2024-20612. Requirements Related to the Mental Health Parity and Addiction Equity Act

Benefits:

• Improved understanding of and compliance with MHPAEA by plans and issuers, resulting in better frameworks for determining whether plans and issuers are complying with MHPAEA with respect to NQTLs applicable to mental health and substance use disorder benefits and medical/surgical benefits.

• Greater access and utilization of mental health and substance use disorder services by reducing barriers to coverage of mental health and substance use disorder treatment, which will result in better health outcomes for those with mental health conditions or substance use disorders.

• Reduction in the negative impacts on families, friends, caregivers, and coworkers of those with untreated or poorly managed mental health conditions or substance use disorders based on their improved access to treatment.

Costs:

• Increased costs to plans and issuers to implement changes associated with the revision of plan provisions, which would result in increased costs from expanded coverage of mental health and substance use disorder services.

• Costs to plans and issuers from collecting and evaluating outcomes data and documenting NQTL comparative analyses consistent with the requirements of these final rules of approximately $656.2 million in the first year and approximately $131.2 million in subsequent years or between 0.07 percent and 0.01 percent of total health insurance premiums in the group and individual markets.

• Costs to plans and issuers for preparing and mailing the comparative analyses upon request to participants, beneficiaries, and enrollees of approximately $14.8 million annually.

• Cost to plan and issuers for providing comparative analyses for audits is approximately $23,800.

• First-year regulatory review costs to plans and issuers for familiarizing themselves with these final rules of approximately $10.8 million.

• Cost to plan and issuers to maintain recordkeeping is approximately $12.2 million.

• Potential increase in cost-sharing requirements and/or treatment limitations for medical/surgical benefits for participants, beneficiaries, and enrollees, if plans and issuers try to achieve parity by imposing new restrictions on medical/surgical benefits, rather than by reducing restrictions on access to mental health or substance use disorder benefits.

• Potential costs to self-funded non-Federal governmental plans that opted out of MHPAEA to come into compliance with requirements under MHPAEA.

• Cost savings to self-funded non-Federal governmental plans of approximately $11,783 annually in total from no longer sending opt-out notices regarding a plan's MHPAEA opt-out election.

• Cost savings for the Federal Government of approximately $5,200 annually from fewer opt-out notices being submitted by self-funded non-Federal governmental plans.

Costs	Estimate	Year dollar	Discount rate (percent)	Period covered
Annualized Monetized ($million/Year)	$217.35 207.04	2024 2024	7 3	2024-2033 2024-2033
Transfers:
• Potential transfers from plans and issuers to participants, beneficiaries, and enrollees resulting in lower out-of-pocket spending on mental health and substance use disorder services.
• Potential transfers from participants, beneficiaries, and enrollees to plans and issuers caused by higher premiums or contributions associated with increased utilization of mental health and substance use disorder services, provider network improvements, and increased provider reimbursement rates.
• Potential transfers from primary care providers to mental health providers for the treatment of mental health conditions and substance use disorders as a result of an increased number of in-network mental health and substance use disorder providers and decisions by participants, beneficiaries, and enrollees to obtain treatment from those providers instead of a primary care provider.

5. Affected Entities

The following table summarizes the number of plans, issuers,^[184] TPAs, and multiple employer welfare arrangement (MEWAs) that would be affected by the final rules.^[185] These estimates are discussed in greater detail later in this regulatory impact analysis.

Table 2—Affected Entities

	Self-funded plan count	Mixed insured plan count	Total
Issuers (health insurance company/State combinations)			1,467
TPAs			205
Plan MEWAs that are not fully insured			132
Non-plan MEWAs that are not fully insured			21
Plans (total)  186 187	46,080	4,501	50,581
Under 100 participants	25,150	176	25,326
100 to 199 participants	5,209	402	5,611
200 to 499 participants	6,861	755	7,616
( print page 77662)
500 to 999 participants	3,812	671	4,483
1,000 to 2,499 participants	2,880	948	3,828
2,500 to 4,999 participants	1,119	561	1,680
5,000 and above participants	1,049	988	2,037
Plans with less than 500 participants that will seek assistance with the comparative analyses from TPAs, MEWAs, or service providers	37,220	1,333	38,553
Plans with more than 500 participants that will conduct the comparative analysis themselves	709	253	962
Plans with more than 500 participants that will receive generic comparative analyses from TPAs or service providers and will then customize it	4,076	1,458	5,534
Non-Federal governmental plans with less than 500 participants that will seek assistance with the comparative analyses from TPAs or service providers	26,584		26,584
Non-Federal governmental plans with more than 500 participants that will conduct the comparative analysis themselves	505		505
Non-Federal governmental plans with more than 500 participants that will initially receive generic comparative analyses from TPAs or service providers and will then customize it	2,906		2,906

5.1. Issuers, TPAs, and MEWAs

Under the Departments' final rules, issuers are responsible for providing data and comparatives analyses for individual market plans. For small and large group market fully insured, employer-sponsored plans, including non-Federal governmental plans, both employer-sponsored health plans and health insurance issuers are responsible for providing data and comparative analyses, though for those plans, underlying data and analyses will likely be provided by issuers that design and market the plans. Self-funded group health plans, while responsible for complying with these rules, will likely seek assistance from their TPAs, MEWA administrators, and other service providers for collecting and analyzing the data, and generating the comparative analyses.

The Departments estimate that the final rules will affect 479 health insurance companies nationwide that provide coverage, including mental health and substance use disorder benefits, in the group and individual health insurance markets, with 1,467 issuers (health insurance company/State combinations).^[188] In addition, there are an estimated 205 TPAs that provide services to group health plans, particularly for self-funded plans where TPAs often establish provider networks and adjudicate claims, which would be impacted by these final rules.^[189] The Departments estimate that the final rules will affect at least 40 managed behavioral health organizations providing mental health and substance use disorder benefits to group health plans.^[190] Additionally, based on the Form M-1 filings, the Departments estimate that there are 687 plan MEWAs, of which 132 are not fully insured, and 50 non-plan MEWAs, of which 21 are not fully insured.^[191] These MEWAs, similar to issuers, are likely to provide support to employers or plans.

Issuers, TPAs, and MEWAs provide key support for plan compliance with laws and regulations for group health plans, including MHPAEA. The Departments' understanding, based on discussions with the regulated community and numerous direct investigations of plans, including the review of comparative analyses, is that issuers of fully insured coverage provide a menu of benefit combinations from which interested parties select their coverage designs. These coverage designs may include different features, such as varying deductibles, copayments, and coverage for specific items and services, allowing interested parties to choose the plan that best suits their health care needs. While issuers of fully insured health plans are responsible for overseeing the compliance framework and ensuring that plans comply with legal and regulatory requirements, TPAs play a crucial role in facilitating compliance for self-funded plans by providing administrative support, including claims adjudication, member enrollment, and customer service.

TPAs and insurance companies providing administrative services only (ASO) to self-funded plans overwhelmingly design the plans, administer the networks, manage claims, provide plan services, maintain and hold the data relevant for the comparative analyses, and help ensure MHPAEA compliance.^[192] Self-funded plans rarely build independent provider networks and instead rely on those built ( print page 77663) by TPAs (including those that are also health insurance companies). According to the 2019 KFF Employer Health Benefits Survey, only 8 percent of large, self-funded plans with 200 or more employees reported that they directly contracted with hospitals and health systems, independent of the plan's TPA, to provide health care services separate from the provider networks included in the plan network.^[193]

While the requirement to comply with MHPAEA is directly applicable to group health plans and health insurance issuers, the Departments anticipate that issuers and TPAs are best situated to conduct comparative analyses as required under the CAA, 2021 and these final rules, and to provide the analyses in an efficient and cost-effective manner, helping to reduce the compliance burden. Self-funded plans may, however, incur some additional costs to complete the comparative analysis initially prepared by the issuer or TPA to address unique plan issues and include all the information necessary to perform comparative analyses.

One commenter stated they are not aware of any TPA that has assumed compliance obligations wholesale, though they acknowledged that TPAs had cooperated and provided data in response to a government audit. Another commenter reported that TPAs working on behalf of group health plan sponsors struggle to obtain needed information to perform and document comparative analyses, such as when claims expenditure data collected by TPAs is not compatible for testing purposes and, moreover, is not reported at the plan sponsor level. It should be noted that these reported challenges are not unique to TPAs, but are the same issues facing issuers and self-funded plans. However, TPAs are more likely than plan sponsors to have expertise to navigate the challenges.

Other commenters supported the Departments' assumptions that employer-sponsored plans rely on their services providers and TPAs to conduct their comparative analyses. One commenter noted that only the insurance carriers, TPAs, and service providers that play a role in designing plans, administering networks, managing claims, providing plan services, and maintaining and holding the data relevant for the comparative analyses have the expertise to comply with and fulfill all the requirements outlined in the proposed rules. Another commenter noted that self-funded plan sponsors rely on TPAs and/or the owners of provider networks to develop plan designs and develop and impose NQTLs, arguing that if the TPA or owner of the provider networks do not share claims data, then the TPA or owner of the provider networks should be required to conduct analyses for the plans.

While the Departments acknowledge these concerns, based on their own observations when reviewing comparative analyses, the Departments expect that issuers, TPAs, and service providers will continue to provide assistance to evaluate NQTLs and perform and document comparative analyses, including data required under these final rules, for their plan clients. The Departments emphasize that the requirement to perform and document comparative analyses of the design and application of NQTLs has been effective under the CAA, 2021 for more than 3 years (since February 10, 2021) and is an independent statutory obligation that is not dependent upon a request by the Secretaries or an applicable State authority. Issuers and plans, in conjunction with their TPAs for self-funded group health plans, have had ample time to develop the internal structures required for analyzing NQTLs to ensure that their plans and coverage comply with MHPAEA. Finally, while plans could be charged for the services of issuers, TPAs, and other service providers, this arrangement provides for economies of scale in compliance, as issuers evaluate NQTLs, produce or assist in producing the comparative analyses for their products and plan designs, and, in combination with TPAs and other service providers, provide support for other requirements.

5.2. Group Health Plans

Group health plans sponsored by employers with 50 or more employees that offer mental health and substance use disorder benefits are generally required to comply with MHPAEA. Although MHPAEA includes a small employer exemption, group health plans sponsored by employers with less than 50 employees who purchase non-grandfathered small group coverage are required to comply with MHPAEA under the EHB requirements of the ACA. In this analysis, plan size is used as a proxy for employer size to determine if a plan is affected. Evidence suggests that most large group plans offer mental health and substance use disorder benefits and nearly all participants are covered.^[194]

The Departments estimate that approximately 1,719,000 fully insured, non-grandfathered ERISA-covered group health plans with less than 50 participants and approximately 411,000 ERISA-covered group health plans with 50 or more participants, of which approximately 246,000 are self-funded group health plans, will be affected by these final rules.^[195] In addition, the Departments estimate that these final rules will affect approximately 90,900 non-Federal governmental plans,^[196] of which approximately 12,700 are plans with 50 or more participants.^[197] The Departments requested comments on these estimates in the proposal, but did not receive any.

The estimated compliance costs associated with these final rules are ( print page 77664) impacted by whether a plan is fully insured or self-funded. The Departments anticipate that fully insured plans will receive compliance support in the form of comparative analyses and data analyses prepared by the issuer. For these plans, the burden is estimated as a cost for the issuer to prepare the analyses and analyze the data. Self-funded plans may rely on issuers or TPAs acting as service providers, receive some support from their service providers that they supplement themselves, or produce the required information themselves.

Most employer-sponsored health plans are exempt from filing a Form 5500 due to size and the absence of plan assets, the majority of which are fully insured. Large health plans are required to file a Form 5500, regardless of funding arrangement. For statistical year 2021, 81,800 health plans filed a Form 5500. Of these plans, 50,600 were self-funded or mixed-insured,^[198] of which 38,600 had less than 500 participants.^[199] Additionally, the Departments estimate that there are 26,600 self-funded non-Federal governmental plans with less than 500 participants.^[200] The Departments assume that self-funded plans with less than 500 participants will receive assistance with the comparative analyses and data requirements from TPAs or service providers involved with the plans.

The Departments assume that some of the largest plans will incur the full cost of preparing the comparative analysis and conducting the required data analyses. Commenters suggested that some large, self-funded plans would conduct the comparative analyses themselves. To account for these plans, the Departments estimate that 8 percent of self-funded plans with 500 or more participants, or 962 ERISA covered plans ^[201] and 505 non-Federal governmental plans,^[202] will prepare the comparative analysis and conduct the required data analyses themselves. The Departments estimate that 50 percent of the remaining self-funded plans with 500 or more participants, or 5,535 self-funded plans,^[203] and 2,900 self-funded non-Federal governmental plans with 500 or more participants will receive a generic comparative analysis from the TPA,^[204] which they will subsequently customize to suit their specific needs. These plans will incur costs, but not at the same level other entities preparing the comparative analysis and data for themselves.

Finally, HHS estimates that 230 self-funded non-Federal governmental plans will be affected by the implementation of the CAA, 2023 provision that sunsets the MHPAEA opt-out election.^[205] HHS is aware of at least 14 plans with collective bargaining agreements whose sponsors' MHPAEA opt-out elections could be in effect beyond 2024. The MHPAEA opt-out election of these plans with collective bargaining agreements will remain in effect until the last of these plans' respective collective bargaining agreements expires, all of which are anticipated to expire by 2028. HHS does not have precise information about the number of participants and beneficiaries of the plans that have elected to opt out of requirements under MHPAEA, as those plans are not required to report this information to HHS. However, HHS estimates that there are approximately 261 participants, on average, in each self-funded non-Federal governmental plan.^[206] HHS also estimates that there is one beneficiary for each plan participant on average. Therefore, approximately 120,000 participants and beneficiaries will be affected by this final provision.^[207]

HHS solicited comments on the estimated number of self-funded non-Federal governmental plans and the estimated number of plan participants and beneficiaries that would be affected by the implementation of the CAA, 2023 provision that sunsets the MHPAEA opt-out election. Although HHS did not receive comments on the estimated ( print page 77665) number of self-funded non-Federal governmental plans or the estimated number of plan participants and beneficiaries that would be affected by the implementation of this provision, many commenters indicated that hundreds of thousands of public employees and their family members have been denied the critical MHPAEA protections due to the election option for self-funded non-Federal governmental plans to opt out of requirements under MHPAEA. Another commenter indicated that the ability to opt out of requirements under MHPAEA has compromised the health and well-being of State and local government employees, such as teachers, firefighters, and civil servants across the country. HHS agrees that a significant number of individuals will be impacted by the CAA, 2023 provision that sunsets the MHPAEA opt-out election and that these regulatory amendments will ultimately increase access to mental health and substance use disorder services by requiring self-funded non-Federal governmental plans that had previously opted out to come into compliance with the requirements under MHPAEA.

5.3. Participants, Beneficiaries, and Enrollees Receiving Mental Health and Substance Use Disorder Treatment

There are approximately 56,984,000 participants and 50,407,000 beneficiaries in ERISA-covered group health plans with 50 or more participants,^[208] approximately 17,483,000 participants and approximately 14,854,000 beneficiaries in non-Federal governmental plans with 50 or more participants,^[209] approximately 10,258,000 participants and 8,629,000 beneficiaries in ERISA covered, non-grandfathered, fully insured health plans with less than 50 participants,^[210] and approximately 12,000,000 individual health insurance coverage policyholders (with approximately 16,000,000 total enrollees).^[211]

Since the enactment of MHPAEA, participants have increasingly utilized behavioral health services through their health coverage. Between 2007 and 2017, private insurance claim lines for behavioral health diagnoses increased by 320 percent.^[212] Claims data show that between 2013 and 2019, the percentage of the employment-based coverage population under the age of 65 diagnosed with major depressive disorder increased from 4.1 percent to 5.3 percent, and the percentage of the population diagnosed with anxiety increased from 4.8 percent to 8.1 percent.^[213] In 2020, 41 million Americans who were enrolled in employment-based coverage, including 6 million children, received mental health support, which constituted nearly 25 percent of employment-based health plan participants and beneficiaries.^[214] A 2022 survey by SAMHSA indicated that among adults aged 18 or older, 23.1 percent (or 59.3 million people) had any mental illness and 6.0 percent (or 15.4 million people) had serious mental illness in the past year. The same survey also indicated that among individuals aged 12 or older, 17.3 percent (or 48.7 million people) had a substance use disorder in the past year, and of those only 14.9 percent (7.3 million people) received treatment for substance use disorder in the past year.^[215]

The COVID-19 public health emergency (PHE) exacerbated the need for mental health and substance use disorder treatments. During the pandemic, many adults consistently reported anxiety and depressive disorders symptoms, with 4 in 10 adults reporting symptoms in February 2021. Two years later in 2023, even as the pandemic receded from its peak, approximately 3 in 10 adults were still reporting symptoms of anxiety and depression.^[216] The pandemic likewise negatively impacted the mental health of children and adolescents, worsening reported rates of anxiety or depression which, in the 5 years preceding the pandemic, had already increased by 29 percent and 27 percent, respectively.^[217]

The pandemic may have long-term effects on mental health and substance use disorders, suggesting that the number of individuals affected by expanding access through their health plans will only continue to grow. A 2022 study examined the chronic effects of the pandemic on the mental health of Veterans and found that COVID-19 survivors were associated with a higher risk of developing mental health disorders, including anxiety, stress, depression, substance use, and neurocognitive decline, compared to individuals who did not have COVID-19.^[218] Another 2022 study examined the mental health outcomes of COVID-19 survivors during the 12 months following their infection and found that COVID-19 survivors reported a high prevalence of depression, anxiety, and post-traumatic stress disorder at both the 6- and 12-months follow-up, indicating that the pandemic has long-term adverse mental health impacts on ( print page 77666) COVID-19 survivors.^[219] Finally, a 2023 study found that the pandemic resulted in a long-term increase in the number of psychiatric inpatient admissions, suggesting that there is a post-pandemic need to prioritize psychiatric care.^[220]

6. Studies Examining the Impact of MHPAEA and State Parity Laws

6.1. Research Examining the Impact of State Parity Laws

6.1.1. Research Finding State Parity Laws Increase the Utilization of Mental Health and Substance Use Disorder Care

Research has found mixed evidence on the impact of State parity laws prior to the implementation of MHPAEA. While the specifics of the State-level programs might be different from MHPAEA, this research can nonetheless provide important context and suggestive evidence for how modifications to parity policies such as the MHPAEA program ^[221] might impact healthcare demand and quality. While some studies did not identify a significant change in costs or usage of behavioral health treatments following the passage of State parity laws, others found that State parity laws increased the utilization of mental health care and substance use disorder care among populations at risk.

For example, a 2006 study evaluated changes in mental health care utilization before and after States implemented parity laws, comparing them with States that did not enact such laws in the same year controlling for State and year fixed effects. Using data from the 2001, 2002, and 2003 NSDUH, the study categorized individuals with individual or employer-sponsored health insurance by their level of mental and emotional distress during their most challenging month in the past year and found that State parity laws increased the likelihood of using any mental health care in the past year by up to 1.2 percentage points for individuals with lower distress levels and up to 1.8 percentage points for those with moderate distress levels. However, it is important to note that the study did not find a statistically significant effect on the mental health care utilization for individuals with severe distress levels. The authors noted that this group had already been more likely to use mental health care even before the State parity laws were implemented, suggesting they may have sought such care regardless of these laws.^[222]

Similarly, a 2008 study examined whether State parity laws affect mental health care utilization differently among low-income individuals and those with poor mental health conditions. To examine these effects, the study used pooled cross-sectional data from the National Survey of America's Families conducted in 1997, 1999, and 2001 and found that employees of small firms were more likely to use mental health and substance use disorder care after the implementation of State parity laws. While the study found no effect of parity for low-income adults for all employers, when limiting the sample to small employers, the study found that parity was associated with a 5-percentage-point increase in the probability of low-income individuals using mental health services. The study also found a large increase among those with poor mental health conditions employed by small employers, although this finding is only significant at a 10-percent significance level. The study did not find an effect for individuals with poor mental health for medium or large employers. The authors attributed these inconclusive results to the small sample size; therefore, the findings in this study should be interpreted with caution.^[223]

Additionally, a 2013 study examined the effect of State parity laws on substance use disorder treatment using national survey data from 2000 to 2008 using State and year fixed effects to compare non-parity States to parity States prior to the implementation of MHPAEA. The authors reported that the baseline substance use disorder treatment rate before State parity laws were enacted was 1.40 percentage points in all specialty substance use disorder treatment facilities and 1.10 percentage points in facilities accepting private insurance. Relative to these baseline rates, this study found that the implementation of any parity law increased the treatment rate by 9 percent in all specialty substance use disorder treatment facilities and by 15 percent in all treatment facilities accepting private insurance. When controlling for the comprehensiveness of the State parity law, the study found that full parity ^[224] and parity-if-offered ^[225] increased the substance use disorder treatment rate in all facilities by 13 percent and 8 percent, and by 21 percent and 10 percent in those accepting private insurance, respectively; States with partial parity ^[226] did not have a significant effect on the substance use disorder treatment rates. The study conducted sensitivity analyses for facilities not accepting private insurance and found no difference in the treatment rates attributable to parity, suggesting that the effect of parity on the treatment rate is primarily driven by the increased treatment rate among the target population.^[227]

6.1.2. Research Finding State Parity Laws Have Other Positive Effects

Other studies have found that State parity laws have positive effects that extend beyond the use of mental health care. For example, a 2013 study comparing suicide rates in States with and without parity laws during two distinct periods: 1990 to 1997 and 1998 to 2004, the period when the majority of States (22 out of 29) had implemented parity laws. The study found that State parity laws were associated with a 5-percent decrease in suicide rates, even after subjecting the analysis to several robustness checks.^[228]

Similarly, a 2022 study examined how State parity laws affected suicide rates and educational outcomes among college-level students. Utilizing survey ( print page 77667) and administrative data spanning from 1998 to 2008, the study employed a difference-in-differences model and found that State parity laws reduced the suicide rates, increased college grade point averages, and reduced the likelihood of college-level students reporting any poor mental health days. However, the study did not find evidence that State parity laws affect the likelihood of disenrolling from college. These findings remain consistent even after subjecting the analysis to several robustness checks. The authors acknowledged some limitations in the study. Specifically, the reported number of poor mental health days reported is based on self-assessment, rather than on clinical measures. There is also a possibility of underreporting due to the stigma associated with mental health.^[229]

Finally, a 2015 study examined the effect of State parity laws on individuals aged 25 to 64 with moderate levels of distress.^[230] Using individual-level data from the National Health Interview Survey (1997 to 2001) and the Medical Expenditure Panel Survey (1998 to 2003), the study employed a triple-difference model and found a statistically significant increase in employment, weekly wages, and the number of hours worked following the passage of parity. The authors noted that the results do not indicate a shift in the labor demand curve, but rather an increase in the productivity of workers with moderate levels of distress.^[231]

Although the previous three studies suggest mental health outcomes may improve following the initiation of State parity policies, it is not clear from this research the mechanism driving any outcome improvements. Given a lack of data in both studies, the authors cannot directly show that State parity laws increase mental healthcare utilization. The causal impact of these policies, including whether parity would increase mental healthcare utilization, which would in turn improve health outcomes such as the suicide rate, can therefore not be directly ascertained. Absent any utilization increases, it is possible that parity policies could improve the quality of care itself without additional demand, but further research is needed to answer how specifically parity laws affect downstream health outcomes.

6.1.3. Research Finding State Parity Laws Have Statistically Insignificant Effects

In contrast, some studies have found that State parity laws did not significantly improve access to mental health and substance use disorder care. For instance, a 2000 study focused on patients with mental health needs examined the impact of State parity laws on their insurance coverage, with varying specifications which defined this as insurance status, insurance generosity, and perceived access to care. Using national survey data from 1996 to 1998, the study found no statistically significant impact on insurance coverage or access to care for patients with mental health needs following the passage of State parity laws. The authors attributed this finding to several limitations of the study, including a relatively small sample size which limited the narrowness of State parity laws in terms of impact types of insurance coverage, and the significant number of individuals with mental health or substance use disorders who do not have health insurance coverage. Most significantly, while the study examined the impact of parity laws on access to insurance and care, it was not limited to behavioral health care and so the impact on those interventions may not have been statistically significantly captured.^[232]

Furthermore, a 2013 study examined how State parity laws affected access to mental health care services for privately insured children and youths aged three to 17 with ASD. Using national survey data from 2005 to 2006 and adjusting for potential selection bias of States that enacted parity legislation, the study did not find evidence that State parity laws increased the utilization of mental health services for children with ASD. The authors suggested that differences in the availability of services, therapies, and treatments across States could explain this lack of impact, as these children may not benefit from the same protections and service access afforded to children with other mental health conditions under State parity laws. Additionally, the authors acknowledged limitations in their analysis, noting that the study did not provide information on the implementation of State parity laws. They cautioned that measurement errors could arise due to the potential delayed effects associated with varying implementation timelines of the State parity laws.^[233]

6.2. Research Examining the Impact of MHPAEA on Utilization

Several studies have investigated the effect MHPAEA had on utilization of treatment for mental health conditions or substance use disorders. In general, the studies have found either a small or no effect on utilization after the implementation of MHPAEA.

For instance, a 2014 study analyzed pooled data from seven Federal Employees Health Benefits (FEHB) plans, four of which contracted with carve-out plans ^[234] before and after parity implementation, two implemented carve-out plans when parity took effect, and one was not a carve-out plan. The authors looked at annual utilization, including psychotherapy visits, medication management visits, inpatient mental health or substance use disorder days, and mental health of substance use disorder prescription fills, for three target diagnoses: bipolar disorder, major depression, and adjustment disorder. Using a difference in differences model, the authors found a 12-percent statistically significant decrease in annual psychotherapy utilization for individuals diagnosed with adjustment disorders, and a statistically significant decrease in out-of-pocket spending for enrollees across all three diagnostic categories (ranging from $78 to $86) following parity implementation, and found no significant change for all other metrics. The authors opine that the observed decline in psychotherapy utilization may be related to the Office of Personnel Management's encouragement that FEHB plans utilize benefit management techniques to control spending increases following parity implementation.^[235]

( print page 77668)

Along the same lines, a 2016 study used an interrupted time series model to investigate the effect of MHPAEA on the probability of specialty behavioral health treatment, levels of utilization, and expenditures for enrollees aged 27 to 64 in group health plans between 2008 and 2013, with Optum carve-outs. The authors focused on the following outcomes: expenditures (insurer and patient), number of outpatient visits (assessment/diagnostic evaluation, individual psychotherapy, family psychotherapy, and medication management), and number of days of care (structure outpatient, day treatment, residential care, and acute inpatient care). In the post-parity period, 2011 to 2013, the effect of parity differed by type of care: the probability of using any assessment/diagnostic evaluation, medication management, of family psychotherapy visits decreased, while the probability of using structure outpatient care and inpatient care increased. Under multiple specifications and sensitivity tests, the authors found that parity had “modest to no effect on service use.” Though they did find modest evidence that costs shifted from patient to health plans.^[236]

Similarly, a 2019 study looked at insurance claims of enrollees under age 65 with continuous enrollment in a large group, employer-sponsored fully insured health plan between January 2005 and September 2015 to analyze whether parity implementation was associated with utilization and spending changes in behavioral health services compared to medical/surgical services. Parity had a positive but small, statistically significant impact on the share of enrollees that used any outpatient substance use disorder services. Specifically, parity increased the percentage of enrollees that used any outpatient substance use disorder services by 0.023 percentage points in the first year following the implementation of MHPAEA and 0.068 percentage points by the end of 2015 relative to pre-MHPAEA levels. The authors also found that parity led to an increase in the average frequency of monthly services per user for both mental health and substance use disorder services, at a rate of 0.05 services per user for mental health services and 0.054 services per user for substance use disorder services. This implies that people receiving services received more services, on average.^[237]

6.3. Research Examining the Impact of MHPAEA on Spending

Research has found mixed evidence on the impact of MHPAEA on spending. Some studies did not identify a change in out-of-pocket spending following the passage of MHPAEA, whereas others found that MHPAEA increased out-of-pocket spending on substance use disorder care.

For instance, a 2017 study examined whether MHPAEA increased behavioral health expenditures and utilization among a population with substance use disorders. Using Optum's claims and eligibility data from 2008 to 2013, the authors compared the utilization and expenditures for adults with alcohol or drug use disorders across several periods: pre-parity (2008 to 2009), transition period (2010),^[238] and post-parity period (2011 to 2013). They found that for carve-out plans managed by Optum, MHPAEA was associated with modest increases in total spending, plan spending, and patient out-of-pocket spending, as well as outpatient and inpatient utilization. Although the increases were mostly small in magnitude, they were evident across different types of care, potentially indicating small improvements in the accessibility to various substance use disorder treatments.^[239] The authors note that these results are similar to other studies, which used the same data when examining adults in carve-in plans and carve-out plans.^[240]

Additionally, a 2015 study examined whether MHPAEA was associated with changes in the out-of-network services for substance use disorder services. Using a 2007 to 2012 longitudinal, commercial claims database and employing an interrupted time-series design to analyze these effects, the study found that MHPAEA was associated with an increased probability of using out-of-network services at a rate of 0.0024 service users per month, an increased number of out-of-network out-patient visits at a rate of 0.0016 service users per month, and an increased average total spending on out-of-network services by $49.81 per user per month, though it was found to have no effect on out-of-pocket spending. This result would represent a shift in expenses borne by the insurer, which might or might not be passed through to the insured through higher premiums, but the study lacked the data to assess this possibility. The authors acknowledged that the study was not able to examine the adequacy of substance use disorder provider networks, which may have influenced enrollees pursuit of out-of-network care.^[241]

Finally, a 2014 study examined the impact of MHPAEA on the utilization and spending of substance use disorder treatments. Using 2009 to 2010 administrative claims data from Aetna insurance, the study compared changes in outcomes among health plan enrollees one year before (2009) and one year after (2010) the implementation of MHPAEA, compared to enrollees covered by State parity laws in place prior to MHPAEA. The study found the MHPAEA was associated with a modest increase in spending on substance use disorder treatments ($9.99 per health plan enrollee), but did not find significant changes in treatment initiation,^[242] treatment engagement,^[243] or out-of-pocket spending. The authors acknowledged that these findings may not be generalizable to other insurance or population contexts, since the study ( print page 77669) evaluated the effects of parity on individuals insured by a single health insurer in 10 States with pre-existing State parity laws. Moreover, the study examined only the first year following MHPAEA's effective date, which may not have fully captured its implementation.^[244] As discussed in section IV.2.2, the Departments have published regulations and extensive guidance to facilitate the implementation and enforcement of MHPAEA.

