The 2024 Final Rule Complicates MHPAEA Analysis
- Boutwell Fay LLP
- 1 day ago
- 5 min read
Health & Welfare
Journal of Pension Benefits
Issues in Administration, Design, Funding, and Compliance
Volume 32 • Number 4 • Summer 2025
Sherrie Boutwell is a founding partner of Boutwell Fay LLP and has focused a career of 30 plus years in the areas of employee ben- efits law and ERISA. She is a highly sought-after advisor, speaker, and writer on employee benefits topics and takes pride in bringing a practical and down-to-earth approach to resolving complex benefits issues involving qualified, nonqualified, and health and welfare plans.
Lauren Mamaghani is an Associate Attorney at Boutwell Fay LLP and has broad benefits experience, including advising a diverse array of clients on the design, operation, and compliance of health and welfare plans.
by Sherrie Boutwell and Lauren Mamaghani, Boutwell Fay LLP
The Mental Health Parity and Addiction Equity Act (MHPAEA) was enacted in 2008 and generally prevents most group health plans that provide mental health and substance use disorder (MH/SUD) benefits from imposing more restrictive coverage limitations on those benefits than on medical/surgical (M/S) benefits.
MHPAEA analyzes two categories of coverage limitations: (1) quantitative treatment limitations (QTLs) and (2) nonquantitative treatment limitations (NQTLs). Specifically, neither QTLs nor NQTLs may be applied to a MH/SUD benefit in any of six categories unless a similar limitation applies to the M/S benefits within that category.
To replace QTL/NQTL regulations finalized in 2013, the Departments of the Treasury, Labor, and Health and Human Services (the Departments) proposed regulations in 2023 that solicited 9,503 comments. After review, the Departments issued final regulations on September 10, 2024 (the 2024 rules). The 2024 rules shift the focus of the regulations from the process of applying NQTLs to the outcomes of that application. The key changes are addressed below.
New and Revised Definitions
The 2024 rules modify the definitions of “medical/surgical benefits,” “mental health benefits,” and “substance use disorder benefits” by clarifying that, while plans may define these terms, they must do so in a manner consistent with the most current version of the International Classification of Diseases (ICD) or Diagnostic and Statistical Manual (DSM) and may no longer rely on state guidelines.
The 2024 rules also create definitions for “evidentiary standards,” “factors,” “processes,” and “strategies.” Plan sponsors should monitor the ICD and DSM to confirm their plan documents and written comparative analyses reference current versions, because plans must align their definitions by the first day of the plan year that is one year after the date a publication is updated. Plans also should confirm their written analyses comport with the other new definitions.
Notably, the Departments added these provisions because they routinely find that plans reference outdated publications in plan documents and comparative analyses.
New “Meaningful Benefits” Standard
Under the 2024 rules, if a plan provides benefits for a MH/SUD condition in any classification, it must provide meaningful benefits for that condition in every classification in which it provides meaningful M/S benefits. To be meaningful, benefits must be for a “core treatment” (that is, one “indicated by generally recognized independent standards of current medical practice”).
If no core treatment exists, some sort of benefits for the condition must be provided in every classification in which M/S benefits are provided, and the absence must be noted in the written comparative analysis.
Expanded NQTL Analysis
The 2013 rule prohibited application of a NQTL to a MH/SUD benefit unless the processes, strategies, evidentiary standards, or other factors used in applying the NQTL to MH/SUD benefits were comparable to, and applied no more stringently than, those used in applying the limit to M/S benefits in the same classification. The 2024 rules expand this standard into a two-part test.
Part One: Design and Application Analysis
Effective January 1, 2025, not only must those evidentiary standards and factors be evaluated with respect to application of a NQTL, but now they also must be evaluated with respect to the design of the NQTL. Additionally, for purposes of determining comparability and stringency, plans are specifically prohibited from relying upon discriminatory factors to design a NQTL.
Part Two: Data Analysis
Effective January 1, 2026, plans must collect and evaluate data in a manner reasonably designed to assess the impact of NQTLs on outcomes related to access to MH/SUD benefits. The Departments intend to issue additional guidance, but relevant data is construed broadly and may include the percentage of claim denials or data relevant to NQTLs as required by state law or accreditation standards.
The 2024 rules also specifically mandate evaluation of network composition, which may require collection of data on in-network and out-of-network utilization rates, network adequacy metrics, and provider reimbursement rates. If data suggests a NQTL contributes to a material difference in access to MH/SUD benefits (that is, likely to have a negative impact) as compared to M/S benefits, that will be considered a strong indication the plan violates MHPAEA. In such case, the plan must document any reasonable action, taken or planned, to address the difference.
Although these new data evaluation obligations and corresponding documentation requirements are likely the heaviest compliance burden of the new rules, the proposed NQTL rules were more demanding. Originally, any material difference in outcomes data was slated to be a per se violation of MHPAEA. Further, the NQTL analysis was proposed as a mathematical test, but reverted to the statutory language in a move that may be interpreted as a defensive response to the U.S. Supreme Court’s curtailment of agency regulatory authority in Loper Bright Enterprises v. Raimondo [603 U.S. 369 (2024)].
New Documentation Requirement for NQTL Analysis
Since 2021, the Consolidated Appropriations Act has required plans to document the above-described comparative analysis and provide it to the DOL, a participant, or a beneficiary quickly upon request. Under the 2024 rules, the report must contain additional items, including claims data analysis relevant to NQTLs and details demonstrating that no NQTL directly or indirectly limits access to MH/SUD coverage improperly.
The 2024 rules also require a named fiduciary to certify they have engaged in a prudent process to select one or more qualified service providers to perform and document the comparative analysis of NQTLs applied to MH/SUD benefits and satisfy their duty to monitor those service providers. These requirements take effect on January 1, 2026.
Court Enforcement of MHPAEA Document Responses
ERISA requires that certain documents be furnished within 30 days of a request to plan participants and beneficiaries. Failure to do so without reasonable cause can result in penalties of up to $110 per day at the court’s discretion [ERISA §104(b)(4)]. The 2013 MHPAEA regulations added certain documents to that list.
A court recently awarded statutory penalties of more than $32,000 to a plaintiff who lost on the benefit claim itself for failure to provide the requested documents [W.H. v. Allegiance Benefit Plan Mgmt. Inc., 2024 WL 2830792 (D. Mont. June 4, 2024)].
Department of Health and Human Services Finalized Regulations
The Department of Health and Human Services finalized related regulatory amendments that indicate a commitment to bring plans into compliance with MHPAEA.
First, the MHPAEA requirements will extend to insurers offering individual health insurance coverage, effective January 1, 2026. Until then, insurers must continue to comply with the 2013 regulations.
Second, a sponsor of a self-funded, non-federal governmental plan may no longer elect to exempt its plan from any of the MHPAEA requirements, effective after December 28, 2022 (except for certain plans subject to multiple collective bargaining agreements which may extend their elections).
The Big Picture
MHPAEA is full of complex requirements that, even after a decade, are still subject to varying interpretations and ongoing changes in the regulatory environment.
On May 15, 2025, the Departments announced they will not enforce the 2024 rules until 18 months after a decision is reached in a lawsuit challenging the 2024 rules. Until then, the 2013 rules are very much in effect, and the 2024 rules underscore the importance of monitoring MHPAEA compliance obligations.