Employer Health Plans Failing to Deliver Parity in Mental Health Coverage

A Biden administration report to Congress finds that none of the selected analyses employers initially submitted to the Department of Labor to review for mental health parity compliance audits contained sufficient information, and recommends Congress enact civil monetary penalties for violations.

Background: The Mental Health Parity and Addiction Equity Act prohibits coverage limitations in employer health plans that apply more restrictively to mental health and substance use disorder (MH/SUD) benefits than for medical/surgical benefits. Such limitations include higher copayments, separate deductibles, and stricter preauthorization or medical necessity reviews, as compared to other medical treatments covered by a plan. As recently amended, the Act requires employer plans to perform and document comparative analyses of any treatment limitations they have in their health plans and to submit those analyses to DOL upon request. The report examines the analyses from 156 plans and issuers, which the Department requested on a random basis after the February 2021 deadline.

Secretary of Labor Marty Walsh said the findings in the report “clearly indicate that health plans and insurance companies are falling short of providing parity in mental health and substance-use disorder benefits, at a time when those benefits are needed like never before.”

Not all bad news: While DOL issued 80 insufficiency letters across 89 investigations and identified 48 impermissible treatment limitations, it has not yet made any final determinations and is working with employers and carriers to improve compliance. In some instances, where DOL did not issue an initial determination of noncompliance, plans and carriers simply dropped the treatment limitation in question from their plans.

Parity law difficult to comply with: The report shows what HR Policy has been telling DOL for years: without better guidance from the Department, employers have no way to know how to comply with the parity analyses required by the law. The report itself notes that the law’s requirements are “complex” and recommends Congress “ensure that MH/SUD benefits are defined in an objective and uniform manner pursuant to external benchmarks that are based in nationally recognized standards.”

Other policy recommendations include:

• Enact civil monetary penalties for parity violations and enable plan participants to pursue private actions to recover damages, which HR Policy opposes;
  
  
• Provide DOL with the authority to pursue third party administrators; and
  
  
• Permanently expand access to telehealth and remote care services.

Outlook: DOL has announced it will be updating its parity guidance later this year and the Build Back Better Act includes civil monetary penalties that could be enacted by Congress. The report also indicates DOL is willing to work with employers who are acting in good faith to ensure compliance this year before issuing penalty determinations and identifying companies by name in the next annual report. Employers should take advantage of this time to get their parity analyses in order.