7. Benefits

The Departments expect that these final rules will improve the quality of the comparative analyses performed and documented by plans and issuers required by MHPAEA, as amended by the CAA, 2021; help plans and issuers better understand and fulfill their obligations under MHPAEA; and promote greater clarity regarding differences in access to mental health and substance use disorder benefits as compared to medical/surgical benefits. By specifying more details on how to perform and document NQTL comparative analyses, the Departments expect improvements in plan and issuer compliance with the requirements for imposing NQTLs under MHPAEA, and by doing so, increased access for participants, beneficiaries and enrollees to mental health and substance use disorder services.

Thus, these final rules will generate the following economic and societal benefits for participants, beneficiaries, and enrollees:

• improved understanding of and compliance with MHPAEA by plans and issuers, resulting in better frameworks for regulators, plans, and issuers to determine whether plans and issuers are complying with MHPAEA with respect to NQTLs applicable to coverage of mental health and substance use disorder benefits,
• greater access and utilization of mental health and substance use disorder services in response to a reduction in barriers to mental health and substance use disorder coverage (the greater utilization being a cost of the rule), resulting in better health outcomes among those with mental health conditions or substance use disorders, and
• reduced adverse impacts on the families, friends, caregivers, and coworkers of people who suffer from untreated or under treated mental health conditions or substance use disorders based on their improved access to treatment.

This analysis provides a mainly qualitative discussion of the benefits associated with these final rules, as the Departments do not have the data necessary to quantify the likely benefits associated with the additional guidance and its impact on ensuring better compliance with the rules related to NQTLs and access to mental health and substance use disorder benefits. Where possible, however, the Departments have provided estimates to illustrate some of the benefits of these final rules. The illustrative calculations address overlapping phenomena and thus are not summed due to the noteworthy potential for double-counting (moreover, for only a subset of the illustrated benefits have the associated treatment costs been quantified).

In addition, the Departments have identified several transfers that will occur due to this rulemaking, such as decreases in out-of-pocket spending and increases in premiums. These transfers are discussed in section IV.9 of this regulatory impact analysis.

The Departments requested comments and data in the proposed rules related to how the Departments might quantify these benefits. While one commenter stated that the Departments had not quantified the benefits of the proposal, they did not provide any data or recommendations on how these benefits could be quantified. Another commenter suggested that the Congressional Budget Office's (CBO) cost estimate ^[245] of the CAA, 2021 may help the Departments to quantify the benefits of the proposal. However, the CBO report primarily focuses on the program cost of CAA, 2021, rather than addressing the specific impact of the additional requirements for documenting comparative analyses, and therefore the Departments are not able to utilize it for quantifying the benefits of these final rules.

7.1. Improved Understanding of and Compliance With MHPAEA by Plans and Issuers

As noted earlier, the 2022 MHPAEA Report to Congress ^[246] found that none of the comparative analyses reviewed by the Departments under the first year of the CAA, 2021, contained sufficient information and documentation from plans and issuers upon initial receipt and nearly all were similarly deficient for the 2023 MHPAEA Comparative Analysis Report to Congress.^[247] As a result, the Departments had to make numerous requests for additional information. This process is costly for plans, issuers, and the Departments, and undermines the effectiveness of MHPAEA.

These final rules will clarify and strengthen the obligations of plans and issuers under MHPAEA, thus promoting compliance, by:

• placing renewed focus on the elimination of more restrictive barriers to access to mental health and substance use disorder benefits as compared to medical/surgical benefits,
• standardizing the definitions associated with the parity analysis for NQTLs applicable to mental health and substance use disorder benefits and medical/surgical benefits,
• providing examples of the application of MHPAEA to NQTLs, and
• setting forth the content and data evaluation requirements of the NQTL comparative analyses.

These final rules will help parties better understand what plans and issuers need to do to comply with MHPAEA, reduce uncertainty about compliance status, and help plans and issuers better identify areas they need to improve upon as well as reduce the need to revise analyses upon the Departments identifying non-compliance. In the course of implementing these final rules, the Departments anticipate that parties will adjust their policies and procedures in order to come into compliance and offer better coverage of mental health and substance use benefits to participants, beneficiaries, and enrollees.

Many commenters supported modifying existing definitions and adding new ones to the MHPAEA regulations, particularly for terms such as “medical/surgical benefits,” “mental health benefits,” and “substance use disorder benefits.” Commenters stated that these definitions would significantly improve clarity for plans and issuers. One commenter stated the proposal would clearly specify how mental health and substance use disorder benefits must be defined for MHPAEA compliance purposes, minimize situations where ( print page 77670) contradictions with State guidelines limit protections under MHPAEA, and ensure that plans appropriately classify mental health and substance use disorder benefits and medical/surgical benefits. The Departments acknowledge the supportive comments and agree that modifying and adding definitions, particularly for key terms like “medical/surgical benefits,” “mental health benefits,” and “substance use disorder benefits,” will enhance clarity and ensure consistent application of the MHPAEA requirements across plans and issuers, and have done so in these final rules.

Commenters also expressed support for clarifying the application of MHPAEA's requirements to NQTLs. One commenter stated that the proposal provides more specificity for plans and issuers to assess their NQTLs applicable to mental health or substance use disorder benefits, and the information that must be included in a comparative analysis of NQTLs applicable to mental health and substance use disorder benefits and medical/surgical benefits. The commenter further stated the proposal reduces uncertainty for all parties, while providing greater clarity for consumers and other stakeholders to assess whether an NQTL is compliant with MHPAEA. Additionally, the commenter stated that the proposal provides greater clarity for insurers and patients and helps State insurance regulators better enforce existing regulations. The Departments acknowledge the supportive comments and agree that the final rules provide clarity to the statutory requirements for the regulated community and other interested parties.

However, some commenters expressed concern regarding whether certain policies and procedures would now be prohibited under MHPAEA, as interpreted through the proposed rules, if finalized. One commenter, in objecting to the proposed mathematical substantially all and predominant tests, stated that the most significant cost is not in conducting the comparative analysis, but rather in the additional expenses incurred should plans and issuers no longer be able to utilize common medical management techniques that improve cost and quality outcomes, such as prior authorization and concurrent review.

As stated earlier in this preamble, the Departments are not finalizing the proposed mathematical test for applying the substantially all and predominant tests in these final rules. These final rules also do not eliminate the use of prior authorization or other medical management NQTLs applicable to both mental health and substance use disorder benefits and medical/surgical benefits. However, NQTLs applicable to mental health and substance use disorder benefits and medical/surgical benefits must be designed and applied in compliance with MHPAEA's parity requirements. Moreover, as discussed earlier in this preamble, the Departments anticipate that these final rules will promote changes in network composition and medical management techniques that result in more robust mental health and substance use disorder provider networks, as well as fewer and less restrictive prior authorization requirements for individuals seeking mental health and substance use disorder treatment. While this could increase costs in some cases, there are potential offsetting benefits in other cases for the reduction in the use of medical management techniques.

7.2. Greater Access to Mental Health and Substance Use Disorder Treatments

By improving plan and issuer understanding of the requirements under MHPAEA and clarifying how comparative analyses must be performed and documented, these final rules will improve compliance. Specifically, this will ensure compliance with the design and application requirements and the relevant data evaluation requirements so that NQTLs applied to mental health and substance use disorder benefits are no more restrictive than the predominant limitation applicable to substantially all medical/surgical benefits. The Departments are of the view that this will, in turn, expand access to and utilization of mental health and substance use disorder services. These final rules will have the greatest direct benefits for individuals who currently forego treatments or cannot access specialized care for a mental health condition or substance use disorder because their plan or coverage imposes barriers to accessing benefits for coverage of these services that are greater than the barriers for accessing medical/surgical services.

The Departments do not have sufficient data to estimate how many participants, beneficiaries, and enrollees will receive treatment, or more appropriate treatment, as a result of these final rules. However, research has demonstrated that participants, beneficiaries, and enrollees experienced increased access to mental health and substance use disorder treatments following the implementation of MHPAEA. Drawing on these studies, the Departments expect that this rulemaking, in further improving compliance with MHPAEA, will result in significant improvements in access to mental health and substance use disorder care.

For example, a 2018 study examined how MHPAEA affected the coverage of commercial health plans in the United States. The study found that between 2010 ^[248] and 2014, 68 percent of insurance products had expanded behavioral health coverage, and among plans that expanded services, 96 percent reported it was in part because of parity requirements.^[249] Further, a 2017 study examined the prevalence of behavioral health quantitative treatment limitations in large group health plans that utilized carve-out and carve-in services of a single service provider. While prior to implementation of MHPAEA, quantitative treatment limitations existed, following its implementation virtually all of those plans had eliminated quantitative treatment limitations.^[250] A 2019 study of claims data from both a pre-parity (January 2005 through December 2010) and post-parity period (January 2011 through September 2015), found that while MHPAEA did not appreciably increase the share of participants utilizing any outpatient mental health services, it did increase the frequency of use and total utilization of outpatient mental health and substance use disorder services of participants already receiving these services.^[251] Moreover, a 2020 study of MHPAEA, using 2007 and 2011 to 2012 data from the National Survey of Children's Health, found that among children and adolescents with family income between 150 and 400 percent of the Federal poverty level in States without prior parity laws, the enactment of MHPAEA resulted in a 2.8-percentage-point increase in mental health care utilization.^[252]

( print page 77671)

These final rules will directly benefit individuals who are currently enrolled in a plan with narrower networks, with regard to mental health and substance use disorder benefits compared to the networks for medical/surgical benefits, which prevent participants, beneficiaries, and enrollees from being able to access care from in-network providers and receive the benefits they need. A 2017 study of ACA Marketplace provider networks found that mental health networks were significantly narrower on average than primary care networks, providing less than half the share of providers practicing within a State-level market.^[253] A 2023 secret shopper study conducted by the Senate Committee on Finance contacted 10 providers from directories of 12 plans, making a total of 120 calls. The study found that more than 80 percent of mental health providers contacted were either unreachable, not in-network, or not accepting new patients.^[254]

Ghost or phantom networks—collections of providers and facilities that are listed as being within a plan's or issuer's network but, in fact, are not available to participants, beneficiaries, and enrollees for treatment on an in-network basis—make it difficult for participants to find in-network providers.^[255] One 2020 national survey of privately insured individuals that received mental health treatment found that more than half of those patients that used a provider directory encountered inaccuracies which made them more likely to be treated by an out-of-network provider, and four times as likely to receive a surprise, out-of-network bill.^[256]

In response to the Departments' proposal, numerous commenters stated that they believed the proposed rules would benefit patients, specifically by improving access to mental health and substance use disorder treatments. Several commenters stated the proposed rules would ensure more equitable access to care by addressing burdensome administrative practices, such as NQTLs and other utilization management techniques, which negatively impact patient access to mental health and substance use disorder benefits. Additionally, many other commenters suggested that the enhanced clarity and transparency provided by the proposed rules would alleviate administrative burdens and, as such, help to streamline access to behavioral health care. The Departments acknowledge these supportive comments and agree that the final rules will increase access to mental health and substance use disorder treatments.

Given those concerns highlighted by commenters regarding challenges related to accessing mental health substance use disorder benefits, the final rules particularly highlight parity in NQTLs related to network composition as an area that requires improvement. By requiring plans and issuers to collect and evaluate relevant data on provider networks, including for network composition NQTLs, the final rules will help to ensure that individuals have more equitable access to in-network providers that are available to provide care for mental health conditions and substance use disorders. Additionally, by ensuring that plans and issuers collect and evaluate data related to NQTLs for network composition for mental health and substance use disorder benefits and medical/surgical benefits, and as necessary address material differences in access between these benefits, the Departments expect that the final rules will improve the ability of participants, beneficiaries, and enrollees to access available in-network mental health and substance use disorder providers. Thus, the final rules will reduce barriers to accessing mental health and substance use disorder care.

This discussion focuses on the benefits for participants, beneficiaries, and enrollees who were previously prevented from receiving mental health or substance use disorder treatment. For a discussion of the effects on participants, beneficiaries, and enrollees who were previously paying out-of-pocket for treatment, refer to section IV.9.1 of this regulatory impact analysis pertaining to transfers.

The implementation of the CAA, 2023 provision that sunsets the MHPAEA opt-out election is expected to reduce financial and non-financial barriers to accessing mental health and substance use disorder treatment for participants and beneficiaries of self-funded non-Federal governmental plans that elected to opt out of requirements under MHPAEA. This is expected to result in increased access to mental health and substance use disorder care and, as discussed in more detail in the section IV.7.3, lead to better health outcomes for plan participants and beneficiaries who need mental health or substance use disorder services.

7.3. Better Health Outcomes Among Those With Mental Health Conditions and Substance Use Disorders

The Departments are of the view that by ensuring parity in medical management techniques and other NQTLs imposed by plans and issuers, the final rules will reduce barriers for participants, beneficiaries, and enrollees seeking mental health and substance use disorder care. As discussed later in this regulatory impact analysis, the removal of barriers preventing individuals from accessing mental health and substance use disorder treatment on par with medical/surgical treatment will in turn produce better patient outcomes, including potentially lives saved.

Research has demonstrated that MHPAEA has already had a positive effect on improving access to treatment. A 2016 study examining the initial effects of MHPAEA found that following implementation, prior authorization requirements were less common for behavioral health care services than in previous years.^[257] Further, removal of treatment limitations has had significant beneficial impacts in the mental health and substance use disorder space. A 2013 study, which analyzed changes in suicide rates by age groups before and after State parity laws were enacted, found that, controlling for State-specific time trends, enactment of parity laws was associated with a 5-percent decrease in suicides.^[258] It is worth noting, however, that State parity laws do not apply to most self-funded employer-sponsored health coverage, which comprise a large portion of the population in States affected by these final rules. As such, the impact of the laws in that study may have been somewhat dampened. For a more detailed description of this study, see section IV.6.1.

If, as the Departments expect, these final rules similarly increase access to mental health and substance use ( print page 77672) disorder care, the potential benefits could be significant. Using the suicide fatality rate for adults in 2021 from the Centers for Disease Control and Prevention (CDC) of approximately 14.1 per 100,000 persons ^[259] and the 2020 Agency for Healthcare Research and Quality youth suicide fatality rate of approximately 6.3 per 100,000,^[260] and applying these rates to the numbers of individuals 12 years old and older with private health insurance,^[261] suggests approximately 22,200 suicide deaths annually for adults ^[262] and 979 suicide deaths annually for children 12-17 years old.^[263] For illustrative purposes, the Departments assume that these final rules would have roughly 40 percent of the impact of the Lang study, or a 2-percent reduction of fatalities.^[264] As such, the Departments estimate that the final rules could help prevent 444 adult ^[265] and 20 youth ^[266] fatalities from suicide annually. Using the 2023 estimate of the value of a statistical life (VSL) developed by the U.S. Department of Transportation (DOT), $13.2 million,^[267 268] this would translate into benefits of $6.11 billion annually.^[269 270] The Departments recognize the uncertainty in the production of VSL benefit estimates. This uncertainty arises from a variety of assumptions that are key to the VSL estimate, such as the underlying demographic characteristics of the affected population or the differential willingness-to-pay for statistically equivalent but qualitatively different risks.^[271] To account for potential sensitivity arising from such uncertainty, the Departments have conducted a sensitivity analysis of these benefits and, following guidance on VSL sensitivity analysis,^[272] produced a lower and upper estimate of the VSL of approximately $5.3 million and $18.5 million, respectively.^[273] Utilizing this range of estimates, the Departments accordingly estimate the value of the benefits of reduced mortality arising from increased mental health treatment utilization at between $2.5 billion and $8.6 billion annually.^[274]

These benefits further illustrate the value of receiving treatment earlier and the harms of delaying treatment. While 75 percent of mental illness onsets before age 25, individuals between age 18 and 25 have a considerably higher prevalence of serious mental illness ^[275] than any other age group but the lowest rate of mental health treatment._276 277 Moreover, research suggesting that early symptom onset is associated with elevated risk for comorbid mental health disorders, as well as worsening health outcomes, illustrates the critical need for early mental health interventions and treatment access._278 279 However, the majority of adolescents with a mental health condition do not receive treatment.^[280] One review of recent changes in mental health treatment noted that “young people typically demonstrate a need for care prior to reaching the threshold for a traditional ( print page 77673) major psychiatric diagnosis where distress, functional impairment and warning signs . . . of mental illness are present, making early intervention at this time point crucial to preventing or reducing the severity of a full-threshold disorder.” ^[281] Further, this review noted that early intervention is key for reducing “premature death, social isolation, poor functioning and reduced educational and vocational productivity.” In recent years, research has driven an increased interest in early intervention services for younger individuals.^[282]

Mental health research often evaluates the benefits of mental health care in terms of a quality-adjusted life year (QALY), an assessment metric that evaluates the changes to a person's quality of life arising from an intervention. According to the National Institute for Health and Care Excellence, one QALY “is equal to 1 year of life in perfect health.” ^[283] In 2015 New York City launched a program called ThriveNYC, which included 54 initiatives to improve mental health, including additional screening and collaborative care. The study found that, on average, a 20-year-old who received these interventions would see an increase of 0.38 QALYs (representing a change in quality of life, with no estimation in this study of changes to length of life) relative to those who did not receive these interventions.^[284]

Another study compared the cost effectiveness of early intervention to standard care for the treatment of first-episode psychosis, finding that from a societal perspective (that is, quality of life, educational attainment, and gainful employment), early intervention resulted in higher discounted QALYs and lower costs than standard care. While acknowledging that earlier interventions result in higher lifetime costs than the standard care perspective, the authors still found early intervention to be cost effective.^[285]

The Departments do not anticipate the benefits to be exclusive to prevented suicides. The final rules are also expected to increase access to and utilization of behavioral health services and substance use disorder services.^[286] The 2022 NSDUH from SAMHSA indicates that 1.4 percent of adults with private health insurance reported having an OUD in the past year, while only 29 percent of those individuals indicated receiving treatment for OUD in the same year.^[287] A 2017 study utilizing claims and eligibility data from nearly 6 million enrollees found that parity resulted in a 17 percent increase in use of OUD treatment services, which illustrates a strong, positive relationship between parity and the utilization of behavioral health services.^[288] As discussed in section IV.6.1.3, there have been findings of positive or no impact of MHPAEA on the utilization of mental health and substance use disorder services. For illustrative purposes, the Departments assume that these final rules would have roughly 40 percent of the impact of the 2017 study, or an approximately 7 percent increase in OUD treatment service utilization.^[289] This would result in approximately 43,000 additional individuals receiving OUD treatment each year.^[290] Considerable research has demonstrated the efficacy of treatment for OUD,^{[291 292 293 294 295 296 297]} including several recent studies that have observed the reduction of both fatal and non-fatal overdoses for people diagnosed with OUD after receiving treatment. For example, an 18-month observational study of multiple cohorts of people receiving OUD treatments across the United States between 2017 and 2021 found that following outpatient treatment for OUD, the number of patient overdoses, arrests, and drug-related hospitalizations were all reduced by over 50 percent.^[298] Similarly, a 2024 retrospective study of opioid overdose fatalities found that individuals who recently received treatment for OUD experienced approximately 34 percent to 38 percent fewer overdose deaths compared to those who did not receive treatment. ^[299] ( print page 77674) A 2021 study funded by the National Institute on Drug Abuse (NIDA) found that, across a nationally representative cohort of individuals with OUD, common treatments for OUD were associated with a reduction in the number of overdoses by 11 to 21 percent, with an average reduction of 16 percent across all treatment types.^[300] This study assessed the effects of all three FDA-approved medications for OUD in various combinations with and without the most common treatments (psychotherapy, contingency management, and overdose education and naloxone distribution).^[301] Utilizing life tables, clinical data, and relevant literature on treatment outcomes, the study produced a dynamic compartmental model to analyze the effects of medications and treatments on overdoses and mortality. While it is limited by the scope and availability of relevant secondary data, the model employs parameters, robustness checks, and sensitivity analysis that sufficiently validate the empirical model.

To illustrate the potential impact of these final rules, the Departments employ this lower estimate of a 16 percent reduction in overdoses following treatment, and estimate that increased treatment for expanded OUD access and utilization could result in the prevention of approximately 730 non-fatal overdoses each year.^[302 303] Utilizing data from the CDC estimating the average medical and non-medical cost of non-fatal overdoses,^[304] the Departments estimate the benefits of these reduced non-fatal overdoses at $16.4 million annually.^{[305 306 307]}

The benefits of individuals diagnosed with an OUD receiving treatment may go beyond the benefit of reduced harms from overdoses. Mortality data of individuals diagnosed with an OUD indicate overdoses comprise approximately half of fatalities for such individuals, who are increasingly at risk of death from infectious disease, common co-morbid conditions such as liver or heart disease, accidental deaths, suicide, and other physical traumas.^[308] Research indicates that individuals with an OUD that are receiving treatment, while still at increased risk from all-cause mortality compared to the general population, may experience a reduced risk of mortality after receiving treatment for their OUD condition.^[309 310] One study found that mortality rates were 35 percent lower for individuals that received treatment for OUD than for those who did not receive treatment.^[311 312] This retrospective cohort study used expansive, linked public health, medical, and vital statistics data from a single State to establish a robust population cohort of individuals with OUD for which mortality was the observed outcome over approximately 45,000 person-years following an initial detox episode. While a potential limitation of observational studies is the presence of confounding variables distorting measured outcomes, the breadth of the data being utilized, which included data from insurance claims and extensive medical histories, limit this concern. The findings of the study, indicating a high all-cause and overdose-related mortality rate for individuals with OUD and resultant decline following treatment, are consistent with other research findings and, as an observational cohort study, represent a high level of evidence.^[313 314]

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Employing this estimate of an approximately 35 percent reduction in fatalities following treatment to illustrate the potential impact of these final rules, the Departments estimate that increased treatment for expanded OUD access and utilization could result in the prevention of approximately 702 fatalities from all causes in persons receiving treatment for OUD each year.^[315] The Departments have utilized the VSL, as with their estimate of the value of prevented suicides, to estimate the benefits of reduced mortality arising from increased OUD treatment utilization at $9.3 billion annually.^[316] As discussed earlier in this section, the Departments recognize some uncertainty in the production of VSL benefit estimates.^[317] To account for potential sensitivity arising from such uncertainty, the Departments have conducted a sensitivity analysis of these benefits and, following guidance on VSL sensitivity analysis,^[318] produced a lower and upper estimate of the VSL of approximately $5.3 million and $18.5 million, respectively.^[319] Utilizing this range of estimates, the Departments accordingly estimate the value of the benefits of reduced mortality arising from increased OUD treatment utilization at between $3.7 billion and $13.0 billion annually.^[320]

Mental health and substance use disorders do not always occur in isolation, but are commonly co-occurring conditions, as individuals with substance use disorders are more likely to experience a mental health condition than the general population and nearly half of adults with serious mental illness also have a substance use disorder.^[321] Such co-occurring conditions can significantly exacerbate the severity of symptoms as well as negative health outcomes related to these conditions.^[322] Additionally, individuals with mental health conditions and substance use disorders are known to commonly experience physical co-morbidities that can significantly impact overall health and quality of life. A 2011 study indicated that over 68 percent of adults with a mental health disorder reported a comorbid medical disorder while 29 percent indicated they had another comorbid mental health condition.^[323] Human immunodeficiency virus (HIV), hepatitis, and diabetes are all more prevalent among those with substance use disorders or mental health conditions than the general population, while such physical or other mental comorbid conditions are more likely to be adversely impacted by poor disease management and treatment adherence when co-occurring with a mental health condition or substance use disorder.^{[324 325 326 327 328 329]} A 2022 study observing the presence of comorbid conditions for inpatient hospitalizations found that 81 percent of hospitalizations for a mental health condition or substance use disorder had a co-morbid condition.^[330] The study also found that co-morbid conditions were associated with a longer hospitalization period, a higher cost per hospitalization, as well as increased mortality during hospitalization.^[331]

As mental health conditions and substance use disorders can make preventing, managing, and treating physical comorbidities difficult, improvements in mental health and substance use disorder outcomes may also improve overall physical health outcomes and lower healthcare costs for participants.^[332 333] Data from Evernorth Health Services, a subsidiary of Cigna, indicates that accessing mental health and substance use disorder services can result in considerable cost savings for patients diagnosed with a mental health condition and substance use disorder concern, producing a reported cost savings of between $1,134 to $3,321 per person over the first 27 months ( print page 77676) following diagnosis.^[334] Similarly, a 2012 study of patients with a mental health condition and comorbid physical health condition found that treating the underlying mental health condition yielded significant improvements in the comorbid physical conditions, resulting in increased positive health outcomes and lower long-term healthcare costs.^[335] The Departments, in evaluating the impacts of these final rules, anticipate that, by prohibiting inequitable barriers to coverage, the estimated improvements in mental health conditions and substance use disorders will help reduce the severity of comorbid conditions, improve related health outcomes for participants, beneficiaries, and enrollees, and as such, represent a substantial, but potentially unquantified, benefit.

7.4. Reduced Adverse Impacts on the Families, Friends, Caregivers, and Coworkers of People Who Suffer From Untreated or Poorly Managed Mental Health Conditions and Substance Use Disorders

These final rules will help employees, caregivers and their families meet their mental health and substance use disorder care needs, and thus, may improve the productivity and resulting earnings of workers dealing with mental health conditions and substance use disorder. Among adults with any mental health condition in 2022, only 50.6 percent received treatment.^[336] Moreover, while 19.4 percent of NSDUH respondents 12 and older were classified as needing substance use disorder treatment in 2022, only 4.6 percent of respondents 12 and older indicated that they received treatment that year.^[337] One survey found that more than 85 percent of individuals that did not receive their needed mental health or substance use care reported negative impacts, including personal relationship issues, job issues and performing poorly or dropping out of school.^[338]

The economic impact of untreated mental health conditions and substance use disorders can be significant. A 2021 study of claims data for large, self-funded health plans looked at the economic burden attributable to major depressive disorder, including the direct costs associated with treatment, suicide-related costs, and workplace costs, between 2010 and 2018. During that period, overall economic burden of adults with a major depressive disorder increased 37.9 percent (from $236.6 billion to $326.2 billion). While part of the cost increase can be attributed to a 12.9 percent increase in the number of adults with major depressive disorders, direct costs became a smaller share of the total costs, with workplaces costs, defined as missed work (due to injury/illness, discretionary time off and disability) and lower productivity while at work, constituting 61 percent of the costs in 2018 and increasing from $48.3 billion in 2010 to $70.8 billion in 2018.^[339] A 2015 study examined the impact of State parity laws on individuals with moderate levels of mental distress and found that State parity laws were associated with an increase in overall employment, weekly wages, and the number of hours worked per week, and attributed these changes to the increased productivity of these workers.^[340] A 2023 study critically reviewed 38 studies on the relationship between mental health and lost productivity, and found that poor mental health was associated with increased presenteeism ^[341] and absenteeism.^[342]

These final rules will also have significant indirect impacts on families, friends, caregivers, and coworkers with untreated or poorly managed mental health conditions and substance use disorders, as well as society at large. By prohibiting inequitable barriers to coverage and thereby increasing access to mental health and substance use disorder services, these final rules will lead to more people receiving treatment, reducing the burden on family members and other support systems. For example, this includes untreated maternal mental health conditions, which can lead to a reduced ability to work, increased risk of suicide, increased use of public services, and worse maternal and child health. A 2022 study of the cost of maternal mental health conditions to Texas women and their children projected costs for the 2019 birth cohort from the time of conception through 5 years postpartum to total $2.2 billion.^[343] Untreated maternal mental health conditions include untreated perinatal mood and anxiety disorders, which have been found to account for approximately $48 million in societal costs in Vermont for the average annual birth cohort from conception through 5 years postpartum, including $12.5 million in productivity loss and $9.4 million in non-obstetric health expenditures.^[344]

The cost in missed productivity for workers with fair or poor mental health due to unplanned absences was estimated as $47.6 billion annually in 2022.^[345] A 2022 study found that households with a family member diagnosed with a mental health disorder had lower health status scores compared to households without a mental illness diagnosis, suggesting evidence of family spillover effects on mental illness.^[346] Finally, a 2021 study estimated that the societal costs of untreated OUD was approximately $1.02 trillion in 2017, which includes $35 billion in health care costs and $92 billion in lost productivity.^[347]

( print page 77677)

These final rules are expected to improve access to and utilization of mental health and substance use disorder services by removing barriers to access to mental health and substance use disorder benefits caused by NQTLs. By enhancing treatment for these conditions and disorders, these final rules will likely result in reduced productivity loss or missed workdays for individuals suffering from mental health conditions or substance use disorders. Furthermore, the improved management and treatment of these conditions and disorders will potentially lead to reduced adverse impacts on the families, friends, and coworkers of those affected, as untreated or poorly managed mental health conditions and substance use disorders can have significant spillover effects on an individual's personal and professional lives.

8. Costs

These final rules aim to promote access to mental health and substance use disorder benefits by clarifying how plans and issuers must ensure that their plans and coverage are designed, as written and in operation, to comply with MHPAEA's parity requirements for mental health and substance use disorder benefits and medical/surgical benefits, and allowing them to more easily identify changes needed to bring their plans and coverage into compliance. The Departments acknowledge that plans and issuers, in revising their approach to performing and documenting their already required comparative analyses, will incur additional costs. Moreover, by removing some of the barriers to access to mental health and substance use disorder treatments caused by existing NQTLs, the Departments expect increased utilization of mental health and substance use disorder services, which will also increase costs. This collection of costs would appropriately be included in any comparison with the benefits described, and in some cases illustratively quantified, elsewhere in this regulatory impact analysis.

It is notable that the Departments are clarifying existing requirements, and only the cost burden limited to those additional content elements outlined in these final rules is a key topic discussed in the following sections.

8.1. Comment Summary

In response to the proposal, many commenters expressed concern that the Departments underestimated the burden of collecting the required data, the burden required in conducting the proposed mathematical substantially all and predominant tests, the number of NQTLs that would need to be analyzed for each plan and issuer, and the amount of time that it would take to conduct those analyses. Commenters stated that in order to comply with the proposed rules, plans and issuers would need to purchase new data systems and hire additional staff or contractors. One commenter further stated that existing systems to provide mental health and substance use disorder benefits, such as carve out plans, would be eliminated under the proposed rule, as vendors would not be able to build networks of mental health and substance use disorder providers in alignment with networks of medical/surgical providers, as required under the proposed special rule for network composition.

