No Rest for the Weary

The Trump administration has stayed enforcement of the 2024 mental health parity rule, which requires carriers to prepare and make available comprehensive analyses of non-quantitative treatment limitations (NQTLs).

The stay is in response to an ongoing litigation challenge filed by the ERISA Industry Committee (ERIC) alleging the rule exceeds statutory authority and imposes burdensome requirements. While the stakeholder agencies have indicated that they will take a more comprehensive review of mental health parity enforcement, including potentially rescinding the final rule, group health plans and carriers should remember that the underlying parity requirements remain firmly in place.

In 2008, Congress passed the Mental Health Parity and Addiction Equity Act (MHPAEA) mandating that financial requirements and treatment limitations on mental health and substance use disorder (MH/SUD) benefits be no more restrictive than those applied to medical/ surgical services. In the ensuing years, mental health parity laws evolved to further clarify the types of coverage limits subject to parity under the statute. Specifically, the rules were refined to distinguish between numeric and non-numeric restrictions on coverage or plan attributes, with the latter described as non-quantitative treatment limitations. These include restrictions such as prior authorization, step therapy, and provider admission requirements.

In the Consolidated Appropriations Act of 2021 (“CAA,” an old favorite), Congress enacted an express requirement that group health plans and issuers that offer MH/SUD benefits perform and document comparative analyses of the design and application of their NQTLs to demonstrate parity. These analyses must be made available upon request by the Departments of Labor, Health and Human Services, and Treasury, along with information regarding:

(1)The specific plan or coverage terms regarding the NQTLs and a description of the benefits to which each term applies;

(2)The factors used to determine that the NQTLs will apply; and

(3)The evidentiary standards used for the factors in (2).

The federal departments subsequently released a set of frequently asked questions for group health plans and issuers on how to prepare their comparative NQTL analyses.

Since then, the road to compliance has been challenging. Our plan clients (and many of you) maintain that the compliance guidance offered to date is insufficient. The departments insist that despite what they view as extensive support and resources, plans and carriers continue to fall short on their compliance obligations. Indeed, in their first report to Congress after passage of the CAA, the federal agencies noted that none of the NQTL comparative analyses reviewed to that point had met the statutory requirements in the CAA.

In November 2024, the Biden administration issued a final rule implementing the CAA amendments and imposing new requirements and clarifications related to the NQTL analyses (the 2024 Rule). In addition to providing greater clarity on preparation of NQTL analyses, the 2024 Rule included new language that restrictions on access to MH/SUD benefits must not be greater than those on access to medical/surgical benefits. The 2024 Rule also imposed new standards for assessing the adequacy of MH/SUD benefits.

The ERISA Industry Committee trade group filed a challenge to the 2024 Rule on Jan. 17, 2025, in the United States District Court for the District of Columbia, questioning the departments’ authority to issue the 2024 Rule. The Trump administration subsequently notified the court that the departments intend to reconsider the 2024 Rule and will stay enforcement of that rule during the review. The court then granted the administration’s request that the case be held in abeyance until it completes the review.

In a May 15 statement, the departments declared that they would not enforce the 2024 Rule or otherwise pursue enforcement actions for compliance failures related to the rule that occur prior to a final decision in the pending litigation plus an additional 18 months. The statement also notes that the departmental reconsideration would be done in accordance with President Donald Trump’s February 2025 executive order directing federal agencies to review regulations that “impose undue burdens on small businesses or significant costs upon private parties.”

So, where do we go from here?

First, the non-enforcement policy only applies to the 2024 Rule. Prior regulations, such as the 2013 Final Rule (which provided that parity requirements also apply to NQTLs), and relevant guidance (the FAQs), remain in effect, and the departments advised plans and issuers to continue referring to the policies outlined in both documents to ensure compliance with mental health parity laws.

The MHPAEA itself and the CAA 2021 amendments, including the requirement to prepare and document NQTL analyses and to make these analyses available to the departments, also remain in full force and effect. It is unclear whether the departments intend to request access to those NQTL analyses while they reconsider the 2024 Rule, but the statute does mandate that they request a minimum of 20 per year.

It also is important to note that the states retain primary jurisdiction over carriers. Despite the departments encouraging them to adopt the same approach, some states may choose to continue rigorous enforcement.

Second, with respect to the likely outcome of the departments’ 2024 Rule reconsideration, ERIC’s litigation arguments may provide a framework. ERIC argues that, at its core, the 2024 Rule seeks to regulate the adequacy of MH/SUD benefits and patient access to these benefits but that those policies are beyond the scope of the departments’ statutory authority. The 2024 Rule, for example, dictates that if a plan provides a MH/SUD benefit in any benefit classification (i.e., inpatient or pharmacy), then the plan must provide “meaningful benefits” for that condition in every classification in which medical/surgical benefits are provided.

ERIC argues that, by imposing such strict standards, the departments are effectively imposing a benefits mandate on plans and issuers in violation of the MHPAEA directive that nothing in the statute “shall be construed as to require a group health plan (or health insurance coverage offered in connection with such plan) to provide any mental health or substance use disorder benefits.”

ERIC also argues that by citing increased access to MH/SUD benefits as a goal, and rendering any material differences in access between MH/SUD and medical/surgical benefits as a “strong indicator that the plan violates the rule,” the rule seeks to regulate parity of outcomes, rather than parity of terms, which is outside the scope of the departments’ authority.

The 2024 Rule itself acknowledges that this “meaningful benefits” standard and other provisions may require changes to plan benefit design that could be difficult to implement within a short period of time, potentially triggering that burdensomeness directive in the February executive order.

We believe it likely that many of the more onerous components of the 2024 Rule will be pared back or eliminated and that the departments’ reconsideration will rely heavily on the ERIC critiques. In the interim, although the departments appear to be holding off on requesting comparative NQTL analyses for review, the underlying parity requirements remain in full force and effect, and 2024 Rule reconsideration should not be treated as a free pass on MHPAEA compliance.