difficult for enrollees to access mental health services. Individuals with health insurance are more than twice as likely to be forced to use out-of-network mental health providers. In recent years, the gap between usage of out-of-network care for mental health and Substance Use Disorder (SUD) benefits compared to physical health benefits rose 85%.

What does the rule do?
The proposed rule would:

  • Require payors to use similar factors in setting out-of-network payment rates for mental health and SUD providers as they do for medical providers. The rule provides specific examples of non-compliance, making it clear that health plans cannot make it harder to access care for mental health and SUD services by using more restrictive prior authorization, other medical management techniques, or narrower networks.
  • Require payors to make changes when they are providing inadequate access to mental health care. In 2020, Congress amended the MHPAEA to require payors to conduct comparative analyses to ensure that coverage of mental health and SUD are no more restrictive than medical care. This rule would require payors to evaluate the outcomes of their coverage rules as well, such as:
    • The payors actual provider network.
    • How must they pay to out-of-network providers.
    • How often prior authorization is required.
    • The rate at which prior authorization requests are denied.
  • Close existing loopholes allowing non-federal governmental health plans to opt out of compliance with MHPAEA. This would require over 200 health plans servicing roughly 90,000 consumers to comply with MHPAEA.

How will the policies be enforced?
The proposed rules lack teeth when it comes to enforcement and allowing the DOL to levy penalties for noncompliance, something for which Congress has yet to grant authority to the DOL. The Administration also announced a request for information on how the federal government can work with states to ensure payors’ compliance with the MHPAEA. Congress introduced a bill in May 2023 which would grant the DOL the authority to enforce the parity requirements for group health plans.