Several commenters questioned the Departments' assumptions related to the number of NQTLs for which plans and issuers would need to produce comparative analyses. While the Departments assumed that issuers would impose twice as many NQTLs as plans, several commenters did not think the number of NQTLs would vary between plans and issuers. Commenters also argued that the number of NQTLs that plans and issuers would need to analyze would be roughly twice the Departments' proposed assumption for issuers, 16 NQTLs rather than 8, based on the Departments' descriptions of types of NQTLs listed in the proposed rule. Consistent with the explanation earlier in this preamble, the Departments note that they do not intend to provide an exhaustive list of NQTLs. Plans and issuers may be analyzing a fewer or greater number of NQTLs than the number of NQTLs listed in the illustrative, non-exhaustive list in these final rules.

Commenters also questioned the amount of time that it would take to conduct the NQTL comparative analyses under the proposal. While the Departments assumed that the plans and issuers preparing their own comparative analyses would incur an incremental burden of 10 hours per NQTL in the first year and 4 hours per NQTL in subsequent years, several commenters thought this was an underestimate. For instance, one commenter stated that it currently takes a team of subject matter experts, compliance officials, a project manager, and attorneys or consultants 60 hours in the first year and 12 hours in subsequent years to produce NQTL comparative analyses as required under the CAA, 2021 and current guidance. The commenter suggested that the added requirements for the comparative analysis under these final rules could require at least an additional 60 hours per NQTL.

Another commenter estimated that the cost to issuers of fully insured plans to conduct the comparative analyses for all NQTLs is approximately between $200,000 and $300,000 (200 to 300 external attorney or consultant hours in addition to several hundred in-house staff hours). The commenter also reported that for large, self-funded plans, while issuers and TPAs prepare and distribute baseline comparative analysis, plans would still need to customize the comparative analysis. The commenter estimated that the cost for large self-funded plans to customize the comparative analysis and request additional information and data for all NQTLs is approximately between $50,000 and $150,000 (100 to 200 external attorney or consultant hours in addition to in-house staff work). The Departments are not clear whether these suggested costs represent current expenditures or projections of the added requirements for the comparative analyses. The commenter further stated that time and cost estimates for plans with behavioral carve-out vendors should be higher.

In preparing these final rules, the Departments have considered these comments and have clarified the requirements and reevaluated their estimates as appropriate. The specific adjustments to the estimates are discussed in section IV.8.4 of this regulatory impact analysis.

8.2. Commenters' Cost Estimates

As discussed earlier in this regulatory impact analysis, commenters questioned the Departments' assumptions related to the number of NQTLs imposed by plans and issuers on mental health and substance use disorder benefits and medical/surgical benefits, and the amount of time that it would take to conduct the additional requirements for producing comparative analyses and analyzing data, beyond what was required in CAA, 2021. The Departments have reviewed these comments, which include estimates made by those commenters, on the expected additional costs to prepare NQTL comparative analyses under the proposed rules. While these comments are helpful to understand the cost implications of the final rules and how they differ from the proposal, the Departments disagree with some of the inputs and underlying assumptions of these cost estimates and use different assumptions in section IV.8.4 of this regulatory impact analysis. The ( print page 77678) commenters' cost estimates do, however, demonstrate a possible upper bound on the costs associated with these final rules.

8.2.1. Association for Behavioral Health and Wellness

The Departments considered estimates and assumptions regarding the costs to prepare the NQTL comparative analyses under the proposed rules made by the Association for Behavioral Health and Wellness (ABHW). ABHW reports that the amendments would require plans and issuers to analyze 15 NQTLs on average. They also reported that it currently takes a team of subject matter experts, compliance officials, a project manager, and attorneys or consultants 60 hours to prepare each comparative analysis for a typical NQTL as required under the CAA, 2021 and current guidance. Thus, ABHW estimates that a comparable burden (60 hours per NQTL) is needed to review and revise the analyses under the updated requirements in the first year. In addition, they also estimate it would require 12 hours in each subsequent year to produce the comparative analyses. For the purpose of this calculation, the Departments have estimated a composite wage rate of $167.48, which consist of attorneys, actuaries, and data analysts.^[348] Based on these assumptions, and the Departments' estimates of affected entities, this would result in a cost burden of $984.8 million in the first year and $197 million in subsequent years, resulting in a 3-year average cost burden of $459.6 million. See Table 3 for more details.

ABHW also suggested that issuers and plans would need to hire at least three full-time equivalent new staff members to help with the proposed relevant data evaluation requirements. This additional cost was not included in their cost estimates.

Table 3—Incremental Cost To Prepare the Comparative Analyses Based on the Association for Behavioral Health and Wellness's Assumptions

	Number of entities	Number of NQTLs per entity	Number of hours per NQTL	Total hour burden	Hourly wage	Cost
	(A)	(B)	(C)	(A × B × C)	(D)	(A × B × C × D)
First Year
Issuers (health insurance company/State combinations)	1,467	15	60	1,320,300	$167.48	$221,123,844
TPAs	205	15	60	184,500	167.48	30,900,060
Self-funded plans with more than 500 participants that will conduct a comparative analysis themselves	709	15	60	638,100	167.48	106,868,988
Self-funded plans with more than 500 participants that will receive a generic comparative analysis from TPA or service providers, and will then customize it	4,076	15	30	1,834,200	167.48	307,191,816
Self-funded non-Federal governmental plans with more than 500 participants that will conduct the comparative analysis themselves	505	15	60	454,500	167.48	76,119,660
Self-funded non-Federal governmental plans with more than 500 participants that will initially receive generic comparative analyses from TPAs or service providers, and will then customize it	2,906	15	30	1,307,700	167.48	219,013,596
Plan MEWAs that are not fully insured	132	15	60	118,800	167.48	19,896,624
Non-plan MEWAs that are not fully insured	21	15	60	18,900	167.48	3,165,372
First-year Total	10,021	15		5,877,000		984,279,960
Subsequent Years
Issuers (health insurance company/State combinations)	1,467	15	12	264,060	167.48	44,224,769
TPAs	205	15	12	36,900	167.48	6,180,012
Self-funded plans with more than 500 participants that will conduct the comparative analysis themselves	709	15	12	127,620	167.48	21,373,798
Self-funded plans with more than 500 participants that will receive a generic comparative analysis from TPAs or service providers, and will then customize it	4,076	15	6	366,840	167.48	61,438,363
Self-funded non-Federal governmental plans with more than 500 participants that will conduct the comparative analysis themselves	505	15	12	90,900	167.48	15,223,932
Self-funded non-Federal governmental plans with more than 500 participants that will initially receive generic comparative analyses from TPAs or service providers, and will then customize it	2,906	15	6	261,540	167.48	43,802,719
Plan MEWAs that are not fully insured	132	15	12	23,760	167.48	3,979,325
Non-plan MEWAs that are not fully insured	21	15	12	3,780	167.48	633,074
Subsequent Years Total	10,021	15		1,175,400		196,855,992
Total (3-year average)	10,021	15		2,742,600		459,330,648

The Departments conducted a sensitivity analysis of the assumption that 50 percent of self-funded plans and another 50 percent of self-funded non-Federal governmental plans with more than 500 participants will receive a generic comparative analysis from TPAs or service providers, which they will then need to customize. For every 10-percentage-point increase or decrease in the number of self-funded plans and self-funded non-Federal governmental ( print page 77679) plans with more than 500 participants that need to customize documentation received from TPAs or service providers, the cost would increase or decrease by $24.6 million.^[349]

8.2.2. Blue Cross Blue Shield Association

The Blue Cross Blue Shield Association (BCBSA) asked the Departments to specifically quantify the costs of preparing additional comparative analysis beyond the four priority NQTLs outlined in FAQs Part 45. BCBSA stated that based on the number of NQTLs identified in the regulation, and the additional NQTLs identified in the preamble, the proposed rules would require plans and issuers to prepare comparative analyses for at least 17 NQTLs (7 from the preamble, and 10 from the regulation, counting those related to network composition as 3 separate NQTLs), all with the associated documentation and outcomes data.

BCBSA estimated that the cost of issuers of fully insured plans to conduct the comparative analyses for all NQTLs would range between $200,000 and $300,000. BCBSA also estimated the cost for large self-funded plans that receive a generic comparative analysis from the issuer, which they then need to customize and request additional information and data for all NQTLs referenced in the proposal, is between $50,000 and $150,000. BCBSA did not explain if these cost estimates were for all years or were applicable to just the first year. Based on BCBSA's assumptions, and the Departments' estimates of affected entities, this will result in a lower bound cost of $957.4 million and an upper bound cost of $2 billion. See Table 4 for more details.

Table 4—Annual Costs To Conduct the Comparative Analyses for all NQTLs Based on Blue Cross Blue Shield Association's Assumptions

	Number of entities	Lower bound cost per entity	Total lower bound cost	Upper bound cost per entity	Total upper bound cost
	(A)	(B)	(A × B)	(C)	(A × C)
Issuers (health insurance company/State combinations)	1,467	$200,000	$293,400,000	$300,000	$440,100,000
TPAs	205	200,000	41,000,000	300,000	61,500,000
Self-funded plans with more than 500 participants that will conduct the comparative analysis themselves	709	200,000	141,800,000	300,000	212,700,000
Self-funded plans with more than 500 participants that will receive a generic comparative analysis from TPAs or service providers, and will then customize it	4,076	50,000	203,800,000	150,000	611,400,000
Self-funded non-Federal governmental plans with more than 500 participants that will conduct the comparative analysis themselves	505	200,000	101,000,000	300,000	151,500,000
Self-funded non-Federal governmental plans with more than 500 participants that will initially receive generic comparative analyses from TPAs or service providers, and will then customize it	2,906	50,000	145,300,000	150,000	435,900,000
Plan MEWAs that are not fully insured	132	200,000	26,400,000	300,000	39,600,000
Non-plan MEWAs that are not fully insured	21	200,000	4,200,000	300,000	6,300,000
Total	10,021		956,900,000		1,959,000,000

The Departments conducted a sensitivity analysis of the assumption that 50 percent of self-funded plans and another 50 percent of self-funded non-Federal governmental plans with more than 500 participants will receive a generic comparative analysis from the issuer, and will then customize it. For every 10-percentage-point increase or decrease in the number of self-funded plans and self-funded non-Federal governmental plans with more than 500 participants that need to customize documentation received from TPAs or service providers, the cost would increase or decrease by $34.9 million in the total lower bound cost ^[350] and $104.7 million in the total upper bound cost.^[351]

8.3. Final Amendments to the Existing MHPAEA Regulations (26 CFR 54.9812-1, 29 CFR 2590.712, and 45 CFR 146.136)

As part of these final rules, the Departments have added new definitions, amended existing definitions, and clarified and added new requirements for NQTLs imposed with respect to mental health or substance use disorder benefits. For example, as discussed earlier in this preamble, the final rules clarify that any condition or disorder defined by the plan or coverage as being or as not being a mental health condition or a substance use disorder must be defined consistent with generally recognized independent standards of current medical practice. To be consistent with those generally recognized independent standards of current medical practice, these final rules state that the plan's or coverage's definition of “mental health benefits” must include all conditions covered under the plan or coverage, except for substance use disorders, that fall under any of the diagnostic categories listed in the mental, behavioral, and neurodevelopmental disorders chapter (or equivalent chapter) of the most current version of the ICD or that are listed in the most current version of the DSM. Similarly, the definition of “substance use disorder benefits” must include all disorders covered under the plan or coverage that fall under any of the diagnostic categories listed as a mental or behavioral disorder due to psychoactive substance use (or equivalent category) in the mental, behavioral, and neurodevelopmental disorders chapter (or equivalent ( print page 77680) chapter) of the most current version of the ICD or that are listed as a Substance-Related and Addictive Disorder (or equivalent category) in the most current version of the DSM.

Under these final rules, plans and issuers are required to collect and evaluate relevant data in a manner reasonably designed to assess the impact of the NQTL on relevant outcomes related to access to mental health and substance use disorder benefits and medical/surgical benefits. In addition, these final rules require plans and issuers to determine whether the relevant data reflect material differences in access to mental health or substance use disorder benefits as compared to medical/surgical benefits and take reasonable action, as necessary to address such differences to ensure compliance, in operation, with 26 CFR 54.9812-1(c)(4), 29 CFR 2590.712(c)(4), and 45 CFR 146.136(c)(4). Relevant data for all NQTLs could include, as appropriate, but are not limited to, the number and percentage of claims denials and any other data relevant to the NQTL required by State law or private accreditation standards. Additionally, for NQTLs related to network composition, relevant data could include, as appropriate, but are not limited to, in-network and out-of-network utilization rates (including data related to provider claim submissions), network adequacy metrics (including time and distance data, and data on providers accepting new patients), and provider reimbursement rates (for comparable services and as benchmarked to a reference standard).

The proposed rules would have required plans and issuers to apply the proposed mathematical substantially all and predominant tests to each NQTL applicable to mental health or substance use disorder benefits and medical/surgical benefits. As discussed earlier in this preamble, the Departments decline to finalize the proposed mathematical tests for applying the substantially all and predominant tests in these final rules. However, plans and issuers are required to collect and evaluate relevant data for NQTLs applicable to mental health and substance use disorder benefits and medical/surgical benefits under these final rules. For NQTLs related to network composition, plans and issuers must collect and evaluate relevant data in a manner reasonably designed to assess the aggregate impact of all such NQTLs on relevant outcomes related to access to mental health and substance use disorder benefits and medical/surgical benefits. Under these final rules, the Departments may specify the type, form, and manner for the relevant data evaluation requirement in future guidance, but for some plans and issuers already subject to existing data requirements under MHPAEA, Federal transparency rules,^[352] and State law and private accreditation standards, some of the additional data burden associated with this rulemaking will be mitigated.

These final rules could cause plans and issuers to revise their policies and procedures to remove or modify NQTLs in response to the Departments' clarifications and examples. Requirements such as covering meaningful benefits for mental health conditions and substance use disorders (determined in comparison to the benefits provided for medical conditions and surgical procedures); assessing whether the relevant data evaluated suggest that the NQTL contributes to material differences in access to mental health and substance use disorder benefits as compared to medical/surgical benefits; and not using or taking the steps necessary to correct, cure, or supplement the information, evidence, sources, or standards used to inform a factor or evidentiary standard that would have been biased or not objective in the absence of such steps could also cause plans and issuers to revise their policies and procedures.

For example, a 2016 study examined how private health plans responded to the 2010 interim final rules implementing MHPAEA and found that the majority of plans had eliminated quantitative treatment limitations referred to as “special annual limits” related to behavioral health treatments. The percentage of health insurance products with such limits on mental health treatments decreased from 28 percent in 2009 to 4 percent in 2010, and a similar decrease was observed for health insurance products with such limits on substance use disorder treatments (from 26 percent in 2009 to 3 percent in 2010).^[353] A 2019 study of claims data from both a pre-parity (January 2005 through December 2010) and post-parity period (January 2011 through September 2015), found that while MHPAEA did not appreciably increase the share of participants utilizing any outpatient mental health services, it did increase the frequency of use and total utilization of outpatient mental health and substance use disorder services of participants already receiving these services.^[354]

Plans and issuers could incur costs to implement changes associated with revising coverage and plan provisions to ensure that they comply with the requirements of these final rules or ceasing the imposition of an NQTL as directed by the Departments or an applicable State authority after a final determination of noncompliance under Code section 9812(a)(8), ERISA section 712(a)(8), or PHS Act section 2726(a)(8), or 26 CFR 54.9812-2, 29 CFR 2590.712-1, or 45 CFR 146.137, which might result in increased costs from expanded utilization of mental health and substance use disorder services. Recent data suggests that mental health and substance use disorder services account for a small portion of total health care expenditures, representing just 8.4 percent of all expenses in 2021 for individuals with private insurance.^[355] The Departments face uncertainty in quantifying these costs and did not receive public comments containing data or information to inform these estimates. As such, the Departments cannot estimate the potential increase in utilization and which services might see the largest increase in utilization.

8.3.1. Mitigation in Utilization Costs From Telehealth Expansion

As discussed in section 2 of this regulatory impact analysis, individuals seeking mental health or substance use disorder treatment often face barriers preventing them from accessing care, such as inadequate networks. Telehealth is one method of care that has the potential to improve access to treatment for mental health conditions or substance use disorders, particularly as research has documented that it can be as effective as in-person treatment, ^[356] ( print page 77681) particularly when the treatment is provided through video instead of audio-only.^[357] These final rules require plans and issuers to collect and evaluate relevant data and, where the relevant data suggest that the NQTL contributes to material differences in access to mental health and substance use disorder benefits as compared to medical/surgical benefits in a classification, to take reasonable action, as necessary, to address the material differences to ensure compliance, in operation, with 26 CFR 54.9812-1(c)(4), 29 CFR 2590.712(c)(4), and 45 CFR 146.136(c)(4). One potential reasonable action a plan or issuer could take to address material differences in access with respect to relevant data for NQTLs related to network composition may include expanding the availability of telehealth arrangements to mitigate any overall mental health and substance use disorder provider shortages in a geographic area.

The COVID-19 pandemic sparked increased demand for health care services, including behavioral health services delivered remotely. While in February 2020 telehealth claims accounted for only around 1 percent of claims pertaining to mental health or substance use disorder benefits, by April 2020 they accounted for over 50 percent of the claims and still accounted for approximately 40 percent of claims at the end of 2021.^[358] The expansion was significantly aided by the Departments issuing guidance providing time-limited Federal flexibilities for private health plans to expand access to telehealth, which specifically included coverage of treatment for mental health conditions and substance use disorders. These Federal flexibilities included “allowing midyear plan design changes to increase telehealth coverage,” “allowing certain employers to offer coverage only for services provided via telehealth and other remote care services,” and “allowing telehealth coverage pre-deductible” for catastrophic plans and for health savings account-qualified high deductible health plans.^[359]

While the COVID-19 PHE ended on May 11, 2023,^[360] many of the telehealth flexibilities it allowed were extended under the CAA, 2023 through December 31, 2024.^[361] Additionally, Medicare has permanently adopted policies allowing patients to receive behavioral and mental care through telehealth within their homes,^[362] and a survey of States indicated that, for Medicaid, “all or most expansions of behavior health providers and/or services allowed for telehealth would be maintained after the public emergency.” ^[363] For private plans, access to telehealth for mental health and substance use disorder care will depend on plan design.

By nature, telehealth makes accessing treatment for mental health conditions and substance use disorders more convenient for many patients, particularly for those who do not have the ability, time, or means to travel to an appointment or who need care from a provider that specializes in a particular treatment that is not available in their geographic area. Despite observing similar levels of mental illness and psychiatric disorders in urban residents, one research paper remarked that rural residents face “challenges accessing care systems due to geographic isolation, reduced access to and engagement with appropriate providers, lower socioeconomic status, generally lower levels of educational attainment, as well as reluctance to seek help due to discrimination and stigma.” ^[364] An analysis of 2021 outpatient visits reported that 55 percent of patients in rural areas relied on telehealth for outpatient mental health and substance use services compared to 35 percent in urban areas.^[365] Given that 73.3 million people in the United States live in a geographic area designated as a mental health professional shortage area, of which 24.4 million resided in a rural area, telehealth is likely to continue to be a necessary means to offset provider network limitations in these areas.^[366]

As with rural populations, many underserved racial, ethnic, cultural minorities, and individuals with disabilities face barriers to receiving treatment for mental health conditions and substance use disorders. These barriers may include language, stigma, or finding a therapist that understands their situation. While important in many areas of health care, many underserved populations prefer to receive treatment for mental health conditions and substance use disorders specifically from a provider with an understanding of their cultural background. A 2022 study found that there was an overall increase in the use and willingness to use video telehealth during the pandemic, with the highest levels of increase being seen among Black adults and adults with lower educational attainment. Certain communities became more willing to use telehealth, since many patients had their first telehealth experience with their trusted health care provider during the pandemic and their positive ( print page 77682) experiences eliminated their concerns with telehealth, such as concerns related to privacy or to the level of engagement of a provider through telehealth.^[367]

In addition to expanding access, telehealth has also been found to improve the retention of patients receiving mental health and substance use disorder care. A 2023 retrospective cohort study of treatment-seeking patients enrolled in a substance use disorder treatment program in Ohio found that “[p]atients who received services through telehealth with video in the initial 14 days of diagnosis had a lower hazard of dropout, compared to patients receiving solely in-person services.” Moreover, when compared to in-person care, patients receiving services through either video or telephone were more likely to have higher treatment engagement, which was defined as “initiating treatment and completing at least two treatment visits within 34 days of the initiation visit.” ^[368]

Research has demonstrated that telehealth for medical appointments saves patients time and money.^[369] A 2021 study focused specifically on the travel cost savings associated with using tele-mental health services in a pediatric outpatient psychology clinic. The study found that patients experienced a median of 132 miles saved by not travelling to an in-person session, which translated to a median 3.5 hours saved not travelling to an in-person session and a median cost savings of $22 per session over the course of the telehealth treatment.^[370] The benefits of telehealth are particularly relevant for mental health and substance use disorder treatment because treatment often requires frequent sessions or appointments.

It is important to note that, while telehealth may improve access, it is not a perfect solution. For instance, it has limitations in certain segments of the population, such as individuals with limited English proficiency ^[371] or without access to computers or the internet.^[372] Additionally, many individuals may prefer in-person care over telehealth. A survey published in 2023 showed that while patients have differing preferences for in-person care or telehealth, many are not able to find care that fits their preferences. Of the respondents receiving therapy, less than half were able to select whether they received in-person care or telehealth.^[373] Further, interviews conducted with respondents found that while many patients appreciate the convenience of telehealth, others expressed concern about the rapport between the patient and provider during telehealth. The authors cautioned that while telehealth is an attractive way to expand access to mental health care for much of the population, telehealth may not alone be sufficient for all individuals or conditions.^[374] Therefore, while telehealth may contribute significantly to the alleviation of mental health and substance use disorder provider shortages, it may not be a viable alternative for everyone.

8.4. New Regulations (26 CFR 54.9812-2, 29 CFR 2590.712-1, and 45 CFR 146.137 and 146.180)

These final rules set forth content requirements for comparative analyses required by the CAA, 2021 and outline the timeframes and processes for plans and issuers to provide their comparative analyses to the Departments and applicable State authorities upon request. Under these final rules, the Departments outlined the elements that a comparative analysis must include for each NQTL (in addition to the requirements to include a written list of all NQTLs imposed under the plan or coverage). They include, as described in more detail earlier in this preamble:

• A description of the NQTL,
• Identification and definition of the factors used to design or apply the NQTL,
• A description of how factors are used in the design and application of the NQTL,
• A demonstration of comparability and stringency, as written,
• A demonstration of comparability and stringency, in operation, and
• Findings and conclusions.

However, because these elements are already required under the CAA, 2021, the cost of these final rules is more limited than the full cost of generating a comparative analysis. For instance, plans and issuers are already required under the CAA, 2021 to provide a description of the specific plan or coverage terms or other relevant terms regarding the NQTLs that applies to such plan or coverage, and a description of all the mental health and substance use disorder benefits and medical or surgical benefits to which each such term applies in each respective benefit classification.^[375] Similarly, plans and issuers are already required to identify the factors used to determine that the NQTLs will apply to mental health or substance use disorder benefits and medical or surgical benefits,^[376] and the evidentiary standards used for the factors identified, when applicable, provided that every factor shall be defined, and any other source or evidence relied upon to design and apply the NQTLs to mental health or substance use disorder benefits and medical or surgical benefits.^[377]

( print page 77683)

Moreover, the CAA, 2021 requires that the comparative analyses demonstrate that the processes, strategies, evidentiary standards, and other factors used to apply NQTLs to mental health and substance use disorder benefits, as written and in operation, are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, and other factors used to apply the NQTLs to medical or surgical benefits in the benefits classification,^[378] as well as the specific findings and conclusions reached by the plan or issuer, including any results of the analyses that indicate that the plan or coverage is or is not in compliance with MHPAEA.^[379]

In their comparative analyses, plans and issuers must describe each NQTL and identify and define all the factors and evidentiary standards used to design or apply the NQTL. The plan or issuer also must describe how the factors identified are used in the design and application of the NQTL, and evaluate whether any processes, strategies, evidentiary standards, or other factors used in designing and applying the NQTL to mental health or substance use disorder benefits are comparable to, and are applied no more stringently than, those with respect to medical/surgical benefits, both as written and in operation. The explanation of how the plan or issuer evaluates compliance, in operation, with MHPAEA must identify the relevant data collected and evaluated, and document the outcomes that resulted from the application of the NQTL to mental health or substance use disorder benefits and medical/surgical benefits. In limited circumstances where relevant data is temporarily unavailable for a newly imposed NQTL, the comparative analysis must include a detailed explanation of the lack of relevant data, the basis for the plan's or issuer's conclusion that there is a lack of relevant data, and when and how the data will become available and be collected and analyzed. Additionally, in rare instances where no data exists that can reasonably assess any relevant impact of an NQTL on relevant outcomes related to access to mental health and substance use disorder benefits and medical/surgical benefits, the plan or issuer must provide a reasoned justification as to the basis for the conclusion that there are no data that can reasonably assess the NQTL's impact, an explanation of why the nature of the NQTL prevents the plan or issuer from reasonably measuring its impact, an explanation of what data was considered and rejected, and documentation of any additional safeguards or protocols used to ensure that the NQTL complies with MHPAEA. In the instances where there is a temporary data lag for a newly imposed NQTL or no data exists that can reasonably assess any relevant impact of an NQTL, providing this justification for the temporary data lag is likely to be less expensive than the estimated burden for doing an analysis when there is data. However, as explained earlier in this preamble, the Departments are of the view that nearly all NQTLs will have some relevant data to collect and evaluate; therefore, the Departments estimate the burden as if every plan and issuer performs the data analysis.

These final rules require additional specificity with regard to the findings and conclusion of the comparative analysis. While these final rules provide specificity for how a plan or issuer must comply with the comparative analysis requirements, they are primarily providing additional clarification and requirements with respect to the statutory content elements of a comparative analysis outlined in the CAA, 2021, so that plans and issuers can perform and document sufficient comparative analyses.

Additionally, for ERISA plans, these final rules also require the comparative analysis to include a certification by one or more named fiduciaries that they have engaged in a prudent process to select one or more qualified service providers to perform and document a comparative analysis in connection with the imposition of any NQTLs that apply to mental health and substance use disorder benefits under the plan in accordance with applicable law and regulations, and have satisfied their duty to monitor those service providers as required under part 4 of ERISA with respect to the performance and documentation of such comparative analysis. The cost to provide the certification is included in the cost estimates to prepare the comparative analysis.

In the proposed rules, the Departments estimated that, on average, plans would need to analyze four separate NQTLs and issuers would need to analyze eight NQTLs to satisfy the comparative analysis requirements.^[380] The Departments further estimated that plans and issuers preparing their own comparative analyses would incur an incremental burden of 10 hours per NQTL in the first year, with 2 hours for a general or operations manager to review the requirements and outline the changes needed for the comparative analyses and 8 hours for a business operations specialist to prepare the comparative analyses. Once the comparative analyses are performed and documented, the Departments noted that plans and issuers would need to update the analyses when making changes to the terms of the plan or coverage, including changes to the way NQTLs are applied to mental health and substance use disorder benefits, as well as medical/surgical benefits. In subsequent years, the Departments estimated that plans and issuers would incur an incremental burden of 4 hours annually per NQTL to update the analyses, with 1 hour for a general or operations manager and 3 hours for a business operations specialist.

In response to commenters' concerns that the Departments underestimated the number of NQTLs that each plan or issuer would need to provide comparative analyses for, and that plans and issuers would on average have the same number of NQTLs, the Department have revised their assumptions to 10 NQTLs for both plans and issuers. While one commenter suggested the average number of NQTLs should be more than 15 at a minimum, and another commenter noted that the proposal and guidance referenced at least 17 NQTLs, the Departments note that the number of NQTLs vary by issuer and plans and that most will not incorporate every NQTL listed in the proposal and the guidance (while some plans and issuers might incorporate others not listed). Taking into account the Departments' experience and comments received, the Departments assume 10 NQTLs but present a sensitivity analysis using 15 NQTLs. ( print page 77684)

The Departments assume that the incremental costs to collect the data and review and revise the comparative analyses will require 60 hours per NQTL in the first year and 12 hours per NQTL in subsequent years. For plan sponsors that receive a generic comparative analysis from a TPA that will require customizing to suit the plan's specific needs, the Departments assume that it will take 30 hours per NQTL in the first year and 6 hours per NQTL in subsequent years. While plans and issuers can use other professionals to fulfill their requirements, for purposes of developing the wage estimate, the Departments assume that it will take a team of data analysts, actuaries, and attorneys to collect the data and prepare the comparative analyses, and have estimated a composite wage rate of $167.48.^[381] See Table 5 for calculations and burden totals.

The Departments conducted a sensitivity analysis of the assumption that plans and issuers would each analyze 10 NQTLs. If the Departments assume that plans and issuers analyze 15 NQTLs, the cost burden would increase by $328.1 million in the first year and $65.6 million in the subsequent years, resulting in a 3-year average cost increase of $153.1 million.

Table 5—Incremental Cost To Fulfill the Data Requirements and Prepare the Comparative Analyses

	Number of entities	Number of NQTLs per entity	Number of hours per NQTL for data and comparative analysis	Total hour burden	Hourly wage	Cost
	(A)	(B)	(C)	(A × B × C)	(D)	(A × B × C × D)
First Year
Issuers (health insurance company/State combinations)	1,467	10	60	880,200	$167.48	$147,415,896
TPAs	205	10	60	123,000	167.48	20,600,040
Self-funded plans with more than 500 participants that will conduct the comparative analysis themselves	709	10	60	425,400	167.48	71,245,992
Self-funded plans with more than 500 participants that will receive generic comparative analyses from TPAs or service providers, and will then customize it	4,076	10	30	1,222,800	167.48	204,794,544
Self-funded non-Federal governmental plans with more than 500 participants that will conduct the comparative analysis themselves	505	10	60	303,000	167.48	50,746,440
Self-funded non-Federal governmental plans with more than 500 participants that will initially receive generic comparative analyses from TPAs or service providers, and will then customize it	2,906	10	30	871,800	167.48	146,009,064
Plan MEWAs that are not fully insured	132	10	60	79,200	167.48	13,264,416
Non-plan MEWAs that are not fully insured	21	10	60	12,600	167.48	2,110,248
First-year Total	10,021			3,918,000		656,186,640
Subsequent Years
Issuers (health insurance company/State combinations)	1,467	10	12	176,040	167.48	29,483,179
TPAs	205	10	12	24,600	167.48	4,120,008
Self-funded plans with more than 500 participants that will conduct the comparative analysis themselves	709	10	12	85,080	167.48	14,249,198
Self-funded plans with more than 500 participants that will receive generic comparative analyses from TPAs or service providers, and will then customize it	4,076	10	6	244,560	167.48	40,958,909
Self-funded non-Federal governmental plans with more than 500 participants that will conduct the comparative analysis themselves	505	10	12	60,600	167.48	10,149,288
Self-funded non-Federal governmental plans with more than 500 participants that will initially receive generic comparative analyses from TPAs or service providers, and will then customize it	2,906	10	6	174,360	167.48	29,201,813
Plan MEWAs that are not fully insured	132	10	12	15,840	167.48	2,652,883
Non-plan MEWAs that are not fully insured	21	10	6	2,520	167.48	422,050
Subsequent Years Total	10,021			783,600		131,237,328
Total (3-year average)	10,021			1,828,400		306,220,432

Additionally, plans and issuers must make the comparative analyses and other applicable information required by the CAA, 2021 available upon request to participants, beneficiaries, and enrollees in all non-grandfathered group health plans and non-grandfathered group or individual health insurance coverage (including a provider or other person acting as a participant's, beneficiary's, or enrollee's authorized representative) in connection with an adverse benefit determination, as well as to participants and beneficiaries in plans subject to ERISA. The Departments estimate that on average each plan or issuer will receive one request annually and that plans and issuers will annually incur a burden of 5 minutes for a clerical worker to prepare and send the comparative analyses to each requesting participant or beneficiary. The Departments received comments suggesting that this ( print page 77685) underestimated the demand for these analyses as well as the cost to produce them. However, after reviewing data on the number of appealed mental health or substance use disorder claims per year, which serves as a proxy for when participants or beneficiaries would request an analysis, the Departments are of the view that this estimate is appropriate. Moreover, because plans and issuers are already responsible for preparing these analyses, the only cost associated with providing them are the clerical ones outlined earlier in this preamble. See Table 6 for calculations and burdens totaling the cost to prepare the analysis.^[382]

Table 6—Costs To Prepare the Comparative Analysis Upon Participant Request

	Number of entities	Number of NQTLs per entity	Number of hours per NQTL	Total hour burden	Hourly wage	Cost
	(A)	(B)	(C)	(A × B × C)	(D)	(A × B × C × D)
Issuers (health insurance company/State combinations)	1,467	1	0.0833	122	$65.99	$8,051
ERISA-covered group health plans	2,129,516	1	0.0833	177,460	65.99	11,710,585
Non-Federal governmental plans	90,887	1	0.0833	7,574	65.99	499,808
Plan MEWAs that are not fully insured	132	1	0.0833	11	65.99	726
Non-plan MEWAs that are not fully insured	21	1	0.0833	2	65.99	132
Annual Total	2,222,023			185,169		12,219,302

The Departments further assume that 58.3 percent of requests will be delivered electronically, resulting in a de minimis cost.^[383] The remaining 41.7 percent of requests will be mailed, at a cost of $2.79 each.^[384] See Table 7 for calculations and burden totaling the cost to distribute the analysis.

Table 7—Costs To Distribute the Comparative Analysis Upon Participant or Beneficiary Request

	Number of entities	Estimated page length	Paper and printing cost (per page)	Mailing cost	Cost
	(A)	(B)	(C)	(D)	[(A × B × C) + (A × D)] × 41.7 percent
Issuers (health insurance company/State combinations)	1,467	15	$0.05	$2.04	$1,603
ERISA-covered Group Health Plans	2,129,516	15	0.05	2.04	2,326,581
Non-Federal Governmental Plans	90,887	15	0.05	2.04	105,741
Plan MEWAs that are not fully insured	132	15	0.05	2.04	144
Non-plan MEWAs that are not fully insured	21	15	0.05	2.04	23
Annual Total	2,222,023				2,585,169

( print page 77686)

Finally, these final rules require that group health plans and health insurance issuers offering group or individual health insurance coverage must make comparative analyses available upon request to the Departments or an applicable State authority. The CAA, 2021 requires the Departments to collect no fewer than 20 comparative analyses per year, but it also provides that the Departments shall request that a group health plan or issuer submit the comparative analyses for plans that involve potential MHPAEA violations or complaints regarding noncompliance with MHPAEA that concern NQTLs, and any other instances in which the Departments determine appropriate. Based on prior experience and current funding, DOL and HHS expect to each request 20 comparative analyses each year. To provide the Departments with their comparative analyses and associated documentation, the Departments estimate, based on internal discussion, that it will take a total of 5 hours for plans, with 1 hour for a general or operations manager and 4 hours for a business operations specialist. See Table 8 for calculations and burden totals.

Table 8—Costs of Providing Comparative Analyses for Audits

	Number of entities	Hour burden per entity	Total hour burden	Hourly wage	Cost
	(A)	(B)	(A × B)	(C)	(A × B × C)
General Operations Manager (Requested by HHS)	20	1	20	$137.67	$2,753
Business Operations Specialist (Requested by HHS)	20	4	80	114.36	9,149
General Operations Manager (Requested by DOL)	20	1	20	137.67	2,753
Business Operations Specialist (Requested by DOL)	20	4	80	114.36	9,149
Total	40		200		23,804

In the first year, group health plans and issuers will need time to familiarize themselves with these final rules to ensure that their comparative analyses comply with all applicable requirements. The Departments assume that on average it will require 6.5 hours for an attorney to review these final rules.^[385] See Table 9 for calculations and burden totals.

Table 9—Costs for Rule Familiarization

	Number of entities	Number of NQTLs per entity	Hour burden per entity	Total hour burden	Hourly wage	Cost
	(A)	(B)	(C)	(A × B × C)	(D)	(A × B × C × D)
First Year
Issuers (health insurance company/State combinations)	1,467	1	6.5	9,536	$165.71	$1,580,211
TPAs	205	1	6.5	1,333	165.71	220,891
Self-funded plans with more than 500 participants that will conduct the comparative analysis themselves	709	1	6.5	4,609	165.71	763,757
Self-funded plans with more than 500 participants that will receive generic comparative analyses from TPAs or service providers, and will then customize it	4,076	1	6.5	26,494	165.71	4,390,321
Self-funded non-Federal governmental plans with more than 500 participants that will conduct the comparative analysis themselves	505	1	6.5	3,283	165.71	544,026
Self-funded non-Federal governmental plans with more than 500 participants that will initially receive generic comparative analyses from TPAs or service providers, and will then customize it	2,906	1	6.5	18,889	165.71	3,130,096
Plan MEWAs that are not fully insured	132	1	6.5	858	165.71	142,179
Non-plan MEWAs that are not fully insured	21	1	6.5	137	165.71	22,702
First-year Total	10,021			65,139		10,794,184

According to the 2022 National Health Expenditure Data, the total contribution of private employers to health insurance premiums is $592.2 billion. The total contribution of State and local employers to health insurance premiums is $194.5 billion.^[386] The total health expenditure on the individual market is $93.9 billion.^[387] In the first year, the cost to comply with these final rules is estimated to be approximately $681.8 million,^[388] which represents 0.08 percent of total premiums in these markets. In subsequent years, the cost to comply with these final rules is estimated to be approximately $146.1 million,^[389] which represents 0.02 ( print page 77687) percent of total premiums in these markets.

In the proposed rules, HHS assumed that most of the self-funded non-Federal governmental plans that would be affected by the implementation of the CAA, 2023 provision that sunsets the MHPAEA opt-out election offered mental health and substance use disorder benefits, but that many of these plans might not be complying with MHPAEA. HHS assumed that plans would incur costs to come into compliance and noted that, in particular, some plans might remove limits on or offer more generous mental health and substance use disorder benefits, which would likely increase utilization of mental health and substance use disorder services, increasing the number of claims submitted, and the overall costs incurred by these plans. HHS also noted that plans that have opted out of requirements under MHPAEA would also need to conduct NQTL comparative analyses if they were not already doing so. HHS solicited comments on the potential costs to these plans to come into compliance with MHPAEA. Although the Departments received comments on the potential underestimation of costs related to NQTL comparative analysis requirements (refer to section IV.8.1 of this regulatory impact analysis for further discussion), HHS did not receive any comments specific to the costs associated with coming into compliance for self-funded non-Federal governmental plans. As such, HHS is unable to estimate the costs to these plans because the extent to which these plans are currently out of compliance is unknown, and costs associated with coming into compliance are expected to vary from plan to plan.

HHS estimates that the regulatory amendments to implement a provision of the CAA, 2023 that sunsets the election option for sponsors of self-funded non-Federal governmental plans to opt out of requirements under MHPAEA eliminates the need for sponsors to submit a notice to the Federal Government regarding their plan's opt-out election, as long as the sponsors do not elect to permissibly opt out of other requirements. HHS estimates that sponsors of 185 plans will no longer submit a notice to the Federal Government regarding their plan's opt-out election. This is estimated to generate a total cost savings of approximately $11,783 for plans (as discussed later in section V.2.5 of the Paperwork Reduction Act analysis for HHS), and cost savings of approximately $5,200 for the Federal Government as HHS will no longer have to process the opt-out notices previously submitted by these plans.

8.5. Illustration of Cost Increases for Plans and Issuers

As discussed in the benefits section, the Departments estimate that the final rules will increase access and subsequently the utilization or frequency of use of behavioral health services. The Departments also recognize that increased service utilization will likely increase costs for plans. These costs will likely differ significantly by the type of condition and the type of treatment. The analysis that follows provides an illustration of potential increases in costs for plans associated with depression and substance use disorder treatments.

Increasing access to mental health services is estimated to result in a significant reduction in suicides, as enumerated in section IV.7.2. While many mental health conditions and substance use disorders may increase the risk of suicide, suicide itself is an outcome that may or may not be tied directly to mental health conditions or substance use disorders. As such, it is difficult to directly tie the decrease in suicides discussed in section IV.7.2 to increased costs.

However, the most common mental health condition among those who attempt suicide, as well as one of the most highly prevalent mental health conditions in the United States, is depressive disorder.^[390 391] Research indicates that individuals with major depressive disorder are at an elevated risk of suicide and that approximately two-thirds have contemplated suicide.^[392] Furthermore, major depressive disorder was the most common comorbid condition in a study of U.S. suicides, followed by substance use disorder.^[393] Individuals with major depressive disorder and another comorbid condition (such as a substance use disorder or anxiety disorder) are at even greater risk of suicide.^[394] Data from the 2022 NSDUH indicates that approximately 8 percent of individuals who have private health insurance experienced a major depressive episode in the past year, of whom 64 percent received treatment for depression.^[395]

Table 10—Number of People Diagnosed With a Major Depressive Episode in the Past Year

	2021	2022
Total:
All Ages	21,553,000	22,475,000
With Private Health Insurance	11,750,000	12,551,000
Receiving Treatment for Depression:
All Ages	12,932,000	14,088,000
With Private Health Insurance	7,540,000	8,240,000
Not Receiving Treatment for Depression:
All Ages	8,621,000	8,387,000
With Private Health Insurance	4,210,000	4,311,000
SAMHSA, 2022 National Survey on Drug Use and Health (Nov. 2023), https://www.samhsa.gov/​data/​report/​2022-nsduh-detailed-tables.

As discussed in Section 6.1.3, MHPAEA has been found to have mixed effects on the utilization of mental health services. A 2019 study found that, outside of substance use disorder, MHPAEA was not associated with an ( print page 77688) increase in new utilization of behavioral healthcare. However, the authors did find an increase in the average frequency of monthly outpatient services per user.^[396] Critically, increased frequency of mental health and OUD treatment utilization have both been associated with decreasing risks of mortality from suicide and OUD.^[397 398]

The 2019 study also found that the average insurer cost for members receiving treatment increased following the passage of MHPAEA. According to the study, in September 2015, the last month of data considered, MHPAEA was associated with an average insurer cost increase of $16.17 for each member receiving treatment for mental health per month.^[399]

For the purposes of this analysis, it is helpful to consider this measurement in terms of the increased cost per member with depression, regardless of treatment status. To estimate a per-member cost, regardless of treatment status, the Departments scaled the estimate by the proportion of individuals who had a major depressive episode in 2015, with private insurance, and who received treatment for depression. Applying these assumptions, the Departments estimate that in 2015, MHPAEA was associated with a $11.15 increase in average monthly insurer spending per member with depression.^[400]

The Departments do not have data on per-member per-month costs associated with a major depressive illness alone. Based on a 2018 Milliman report, the Departments estimate that the 2015 per-member per-month behavioral healthcare cost ^[401] —including behavioral inpatient, outpatient, professional, and prescription drug costs—was $225.10 for someone with a serious and persistent mental illness and $116.59 on average for someone with any mental illness.^[402] Milliman defines a serious and persistent mental illness as someone treated for bipolar disorder, major depression, paranoid and other psychotic disorder, or schizoaffective disorder. As costs to treat bipolar disorder, psychotic disorder, and schizoaffective disorder are likely higher than costs to treat major depression, on average, the Departments are of the view that the per-member per-month costs represent an overestimate for costs to treat major depression. Similarly, the Departments expect that the per-member per-month costs to treatment someone with any mental illness likely represent an underestimate due to factors such as underdiagnosis, comorbidities, and delayed treatments. Additionally, the per-member per-month costs may not fully capture indirect costs or the cost of out-of-network care, further suggesting that the total costs of adequately treating mental illness are likely higher. As such, the Departments are of the view that these two measures create a reasonable range with regard to major depression.

Based on this analysis, the estimated $11.15 increase in monthly insurer spending per-member with depression accounts for 5.0 percent of the per-member per-month costs for someone with a serious and persistent mental illness or 9.6 percent of the average cost for someone with any mental illness. In 2021, total expenditures for private insurance were $981.2 billion, while total expenditures for private insurance for depression were $21.0 billion.^[403] For illustrative purposes, if it is assumed that the increase in costs associated with MHPAEA had accounted for between 5.0 percent and 9.6 percent of private insurance expenditures for depression in 2021, this would account for between $1.0 billion and $2.0 billion of total expenditures for private insurance for depression.^[404]

In their estimate of benefits associated with the prevention of suicide fatalities and reduced mortality from the utilization of OUD treatments, the Departments assumed that the effect of these final rules would be approximately 40 percent of the initial impact from MHPAEA. For consistency, applying this proportion to the estimated costs, the Departments estimate that these final rules would be associated with an increase cost for treatment related to depression for private insurers of between $0.42 billion and $0.80 billion in 2021 dollars or $0.43 billion and $0.84 billion in 2023 dollars.^[405]

It is important to note that the benefits estimated in section IV.7.2 and these cost estimates do not necessarily capture the same segment. The benefits related to more frequent treatment of depression are more expansive than the estimated benefits in section IV.7.2 that only focus on suicide prevention. On the other hand, treatment for other types ( print page 77689) of mental health conditions or substance use disorders may also contribute to the decreased prevalence of suicides, the cost of which is not considered in this illustration.

Additionally, the Departments estimate that the final rules will increase the utilization of substance use disorder services (specifically, OUD), resulting in significant benefits arising from decreased mortality related to substance use disorders. These benefits would arise from approximately 40,000 additional individuals receiving treatment each year. As recent research indicates that cost of treatment for OUD is approximately $13,500, the Departments estimate that the increased service utilization for OUD would result in an additional cost of approximately $579 million annually.^{[406 407 408]}

9. Transfers

Achieving parity in coverage of mental health and substance use disorder benefits has the potential to change the spending patterns of plans and issuers, increase premiums and contributions, and change the utilization patterns of participants, beneficiaries, and enrollees. The Departments recognize these as transfers among participants, beneficiaries, and enrollees; plans and issuers; and mental health and substance use disorder providers and facilities. Specifically, the Departments expect these final rules will result in:

• transfers from plans and issuers to participants, beneficiaries, and enrollees caused by lower out-of-pocket spending;
• transfers from participants, beneficiaries, and enrollees to plans and issuers caused by higher premiums; and
• transfers between primary care providers and mental health and substance use disorder providers for the treatment of mental health and substance use disorders resulting from the anticipated shift of participants, beneficiaries, and enrollees choosing to obtain such treatment from a specialist instead of a primary care provider.

The following sections are primarily qualitative discussions of transfers that the Departments expect to occur due to these final rules. Where possible, the Departments have referenced studies with quantitative results that help indicate the potential magnitude of these transfers. The Departments requested comment or data in the proposal on how large these transfers might be but did not receive any comments.

9.1. Transfers From Plans and Issuers to Participants, Beneficiaries, and Enrollees Caused by Lower Out-of-Pocket Spending

As discussed in section IV.7.2 of this regulatory impact analysis, these final rules are expected to increase access to mental health and substance use disorder treatments by improving plan and issuer compliance with the requirements under MHPAEA. This will help ensure that NQTLs are no more restrictive for mental health and substance use disorder benefits than the predominant limitations applicable to substantially all medical/surgical benefits. For individuals who were previously prevented from accessing care because it was not covered by their plan or coverage in a manner that violated these final rules, improved access to treatment is a benefit. However, for individuals who previously resorted to out-of-network treatment, expanded coverage of treatment—resulting in more access to in-network providers or facilities—will result in a transfer from plans and issuers to participants, beneficiaries, and enrollees.

Currently, it is more common for individuals to rely on out-of-network care for mental health and substance use disorder treatment than for medical/surgical treatment. One study found that patients received out-of-network care 3.5 times more often for behavioral health clinician office visits than for medical and surgical clinician office visits (13.4 percent vs. 3.8 percent). Further, the study found that when comparing specialist care, patients received out-of-network care 8.9 times more often for psychiatrist office visits (15.3 percent vs. 1.7 percent) and 10.6 times more often for psychologist office visits (18.2 percent vs. 1.7 percent) than for medical and surgical specialist physicians.^[409]

Receiving out-of-network treatment is costly, and research has found that mental health parity decreases out-of-pocket spending on treatment. For example, a 2013 study that examined the impact of the 2001 parity directive in the FEHB Program found that annual out-of-pocket spending for FEHB enrollees diagnosed with bipolar disorder, major depression, or adjustment disorder decreased by between $78 and $86, roughly between 11 percent and 18 percent of average total out-of-pocket spending for enrollees with one of these diagnoses, as compared to before the parity directive.^[410]

A 2018 study compared commercially insured children ages 3 to 18 years in 2008 who were continuously enrolled in plans newly subject to parity under MHPAEA to children continuously enrolled in plans never subject to MHPAEA. The study found that children with mental health conditions who were enrolled in plans subject to parity had, on average, $140 lower annual out-of-pocket mental health spending than expected compared to the comparison group. The study further found that children at or above the 85th percentile in total mental health spending who were enrolled in plans subject to MHPAEA had, on average, $234 lower annual out-of-pocket mental health spending than those in the comparison group.^[411]

A 2019 study examined the impact of MHPAEA on mental health services spending in a commercially insured population diagnosed with mental health disorders and found that MHPAEA resulted in a decrease in the mean out-of-pocket spending per mental health outpatient visit.^[412] Additionally, a 2017 study that examined expenditures of patients receiving behavioral health treatment following the implementation of MHPAEA found that the out-of-pocket expenditure for ( print page 77690) patients had decreased and the total expenditure for health plans had increased, with no significant impact on health care utilization, suggesting that the costs had shifted from patients to health plans.^[413]

According to the 2019 MEPS-HC, private insurance covered $33.87 billion of expenditures for treatment of mental health disorders among adults ages 18 and older ^[414] while all individuals paid $15.62 billion out-of-pocket.^[415] As discussed throughout this analysis, there are many reasons someone might seek care out-of-network or pay out-of-pocket for treatment, such as limited coverage from the issuer or plan, difficulty finding a network provider, or long wait times to see an in-network provider. The Departments acknowledge that these final rules will not address all the reasons that individuals pay out-of-pocket for treatment, and there is significant uncertainty in how these final rules will affect out-of-network spending.

Accordingly, the Departments do not know what proportion of total out-of-pocket spending experienced in the past will be covered by group health plans and health insurance coverage following the applicability of these final rules. However, to illustrate the potential scale of transfers from participants, beneficiaries, and enrollees to plans under this rulemaking, the Departments reference a 2020 study of in-network versus out-of-network psychotherapy employer-sponsored insurance claims which found in-network cost sharing was, on average, $24.41 less that out-of-network cost-sharing for psychotherapy claims.^[416] Utilizing tabulations from the MEPS-HC on events, such as office and outpatient visits for mental, behavioral, or neurological conditions, there were 530.7 million of these medical events in 2021 for individuals 65 and under with private insurance.^[417] Applying the initial out-of-network rates of 13.4 percent from the Marsh and Parish paper would translate into 71.1 million out-of-network claims, which is 9 percentage points higher for mental health and substance use disorders than for medical/surgical treatments.^[418] It is assumed that, under these final rules, the out-of-network utilization rates for mental health and substance use disorder benefits fall by just 10 percent to 12.1 percent of claims, this would still represent a transfer from plans and issuers to participants and beneficiaries of $168.4 million annually in lower cost-sharing.^[419]

9.2. Transfers From Participants, Beneficiaries, and Enrollees to Plans and Issuers Caused by Higher Premiums

These final rules might also result in a transfer from participants, beneficiaries, and enrollees to plans and issuers in the form of higher premiums. By limiting the ability of plans and issuers to avoid costs of certain mental health and substance use disorder treatments while increasing access to and utilization of these services, these final rules might cause plans and issuers to increase premiums and change cost-sharing requirements (for example, by raising deductibles) to offset these costs. Similarly, plans and issuers might reduce the number of NQTLs employed and increase premiums in order to offset the costs of participants, beneficiaries, and enrollees utilizing more mental health and substance use disorder benefits.

Many studies attempt to isolate the changes in health costs associated with implementing parity requirements. One 2005 study by the Society of Actuaries on State mental health parity laws found that “overall health care costs increased minimally and in some cases were even reduced.” ^[420] As discussed earlier in section IV.8 of this regulatory impact analysis, by removing some of the barriers to access to mental health and substance use disorder treatments caused by existing NQTLs, the Departments expect that the final rules will result in increased utilization of mental health and substance use disorder services, which could increase costs, including premiums. However, as discussed in section IV.7.3 of this regulatory impact analysis, better access to mental health and substance use disorder services can lead to better health outcomes and prevent costly interventions, which may reduce overall health care costs and premiums in the long-term. Thus, the Departments anticipate that these final rules will have a minimal impact on premiums, but there may be instances in which plans and issuers may impose higher premiums.

The Departments requested comments or data on this transfer in the proposal. A few commenters stated that the proposal would hinder the ability of plans to utilize common medical management techniques that improve cost and quality outcomes, such as prior authorization. As a result, commenters stated there would be an increase in premiums for participants, beneficiaries, and enrollees. However, as discussed previously, these final rules do not finalize the substantially all and predominant mathematical tests for NQTLs as proposed. The final rules also do not eliminate the use of prior authorization or other medical management, but the Departments emphasize that they must be designed and applied in parity as required by law.

9.3. Transfers Between Primary Care Providers and Mental Health and Substance Use Disorder Providers

These final rules may result in a transfer from primary care providers to mental health and substance use disorder providers. More specifically, with improved in-network access to mental health and substance use disorder providers, patients may be more likely to seek treatment from a behavioral health specialist rather than a primary care provider.

For example, a 2012 study that examined the impact of Oregon's 2007 parity law on the choice of provider found that the law was associated with a slight increase in the likelihood of patients seeking care “with masters-level specialists, and relatively little change for generalist physicians, ( print page 77691) psychiatrists, and psychologists,” leading to a shift in the use of nonphysician specialists and away from generalist physicians.^[421] Further, a 2020 study compared mental health outpatient visits of adults in the period between 2008 and 2011 to the period between 2012 and 2015 using data from the MEPS-HC. Between the two time periods, the study found that the percentage of adults who visited only primary care non-physicians, such as physician assistants and nurse practitioners, increased by about 4 percent, whereas the percentage of adults who visited only primary care physicians decreased by about 2 percent.^[422] The findings of these papers suggest that the final rules may lead to a slight shift in the use of nonphysician specialists, and away from generalist physicians.

9.4. Transfers Associated With the Implementation of the CAA, 2023 Provision That Sunsets the MHPAEA Opt-Out Election for Self-Funded Non-Federal Governmental Plans

HHS anticipates that the rules implementing the CAA, 2023 provision that sunsets the MHPAEA opt-out election for self-funded non-Federal governmental plans will have similar effects as the other provisions examined in this section IV.9 of the regulatory impact analysis. These final rules are generally expected to lead to improved coverage of and lower cost-sharing requirements for mental health and substance use disorder benefits for participants and beneficiaries of self-funded non-Federal governmental plans. This will lead to lower out-of-pocket costs for plan participants and beneficiaries who receive mental health or substance use disorder services, which will be a transfer from self-funded non-Federal governmental plans to participants and beneficiaries.

On the other hand, as noted in section IV.8.2 of this regulatory impact analysis, if the final rules cause plans to remove limits on or offer more generous mental health and substance use disorder benefits, utilization of mental health and substance use disorder services may increase, which may cause in the number of claims submitted, the number of claims paid, and the overall costs incurred by plans to also increase. This, in turn, might lead to higher contributions and/or deductibles for plan participants, which may seem to be a transfer from plan participants to self-funded non-Federal governmental plans, but is instead an indication of the societal cost presented in section IV.8 of this regulatory impact analysis (and who bears it).

10. Uncertainty

It is unclear what percentage of plans and issuers impose greater burdens on mental health and substance use disorder benefits than on medical/surgical benefits. This frequency may differ among small and large plans and issuers. The Departments' experience in enforcing MHPAEA shows that plans and issuers are not in full compliance with MHPAEA, although the extent across all plans and issuers is not known. As documented in the fiscal year (FY) 2022 MHPAEA Enforcement Fact Sheet, DOL closed investigations on 145 health plans, with 86 of them subject to MHPAEA, in fiscal year 2022. Of these closed investigations, EBSA cited 18 MHPAEA violations in 11 investigations.^[423]

One commenter stated that the new requirements of the comparative analyses would require plans to make significant changes to their benefits design and NQTL compliance structure, which could result in more restrictions on medical/surgical benefits and/or higher premiums. The commenter did not provide any data or evidence. The Departments note that there is no evidence from previous parity requirements that such actions led to the implementation of new NQTLs, particularly to medical/surgical benefits, and impacted cost sharing, medical management provisions, or medical/surgical coverage.

There is also the possibility that some plans and issuers will stop offering mental health and substance use disorder benefits. In 2010, 2 percent of employers reported discontinuing their coverage of both mental health and substance use disorder treatments or only substance use disorder treatments since MHPAEA was passed.^[424] Nevertheless, as discussed in section IV.9.1 of this regulatory impact analysis, the Departments anticipate that these final rules will expand the level of coverage for mental health and substance use disorder benefits, which will result in reduced out-of-pocket spending for plan participants, beneficiaries, and enrollees.

Another commenter also stated that the proposed rules would largely eliminate behavioral health carve-out vendors as a business model, because such vendors would not be able to build networks in complete alignment with medical/surgical disorder networks, as required under the proposed network composition NQTL rule. In response, the Departments note that similar claims—that MHPAEA would eliminate behavioral health carve-outs—were made when MHPAEA was first enacted in 2008. Furthermore, studies have found that the number of carve-out plans have increased since the enactment of MHPAEA. A 2016 study examined the impact of MHPAEA on carve-out plans and found that MHPAEA “led to a proliferation of plans and heterogeneity in benefit design in the post-parity period among employer groups choosing to retain the carve-out model for their behavioral health coverage.” The study also found no evidence that carve-out plans dropped coverage altogether for behavioral health treatments.^[425] A 2020 study also observing the impact of MHPAEA on carve-out plans found that “post-MHPAEA, the number of carve-out plans increased relative to carve-ins” and that MHPAEA was associated with lower copayments and out-of-network coinsurance for emergency room and outpatient services. The findings suggest that MHPAEA led to more generous benefits for carve-out plans. However, the authors also noted an increase in deductibles and in-network outpatient coinsurance, suggesting that some patients experienced higher out-of-pocket costs.^[426] Nevertheless, these studies suggest that the purported issues referenced by commenters were surmountable.

Additionally, the Departments note that they are not finalizing the proposed ( print page 77692) special rule for NQTLs related to network composition, and are instead including language in these final rules to explain how plans and issuers are expected to comply with the relevant data evaluation requirements with respect to those NQTLs. Under these final rules, material differences in access to mental health and substance use disorder benefits as compared to medical/surgical benefits (including for NQTLs related to network composition) will not be treated as a violation; instead, plans and issuers must take reasonable action, as necessary, to address any material differences in access to mental health or substance use disorder benefits as compared to medical/surgical benefits, and document those actions in their comparative analyses.

Further, there may be some possible societal spillover effects which may occur as a result of these final rules such as improving public safety in the long-term from an increase in access to mental health and substance use disorder treatments. For example, a 2017 study examined the effect of State parity laws for substance use disorder treatments on fatal traffic accidents and found that enactment of State parity laws were associated with reduced annual total traffic fatality rates from 4.1 percent to 5.4 percent.^[427] Furthermore, a 2021 study which examined the impact of State parity laws on crime between 1994 and 2010 found that the enactment of State parity laws was associated with a reduction of violent crimes by 5 percent to 7 percent and that the resulting lower crime rates were associated with an annual savings of $3 billion.^[428] These studies suggest that the benefits of these final rules may go beyond the listed benefits discussed in this regulatory impact analysis.

The Departments face uncertainty in estimating the magnitude of savings for participants, beneficiaries, and enrollees. The Departments requested comments and data in the proposal related to how the Departments may quantify the impact in out-of-pocket spending from these rules, but did not receive any comments.

Additionally, HHS is unable to precisely forecast how many participants and beneficiaries will be affected by the amendments to implement the CAA, 2023 provision that sunsets the MHPAEA opt-out election for self-funded non-Federal governmental plans, as plan sponsors that have elected to opt out of requirements under MHPAEA were not required to report that information to HHS as part of their opt-out filings. See section IV.5.3 of this regulatory impact analysis for further discussion on the affected participants and beneficiaries.

It is possible that some self-funded non-Federal governmental plans will stop offering mental health and substance use disorder benefits in response to the final rules. However, HHS is unable to estimate the potential number of self-funded non-Federal governmental plans that might do so. It is also possible that some self-funded non-Federal governmental plans might increase the financial requirements and treatment limitations that apply to medical/surgical benefits in response to this provision, to ensure that financial requirements and treatment limitations applicable to mental health and substance use disorder benefits comply with MHPAEA and its implementing regulations. HHS anticipates that this is a less likely outcome of these amendments.

HHS solicited comments on the potential number of self-funded non-Federal governmental plans that might stop offering mental health and substance use disorder benefits, as well as the potential number of self-funded non-Federal governmental plans that might increase financial requirements and treatment limitations for medical/surgical benefits in response to the proposed amendments. HHS also solicited comments on the potential number of participants and beneficiaries that might be affected by these potential plan changes. HHS did not receive any comments that provided this information.

11. Alternatives

In addition to the regulatory approach outlined in these final rules, the Departments considered alternatives when developing policy regarding the implementation of MHPAEA. The Departments considered not expressly incorporating the statutory requirement that NQTLs be no more restrictive for mental health and substance use disorder benefits than for medical/surgical benefits. However, as described earlier in this preamble, it is clear that plans and issuers too often fail to consider the impact of their NQTLs on access to mental health and substance use disorder benefits before designing and applying NQTLs, in a manner that is consistent with MHPAEA's fundamental purpose. While the Departments have seen some improvements in response to their reviews of plans' and issuers' comparative analyses under the CAA, 2021 requirements, they have primarily seen a great deal of confusion about the application of the current regulation to NQTLs and about the parity obligation generally. Based on the experience with plans' and issuers' attempts to comply with the existing regulations and guidance and the CAA, 2021, the Departments have concluded that the existing MHPAEA regulations failed to sufficiently focus attention on the obligation to ensure that NQTLs, and associated processes, strategies, evidentiary standards, and other factors avoid placing disparate burdens on participants', beneficiaries', and enrollees' access to mental health and substance use disorder benefits as compared to medical/surgical benefits. Accordingly, the Departments are of the view that these final rules will be beneficial to participants, beneficiaries, and enrollees, as plans and issuers revise their policies and remove or amend NQTLs that are inconsistent with MHPAEA.

The Departments also considered not requiring plans and issuers to use specific data elements in designing and applying NQTLs and preparing their comparative analyses or to provide the data to the Departments upon request. However, during their review of comparative analyses as part of their reporting requirements to Congress, the Departments found that many plans and issuers did not initially provide sufficient information to demonstrate compliance of an NQTL as written, in operation, or both. It is often difficult to assess compliance in operation without such data. By requiring the consideration, use, and production of this data, the regulation will improve the review of plans' and issuers' policies and processes, and improved parity outcomes for participants, beneficiaries, and enrollees.

12. Conclusion

The Departments expect that these final rules will provide plans and issuers with a better understanding of the requirements of MHPAEA and improve how they measure, analyze, document, and demonstrate parity with regard to NQTLs. The Departments are of the view that these final rules will help plans and issuers produce NQTL comparative analyses that meet the requirements of the CAA, 2021, resulting in improved access to and coverage of mental health and substance use disorder treatments, which should ( print page 77693) ultimately result in better health outcomes among those with mental health conditions and substance use disorders.

V. Paperwork Reduction Act

1. Paperwork Reduction Act—Departments of Labor and the Treasury

In accordance with the Paperwork Reduction Act of 1995 (PRA 95) (44 U.S.C. 3506(c)(2)(A)), the Departments solicited comments concerning the information collection requests (ICRs) included in the proposed rules. At the same time, the Departments also submitted ICRs to OMB, in accordance with 44 U.S.C. 3507(d).

The Departments received comments that specifically addressed the paperwork burden analysis of the ICRs contained in the proposed rules. Many commenters expressed concern that the Departments underestimated the burden of collecting the required data, the burden required in conducting the substantially all and predominant variation analysis, the number of NQTLs that would need to be analyzed for each plan and issuer, and the amount of time that it would take to conduct those analyses. The Departments reviewed these public comments in developing the paperwork burden analysis discussed here.

The changes made by these final rules affect the existing OMB control number, 1210-0138. A copy of the ICR for OMB Control Number 1210-0138 may be obtained by contacting the PRA addressee listed in the following sentence or at www.RegInfo.gov. For additional information contact, U.S. Department of Labor, Employee Benefits Security Administration, Office of Research and Analysis, Attention: PRA Officer, 200 Constitution Avenue NW, Room N-5718, Washington, DC 20210; or send to [e-mail].

1.1. Final Amendments to Existing MHPAEA Regulations (26 CFR 54.9812-1; 29 CFR 2590.712)

These final rules add new definitions, amend existing definitions, specify new requirements related to NQTLs, including by prohibiting discriminatory factors and evidentiary standards, amend existing examples illustrating the rules for NQTLs, and add new examples illustrating the rules for NQTLs, providing clarity to interested parties. The final rules also specify that the way a plan or issuer defines mental health benefits, substance use disorder benefits, and medical/surgical benefits must be consistent with generally recognized independent standards of current medical practice and add more specificity as to what conditions or disorders plans and issuers must treat as mental health conditions, substance use disorders, and medical conditions and surgical procedures. The final rules also require that plans and issuers provide meaningful benefits for covered mental health conditions or substance use disorders in each classification in which meaningful medical/surgical benefits are provided. Additionally, these final rules require plans and issuers to collect and evaluate relevant data in a manner reasonably designed to assess the impact of the NQTL on relevant outcomes related to access to mental health and substance use disorder benefits and medical/surgical benefits. Where the relevant data suggest that the NQTL contributes to material differences in access to mental health and substance use disorder benefits as compared to medical/surgical benefits in a classification, plans and issuers are required to take reasonable action, as necessary, to address the material differences to ensure compliance, in operation, with 26 CFR 54.9812-1(c)(4), 29 CFR 2590.712(c)(4), and 45 CFR 146.136(c)(4). These final rules provide guidance for how to comply with the relevant data evaluation requirements in limited circumstances where data is initially and temporarily unavailable for new and newly imposed NQTLs and where no data exists that can reasonably measure any relevant impact of the NQTL on relevant outcomes related to access to mental health and substance use disorder benefits and medical/surgical benefits. In those instances, the plan or issuer must include specific information in their comparative analyses, as explained earlier in this preamble. However, as explained earlier in this preamble, the Departments are of the view that nearly all NQTLs will have some relevant data to collect and evaluate; therefore, the Departments estimate the burden as if every plan and issuer performs the data analysis.

1.2. New Regulation (26 CFR 54.9812-2; 29 CFR 2590.712-1)

These final rules set more specific content and data requirements for the NQTL comparative analyses required by MHPAEA as amended by the CAA, 2021, clarify when the comparative analyses need to be performed, and outline the timeframes and process for plans and issuers to provide their comparative analyses to the Departments or applicable State authority upon request.

For the purpose of this analysis, it is assumed that health insurance issuers will fulfill the data request for fully insured group health plans. This burden is accounted for under HHS' OMB Control number 0938-1393 and is discussed later in this document. It is also assumed that TPAs and other service providers will fulfill the requirements for the vast majority of self-funded group health plans.

1.3. Burden Estimates for Final Rules Requirements

The final rules will affect self-funded plans and MEWAs. The Departments estimate that 709 self-funded plans with 500 or more participants will prepare the comparative analysis and data themselves. The Departments also estimate that 4,076 self-funded plans with 500 or more participants will receive a generic comparative analysis from their TPA or other service provider, which they will subsequently customize to suit their specific needs. Finally, the Departments estimate that 132 plan MEWAs and 21 non-plan MEWAs that are not fully insured will provide assistance to plans in collecting and analyzing the data, and generating the comparative analyses. For more information on how the number of each type of entity is estimated, please refer to the Affected Entities section of the regulatory impact analysis.

Non-grandfathered, fully insured ERISA plans with less than 50 participants that are subject to MHPAEA under the EHB requirements of the ACA are likely to have their issuers prepare their comparative analyses. Issuers can take advantage of economies of scale by preparing the required documents for those plans purchasing coverage. HHS has jurisdiction over issuers in States that substantially fail to enforce MHPAEA's requirements and therefore is accounting for this portion of the burden in its analysis, in addition to the burden related to non-Federal governmental plans. Accordingly, this analysis considers only the burden associated with ERISA self-funded group health plans, which are under the jurisdiction of the DOL and the Treasury.

These final rules require that a plan or issuer perform and document a comparative analysis of each NQTL applicable to mental health and substance use disorder benefits. In the proposed rules, the Departments estimated that, on average, plans would need to analyze four separate NQTLs and issuers would need to analyze eight NQTLs to satisfy their additional comparative analysis requirements. The Departments further estimated that plans and issuers preparing their own comparative analyses would incur a burden of 20 hours per NQTL in the first year, with 4 hours for a general or ( print page 77694) operations manager to review the requirements and outline the changes needed for the comparative analyses and 16 hours for a business operations specialist to prepare the comparative analyses. Once the comparative analyses are performed and documented, the Departments estimated that plans and issuers would need to update the analyses when making changes to the terms of the plan or coverage, including changes to the way NQTLs are applied to mental health and substance use disorder benefits as well as medical and surgical benefits. In subsequent years, the Departments estimated plans would incur a burden of 10 hours annually per NQTL to update the analyses, with 2 hours for a general or operations manager and 8 hours for a business operations specialist.

In response to commenters' concerns that the Departments underestimated the number of NQTLs that each plan or issuer would need to create comparative analyses for, and that plans and issuers would on average have the same number NQTLs, the Departments have revised their assumptions to 10 NQTLs for both plans and issuers. One commenter proposed the average number of NQTLs should be more than 15 at a minimum, while another noted that there were at least 15 NQTLs referenced in the proposed rules and other guidance. However, given that the number of NQTLs vary by issuer and plan, that most plans will not have every NQTL referenced in the proposed rules and other guidance (although some might have more), and that NQTLs can be counted as an umbrella group, the Departments assume 10 NQTLs.

The Departments assume that collecting the data, and reviewing and revising the comparative analyses would require 60 hours per NQTL in the first year and 12 hours per NQTL in subsequent years. For plans that receive a generic comparative analysis that will require customizing to suit the plan's specific needs, the Departments assume that it will take 30 hours per NQTL in the first year and 6 hours per NQTL in subsequent years. While plans and issuers can use other professionals to fulfill their requirements, for purposes of developing the wage estimate, the Departments assume that it will take a team of data analysts, actuaries, and attorneys to collect the data and prepare the comparative analyses and have estimated a composite wage rate of $167.48.^[429] See Table 11 for calculations and burden totals.

Table 11—Hour Burden to Fulfill the Data Requirements and Prepare the Comparative Analyses

	Number of entities	Number of NQTLs per entity	Number of hours per NQTL for data and comparative analysis	Total hour burden	Hourly wage	Equivalent cost of hour burden
	(A)	(B)	(C)	(A × B × C)	(D)	E (A × B × C × D)
First Year
TPAs	103	10	60	61,800	$167.48	$10,350,264
Self-funded plans with more than 500 participants that will conduct the comparative analysis themselves	709	10	60	425,400	167.48	71,245,992
Self-funded plans with more than 500 participants that will receive generic comparative analyses from TPAs or service providers, and will then customize it	4,076	10	30	1,222,800	167.48	204,794,544
Plan MEWAs that are not fully insured	132	10	60	79,200	167.48	13,264,416
Non-plan MEWAs that are not fully insured	21	10	60	12,600	167.48	2,110,248
First-year Total	5,041			1,801,800		301,765,464
Subsequent Years
TPAs	103	10	12	12,360	167.48	2,070,053
Self-funded plans with more than 500 participants that will conduct the comparative analysis themselves	709	10	12	85,080	167.48	14,249,198
Self-funded plans with more than 500 participants that will receive generic comparative analyses from TPAs or service providers, and will then customize it	4,076	10	6	244,560	167.48	40,958,909
Plan MEWAs that are not fully insured	132	10	12	15,840	167.48	2,652,883
Non-plan MEWAs that are not fully insured	21	10	12	2,520	167.48	422,050
Subsequent Years Total	5,041			360,360		60,353,093
Total (3-year average)	5,041			840,840		140,823,883

These final rules also require that group health plans offering group health insurance coverage must make a comparative analysis available upon request by the Departments. The CAA, 2021 requires the Departments to collect no fewer than 20 comparative analyses per year, but it also provides that the Departments shall request that a group health plan or issuer submit the comparative analyses for plans that involve potential MHPAEA violations or complaints regarding noncompliance with MHPAEA that concern NQTLs, and any other instances in which the Departments determine appropriate. Based on its prior experience and current funding, DOL expects to request 20 comparative analyses each year. See Table 12 for calculations and burden totals. ( print page 77695)

These final rules also require plans and issuers to make the comparative analyses and other applicable information required by the CAA, 2021 available upon request to participants, beneficiaries, and enrollees in all non-grandfathered group health plans and non-grandfathered group or individual health insurance coverage (including a provider or other person acting as a participant's, beneficiary's, or enrollee's authorized representative) in connection with an adverse benefit determination, as well as to participants and beneficiaries in plans subject to ERISA. The Departments estimate that each plan will receive one request per covered health plan annually and that plans will annually incur a burden of 5 minutes for a clerical worker to prepare and send the comparative analyses to each requesting participant or beneficiary. DOL also assumes that 58.3 percent of requests will be delivered electronically, resulting in a de minimis cost.^[430] The remaining 41.7 percent of requests will be mailed at a cost of $2.79.^[431] See Table 12 for calculations and burden totals.

1.4. Recordkeeping Requirement

The Departments posit that plans and issuers already maintain records as part of their regular business practices. Further, ERISA section 107 includes a general 6-year retention requirement. For these reasons, the Departments estimate a minimal additional burden. The Departments estimate that, on average, any additional recordkeeping requirements will take clerical personnel 5 minutes annually. See Table 12 for calculations and burden totals.

Table 12—Hour and Cost Burden of Other Requirements

	Number of response	Number of hours per responses	Total hour burden	Wage rate	Hour equivalent of cost burden	Mailing cost per response	Cost burden
	(A)	(B)	(A × B)	(C)	(A × B × C)	(D)	(A × D × 41.7 percent)
Business operations specialists prepare comparative analysis for audits	20	1	20	137.67	2,753	0	0
General operation managers prepare comparative analysis for audits	20	4	80	114.36	9,149	0	0
Clerical workers prepare and distribute comparative analyses upon participant request	2,129,516	0.083	177,460	65.99	11,710,585	2.79	2,477,543
Clerical workers maintain recordkeeping	2,129,516	0.083	177,460	65.99	11,710,585	0	0
Total	2,129,536		355,020		23,433,073		2,477,543

1.5. Overall Summary

In summary, the total burden associated with these final rules has a 3-year average hour burden of 1,195,860 hours with an equivalent cost of $164,256,956 and a cost burden of $2,477,543.

A summary of paperwork burden estimates follows:

Type of Review: Revision.

Agency: Employee Benefits Security Administration, U.S. Department of Labor; Internal Revenue Service, U.S. Department of the Treasury.

Title: MHPAEA Notices.

OMB Control Number: 1210-0138.

Affected Public: Businesses or other for-profits, Not-for-profit institutions.

Estimated Number of Respondents: 123,1752.

Estimated Number of Annual Responses: 123,1752.

Frequency of Response: Annual.

Estimated Total Annual Burden Hours: 1,195,860 (597,930 for DOL, 597,930 for Treasury).

Estimated Total Annual Burden Cost: $2,477,543 ($1,238,771 for DOL, $1,238,771 for Treasury).

2. Paperwork Reduction Act—Department of HHS

In accordance with the Paperwork Reduction Act of 1995 (PRA 95) (44 U.S.C. 3506(c)(2)(A)), the Department solicited comments concerning the ICRs included in the proposed rules. At the same time, the Departments also submitted ICRs to OMB, in accordance with 44 U.S.C. 3507(d).

The Departments received comments that specifically addressed the paperwork burden analysis of the ICRs contained in the proposed rules. Many commenters expressed concern that the Departments underestimated the burden of collecting the required data, the burden of conducting the substantially all and predominant variation analysis, the number of NQTLs that would need to be analyzed for each plan and issuer, and the amount of time that it would take to conduct those analyses. The Departments reviewed these public comments in developing the paperwork burden analysis discussed here.

The changes made by these final rules affect the existing OMB control number, 0938-1393. HHS will update the information collection to account for the burden related to the provisions in these final rules.

2.1. Final Amendments to Existing MHPAEA Regulations (45 CFR 146.136)

The amendments to the existing MHPAEA regulations in these final rules add new definitions, amend existing definitions, clarify the rules for NQTLs, including by prohibiting discriminatory factors and evidentiary standards, amend existing examples illustrating the rules for NQTLs, and add new examples illustrating the rules for NQTLs, providing clarity to the regulated community. The amendments also clarify that whether a condition or disorder is defined by the plan or issuer as being a mental health condition or a substance use disorder for purposes of ( print page 77696) MHPAEA must be consistent with generally recognized independent standards of current medical practice. The final rules also require that plans and issuers provide meaningful benefits for covered mental health conditions or substance use disorders in each classification in which meaningful medical/surgical benefits are provided.

These final rules also require plans and issuers to collect and evaluate relevant data in a manner reasonably designed to assess the impact of the NQTL on relevant outcomes related to access to mental health and substance use disorder benefits and medical/surgical benefits. Relevant data for the majority of NQTLs could include, as appropriate, but are not limited to, the number and percentage of claims denials and any other data relevant to the NQTL required by State law or private accreditation standards. Additionally, relevant data for NQTLs related to network composition could include, as appropriate, but are not limited to, in-network and out-of-network utilization rates (including data related to provider claim submissions), network adequacy metrics (including time and distance data, and data on providers accepting new patients), and provider reimbursement rates (for comparable services and as benchmarked to a reference standard).

2.2. New Regulations (45 CFR 146.137)

These final rules set forth more specific content and data requirements for the NQTL comparative analyses required by MHPAEA as amended by the CAA, 2021, clarify when the comparative analyses need to be performed, and outline the timeframes and process for plans and issuers to provide their comparative analyses to the Departments or an applicable State authority upon request.

These final rules provide guidance for how to comply with the relevant data evaluation requirements in limited circumstances where data is initially and temporarily unavailable for new and newly imposed NQTLs and where no data exists that can reasonably measure any relevant impact of the NQTL on relevant outcomes related to access to mental health and substance use disorder benefits and medical/surgical benefits. In those instances, the plan or issuer must include specific information in their comparative analyses, as explained earlier in this preamble. In such instances, providing this justification is likely to be less expensive than the estimated burden for doing an analysis when there is data. However, as explained earlier in this preamble, the Departments are of the view that nearly all NQTLs will have some relevant data to collect and evaluate; therefore, the Departments estimate the burden as if every plan and issuer performs the data analysis.

As discussed earlier in this preamble, HHS enforces applicable provisions of Title XXVII of the PHS Act, including the provisions added by MHPAEA, with respect to health insurance issuers offering group and individual health insurance coverage in States that elect not to enforce or fail to substantially enforce MHPAEA or another PHS Act provision. HHS is therefore accounting for this portion of the burden in its analysis, in addition to accounting for the burden on sponsors of self-funded non-Federal governmental plans.

2.3. Burden Estimates for Final Requirements

These final rules will affect issuers, TPAs, and self-funded non-Federal governmental plans. Health insurance issuers offering individual or group health insurance coverage usually have multiple products offered in multiple States. HHS estimates a total of 479 health insurance companies offering individual or group health insurance coverage nationwide, with a total of 1,467 issuers (health insurance company/State combinations). In addition, there are an estimated 205 TPAs that provide services to group health plans, particularly for self-funded plans where TPAs often establish provider networks and adjudicate claims, which will be impacted by these final rules. Furthermore, sponsors of self-funded non-Federal governmental plans will be affected by these final rules. HHS estimates that out of the estimated 32,901 self-funded non-Federal governmental plans, 505 self-funded non-Federal governmental plans with 500 or more participants will prepare the comparative analysis and data themselves, and 2,906 self-funded non-Federal governmental plans with 500 or more participants will receive a generic comparative analysis from their TPA, which they will subsequently customize to suit their specific needs. For more information on how the number of each type of entity is estimated, please refer to section IV.5.2 of the regulatory impact analysis.

These final rules require that a plan or issuer perform and document a comparative analysis of each NQTL applicable to mental health and substance use disorder benefits. In the proposed rules, the Departments estimated that, on average, plans would need to analyze four separate NQTLs and issuers would need to analyze eight NQTLs to satisfy their additional comparative analysis requirements. The Departments further estimated that plans and issuers preparing their own comparative analyses would incur a burden of 20 hours per NQTL in the first year, with 4 hours for a general or operations manager to review the requirements and outline the changes needed for the comparative analyses and 16 hours for a business operations specialist to prepare the comparative analyses. Once the comparative analyses are performed and documented, plans and issuers would need to update the analyses when making changes to the terms of the plan or coverage, including changes to the way NQTLs are applied to mental health and substance use disorder benefits, as well as medical and surgical benefits. In subsequent years, the Departments estimated plans would incur a burden of 10 hours annually per NQTL to update the analyses, with 2 hours for a general or operations manager and 8 hours for a business operations specialist.

In response to commenters' concerns that the Departments underestimated the number of NQTLs that each plan or issuer would need to create comparative analyses for, and that plans and issuers would on average have the same number NQTLs, the Departments have revised their assumptions to 10 NQTLs for both plans and issuers. One commenter proposed the average number of NQTLs should be more than 15 at a minimum, while another noted that there were at least 15 NQTLs referenced in the proposed rules and other guidance. However, because the number of NQTLs varies by issuer and plan, most plans will not have every NQTL referenced in the rules or guidance (although some might use more), and NQTLs can be counted as an umbrella group, the Departments assume 10 NQTLs.

The Departments assume that collecting the data, and reviewing and revising the comparative analyses will require 60 hours per NQTL in the first year and 12 hours per NQTL in subsequent years. For plan sponsors that receive a generic comparative analysis from a TPA that will require customizing to suit the plan's specific needs, the Departments assume that it will take 30 hours per NQTL in the first year and 6 hours per NQTL in subsequent years. While plans and issuers can use other professionals to fulfill their requirements, for purposes of developing the wage estimate, the Departments assume that it will take a team of data analysts, actuaries, and attorneys to collect the data and prepare the comparative analyses, and have estimated a composite wage rate of ( print page 77697) $167.48.^[432] See Table 13 for calculations and burden totals.

Table 13—Hour Burden to Fulfill the Data Requirements and Prepare the Comparative Analyses

	Number of entities	Number of NQTLs per entity	Number of hours per NQTL for data and comparative analysis	Total hour burden	Hourly wage	Equivalent cost of hour burden
	(A)	(B)	(C)	(A × B × C)	(D)	E (A × B × C × D)
First Year
Issuers (health insurance company/State combinations)	1,467	10	60	880,200	$167.48	$147,415,896
TPAs	103	10	60	61,800	167.48	10,350,264
Self-funded non-Federal governmental plans with more than 500 participants that will conduct the comparative analysis themselves	505	10	60	303,000	167.48	50,746,440
Self-funded non-Federal governmental plans with more than 500 participants that will receive a generic comparative analysis from TPAs or service providers, and will then customize it	2,906	10	30	871,800	167.48	146,009,064
First-year Total	4,981			2,116,800		354,521,664
Subsequent Years
Issuers	1,467	10	12	176,040	167.48	29,483,179
TPAs	103	10	12	12,360	167.48	2,070,053
Self-funded non-Federal governmental plans with more than 500 participants that will conduct the comparative analysis themselves	505	10	12	60,600	167.48	10,149,288
Self-funded non-Federal governmental plans with more than 500 participants that will receive a generic comparative analysis from TPAs or service providers, and will then customize it	2,906	10	6	174,360	167.48	29,201,813
Subsequent Years Total	4,981			423,360		70,904,333
Total (3-year average)	4,981			987,840		165,443,443

These final rules require that plans or issuers make their comparative analyses available upon request to the Departments. The CAA, 2021 requires the Departments to collect not fewer than 20 comparative analyses per year, but it also provides that the Departments shall request that a plan or issuer submit the comparative analyses for plans that involve potential MHPAEA violations or complaints regarding noncompliance with MHPAEA that concern NQTLs, and any other instances in which the Departments determine appropriate. HHS expects to request at least 20 comparative analyses each year. See Table 14 for calculations and burden totals.

These final rules also require plans and issuers to make the comparative analyses and other applicable information required by the CAA, 2021 available upon request to participants, beneficiaries, and enrollees in all non-grandfathered group health plans and non-grandfathered group or individual health insurance coverage (including a provider or other person acting as a participant's, beneficiary's, or enrollee's authorized representative) in connection with an adverse benefit determination, as well as to participants and beneficiaries in plans subject to ERISA. HHS estimates that each non-Federal governmental plan and each issuer will receive one request annually and that plans and issuers will annually incur a burden of 5 minutes for a clerical worker to prepare and send the comparative analyses to each requesting participant, beneficiary, or enrollee. HHS also assumes that 58.3 percent of requests will be delivered electronically, resulting in a de minimis cost.^[433] The remaining 41.7 percent of requests will be mailed.^[434] The annual cost burden to mail the comparative analyses to the participants and beneficiaries will therefore be approximately $107,500. See Table 14 for calculations and burden totals.

2.4. Recordkeeping Requirement

HHS posits that plans and issuers already maintain records as part of their regular business practices. HHS therefore estimates a minimal additional burden associated with these final rules. HHS estimates that each non-Federal governmental plan and issuer will annually incur a burden of 5 minutes, on average. See Table 14 for calculations and burden totals.

HHS will revise the information collection approved under OMB Control ( print page 77698) Number 0938-1393 to account for this burden.^[435]

Table 14—Hour and Cost Burden of Other Requirements

	Number of responses	Number of hours per response	Total hour burden	Wage rate	Hour equivalent of cost burden	Mailing cost per response	Cost burden
	(A)	(B)	(A × B)	(C)	(A × B × C)	(D)	(A × D × 41.7 percent)
Business operations specialists prepare comparative analysis for audits	20	4	80	$114.36	$9,149	$0	$0
General operation managers prepare comparative analysis for audits	20	1	20	137.67	2,753	0	0
Clerical workers prepare comparative analyses upon participant request	92,354	0.083	7,696	65.99	507,859	2.79	107,477
Clerical workers maintain recordkeeping	92,354	0.083	7,696	65.99	507,859	0	0
Total	92,374		15,492		1,027,620		107,477

2.5. ICRs Regarding the Self-Funded Non-Federal Governmental Plan Opt-Out Provisions (45 CFR 146.180)

2.5.1. Notice to Federal Government of Self-Funded Non-Federal Governmental Plan Opt-Out: Plan Burden Reduction—Preparation and Processing of Opt-Out Election Notice

The regulatory amendments to implement a provision in the CAA, 2023 that sunsets the election option for sponsors of self-funded non-Federal governmental plans to opt out of requirements under MHPAEA eliminate the need for sponsors to submit a notice to the Federal Government regarding their plan's opt-out election (or, for sponsors of multiple plans, their plans' opt-out elections), as long as the sponsors do not elect to permissibly opt out of other requirements.^[436] HHS estimates that sponsors of 185 plans will no longer need to submit a notice to the Federal Government regarding their plan's opt-out election. HHS estimates that for each self-funded non-Federal governmental plan whose sponsor has elected to opt out of the requirements, a compensation and benefits manager will need 15 minutes annually to fill out and electronically submit the model notification form to HHS.^[437] See Table 14 for calculations and cost savings.

These amendments also generate cost savings for the Federal Government, as HHS will no longer have to process the opt-out notices submitted by plan sponsors. The processing of the opt-out notices is performed by an HHS employee. The average labor rate for the employee who completes this task, which includes the locality pay adjustment for the area of Washington-Baltimore-Arlington, and the cost of fringe benefits and other indirect costs, is $113.04 per hour for a GS-13, step 1 employee.^[438] HHS estimates that on average it takes an HHS employee 15 minutes to process an opt-out notice submitted by a plan sponsor. See Table 15 for calculations and cost savings.

2.5.2. Notice to Plan Participants of Self-Funded Non-Federal Governmental Plan Opt-Out: Plan Burden Reduction—Preparation and Processing of Opt-Out Election Notice

The regulatory amendments to implement the provision in the CAA, 2023 that sunsets the election option for sponsors of self-funded non-Federal governmental plans to opt out of requirements under MHPAEA also eliminate the need for those sponsors to prepare and disseminate an opt-out notice to plan participants regarding their plan sponsors' opt-out election, as long as the sponsors do not elect to permissibly opt out of other requirements. HHS estimates that sponsors of 185 plans will no longer need to prepare and disseminate an opt-out notice to plan participants. HHS estimates that for each self-funded non-Federal governmental plan whose sponsor has elected to opt out of the requirements under MHPAEA, an administrative assistant will need 15 minutes to develop and update the HHS standardized disclosure statement annually. Further, self-funded non-Federal governmental plan sponsors will no longer be required to print and mail the opt-out notice to plan participants and will therefore no longer incur costs associated with this requirement. As noted earlier in section IV.5.2 of the regulatory impact analysis, HHS estimates that there are approximately 261 participants in each self-funded non-Federal governmental plan, and therefore approximately 48,285 notices ^[439] will no longer have to be printed and mailed. See Table 15 for calculations and cost savings.

The burden related to HIPAA opt-outs is currently approved under OMB Control Number 0938-0702.^[440] HHS will update the information collection to account for this burden reduction.

( print page 77699)

Table 15—Cost Savings of Preparing and Distributing Opt-Out Election Notice

	Number of responses	Number of hours per entity	Total hour burden	Wage rate	Mailing cost per response	Cost savings
	(A)	(B)	(A × B)	(C)	(D)	(A × B × C) or (A × D)
General operation managers preparing and processing of opt-out election notice to Federal Government	185	0.25	46	$131.14		$6,032
Clerical workers preparing and processing of opt-out election notice to plan participants	185	0.25	46	42.58		1,959
Clerical workers distributing opt-out election notice to plan participants	48,285				$0.05	2,414
Total	48,470		92			10,405

2.6. Overall Summary

In summary, the total new burden imposed by these final rules regarding NQTL comparative analyses and compliance, has a 3-year average hour burden of approximately 1,003,332 hours with an equivalent cost of approximately $166,471,063 and a total cost burden of approximately $107,447. The final amendments to implement the CAA, 2023 provision that sunsets the MHPAEA opt-out election for sponsors of self-funded non-Federal governmental plans will result in an annual burden reduction of approximately 92 hours with an equivalent annual cost savings of approximately $7,991 and total cost savings of approximately $10,405.

A summary of the change in paperwork burden estimates follows:

Type of Review: Revision.

Agency: Centers for Medicare & Medicaid Services, U.S. Department of Health and Human Services.

Title: Non-Quantitative Treatment Limitation Analyses and Compliance Under MHPAEA.

OMB Control Number: 0938-1393.

Affected Public: Businesses or other for-profits, Not-for-profit institutions, State, Local, or Tribal Governments.

Estimated Number of Respondents: 92,457.

Estimated Number of Annual Responses: 189,709.

Frequency of Response: Annual.

Estimated Total Annual Burden Hours: 1,003,332.

Estimated Total Annual Burden Cost: $107,447.

Title: Requirements for Compliance with Individual and Group Market Reforms under Title XXVII of the Public Health Service Act.

OMB Control Number: 0938-0702.

Affected Public: State, Local, or Tribal Governments.

Estimated Number of Respondents: (185).

Estimated Number of Annual Responses: (185).

Frequency of Response: Annual.

Estimated Total Annual Burden Hours: (92).

Estimated Total Annual Burden Cost: ($2,414).

Note:

Numbers in parentheses denote a burden reduction.

VI. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) ^[441] imposes certain requirements with respect to Federal rules that are subject to the notice-and-comment requirements of section 553(b) of the Administrative Procedure Act and are likely to have a significant economic impact on a substantial number of small entities. Unless the head of an agency determines that a final rule is not likely to have a significant economic impact on a substantial number of small entities, section 604 ^[442] of the RFA requires the agency to present a final regulatory flexibility analysis of these final rules.

The Departments certify that these final rules will not have a significant impact on a substantial number of small entities. The Departments have prepared the following justification for this determination.

1. Need for and Objectives of the Rule

As documented in the 2022 MHPAEA Report to Congress and the 2023 MHPAEA Comparative Analysis Report to Congress,^[443] the Departments found that none of the NQTL comparative analyses they reviewed upon initial receipt contained sufficient information and documentation.

These final rules clarify existing definitions, add new definitions of key terms, and provide additional examples of the application of MHPAEA to NQTLs to improve the understanding and ability of the regulated community to comply with MHPAEA. The final rules also clarify that plan and issuer definitions of conditions or disorders as mental health conditions and substance use disorders must be consistent with generally recognized independent standards of current medical practice and add more specificity as to what plans and issuers must treat as mental health conditions or substance use disorders. The final rules also require that plans and issuers must provide meaningful benefits for covered mental health conditions or substance use disorders in each such classification in which medical/surgical benefits are provided. These final rules also require plans and issuers to collect and evaluate relevant data in a manner reasonably designed to assess the impact of the NQTL on access to mental health and substance use disorder benefits and medical/surgical benefits. Relevant data for the majority of NQTLs could include, as appropriate, but are not limited to, the number and percentage of claims denials and any other data relevant to the NQTL as required by State law or private accreditation standards. Additionally, for NQTLs related to network composition, relevant data could include, as appropriate, but are not limited to, in-network and out-of-network utilization rates (including data related to provider claim submissions), network adequacy metrics (including time and distance data, and data on providers accepting new patients), and provider reimbursement rates (for comparable services and as benchmarked to a reference standard). Under these final rules, the Departments may specify the type, form, and manner for the relevant data evaluation requirements in future guidance, which will allow the Departments to adjust the data requirements as needed to account for enforcement experience and industry trends.

These final rules also set more specific content requirements for ( print page 77700) comparative analyses required by the CAA, 2021, clarify when a comparative analysis needs to be performed and for which NQTLs, and outline the process for plans and issuers to provide their comparative analyses to the Departments upon request.

The Departments expect that these final rules will result in plans and issuers having a better understanding of the MHPAEA requirements for NQTLs. These final rules will also improve the manner in which parity is measured, compared, and demonstrated by plans and issuers. The Departments are of the view that these final rules will improve the compliance of plans and issuers with these requirements, resulting in greater parity in access to benefits for mental health conditions and substance use disorders as compared with medical/surgical benefits, as intended by MHPAEA.

Additionally, in these final rules, HHS finalizes regulatory amendments to implement a provision in the CAA, 2023 that sunsets the election option for sponsors of self-funded non-Federal governmental plans to opt out of requirements under MHPAEA. HHS is of the view that these regulatory amendments will ultimately increase access to mental health and substance use disorder services, and increase parity of benefits for such services as compared to benefits for medical/surgical services by requiring self-funded non-Federal governmental plans that had previously opted out to come into compliance with the requirements under MHPAEA.

2. Affected Small Entities

For purposes of analysis under the RFA, the Departments consider employee benefit plans with fewer than 100 participants to be small entities. The basis of this definition is found in section 104(a)(2) of ERISA, which permits the Secretary of Labor to prescribe simplified annual reports for plans that cover fewer than 100 participants. Under section 104(a)(3) of ERISA, the Secretary of Labor may also provide for exemptions or simplified annual reporting and disclosure for welfare benefit plans. Under the authority of section 104(a)(3), DOL has previously issued ( see29 CFR 2520.104-20, 2520.104-21, 2520.104-41, 2520.104-46, and 2520.104b-10) simplified reporting provisions and limited exemptions from reporting and disclosure requirements for small plans, including unfunded or insured welfare plans, that cover fewer than 100 participants and satisfy certain requirements. While some large employers have small plans, small plans are maintained generally by small employers. Thus, the Departments are of the view that assessing the impact of these final rules on small plans is an appropriate substitute for evaluating the effect on small entities. The definition of small entity considered appropriate for this purpose differs, however, from the definition of small business based on size standards (revenue or number of employees) issued by the Small Business Administration (SBA) under the Small Business Act.

As discussed in section IV.5.2 of the regulatory impact analysis, these final rules will affect nearly all small ERISA-covered group health plans, including fully insured group health plans and self-funded group health plans, as well as small health insurance issuers and non-Federal governmental plans. The Departments estimate that these final rules will affect approximately 106,000 fully insured plans with 50 to 100 participants,^[444] and approximately 1,719,000 fully insured, non-grandfathered plans with less than 50 participants.^[445]

The Departments also estimate that approximately 25,300 self-funded plans with less than 100 participants will be affected by these final rules.^[446] Additionally, the Departments estimate that approximately 18,000 self-funded non-Federal governmental plans with less than 100 participants will also be affected by these final rules.^[447] The Departments assume that these small, self-funded plans will receive assistance with the comparative analyses and data requirements from TPAs or other service providers involved with the plan. Due to many small plans using identical insurance products, these small plans are not expected to be significantly impacted as costs are spread across many small plans.

As discussed in section IV.5.1 of the regulatory impact analysis, these final rules will also affect health insurance issuers. The Departments estimate that these final rules will affect 479 health insurance companies nationwide that provide mental health and substance use disorder benefits in the group and individual health insurance markets, with a total of 1,467 issuers (health insurance company/State combinations).^[448]

Health insurance companies are generally classified under the North American Industry Classification System (NAICS) code 524114 (Direct Health and Medical Insurance Carriers). According to SBA size standards, entities with average annual receipts of $47 million or less are considered small entities for this NAICS code.^[449] The Departments expect that few, if any, health insurance companies underwriting health insurance policies fall below these size thresholds. Based on data from MLR annual report submissions for the 2022 MLR reporting year, approximately 87 out of 487 health insurance companies (of which 479 are impacted by these final rules) had total premium revenue of $47 million or less.^[450] However, it should be noted that at least 76 percent of these small companies belong to larger holding groups that may not be small, and many, ( print page 77701) if not all, of these companies are likely to have non-health lines of business that would result in their revenues exceeding $47 million.

The amendments to implement the CAA, 2023 provision that sunsets the MHPAEA opt-out election will affect sponsors of self-funded non-Federal governmental plans, some of which might be small entities. As noted in section IV.8.4 of the regulatory impact analysis, the extent to which these plans are out of compliance is unknown, and the costs for them to come into compliance are expected to vary from plan to plan. HHS solicited comments in the proposal on the number of small entities that would be impacted by the implementation of the sunset provision and the potential effects on small entities. HHS did not receive any comments on these estimates.

2.1. Amendments to Existing MHPAEA Regulation (26 CFR 54.9812-1, 29 CFR 2590.712, and 45 CFR 146.136)

These final rules clarify existing definitions, add new definitions, generally ensure that the NQTLs applicable to mental health and substance use disorder benefits are generally no more restrictive than the predominant NQTLs applied to substantially all medical/surgical benefits, and provide additional examples of the application of MHPAEA to NQTLs to improve the understanding and ability of the regulated community to comply with MHPAEA. These final rules also clarify that mental health benefits and substance use disorder benefits must be defined to be consistent with generally recognized independent standards of current medical practice and add more specificity as to what plans and issuers must define as mental health conditions or substance use disorders. The final rules also require that plans and issuers must provide meaningful benefits for covered mental health conditions or substance use disorders in each classification in which medical/surgical benefits are provided. These final rules also require plans and issuers to collect and evaluate relevant data and include an analysis of the data as part of each comparative analysis. The Departments are of the view that plans and issuers will incur costs in collecting, preparing, and analyzing the data.

The Departments are of the view that the final amendments might cause small plans and issuers to revise their policies and remove treatment limitations. Therefore, small plans and issuers could incur costs to revise plan provisions, which may result in increased costs from expanded utilization of mental health and substance use disorder services. The Departments face uncertainty in quantifying these costs as they cannot estimate the increase in utilization and which services may see the largest increase in utilization.

2.2. New Regulations (26 CFR 54.9812-2, 29 CFR 2590.712-1, and 45 CFR 146.137 and 146.180)

These final rules codify existing guidance, set more specific content requirements for comparative analyses required by the CAA, 2021, and outline the timeframes and process for plans and issuers to provide their comparative analyses to the Departments upon request. Participants and beneficiaries in ERISA plans may also request a copy of comparative analyses at any time, and all participants, beneficiaries, and enrollees may request a comparative analysis in connection with an adverse benefit determination. Additionally, in these final rules, HHS finalizes regulatory amendments to implement the provision in the CAA, 2023 that sunsets the election option for self-funded non-Federal governmental plans to opt out of requirements under MHPAEA.

In the first year, the Departments estimate that TPAs, MEWAs, issuers, and self-funded group health plans, most if not all of which are large entities, will conduct the comparative analysis themselves will incur an incremental per-entity cost of approximately $101,600 associated with these final rules. The Departments also estimate an incremental per-entity cost of $51,300 in the first year for self-funded group health plans that will receive a generic comparative analysis from their TPA or other service provider and subsequently will customize to suit their specific needs.

In the subsequent years, the Departments estimate that TPAs, MEWAs, issuers, and self-funded group health plans that will conduct the comparative analysis themselves, will incur an incremental per-entity cost of approximately $20,100 associated with these final rules and amendments. The Departments also estimate an incremental per-entity cost of $10,100 in subsequent years for self-funded group health plans that will receive a generic comparative analysis from their TPA or other service provider and subsequently will customize it to suit their specific needs.

The Departments note that these per-entity costs are average costs, and these costs are expected to vary by plan or issuer depending on the number of NQTL analyses performed.

3. Comment Summary

In the proposal, commenters expressed concerns that the Departments underestimated the burden of collecting the required data and performing the comparative analyses. One commenter stated that small plans lack access to aggregated claims data. The same commenter suggested that the proposal was burdensome, since it required information that was beyond the possession of small plans. The commenter contended that small employers may decide to stop offering health coverage altogether in favor of having their employees purchase their own individual health insurance coverage through the ACA Exchange, stating that the penalties under the ACA for employers not offering coverage may be preferable compared to the costly requirements under the proposal. The Departments note that there are no such penalties that apply to small employers. The commenter also did not provide any data or evidence.

Another commenter stated that there is a limited market of vendors for conducting the comparative analyses, mentioning that these services could cost upwards of $100,000. The same commenter expressed concern that the proposal's comparative analysis requirements would disproportionately consume the health benefits budget of plan sponsors, potentially causing small employers to discontinue offering mental health and substance use disorder benefits. The Departments note that while there is a possibility that some plans and issuers will stop offering mental health and substance use disorder benefits, the Departments anticipate that these final rules will expand the level of coverage for mental health and substance use disorder benefits, which will result in reduced out-of-pocket spending for plan participants, beneficiaries, and enrollees. The Departments also note that the commenter did not cite any data or evidence.

Furthermore, another commenter was concerned that the proposal would disrupt the operations of plans, by forcing plans to change their network composition and eliminate the use of common medical management techniques. The same commenter stated that the burden would fall on small plans, since they may have insufficient resources to cope with this unanticipated cost burden. The commenter did not provide any data or evidence to support these assertions. As discussed earlier in this preamble, these final rules do not eliminate the use of prior authorization or other medical ( print page 77702) management techniques, but emphasize that they must be developed and used in parity as required by law.

Finally, the Departments did not receive any comments from the Chief Counsel for Advocacy of SBA.

4. Duplicate, Overlapping, or Relevant Federal Rules

There are no duplicate, overlapping, or relevant Federal rules.

VII. Special Analyses—Department of the Treasury

Under the Memorandum of Agreement, Review of Treasury Regulations under Executive Order 12866 (June 9, 2023), tax regulatory actions issued by the Internal Revenue Service (IRS) are not subject to the requirements of section 6 of Executive Order 12866, as amended. Therefore, a regulatory impact analysis is not required. As required by section 7805(f) of the Code, these regulations were submitted to the Chief Counsel for Advocacy of SBA for comment on their impact on small business.

VIII. Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) requires each Federal agency to prepare a written statement assessing the effects of any Federal mandate in a proposed or final agency rule that may result in an expenditure of $100 million or more (adjusted annually for inflation with the base year 1995) in any one year by State, local, and Tribal governments, in the aggregate, or by the private sector.^[451] For purposes of the UMRA, this rulemaking is expected to have such an impact. For the purposes of this rulemaking, the regulatory impact analysis shall meet the UMRA obligations.

IX. Federalism Statement

Executive Order 13132 outlines fundamental principles of federalism, and requires the adherence to specific criteria by Federal agencies in the process of their formulation and implementation of policies that have “substantial direct effects” on the States, the relationship between the Federal Government and States, or on the distribution of power and responsibilities among the various levels of government.^[452] Federal agencies promulgating regulations that have federalism implications must consult with State and local officials and describe the extent of their consultation and the nature of the concerns of State and local officials in the preamble to these final rules.

In the Departments' view, these final rules have federalism implications because they will have direct effects on the States, on the relationship between the Federal Government and the States, and on the distribution of power and responsibilities among various levels of government. These final rules could also have federalism implications because the Departments remove the reference to State guidelines in the definitions of medical/surgical benefits, mental health benefits, and substance use disorder benefits, and amend these definitions to provide that any condition or procedure defined by the plan or coverage as being or not being a mental health condition or substance use disorder, respectively, must be defined to be consistent with generally recognized independent standards of current medical practice, which for purposes of these final rules are all conditions or disorders under the relevant chapters of the ICD or DSM. Finally, these final rules have federalism implications because the implementation of the CAA, 2023 provision that sunsets the election option for sponsors of self-funded non-Federal governmental plans to opt out of requirements under MHPAEA will require State and local government sponsors of self-funded non-Federal governmental plans that currently opt out of requirements under MHPAEA to come into compliance.

In general, through section 514, ERISA supersedes State laws to the extent that they relate to any covered employee benefit plan, and preserves State laws that regulate insurance, banking, or securities. While ERISA prohibits States from regulating a plan as an insurance or investment company or bank, the preemption provisions of section 731 of ERISA and section 2724 of the PHS Act (implemented in 29 CFR 2590.731(a) and 45 CFR 146.143(a)) apply so that the MHPAEA requirements are not to be “construed to supersede any provision of State law which establishes, implements, or continues in effect any standard or requirement solely relating to health insurance issuers in connection with individual or group health insurance coverage except to the extent that such standard or requirement prevents the application of a requirement” of MHPAEA. The conference report accompanying HIPAA indicates that this is intended to be the “narrowest” preemption of State laws. See Conf. Rep. No. 104-736, pg. 205, reprinted in 1996 U.S. Code Cong. & Admin. News 2018.

States may continue to apply State law requirements except to the extent that such requirements prevent the application of the MHPAEA requirements that are the subject of this rulemaking. State insurance laws that are more stringent than the Federal requirements are unlikely to “prevent the application of” MHPAEA and be preempted. Accordingly, States have significant latitude to impose requirements on health insurance issuers that are more restrictive than the Federal law.

Throughout the process of developing these final rules, to the extent feasible within the specific preemption provisions of HIPAA as it applies to MHPAEA, the Departments have attempted to balance the States' interests in regulating health insurance issuers, and Congress' intent to provide uniform minimum protections to consumers in every State. By doing so, it is the Departments' view that they have complied with the requirements of Executive Order 13132.

X. Congressional Review Act

In accordance with Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996 (also known as the Congressional Review Act, 5 U.S.C. 801 et seq.), OIRA has determined that this rule meets the criteria set forth in 5 U.S.C. 804(2). Accordingly, a report containing a copy of the rule along with other specified information has been submitted to each House of the Congress and to the Comptroller General.

List of Subjects

26 CFR Part 54

• Excise taxes
• Health care
• Health insurance
• Pensions
• Reporting and recordkeeping requirements

29 CFR Part 2590

• Continuation coverage
• Disclosure
• Employee benefit plans
• Group health plans
• Health care
• Health insurance
• Medical child support
• Reporting and recordkeeping requirements

45 CFR Part 146

• Health care
• Health insurance
• Reporting and recordkeeping requirements

45 CFR Part 147

• Aged
• Citizenship and naturalization
• Civil rights
• Health care
• Health insurance
• Individuals with disabilities
• Intergovernmental relations
• Reporting

Douglas W. O'Donnell,

Deputy Commissioner, Internal Revenue Service.

Aviva Aron-Dine,

Acting Assistant Secretary (Tax Policy), Department of the Treasury.

Lisa M. Gomez,

Assistant Secretary, Employee Benefits Security Administration, Department of Labor.

Xavier Becerra,

Secretary, Department of Health and Human Services.

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 54

Accordingly, the Treasury Department and the IRS amend 26 CFR part 54 as follows:

PART 54—PENSION EXCISE TAXES

Paragraph 1. The authority citation for part 54 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * *

Par. 2. Amend § 54.9812-1 by:

a. Redesignating paragraph (a) as paragraph (a)(2) and adding paragraphs (a) heading and (a)(1);

b. In newly redesignated paragraph (a)(2):

i. Revising the introductory text;

ii. Adding the definitions of “DSM,” “Evidentiary standards,” “Factors,” and “ICD” in alphabetical order;

iii. Revising the definitions of “Medical/surgical benefits” and “Mental health benefits”;

iv. Adding the definitions of “Processes” and “Strategies” in alphabetical order; and

v. Revising the definitions of “Substance use disorder benefits” and “Treatment limitations”;

c. Revising paragraphs (c)(1)(ii), (c)(2)(i), (c)(2)(ii)(A) introductory text, (c)(2)(ii)(C), and (c)(3)(i)(A), (C), and (D);

d. In paragraph (c)(3)(iii), adding introductory text;

e. Revising paragraphs (c)(3)(iii)(A) and (B), (c)(3)(iv), (c)(4), (d)(3), (e)(4), and (i)(1); and

f. Adding paragraph (j).

The revisions and additions read as follows:

§ 54.9812-1

Parity in mental health and substance use disorder benefits.

(a) Purpose and meaning of terms —(1) Purpose. This section and § 54.9812-2 set forth rules to ensure parity in aggregate lifetime and annual dollar limits, financial requirements, and quantitative and nonquantitative treatment limitations between mental health and substance use disorder benefits and medical/surgical benefits, as required under Code section 9812. A fundamental purpose of Code section 9812, this section, and § 54.9812-2 is to ensure that participants and beneficiaries in a group health plan that offers mental health or substance use disorder benefits are not subject to more restrictive aggregate lifetime or annual dollar limits, financial requirements, or treatment limitations with respect to those benefits than the predominant dollar limits, financial requirements, or treatment limitations that are applied to substantially all medical/surgical benefits covered by the plan in the same classification, as further provided in this section and § 54.9812-2. Accordingly, in complying with the provisions of Code section 9812, this section, and § 54.9812-2, plans must not design or apply financial requirements and treatment limitations that impose a greater burden on access (that is, are more restrictive) to mental health or substance use disorder benefits under the plan than they impose on access to medical/surgical benefits in the same classification of benefits. The provisions of Code section 9812, this section, and § 54.9812-2 should be interpreted in a manner that is consistent with the purpose described in this paragraph (a)(1).

(2) Meaning of terms. For purposes of this section and § 54.9812-2, except where the context clearly indicates otherwise, the following terms have the meanings indicated:

* * * * *

DSM means the American Psychiatric Association's Diagnostic and Statistical Manual of Mental Disorders. For the purpose of this definition, the most current version of the DSM as of November 22, 2024, is the Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition, Text Revision published in March 2022. A subsequent version of the DSM published after November 22, 2024, will be considered the most current version beginning on the first day of the plan year that is one year after the date the subsequent version is published.

Evidentiary standards are any evidence, sources, or standards that a group health plan considered or relied upon in designing or applying a factor with respect to a nonquantitative treatment limitation, including specific benchmarks or thresholds. Evidentiary standards may be empirical, statistical, or clinical in nature, and include: sources acquired or originating from an objective third party, such as recognized medical literature, professional standards and protocols (which may include comparative effectiveness studies and clinical trials), published research studies, payment rates for items and services (such as publicly available databases of the “usual, customary and reasonable” rates paid for items and services), and clinical treatment guidelines; internal plan data, such as claims or utilization data or criteria for assuring a sufficient mix and number of network providers; and benchmarks or thresholds, such as measures of excessive utilization, cost levels, time or distance standards, or network participation percentage thresholds.

Factors are all information, including processes and strategies (but not evidentiary standards), that a group health plan considered or relied upon to design a nonquantitative treatment limitation, or to determine whether or how the nonquantitative treatment limitation applies to benefits under the plan. Examples of factors include, but are not limited to: provider discretion in determining a diagnosis or type or length of treatment; clinical efficacy of any proposed treatment or service; licensing and accreditation of providers; claim types with a high percentage of fraud; quality measures; treatment outcomes; severity or chronicity of condition; variability in the cost of an episode of treatment; high cost growth; variability in cost and quality; elasticity of demand; and geographic location.

* * * * *

ICD means the World Health Organization's International Classification of Diseases adopted by the Department of Health and Human Services through 45 CFR 162.1002. For the purpose of this definition, the most current version of the ICD as of November 22, 2024, is the International Classification of Diseases, 10th Revision, Clinical Modification adopted for the period beginning on October 1, 2015. Any subsequent version of the ICD adopted through 45 CFR 162.1002 after November 22, 2024, will be considered the most current version beginning on the first day of the plan year that is one year after the date the subsequent version is adopted.

Medical/surgical benefits means benefits with respect to items or services for medical conditions or surgical procedures, as defined under the terms of the group health plan and in accordance with applicable Federal and State law, but does not include mental health benefits or substance use disorder benefits. Notwithstanding the ( print page 77704) preceding sentence, any condition or procedure defined by the plan as being or as not being a medical condition or surgical procedure must be defined consistent with generally recognized independent standards of current medical practice (for example, the most current version of the ICD). To the extent generally recognized independent standards of current medical practice do not address whether a condition or procedure is a medical condition or surgical procedure, plans may define the condition or procedure in accordance with applicable Federal and State law.

Mental health benefits means benefits with respect to items or services for mental health conditions, as defined under the terms of the group health plan and in accordance with applicable Federal and State law, but does not include medical/surgical benefits or substance use disorder benefits. Notwithstanding the preceding sentence, any condition defined by the plan as being or as not being a mental health condition must be defined consistent with generally recognized independent standards of current medical practice. For the purpose of this definition, to be consistent with generally recognized independent standards of current medical practice, the definition must include all conditions covered under the plan, except for substance use disorders, that fall under any of the diagnostic categories listed in the mental, behavioral, and neurodevelopmental disorders chapter (or equivalent chapter) of the most current version of the ICD or that are listed in the most current version of the DSM. To the extent generally recognized independent standards of current medical practice do not address whether a condition is a mental health condition, plans may define the condition in accordance with applicable Federal and State law.

Processes are actions, steps, or procedures that a group health plan uses to apply a nonquantitative treatment limitation, including actions, steps, or procedures established by the plan as requirements in order for a participant or beneficiary to access benefits, including through actions by a participant's or beneficiary's authorized representative or a provider or facility. Examples of processes include, but are not limited to: procedures to submit information to authorize coverage for an item or service prior to receiving the benefit or while treatment is ongoing (including requirements for peer or expert clinical review of that information); provider referral requirements that are used to determine when and how a participant or beneficiary may access certain services; and the development and approval of a treatment plan used in a concurrent review process to determine whether a specific request should be granted or denied. Processes also include the specific procedures used by staff or other representatives of a plan (or the service provider of a plan) to administer the application of nonquantitative treatment limitations, such as how a panel of staff members applies the nonquantitative treatment limitation (including the qualifications of staff involved, number of staff members allocated, and time allocated), consultations with panels of experts in applying the nonquantitative treatment limitation, and the degree of reviewer discretion in adhering to criteria hierarchy when applying a nonquantitative treatment limitation.

Strategies are practices, methods, or internal metrics that a plan considers, reviews, or uses to design a nonquantitative treatment limitation. Examples of strategies include, but are not limited to: the development of the clinical rationale used in approving or denying benefits; the method of determining whether and how to deviate from generally accepted standards of care in concurrent reviews; the selection of information deemed reasonably necessary to make medical necessity determinations; reliance on treatment guidelines or guidelines provided by third-party organizations in the design of a nonquantitative treatment limitation; and rationales used in selecting and adopting certain threshold amounts to apply a nonquantitative treatment limitation, professional standards and protocols to determine utilization management standards, and fee schedules used to determine provider reimbursement rates, used as part of a nonquantitative treatment limitation. Strategies also include the method of creating and determining the composition of the staff or other representatives of a plan (or the service provider of a plan) that deliberates, or otherwise makes decisions, on the design of nonquantitative treatment limitations, including the plan's methods for making decisions related to the qualifications of staff involved, number of staff members allocated, and time allocated; breadth of sources and evidence considered; consultations with panels of experts in designing the nonquantitative treatment limitation; and the composition of the panels used to design a nonquantitative treatment limitation.

Substance use disorder benefits means benefits with respect to items or services for substance use disorders, as defined under the terms of the group health plan and in accordance with applicable Federal and State law, but does not include medical/surgical benefits or mental health benefits. Notwithstanding the preceding sentence, any disorder defined by the plan as being or as not being a substance use disorder must be defined consistent with generally recognized independent standards of current medical practice. For the purpose of this definition, to be consistent with generally recognized independent standards of current medical practice, the definition must include all disorders covered under the plan that fall under any of the diagnostic categories listed as a mental or behavioral disorder due to psychoactive substance use (or equivalent category) in the mental, behavioral, and neurodevelopmental disorders chapter (or equivalent chapter) of the most current version of the ICD or that are listed as a Substance-Related and Addictive Disorder (or equivalent category) in the most current version of the DSM. To the extent generally recognized independent standards of current medical practice do not address whether a disorder is a substance use disorder, plans may define the disorder in accordance with applicable Federal and State law.

Treatment limitations include limits on benefits based on the frequency of treatment, number of visits, days of coverage, days in a waiting period, or other similar limits on the scope or duration of treatment. Treatment limitations include both quantitative treatment limitations, which are expressed numerically (such as 50 outpatient visits per year), and nonquantitative treatment limitations (such as standards related to network composition), which otherwise limit the scope or duration of benefits for treatment under a plan. (See paragraph (c)(4)(ii) of this section for an illustrative, non-exhaustive list of nonquantitative treatment limitations.) A complete exclusion of all benefits for a particular condition or disorder, however, is not a treatment limitation for purposes of this definition.

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(c) * * *

(1) * * *

(ii) Type of financial requirement or treatment limitation. When reference is made in this paragraph (c) to a type of financial requirement or treatment limitation, the reference to type means its nature. Different types of financial ( print page 77705) requirements include deductibles, copayments, coinsurance, and out-of-pocket maximums. Different types of quantitative treatment limitations include annual, episode, and lifetime day and visit limits. See paragraph (c)(4)(ii) of this section for an illustrative, non-exhaustive list of nonquantitative treatment limitations.

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(2) * * *

(i) General rule. A group health plan that provides both medical/surgical benefits and mental health or substance use disorder benefits may not apply any financial requirement or treatment limitation to mental health or substance use disorder benefits in any classification that is more restrictive than the predominant financial requirement or treatment limitation of that type applied to substantially all medical/surgical benefits in the same classification. Whether a financial requirement or treatment limitation is a predominant financial requirement or treatment limitation that applies to substantially all medical/surgical benefits in a classification is determined separately for each type of financial requirement or treatment limitation. A plan may not impose any financial requirement or treatment limitation that is applicable only with respect to mental health or substance use disorder benefits and not to any medical/surgical benefits in the same benefit classification. The application of the rules of this paragraph (c)(2) to financial requirements and quantitative treatment limitations is addressed in paragraph (c)(3) of this section; the application of the rules of this paragraph (c)(2) to nonquantitative treatment limitations is addressed in paragraph (c)(4) of this section.

(ii) * * *

(A) In general. If a plan provides any benefits for a mental health condition or substance use disorder in any classification of benefits described in this paragraph (c)(2)(ii), it must provide meaningful benefits for that mental health condition or substance use disorder in every classification in which medical/surgical benefits are provided. For purposes of this paragraph (c)(2)(ii)(A), whether the benefits provided are meaningful benefits is determined in comparison to the benefits provided for medical conditions and surgical procedures in the classification and requires, at a minimum, coverage of benefits for that condition or disorder in each classification in which the plan provides benefits for one or more medical conditions or surgical procedures. A plan does not provide meaningful benefits under this paragraph (c)(2)(ii)(A) unless it provides benefits for a core treatment for that condition or disorder in each classification in which the plan provides benefits for a core treatment for one or more medical conditions or surgical procedures. For purposes of this paragraph (c)(2)(ii)(A), a core treatment for a condition or disorder is a standard treatment or course of treatment, therapy, service, or intervention indicated by generally recognized independent standards of current medical practice. If there is no core treatment for a covered mental health condition or substance use disorder with respect to a classification, the plan is not required to provide benefits for a core treatment for such condition or disorder in that classification (but must provide benefits for such condition or disorder in every classification in which medical/surgical benefits are provided). In determining the classification in which a particular benefit belongs, a plan must apply the same standards to medical/surgical benefits and to mental health or substance use disorder benefits. To the extent that a plan provides benefits in a classification and imposes any separate financial requirement or treatment limitation (or separate level of a financial requirement or treatment limitation) for benefits in the classification, the rules of this paragraph (c) apply separately with respect to that classification for all financial requirements or treatment limitations (illustrated in examples in paragraph (c)(2)(ii)(C) of this section). The following classifications of benefits are the only classifications used in applying the rules of this paragraph (c), in addition to the permissible sub-classifications described in paragraph (c)(3)(iii) of this section:

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(C) Examples. The rules of this paragraph (c)(2)(ii) are illustrated by the following examples. In each example, the group health plan is subject to the requirements of this section and provides both medical/surgical benefits and mental health and substance use disorder benefits. With regard to the examples in this paragraph (c)(2)(ii)(C), references to any particular core treatment are included for illustrative purposes only. Plans must consult generally recognized independent standards of current medical practice to determine the applicable core treatment, therapy, service, or intervention for any covered condition or disorder.

( 1) Example 1 —( i) Facts. A group health plan offers inpatient and outpatient benefits and does not contract with a network of providers. The plan imposes a $500 deductible on all benefits. For inpatient medical/surgical benefits, the plan imposes a coinsurance requirement. For outpatient medical/surgical benefits, the plan imposes copayments. The plan imposes no other financial requirements or treatment limitations.

( ii) Conclusion. In this paragraph (c)(2)(ii)(C)( 1) ( Example 1), because the plan has no network of providers, all benefits provided are out-of-network. Because inpatient, out-of-network medical/surgical benefits are subject to separate financial requirements from outpatient, out-of-network medical/surgical benefits, the rules of this paragraph (c) apply separately with respect to any financial requirements and treatment limitations, including the deductible, in each classification.

( 2) Example 2 —( i) Facts. A plan imposes a $500 deductible on all benefits. The plan has no network of providers. The plan generally imposes a 20 percent coinsurance requirement with respect to all benefits, without distinguishing among inpatient, outpatient, emergency care, or prescription drug benefits. The plan imposes no other financial requirements or treatment limitations.

( ii) Conclusion. In this paragraph (c)(2)(ii)(C)( 2) ( Example 2), because the plan does not impose separate financial requirements (or treatment limitations) based on classification, the rules of this paragraph (c) apply with respect to the deductible and the coinsurance across all benefits.

( 3) Example 3 —( i) Facts. Same facts as in paragraph (c)(2)(ii)(C)( 2)( i) of this section ( Example 2), except the plan exempts emergency care benefits from the 20 percent coinsurance requirement. The plan imposes no other financial requirements or treatment limitations.

( ii) Conclusion. In this paragraph (c)(2)(ii)(C)( 3) ( Example 3), because the plan imposes separate financial requirements based on classifications, the rules of this paragraph (c) apply with respect to the deductible and the coinsurance separately for benefits in the emergency care classification and all other benefits.

( 4) Example 4 —( i) Facts. Same facts as in paragraph (c)(2)(ii)(C)( 2)( i) of this section ( Example 2), except the plan also imposes a preauthorization requirement for all inpatient treatment in order for benefits to be paid. No such requirement applies to outpatient treatment.

( ii) Conclusion. In this paragraph (c)(2)(ii)(C)( 4) (Example 4), because the plan has no network of providers, all benefits provided are out-of-network. Because the plan imposes a separate treatment limitation based on classifications, the rules of this paragraph (c) apply with respect to the deductible and coinsurance separately for inpatient, out-of-network benefits and all other benefits.

( 5) Example 5 —( i) Facts. A plan covers treatment for autism spectrum disorder (ASD), a mental health condition, and covers outpatient, out-of-network developmental ( print page 77706) screenings for ASD but excludes all other benefits for outpatient treatment for ASD, including applied behavior analysis (ABA) therapy, when provided on an out-of-network basis. The plan generally covers the full range of outpatient treatments (including core treatments) and treatment settings for medical conditions and surgical procedures when provided on an out-of-network basis. Under the generally recognized independent standards of current medical practice consulted by the plan, developmental screenings alone do not constitute a core treatment for ASD.

( ii) Conclusion. In this paragraph (c)(2)(ii)(C)( 5) ( Example 5), the plan violates the rules of this paragraph (c)(2)(ii). Although the plan covers benefits for ASD, in the outpatient, out-of-network classification, it only covers developmental screenings, so it does not cover a core treatment for ASD in the classification. Because the plan generally covers the full range of medical/surgical benefits including a core treatment for one or more medical conditions or surgical procedures in the classification, it fails to provide meaningful benefits for treatment of ASD in the classification.

( 6) Example 6 —( i) Facts. Same facts as in paragraph (c)(2)(ii)(C)( 5) of this section ( Example 5), except that the plan is an HMO that does not cover the full range of medical/surgical benefits, including a core treatment for any medical conditions or surgical procedures in the outpatient, out-of-network classification (except as required under Code sections 9816 and 9817), but covers benefits for medical conditions and surgical procedures in the inpatient, in-network; outpatient, in-network; emergency care; and prescription drug classifications.

( ii) Conclusion. In this paragraph (c)(2)(ii)(C)( 6) ( Example 6), the plan does not violate the rules of this paragraph (c)(2)(ii). Because the plan does not provide meaningful benefits, including for a core treatment for any medical condition or surgical procedure in the outpatient, out-of-network classification (except as required under Code sections 9816 and 9817), the plan is not required to provide meaningful benefits for any mental health conditions or substance use disorders in that classification. Nevertheless, the plan must provide meaningful benefits for each mental health condition and substance use disorder for which the plan provides benefits in every classification in which meaningful medical/surgical benefits are provided, as required under paragraph (c)(2)(ii)(A) of this section. This example does not address whether the plan has complied with other applicable requirements of this section in excluding coverage of ABA therapy in the outpatient, out-of-network classification.

( 7) Example 7 —( i) Facts. A plan provides extensive benefits, including for core treatments for many medical conditions and surgical procedures in the outpatient, in-network classification, including nutrition counseling for diabetes and obesity. The plan also generally covers diagnosis and treatment for eating disorders, which are mental health conditions, including coverage for nutrition counseling to treat eating disorders in the outpatient, in-network classification. Nutrition counseling is a core treatment for eating disorders, in accordance with generally recognized independent standards of current medical practice consulted by the plan.

( ii) Conclusion. In this paragraph (c)(2)(ii)(C)( 7) ( Example 7), the plan does not violate the rules of this paragraph (c)(2)(ii). The coverage of diagnosis and treatment for eating disorders, including nutrition counseling, in the outpatient, in-network classification results in the plan providing meaningful benefits for the treatment of eating disorders in the classification, as determined in comparison to the benefits provided for medical conditions or surgical procedures in the classification.

(8) Example 8 —( i) Facts. A plan provides extensive benefits for the core treatments for many medical conditions and surgical procedures in the outpatient, in-network and prescription drug classifications. The plan provides coverage for diagnosis and treatment for opioid use disorder, a substance use disorder, in the outpatient, in-network classification, by covering counseling and behavioral therapies and, in the prescription drug classification, by covering medications to treat opioid use disorder (MOUD). Counseling and behavioral therapies and MOUD, in combination, are one of the core treatments for opioid use disorder, in accordance with generally recognized independent standards of current medical practice consulted by the plan.

( ii) Conclusion. In this paragraph (c)(2)(ii)(C)( 8) ( Example 8), the plan does not violate the rules of this paragraph (c)(2)(ii). The coverage of counseling and behavioral therapies and MOUD, in combination, in the outpatient, in-network classification and prescription drug classification, respectively, results in the plan providing meaningful benefits for the treatment of opioid use disorder in the outpatient, in-network and prescription drug classifications.

(3) * * *

(i) * * *

(A) Substantially all. For purposes of this paragraph (c)(3), a type of financial requirement or quantitative treatment limitation is considered to apply to substantially all medical/surgical benefits in a classification of benefits if it applies to at least two-thirds of all medical/surgical benefits in that classification. (For purposes of this paragraph (c)(3)(i)(A), benefits expressed as subject to a zero level of a type of financial requirement are treated as benefits not subject to that type of financial requirement, and benefits expressed as subject to a quantitative treatment limitation that is unlimited are treated as benefits not subject to that type of quantitative treatment limitation.) If a type of financial requirement or quantitative treatment limitation does not apply to at least two-thirds of all medical/surgical benefits in a classification, then that type cannot be applied to mental health or substance use disorder benefits in that classification.

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(C) Portion based on plan payments. For purposes of this paragraph (c)(3), the determination of the portion of medical/surgical benefits in a classification of benefits subject to a financial requirement or quantitative treatment limitation (or subject to any level of a financial requirement or quantitative treatment limitation) is based on the dollar amount of all plan payments for medical/surgical benefits in the classification expected to be paid under the plan for the plan year (or for the portion of the plan year after a change in plan benefits that affects the applicability of the financial requirement or quantitative treatment limitation).

(D) Clarifications for certain threshold requirements. For any deductible, the dollar amount of plan payments includes all plan payments with respect to claims that would be subject to the deductible if it had not been satisfied. For any out-of-pocket maximum, the dollar amount of plan payments includes all plan payments associated with out-of-pocket payments that are taken into account towards the out-of-pocket maximum as well as all plan payments associated with out-of-pocket payments that would have been made towards the out-of-pocket maximum if it had not been satisfied. The rules of this paragraph (c)(3)(i)(D) apply for any other thresholds at which the rate of plan payment changes. (See also PHS Act section 2707 and Affordable Care Act section 1302(c), which establish annual limitations on out-of-pocket maximums for all non-grandfathered health plans.)

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(iii) Special rules. Unless specifically permitted under this paragraph (c)(3)(iii), sub-classifications are not permitted when applying the rules of paragraph (c)(3) of this section.

(A) Multi-tiered prescription drug benefits. If a plan applies different levels of financial requirements to different tiers of prescription drug benefits based on reasonable factors determined in accordance with the rules in paragraph (c)(4) of this section (relating to requirements for nonquantitative treatment limitations) and without regard to whether a drug is generally prescribed with respect to medical/surgical benefits or with respect to mental health or substance use disorder benefits, the plan satisfies the parity requirements of this paragraph (c) with respect to prescription drug benefits. Reasonable factors include cost, ( print page 77707) efficacy, generic versus brand name, and mail order versus pharmacy pick-up.

(B) Multiple network tiers. If a plan provides benefits through multiple tiers of in-network providers (such as an in-network tier of preferred providers with more generous cost-sharing to participants than a separate in-network tier of participating providers), the plan may divide its benefits furnished on an in-network basis into sub-classifications that reflect network tiers, if the tiering is based on reasonable factors determined in accordance with the rules in paragraph (c)(4) of this section (such as quality, performance, and market standards) and without regard to whether a provider provides services with respect to medical/surgical benefits or mental health or substance use disorder benefits. After the sub-classifications are established, the plan may not impose any financial requirement or treatment limitation on mental health or substance use disorder benefits in any sub-classification that is more restrictive than the predominant financial requirement or treatment limitation that applies to substantially all medical/surgical benefits in the sub-classification using the methodology set forth in paragraph (c)(3)(i) of this section.

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(iv) Examples. The rules of paragraphs (c)(3)(i) through (iii) of this section are illustrated by the following examples. In each example, the group health plan is subject to the requirements of this section and provides both medical/surgical benefits and mental health and substance use disorder benefits.

(A) Example 1 —( 1) Facts. ( i) For inpatient, out-of-network medical/surgical benefits, a group health plan imposes five levels of coinsurance. Using a reasonable method, the plan projects its payments for the upcoming year as follows:

Table 1 to Paragraph ( c )(3)( iv )(A)( 1)( i)

Coinsurance rate	0%	10%	15%	20%	30%	Total
Projected payments	$200x	$100x	$450x	$100x	$150x	$1,000x
Percent of total plan costs	20%	10%	45%	10%	15%
Percent subject to coinsurance level	N/A	12.5% (100x/800x)	56.25% (450x/800x)	12.5% (100x/800x)	18.75% (150x/800x)

( ii) The plan projects plan costs of $800x to be subject to coinsurance ($100x + $450x + $100x + $150x = $800x). Thus, 80 percent ($800x/$1,000x) of the benefits are projected to be subject to coinsurance, and 56.25 percent of the benefits subject to coinsurance are projected to be subject to the 15 percent coinsurance level.

( 2) Conclusion. In this paragraph (c)(3)(iv)(A) ( Example 1), the two-thirds threshold of the substantially all standard is met for coinsurance because 80 percent of all inpatient, out-of-network medical/surgical benefits are subject to coinsurance. Moreover, the 15 percent coinsurance is the predominant level because it is applicable to more than one-half of inpatient, out-of-network medical/surgical benefits subject to the coinsurance requirement. The plan may not impose any level of coinsurance with respect to inpatient, out-of-network mental health or substance use disorder benefits that is more restrictive than the 15 percent level of coinsurance.

(B) Example 2 —( 1) Facts. ( i) For outpatient, in-network medical/surgical benefits, a plan imposes five different copayment levels. Using a reasonable method, the plan projects payments for the upcoming year as follows:

Table 2 to Paragraph ( c )(3)( iv )(B)( 1)( i)

Copayment amount	$0	$10	$15	$20	$50	Total
Projected payments	$200x	$200x	$200x	$300x	$100x	$1,000x
Percent of total plan costs	20%	20%	20%	30%	10%
Percent subject to copayments	N/A	25% (200x/800x)	25% (200x/800x)	37.5% (300x/800x)	12.5% (100x/800x)

( ii) The plan projects plan costs of $800x to be subject to copayments ($200x + $200x +$300x + $100x = $800x). Thus, 80 percent ($800x/$1,000x) of the benefits are projected to be subject to a copayment.

( 2) Conclusion. In this paragraph (c)(3)(iv)(B) ( Example 2), the two-thirds threshold of the substantially all standard is met for copayments because 80 percent of all outpatient, in-network medical/surgical benefits are subject to a copayment. Moreover, there is no single level that applies to more than one-half of medical/surgical benefits in the classification subject to a copayment (for the $10 copayment, 25%; for the $15 copayment, 25%; for the $20 copayment, 37.5%; and for the $50 copayment, 12.5%). The plan can combine any levels of copayment, including the highest levels, to determine the predominant level that can be applied to mental health or substance use disorder benefits. If the plan combines the highest levels of copayment, the combined projected payments for the two highest copayment levels, the $50 copayment and the $20 copayment, are not more than one-half of the outpatient, in-network medical/surgical benefits subject to a copayment because they are exactly one-half ($300x + $100x = $400x; $400x/$800x = 50%). The combined projected payments for the three highest copayment levels—the $50 copayment, the $20 copayment, and the $15 copayment—are more than one-half of the outpatient, in-network medical/surgical benefits subject to the copayments ($100x + $300x + $200x = $600x; $600x/$800x = 75%). Thus, the plan may not impose any copayment on outpatient, in-network mental health or substance use disorder benefits that is more restrictive than the least restrictive copayment in the combination, the $15 copayment.

(C) Example 3 —( 1) Facts. A plan imposes a $250 deductible on all medical/surgical benefits for self-only coverage and a $500 deductible on all medical/surgical benefits for family coverage. The plan has no network of providers. For all medical/surgical benefits, the plan imposes a coinsurance requirement. The plan imposes no other financial requirements or treatment limitations.

( 2) Conclusion. In this paragraph (c)(3)(iv)(C) ( Example 3), because the plan has no network of providers, all benefits are provided out-of-network. Because self-only and family coverage are subject to different deductibles, whether the deductible applies to substantially all medical/surgical benefits is determined separately for self-only medical/surgical benefits and family medical/surgical benefits. Because the coinsurance is applied without regard to coverage units, the predominant coinsurance that applies to substantially all medical/surgical benefits is determined without regard to coverage units.

(D) Example 4 —( 1) Facts. A plan applies the following financial requirements for prescription drug benefits. The requirements are applied without regard to whether a drug is generally prescribed with respect to medical/surgical benefits or with respect to mental health or substance use disorder benefits. Moreover, the process for certifying a particular drug as “generic”, “preferred brand name”, “non-preferred brand name”, or “specialty” complies with the rules of paragraph (c)(4) of this section (relating to requirements for nonquantitative treatment limitations).

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Table 3 to Paragraph ( c )(3)( iv )(D)( 1)

	Tier 1	Tier 2	Tier 3	Tier 4
Tier description	Generic drugs	Preferred brand name drugs	Non-preferred brand name drugs (which may have Tier 1 or Tier 2 alternatives)	Specialty drugs.
Percent paid by plan	90%	80%	60%	50%.

( 2) Conclusion. In this paragraph (c)(3)(iv)(D) ( Example 4), the financial requirements that apply to prescription drug benefits are applied without regard to whether a drug is generally prescribed with respect to medical/surgical benefits or with respect to mental health or substance use disorder benefits; the process for certifying drugs in different tiers complies with paragraph (c)(4) of this section; and the bases for establishing different levels or types of financial requirements are reasonable. The financial requirements applied to prescription drug benefits do not violate the parity requirements of this paragraph (c)(3).

(E) Example 5 —( 1) Facts. A plan has two-tiers of network of providers: a preferred provider tier and a participating provider tier. Providers are placed in either the preferred tier or participating tier based on reasonable factors determined in accordance with the rules in paragraph (c)(4) of this section, such as accreditation, quality and performance measures (including customer feedback), and relative reimbursement rates. Furthermore, provider tier placement is determined without regard to whether a provider specializes in the treatment of mental health conditions or substance use disorders, or medical/surgical conditions. The plan divides the in-network classifications into two sub-classifications (in-network/preferred and in-network/participating). The plan does not impose any financial requirement or treatment limitation on mental health or substance use disorder benefits in either of these sub-classifications that is more restrictive than the predominant financial requirement or treatment limitation that applies to substantially all medical/surgical benefits in each sub-classification.

( 2) Conclusion. In this paragraph (c)(3)(iv)(E) ( Example 5), the division of in-network benefits into sub-classifications that reflect the preferred and participating provider tiers does not violate the parity requirements of this paragraph (c)(3).

(F) Example 6 —( 1) Facts. With respect to outpatient, in-network benefits, a plan imposes a $25 copayment for office visits and a 20 percent coinsurance requirement for outpatient surgery. The plan divides the outpatient, in-network classification into two sub-classifications (in-network office visits and all other outpatient, in-network items and services).The plan does not impose any financial requirement or quantitative treatment limitation on mental health or substance use disorder benefits in either of these sub-classifications that is more restrictive than the predominant financial requirement or quantitative treatment limitation that applies to substantially all medical/surgical benefits in each sub-classification.

( 2) Conclusion. In this paragraph (c)(3)(iv)(F) ( Example 6), the division of outpatient, in-network benefits into sub-classifications for office visits and all other outpatient, in-network items and services does not violate the parity requirements of this paragraph (c)(3).

(G) Example 7 —( 1) Facts. Same facts as in paragraph (c)(3)(iv)(F)( 1) of this section ( Example 6), but for purposes of determining parity, the plan divides the outpatient, in-network classification into outpatient, in-network generalists and outpatient, in-network specialists.

( 2) Conclusion. In this paragraph (c)(3)(iv)(G) ( Example 7), the division of outpatient, in-network benefits into any sub-classifications other than office visits and all other outpatient items and services violates the requirements of paragraph (c)(3)(iii)(C) of this section.

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(4) Nonquantitative treatment limitations. Consistent with paragraph (a)(1) of this section, a group health plan may not impose any nonquantitative treatment limitation with respect to mental health or substance use disorder benefits in any classification that is more restrictive, as written or in operation, than the predominant nonquantitative treatment limitation that applies to substantially all medical/surgical benefits in the same classification. For purposes of this paragraph (c)(4), a nonquantitative treatment limitation is more restrictive than the predominant nonquantitative treatment limitation that applies to substantially all medical/surgical benefits in the same classification if the plan fails to meet the requirements of paragraph (c)(4)(i) or (iii) of this section. In such a case, the plan will be considered to violate Code section 9812(a)(3)(A)(ii), and the nonquantitative treatment limitation may not be imposed by the plan with respect to mental health or substance use disorder benefits in the classification.

(i) Requirements related to design and application of a nonquantitative treatment limitation —(A) In general. A plan may not impose a nonquantitative treatment limitation with respect to mental health or substance use disorder benefits in any classification unless, under the terms of the plan, as written and in operation, any processes, strategies, evidentiary standards, or other factors used in designing and applying the nonquantitative treatment limitation to mental health or substance use disorder benefits in the classification are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in designing and applying the limitation with respect to medical/surgical benefits in the classification.

(B) Prohibition on discriminatory factors and evidentiary standards. For purposes of determining comparability and stringency under paragraph (c)(4)(i)(A) of this section, a plan may not rely upon discriminatory factors or evidentiary standards to design a nonquantitative treatment limitation to be imposed on mental health or substance use disorder benefits. A factor or evidentiary standard is discriminatory if the information, evidence, sources, or standards on which the factor or evidentiary standard are based are biased or not objective in a manner that discriminates against mental health or substance use disorder benefits as compared to medical/surgical benefits.

( 1) Information, evidence, sources, or standards are considered to be biased or not objective in a manner that discriminates against mental health or substance use disorder benefits as compared to medical/surgical benefits if, based on all the relevant facts and circumstances, the information, evidence, sources, or standards systematically disfavor access or are specifically designed to disfavor access to mental health or substance use disorder benefits as compared to medical/surgical benefits. For purposes of this paragraph (c)(4)(i)(B)( 1), relevant facts and circumstances may include, but are not limited to, the reliability of the source of the information, evidence, sources, or standards, including any underlying data; the independence of the information, evidence, sources, and standards relied upon; the analyses and methodologies employed to select the information and the consistency of their application; and any known safeguards deployed to prevent reliance on skewed data or metrics. Information, evidence, ( print page 77709) sources, or standards are not considered biased or not objective for this purpose if the plan has taken the steps necessary to correct, cure, or supplement any information, evidence, sources, or standards that would have been biased or not objective in the absence of such steps.

( 2) For purposes of this paragraph (c)(4)(i)(B), historical plan data or other historical information from a time when the plan was not subject to Code section 9812 or was not in compliance with Code section 9812 are considered to be biased or not objective in a manner that discriminates against mental health or substance use disorder benefits as compared to medical/surgical benefits, if the historical plan data or other historical information systematically disfavor access or are specifically designed to disfavor access to mental health or substance use disorder benefits as compared to medical/surgical benefits, and the plan has not taken the steps necessary to correct, cure, or supplement the data or information.

( 3) For purposes of this paragraph (c)(4)(i)(B), generally recognized independent professional medical or clinical standards and carefully circumscribed measures reasonably and appropriately designed to detect or prevent and prove fraud and abuse that minimize the negative impact on access to appropriate mental health and substance use disorder benefits are not information, evidence, sources, or standards that are biased or not objective in a manner that discriminates against mental health or substance use disorder benefits as compared to medical/surgical benefits. However, plans must comply with the other requirements in this paragraph (c)(4), as applicable, with respect to such standards or measures that are used as the basis for a factor or evidentiary standard used to design or apply a nonquantitative treatment limitation.

(ii) Illustrative, non-exhaustive list of nonquantitative treatment limitations. Nonquantitative treatment limitations include—

(A) Medical management standards (such as prior authorization) limiting or excluding benefits based on medical necessity or medical appropriateness, or based on whether the treatment is experimental or investigative;

(B) Formulary design for prescription drugs;

(C) For plans with multiple network tiers (such as preferred providers and participating providers), network tier design;

(D) Standards related to network composition, including but not limited to, standards for provider and facility admission to participate in a network or for continued network participation, including methods for determining reimbursement rates, credentialing standards, and procedures for ensuring the network includes an adequate number of each category of provider and facility to provide services under the plan;

(E) Plan methods for determining out-of-network rates, such as allowed amounts; usual, customary, and reasonable charges; or application of other external benchmarks for out-of-network rates;

(F) Refusal to pay for higher-cost therapies until it can be shown that a lower-cost therapy is not effective (also known as fail-first policies or step therapy protocols);

(G) Exclusions based on failure to complete a course of treatment; and

(H) Restrictions based on geographic location, facility type, provider specialty, and other criteria that limit the scope or duration of benefits for services provided under the plan.

(iii) Required use of outcomes data —(A) In general. To ensure that a nonquantitative treatment limitation applicable to mental health or substance use disorder benefits in a classification, in operation, is no more restrictive than the predominant nonquantitative treatment limitation applied to substantially all medical/surgical benefits in the classification, a plan must collect and evaluate relevant data in a manner reasonably designed to assess the impact of the nonquantitative treatment limitation on relevant outcomes related to access to mental health and substance use disorder benefits and medical/surgical benefits and carefully consider the impact as part of the plan's evaluation. As part of its evaluation, the plan may not disregard relevant outcomes data that it knows or reasonably should know suggest that a nonquantitative treatment limitation is associated with material differences in access to mental health or substance use disorder benefits as compared to medical/surgical benefits. The Secretary, jointly with the Secretary of Labor and the Secretary of Health and Human Services, may specify in guidance the type, form, and manner of collection and evaluation for the data required under this paragraph (c)(4)(iii)(A).

( 1) Relevant data generally. For purposes of this paragraph (c)(4)(iii)(A), relevant data could include, as appropriate, but are not limited to, the number and percentage of claims denials and any other data relevant to the nonquantitative treatment limitation required by State law or private accreditation standards.

( 2) Relevant data for nonquantitative treatment limitations related to network composition. In addition to the relevant data set forth in paragraph (c)(4)(iii)(A)( 1) of this section, relevant data for nonquantitative treatment limitations related to network composition could include, as appropriate, but are not limited to, in-network and out-of-network utilization rates (including data related to provider claim submissions), network adequacy metrics (including time and distance data, and data on providers accepting new patients), and provider reimbursement rates (for comparable services and as benchmarked to a reference standard).

( 3) Unavailability of data. ( i) If a plan newly imposes a nonquantitative treatment limitation for which relevant data is initially temporarily unavailable and the plan therefore cannot comply with this paragraph (c)(4)(iii)(A), the plan must include in its comparative analysis, as required under § 54.9812-2(c)(5)(i)(C), a detailed explanation of the lack of relevant data, the basis for the plan's conclusion that there is a lack of relevant data, and when and how the data will become available and be collected and analyzed. Such a plan also must comply with this paragraph (c)(4)(iii)(A) as soon as practicable once relevant data becomes available.

( ii) If a plan imposes a nonquantitative treatment limitation for which no data exist that can reasonably assess any relevant impact of the nonquantitative treatment limitation on relevant outcomes related to access to mental health and substance use disorder benefits and medical/surgical benefits, the plan must include in its comparative analysis, as required under § 54.9812-2(c)(5)(i)(D), a reasoned justification as to the basis for the conclusion that there are no data that can reasonably assess the nonquantitative treatment limitation's impact, why the nature of the nonquantitative treatment limitation prevents the plan from reasonably measuring its impact, an explanation of what data was considered and rejected, and documentation of any additional safeguards or protocols used to ensure the nonquantitative treatment limitation complies with this section. If a plan becomes aware of data that can reasonably assess any relevant impact of the nonquantitative treatment limitation, the plan must comply with this paragraph (c)(4)(iii)(A) as soon as practicable.

( iii) Consistent with paragraph (a)(1) of this section, paragraphs ( print page 77710) (c)(4)(iii)(A)( 3)( i) and ( ii) of this section shall only apply in very limited circumstances and, where applicable, shall be construed narrowly.

(B) Material differences. To the extent the relevant data evaluated under paragraph (c)(4)(iii)(A) of this section suggest that the nonquantitative treatment limitation contributes to material differences in access to mental health and substance use disorder benefits as compared to medical/surgical benefits in a classification, such differences will be considered a strong indicator that the plan violates this paragraph (c)(4).

( 1) Where the relevant data suggest that the nonquantitative treatment limitation contributes to material differences in access to mental health and substance use disorder benefits as compared to medical/surgical benefits in a classification, the plan must take reasonable action, as necessary, to address the material differences to ensure compliance, in operation, with this paragraph (c)(4) and must document the actions that have been or are being taken by the plan to address material differences in access to mental health or substance use disorder benefits, as compared to medical/surgical benefits, as required by § 54.9812-2(c)(5)(iv).

( 2) For purposes of this paragraph (c)(4)(iii)(B), relevant data are considered to suggest that the nonquantitative treatment limitation contributes to material differences in access to mental health or substance use disorder benefits as compared to medical/surgical benefits if, based on all relevant facts and circumstances, and taking into account the considerations outlined in this paragraph (c)(4)(iii)(B)( 2), the difference in the data suggests that the nonquantitative treatment limitation is likely to have a negative impact on access to mental health or substance use disorder benefits as compared to medical/surgical benefits.

( i) Relevant facts and circumstances, for purposes of this paragraph (c)(4)(iii)(B)( 2), may include, but are not limited to, the terms of the nonquantitative treatment limitation at issue, the quality or limitations of the data, causal explanations and analyses, evidence as to the recurring or non-recurring nature of the results, and the magnitude of any disparities.

( ii) Differences in access to mental health or substance use disorder benefits attributable to generally recognized independent professional medical or clinical standards or carefully circumscribed measures reasonably and appropriately designed to detect or prevent and prove fraud and abuse that minimize the negative impact on access to appropriate mental health and substance use disorder benefits, which are used as the basis for a factor or evidentiary standard used to design or apply a nonquantitative treatment limitation, are not considered to be material for purposes of this paragraph (c)(4)(iii)(B). To the extent a plan attributes any differences in access to the application of such standards or measures, the plan must explain the bases for that conclusion in the documentation prepared under § 54.9812-2(c)(5)(iv)(A).

(C) Nonquantitative treatment limitations related to network composition. For purposes of applying paragraph (c)(4)(iii)(A) of this section with respect to nonquantitative treatment limitations related to network composition, a plan must collect and evaluate relevant data in a manner reasonably designed to assess the aggregate impact of all such nonquantitative treatment limitations on access to mental health and substance use disorder benefits and medical/surgical benefits. Examples of possible actions that a plan could take to comply with the requirement under paragraph (c)(4)(iii)(B)( 1) of this section to take reasonable action, as necessary, to address any material differences in access with respect to nonquantitative treatment limitations related to network composition, to ensure compliance with this paragraph (c)(4), include, but are not limited to:

( 1) Strengthening efforts to recruit and encourage a broad range of available mental health and substance use disorder providers and facilities to join the plan's network of providers, including taking actions to increase compensation or other inducements, streamline credentialing processes, or contact providers reimbursed for items and services provided on an out-of-network basis to offer participation in the network;

( 2) Expanding the availability of telehealth arrangements to mitigate any overall mental health and substance use disorder provider shortages in a geographic area;

( 3) Providing additional outreach and assistance to participants and beneficiaries enrolled in the plan to assist them in finding available in-network mental health and substance use disorder providers and facilities; and

( 4) Ensuring that provider directories are accurate and reliable.

(iv) Prohibition on separate nonquantitative treatment limitations applicable only to mental health or substance use disorder benefits. Consistent with paragraph (c)(2)(i) of this section, a group health plan may not apply any nonquantitative treatment limitation that is applicable only with respect to mental health or substance use disorder benefits and does not apply with respect to any medical/surgical benefits in the same benefit classification.

(v) Effect of final determination of noncompliance under § 54.9812-2. (A) If a group health plan receives a final determination from the Secretary that the plan is not in compliance with the requirements of Code section 9812(a)(8) or § 54.9812-2 with respect to a nonquantitative treatment limitation, the nonquantitative treatment limitation violates this paragraph (c)(4) and the Secretary may direct the plan not to impose the nonquantitative treatment limitation with respect to mental health or substance use disorder benefits in the relevant classification, unless and until the plan demonstrates to the Secretary compliance with the requirements of this section or takes appropriate action to remedy the violation.

(B) A determination by the Secretary of whether to require cessation of a nonquantitative treatment limitation under this paragraph (c)(4)(v) will be based on an evaluation of the relevant facts and circumstances involved in the specific final determination and the nature of the underlying nonquantitative treatment limitation and will take into account the interest of plan participants and beneficiaries and feedback from the plan.

(vi) Examples. The rules of this paragraph (c)(4) are illustrated by the following examples. In each example, the group health plan is subject to the requirements of this section and provides both medical/surgical benefits and mental health and substance use disorder benefits.

(A) Example 1 (not comparable and more stringent factors for reimbursement rate methodology, in operation)—( 1) Facts. A plan's reimbursement rate methodology for outpatient, in-network providers is based on a variety of factors. As written, for mental health, substance use disorder, and medical/surgical benefits, all reimbursement rates for physicians and non-physician practitioners for the same Current Procedural Terminology (CPT) code are based on a combination of factors, such as the nature of the service, duration of the service, intensity and specialization of training, provider licensure and type, number of providers qualified to provide the service in a given geographic area, and market need (demand). In operation, the plan utilizes an additional strategy to further reduce reimbursement rates for mental health and substance use disorder non-physician providers from those ( print page 77711) paid to mental health and substance use disorder physicians by the same percentage for every CPT code, but does not apply the same reductions for non-physician medical/surgical providers.

( 2) Conclusion. In this paragraph (c)(4)(vi)(A) ( Example 1), the plan violates the rules of this paragraph (c)(4). Because the plan reimburses non-physician providers of mental health and substance use disorder services by reducing their reimbursement rate from the rate for physician providers of mental health and substance use disorder services by the same percentage for every CPT code but does not apply the same reductions to non-physician providers of medical/surgical services from the rate for physician providers of medical/surgical services, in operation, the factors used in designing and applying the nonquantitative treatment limitation to mental health and substance use disorder benefits in the outpatient, in-network classification are not comparable to, and are applied more stringently than, the factors used in designing and applying the limitation with respect to medical/surgical benefits in the same classification. As a result, the nonquantitative treatment limitation with respect to mental health or substance use disorder benefits in the outpatient, in-network classification is more restrictive than the predominant nonquantitative treatment limitation that applies to substantially all medical/surgical benefits in the same classification.

(B) Example 2 (strategy for exclusion for experimental or investigative treatment more stringently applied to ABA therapy in operation) —( 1) Facts. A plan, as written, generally excludes coverage for all treatments that are experimental or investigative for both medical/surgical benefits and mental health and substance use disorder benefits in the outpatient, in-network classification. As a result, the plan generally excludes, as experimental, a treatment or procedure when no professionally recognized treatment guidelines include the treatment or procedure as a clinically appropriate standard of care for the condition or disorder and fewer than two randomized controlled trials are available to support the treatment's use with respect to the given condition or disorder. The plan provides benefits for the treatment of ASD, which is a mental health condition, but, in operation, the plan excludes coverage for ABA therapy to treat children with ASD, deeming it experimental. More than one professionally recognized treatment guideline defines clinically appropriate standards of care for ASD and more than two randomized controlled trials are available to support the use of ABA therapy as one intervention to treat certain children with ASD.

( 2) Conclusion. In this paragraph (c)(4)(vi)(B) ( Example 2), the plan violates the rules of this paragraph (c)(4). As written, the plan excludes coverage of experimental treatment of medical conditions and surgical procedures, mental health conditions, and substance use disorders when no professionally recognized treatment guidelines define clinically appropriate standards of care for the condition or disorder as including the treatment or procedure at issue, and fewer than two randomized controlled trials are available to support the treatment's use with respect to the given condition or procedure. However, in operation, the plan deviates from this strategy with respect to ABA therapy because more than one professionally recognized treatment guideline defines clinically appropriate standards of care for ASD as including ABA therapy to treat certain children with ASD and more than two randomized controlled trials are available to support the use of ABA therapy to treat certain children with ASD. Therefore, in operation, the strategy used to design the nonquantitative treatment limitation for benefits for the treatment of ASD, which is a mental health condition, in the outpatient, in-network classification is not comparable to, and is applied more stringently than, the strategy used to design the nonquantitative treatment limitation for medical/surgical benefits in the same classification. As a result, the nonquantitative treatment limitation with respect to mental health or substance use disorder benefits in the outpatient, in-network classification is more restrictive than the predominant nonquantitative treatment limitation that applies to substantially all medical/surgical benefits in the same classification.

(C) Example 3 (step therapy protocol with exception for severe or irreversible consequences, discriminatory factor) —( 1) Facts. A plan's written terms include a step therapy protocol that requires participants and beneficiaries who are prescribed certain drugs to try and fail a generic or preferred brand name drug before the plan will cover the drug originally prescribed by a participant's or beneficiary's attending provider. The plan provides an exception to this protocol that was developed solely based on a methodology developed by an external third-party organization. The third-party organization's methodology, which is not based on a generally recognized independent professional medical or clinical standard, identifies instances in which a delay in treatment with a drug prescribed for a medical condition or surgical procedure could result in either severe or irreversible consequences. However, with respect to a drug prescribed for a mental health condition or a substance use disorder, the third-party organization's methodology only identifies instances in which a delay in treatment could result in both severe and irreversible consequences, and the plan does not take any steps to correct, cure, or supplement the methodology.

( 2) Conclusion. In this paragraph (c)(4)(vi)(C) ( Example 3), the plan violates the rules of paragraph (c)(4)(i)(B) of this section. The source upon which the factor used to apply the step therapy protocol is based is biased or not objective in a manner that discriminates against mental health or substance use disorder benefits as compared to medical/surgical benefits because it addresses instances in which a delay in treatment with a drug prescribed for a medical condition or surgical procedure could result in either severe or irreversible consequences, but only addresses instances in which a delay in treatment with a drug prescribed for a mental health condition or substance use disorder could result in both severe and irreversible consequences, and the plan fails to take the steps necessary to correct, cure, or supplement the methodology so that it is not biased and is objective. Based on the relevant facts and circumstances, this source systematically disfavors access or is specifically designed to disfavor access to mental health or substance use disorder benefits as compared to medical/surgical benefits. Therefore, the factor used to apply the step therapy protocol is discriminatory for purposes of determining comparability and stringency under paragraph (c)(4)(i)(A) of this section, and may not be relied upon by the plan.

(D) Example 4 (use of historical plan data and plan steps to correct, cure, or supplement) —( 1) Facts. A plan's methodology for calculating provider reimbursement rates relies only on historical plan data on total plan spending for each specialty, divided between mental health and substance use disorder providers and medical/surgical providers, from a time when the plan was not subject to Code section 9812. The plan has used these historical plan data for many years to establish base reimbursement rates in all provider specialties for which it provides medical/surgical, mental health, and substance use disorder benefits in the inpatient, in-network classification. In evaluating the use of these historical plan data in the design of the methodology for calculating provider reimbursement rates, the plan determined, based on all the relevant facts and circumstances, that the historical plan data systematically disfavor access or are specifically designed to disfavor access to mental health or substance use disorder benefits as compared to medical/surgical benefits. To ensure this information about historical reimbursement rates is not biased and is objective, the plan supplements its methodology to develop the base reimbursement rates for mental health and substance use disorder providers in accordance with additional information, evidence, sources, and standards that reflect the increased demand for mental health and substance use disorder benefits in the inpatient, in-network classification and to attract sufficient mental health and substance use disorder providers to the network, so that the relevant facts and circumstances indicate the supplemented information, evidence, sources, or standards do not systematically disfavor access and are not specifically designed to disfavor access to mental health and substance use disorder benefits as compared to medical/surgical benefits.

( 2) Conclusion. In this paragraph (c)(4)(vi)(D) ( Example 4), the plan does not violate the rules of paragraph (c)(4)(i)(B) of this section with respect to the plan's methodology for calculating provider reimbursement rates in the inpatient, in-network classification. The relevant facts and circumstances indicate that the plan's use of only historical plan data to design its methodology for calculating provider reimbursement rates in the inpatient, in-network classification would otherwise be ( print page 77712) considered to be biased or not objective in a manner that discriminates against mental health or substance use disorder benefits as compared to medical/surgical benefits under paragraph (c)(4)(i)(B)( 2) of this section, since the historical data systematically disfavor access or are specifically designed to disfavor access to mental health or substance use disorder benefits as compared to medical/surgical benefits. However, the plan took the steps necessary to supplement the information, evidence, sources, and standards to reasonably reflect the increased demand for mental health and substance use disorder benefits in the inpatient, in-network classification, and adjust the methodology to increase reimbursement rates for those benefits, thereby ensuring that the information, evidence, sources, and standards relied upon by the plan for this purpose are not biased and are objective. Therefore, the factors and evidentiary standards used to design the plan's methodology for calculating provider reimbursement rates in the inpatient, in-network classification are not discriminatory.

(E) Example 5 (generally recognized independent professional medical or clinical standards and more stringent prior authorization requirement in operation) —( 1) Facts. The provisions of a plan state that it relies on, and does not deviate from, generally recognized independent professional medical or clinical standards to inform the factor used to design prior authorization requirements for both medical/surgical and mental health and substance use disorder benefits in the prescription drug classification. The generally recognized independent professional medical standard for treatment of opioid use disorder that the plan utilizes—in this case, the American Society of Addiction Medicine national practice guidelines—does not support prior authorization every 30 days for buprenorphine/naloxone. However, in operation, the plan requires prior authorization for buprenorphine/naloxone combination for treatment of opioid use disorder, every 30 days, which is inconsistent with the generally recognized independent professional medical standard on which the factor used to design the limitation is based. The plan's factor used to design prior authorization requirements for medical/surgical benefits in the prescription drug classification relies on, and does not deviate from, generally recognized independent professional medical or clinical standards.

( 2) Conclusion. In this paragraph (c)(4)(vi)(E) ( Example 5), the plan violates the rules of this paragraph (c)(4). The American Society of Addiction Medicine national practice guidelines on which the factor used to design prior authorization requirements for substance use disorder benefits is based are generally recognized independent professional medical or clinical standards that are not considered to be biased or not objective in a manner that discriminates against mental health and substance use disorder benefits under paragraph (c)(4)(i)(B)( 3) of this section. However, the plan must comply with other requirements in this paragraph (c)(4), as applicable, with respect to such standards or measures that are used as the basis for a factor or evidentiary standard used to design or apply a nonquantitative treatment limitation. In operation, the plan's factor used to design and apply prior authorization requirements with respect to substance use disorder benefits is not comparable to, and is applied more stringently than, the same factor used to design and apply prior authorization requirements for medical/surgical benefits, because the factor relies on, and does not deviate from, generally recognized independent professional medical or clinical standards for medical/surgical benefits, but deviates from the relevant guidelines for substance use disorder benefits. As a result, the nonquantitative treatment limitation with respect to substance use disorder benefits in the prescription drug classification is more restrictive than the predominant nonquantitative treatment limitation that applies to substantially all medical/surgical benefits in the same classification.

(F) Example 6 (plan claims no data exist to reasonably assess impact of nonquantitative treatment limitation on access; medical necessity criteria) —( 1) Facts. A plan approves or denies claims for mental health and substance use disorder benefits and for medical/surgical benefits in the inpatient, in-network and outpatient, in-network classifications based on medical necessity criteria. The plan states in its comparative analysis that no data exist that can reasonably assess any relevant impact of the medical necessity criteria nonquantitative treatment limitation on relevant outcomes related to access to mental health or substance use disorder benefits as compared to the plan's medical necessity criteria nonquantitative treatment limitation's impact on relevant outcomes related to access to medical/surgical benefits in the relevant classifications, without further explanation.

( 2) Conclusion. In this paragraph (c)(4)(vi)(F) ( Example 6), the plan violates this paragraph (c)(4). The plan does not comply with paragraph (c)(4)(iii)(A)( 3)( ii) of this section because the plan did not include in its comparative analysis, as required under § 54.9812-2(c)(5)(i)(D), a reasoned justification as to the basis for its conclusion that there are no data that can reasonably assess the nonquantitative treatment limitation's impact, an explanation of why the nature of the nonquantitative treatment limitation prevents the plan from reasonably measuring its impact, an explanation of what data was considered and rejected, and documentation of any additional safeguards or protocols used to ensure the nonquantitative treatment limitation complies with this paragraph (c)(4). Data that could reasonably assess the medical necessity criteria nonquantitative treatment limitation's impact might include, for example, the number and percentage of claims denials, or the number and percentage of claims that were approved for a lower level of care than the level requested on the initial claim. Therefore, because the plan has not collected and evaluated relevant data in a manner reasonably designed to assess the impact of the nonquantitative treatment limitation on relevant outcomes related to access to mental health and substance use disorder benefits and medical/surgical benefits in the relevant classifications, the plan violates the requirements of paragraph (c)(4)(iii) of this section, and violates the requirements under § 54.9812-2(c)(5)(i)(D) because it did not include sufficient information in its comparative analysis with respect to the lack of relevant data.

(G) Example 7 (concurrent review data collection; no material difference in access) —( 1) Facts. A plan follows a written process to apply a concurrent review nonquantitative treatment limitation to all medical/surgical benefits and mental health and substance use disorder benefits within the inpatient, in-network classification. Under this process, a first-level review is conducted in every instance in which concurrent review applies and an authorization request is approved by the first-level reviewer only if the clinical information submitted by the facility meets the plan's criteria for a continued stay. If the first-level reviewer is unable to approve the authorization request because the clinical information submitted by the facility does not meet the plan's criteria for a continued stay, it is sent to a second-level reviewer who will either approve or deny the request. The plan collects relevant data, including the number of referrals to second-level review, and the number of denials of claims for medical/surgical benefits and mental health and substance use disorder benefits subject to concurrent review as compared to the total number of claims subject to concurrent review, in the inpatient, in-network classification. The plan also collects and evaluates the number of denied claims for medical/surgical benefits and mental health and substance use disorder benefits that are overturned on appeal in the inpatient, in-network classification. The plan evaluates the relevant data and determines that, based on the relevant facts and circumstances, the data do not suggest that the concurrent review nonquantitative treatment limitation contributes to material differences in access to mental health or substance use disorder benefits as compared to medical/surgical benefits in the classification Upon requesting the plan's comparative analysis for the concurrent review nonquantitative treatment limitation and reviewing the relevant data, the Secretary does not request additional data and agrees that the data do not suggest material differences in access.

( 2) Conclusion. In this paragraph (c)(4)(vi)(G) ( Example 7), the plan does not violate the rules of paragraph (c)(4)(iii) of this section. The plan collected and evaluated relevant data in a manner reasonably designed to assess the impact of the nonquantitative treatment limitation on relevant outcomes related to access to mental health and substance use disorder benefits and medical/surgical benefits and considered the impact as part of its evaluation. Because the relevant data evaluated do not suggest that the nonquantitative treatment limitation contributes to material differences in access to mental health and substance use disorder benefits as compared to medical/surgical benefits in the inpatient, in-network classification, under paragraph (c)(4)(iii)(B) of this section, there is no strong indicator that the plan violates this paragraph (c)(4). ( print page 77713)

(H) Example 8 (material difference in access for prior authorization requirement with reasonable action) —( 1) Facts. A plan requires prior authorization that a treatment is medically necessary for all inpatient, in-network medical/surgical benefits and for all inpatient, in-network mental health and substance use disorder benefits. The plan collects and evaluates relevant data in a manner reasonably designed to assess the impact of the prior authorization requirement on relevant outcomes related to access to mental health and substance use disorder benefits and medical/surgical benefits in the inpatient, in-network classification. The plan's written process for prior authorization states that the plan approves inpatient, in-network benefits for medical conditions and surgical procedures and mental health and substance use disorder benefits for periods of 1, 3, and 7 days, after which a treatment plan must be submitted by the patient's attending provider and approved by the plan. Approvals for mental health and substance use disorder benefits are most commonly given only for 1 day, after which a treatment plan must be submitted by the patient's attending provider and approved by the plan. The relevant data show that approvals for 7 days are most common for medical conditions and surgical procedures under this plan. Based on all the relevant facts and circumstances, the difference in the relevant data suggests that the nonquantitative treatment limitation is likely to have a negative impact on access to mental health and substance use disorder benefits as compared to medical/surgical benefits. Therefore, the data suggest that the nonquantitative treatment limitation contributes to material differences in access. To address these material differences in access, the plan consults more recent medical guidelines to update the factors that inform its medical necessity nonquantitative treatment limitations. Based on this review, the plan modifies the limitation so that inpatient, in-network prior authorization requests for mental health or substance use disorder benefits are approved for similar periods to what is approved for medical/surgical benefits. The plan includes documentation of this action as part of its comparative analysis.

( 2) Conclusion. In this paragraph (c)(4)(vi)(H) ( Example 8), the plan does not violate the rules of paragraph (c)(4)(iii) of this section. While relevant data for the plan's prior authorization requirements suggested that the nonquantitative treatment limitation contributes to material differences in access to mental health and substance use disorder benefits as compared to inpatient, in-network medical/surgical benefits under paragraph (c)(4)(iii)(B) of this section, the plan has taken reasonable action, as necessary, to ensure compliance, in operation, with this paragraph (c)(4) by updating the factors that inform its prior authorization nonquantitative treatment limitation for inpatient, in-network mental health and substance use disorder benefits so that these benefits are approved for similar periods to what is approved for medical/surgical benefits. The plan also documents its action taken to address material differences in access to inpatient, in-network benefits as required by paragraph (c)(4)(iii)(B)( 1) of this section.

(I) Example 9 (differences attributable to generally recognized independent professional medical or clinical standards) —( 1) Facts. A group health plan develops a medical management requirement for all inpatient, out-of-network benefits for both medical/surgical benefits and mental health and substance use disorder benefits to ensure treatment is medically necessary. The factors and evidentiary standards used to design and apply the medical management requirement rely on independent professional medical or clinical standards that are generally recognized by health care providers and facilities in relevant clinical specialties. The processes, strategies, evidentiary standards, and other factors used in designing and applying the medical management requirement to mental health and substance use disorder benefits are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, and other factors used in designing and applying the requirement with respect to medical/surgical benefits. The plan collects and evaluates relevant data in a manner reasonably designed to assess the impact of the medical management nonquantitative treatment limitation on relevant outcomes related to access to mental health and substance use disorder benefits and medical/surgical benefits, and considers the impact as part of the plan's evaluation, as required by paragraph (c)(4)(iii)(A) of this section. Within the inpatient, out-of-network classification, the application of the medical management requirement results in a higher percentage of denials for mental health and substance use disorder claims than medical/surgical claims, because the benefits were found to be medically necessary for a lower percentage of mental health and substance use disorder claims. The plan correctly determines that these differences in access are attributable to the generally recognized independent professional medical or clinical standards used as the basis for the factors and evidentiary standards used to design or apply the limitation and adequately explains the bases for that conclusion as part of its comparative analysis.

( 2) Conclusion. In this paragraph (c)(4)(vi)(I) ( Example 9), the plan does not violate the rules of this paragraph (c)(4). Generally recognized independent professional medical or clinical standards of care are not considered to be information, evidence, sources, or standards that are biased and not objective in a manner that discriminates against mental health or substance use disorder benefits as compared to medical/surgical benefits, and the plan otherwise complies with the requirements in paragraph (c)(4)(i) of this section. Additionally, the plan does not violate paragraph (c)(4)(iii) of this section because it has collected and evaluated relevant data, the differences in access are attributable to the generally recognized independent professional medical or clinical standards that are used as the basis for the factors and evidentiary standards used to design or apply the medical management nonquantitative treatment limitation, and the plan explains the bases for this conclusion in its comparative analysis. As a result, the nonquantitative treatment limitation with respect to mental health or substance use disorder benefits in the inpatient, out-of-network classification is no more restrictive than the predominant nonquantitative treatment limitation that applies to substantially all medical/surgical benefits in the same classification.

(J) Example 10 (material differences in access for standards for provider admission to a network with reasonable action) —( 1) Facts. A plan applies nonquantitative treatment limitations related to network composition in the inpatient, in-network and outpatient, in-network classifications. The plan's networks are constructed by separate service providers for medical/surgical benefits and mental health and substance use disorder benefits. The processes, strategies, evidentiary standards, and other factors used in designing and applying the nonquantitative treatment limitations related to network composition for mental health or substance use disorder benefits in the outpatient, in-network and inpatient, in-network classifications are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, and other factors used in designing and applying the nonquantitative treatment limitations with respect to medical/surgical benefits in the classifications, as required under paragraph (c)(4)(i) of this section. In order to ensure, in operation, that the nonquantitative treatment limitations are no more restrictive than the predominant nonquantitative treatment limitations applied to substantially all medical/surgical benefits in the classification, the plan collects and evaluates relevant data in a manner reasonably designed to assess the aggregate impact of all the nonquantitative treatment limitations related to network composition on relevant outcomes related to access to mental health and substance use disorder benefits as compared with access to medical/surgical benefits and considers the impact as part of the plan's evaluation. The plan considers relevant data that is known, or reasonably should be known, including metrics relating to the time and distance from plan participants and beneficiaries to network providers in rural and urban regions; the number of network providers accepting new patients; the proportions of mental health and substance use disorder and medical/surgical providers and facilities that provide services in rural and urban regions who are in the plan's network; provider reimbursement rates (for comparable services and benchmarked to a reference standard, as appropriate); and in-network and out-of-network utilization rates (including data related to the dollar value and number of provider claims submissions). The plan determines that the relevant data suggest that the nonquantitative treatment limitations in the aggregate contribute to material differences in access to mental health and substance use disorder benefits compared to medical/surgical benefits in the classifications because, based on all the relevant facts and circumstances, the ( print page 77714) differences in the data suggest that the nonquantitative treatment limitations related to network composition are likely to have a negative impact on access to mental health or substance use disorder benefits as compared to medical/surgical benefits. The plan takes reasonable actions, as necessary, to address the material differences in access, to ensure compliance, in operation, with this paragraph (c)(4), by strengthening its efforts to recruit and encourage a broad range of available providers and facilities to join the plan's network of providers, including by taking actions to increase compensation and other inducements, streamline credentialing processes, contact providers reimbursed for items and services provided on an out-of-network basis to offer participation in the network, and develop a process to monitor the effects of such efforts; expanding the availability of telehealth arrangements to mitigate overall provider shortages in certain geographic areas; providing additional outreach and assistance to participants and beneficiaries enrolled in the plan to assist them in finding available in-network providers and facilities; and ensuring that the plan's provider directories are accurate and reliable. The plan documents the efforts that it has taken to address the material differences in access that the data revealed, and the plan includes the documentation as part of its comparative analysis submission.

( 2) Conclusion. In this paragraph (c)(4)(vi)(J) ( Example 10), the plan does not violate the rules of this paragraph (c)(4). The plan's nonquantitative treatment limitations related to network composition comply with the rules of paragraph (c)(4)(i) of this section. Additionally, the plan collects and evaluates relevant data, as required under paragraph (c)(4)(iii)(A) of this section, in a manner reasonably designed to assess the aggregate impact of all such nonquantitative treatment limitations on relevant outcomes related to access to mental health and substance use disorder benefits and medical/surgical benefits, as required under paragraph (c)(4)(iii)(C) of this section. While the data suggest that the nonquantitative treatment limitations contribute to material differences in access to mental health and substance use disorder benefits as compared to medical/surgical benefits, the plan has taken reasonable action, as necessary, to ensure compliance with this paragraph (c)(4). The plan also documents the actions that have been and are being taken by the plan to address material differences as required by § 54.9812-21(c)(5)(iv). As a result, the network composition nonquantitative treatment limitations with respect to mental health or substance use disorder benefits in the inpatient, in-network and outpatient, in-network classifications are no more restrictive than the predominant nonquantitative treatment limitations that apply to substantially all medical/surgical benefits in the same classifications.

(K) Example 11 (separate EAP exhaustion treatment limitation applicable only to mental health or substance use disorder benefits) —( 1) Facts. An employer maintains both a major medical plan and an employee assistance program (EAP). The EAP provides, among other benefits, a limited number of mental health or substance use disorder counseling sessions, which, together with other benefits provided by the EAP, are not significant benefits in the nature of medical care. Participants are eligible for mental health or substance use disorder benefits under the major medical plan only after exhausting the counseling sessions provided by the EAP. No similar exhaustion requirement applies with respect to medical/surgical benefits provided under the major medical plan.

( 2) Conclusion. In this paragraph (c)(4)(vi)(K) ( Example 11), the requirement that limits eligibility for mental health and substance use disorder benefits under the major medical plan until EAP benefits are exhausted is a nonquantitative treatment limitation subject to the parity requirements of this paragraph (c)(4). Because the limitation does not apply to medical/surgical benefits, it is a separate nonquantitative treatment limitation applicable only to mental health and substance use disorder benefits that violates paragraph (c)(4)(iv) of this section. Additionally, this EAP would not qualify as excepted benefits under § 54.9831-1(c)(3)(vi)(B)( 1) because participants in the major medical plan are required to use and exhaust benefits under the EAP (making the EAP a gatekeeper) before an individual is eligible for benefits under the plan.

(L) Example 12 (separate exclusion for treatment in a residential facility applicable only to mental health and substance use disorder benefits) —( 1) Facts. A plan generally covers inpatient, in-network and inpatient, out-of-network treatment without any limitations on setting, including skilled nursing facilities and rehabilitation hospitals, provided other medical necessity standards are satisfied. The plan has an exclusion for treatment at residential facilities, which the plan defines as an inpatient benefit for mental health and substance use disorder benefits. This exclusion was not generated through any broader nonquantitative treatment limitation (such as medical necessity or other clinical guideline).

( 2) Conclusion. In this paragraph (c)(4)(vi)(L) ( Example 12), the plan violates the rules of paragraph (c)(4)(iv) of this section. The exclusion of treatment at residential facilities is a separate nonquantitative treatment limitation applicable only to mental health and substance use disorder benefits in the inpatient, in-network and inpatient, out-of-network classifications because the plan does not apply a comparable exclusion with respect to any medical/surgical benefits in the same benefit classification.

(M) Example 13 (impermissible nonquantitative treatment limitation imposed following a final determination of noncompliance and direction by the Secretary) —( 1) Facts. Following an initial request by the Secretary for a plan's comparative analysis of the plan's exclusion of mental health and substance use disorder benefits for failure to complete a course of treatment in the inpatient, in-network classification under § 54.9812-2(d), the plan submits a comparative analysis for the nonquantitative treatment limitation. After review of the comparative analysis, as well as additional information submitted by the plan after the Secretary determines that the plan has not submitted sufficient information to be responsive to the request, the Secretary makes an initial determination that the comparative analysis fails to demonstrate that the processes, strategies, evidentiary standards, and other factors used in designing and applying the nonquantitative treatment limitation to mental health or substance use disorder benefits in the inpatient, in-network classification are comparable to, and applied no more stringently than, those used in designing and applying the limitation to medical/surgical benefits in the classification. Under § 54.9812-2(d)(3), the plan submits a corrective action plan and additional comparative analyses within 45 calendar days after the initial determination. However, the corrective action plan does not alter or eliminate the exclusion or alter the processes, strategies, evidentiary standards, and other factors used in designing and applying the exclusion. Moreover, the additional comparative analysis still does not include sufficient information. The Secretary then determines that the additional comparative analyses do not demonstrate compliance with the requirements of this paragraph (c)(4). Accordingly, the plan receives a final determination of noncompliance with Code section 9812(a)(8) and § 54.9812-2 from the Secretary, which concludes that the plan did not demonstrate compliance through the comparative analysis process. After considering the relevant facts and circumstances, and considering the interests of plan participants and beneficiaries, as well as feedback from the plan, the Secretary directs the plan not to impose the nonquantitative treatment limitation by a certain date, unless and until the plan demonstrates compliance to the Secretary or takes appropriate action to remedy the violation. The plan makes no changes to its plan terms by that date and continues to impose the exclusion of benefits for failure to complete a course of treatment in the inpatient, in-network classification.

( 2) Conclusion. In this paragraph (c)(4)(vi)(M) ( Example 13), by continuing to impose the exclusion of mental health and substance use disorder benefits for failure to complete a course of treatment in the inpatient, in-network classification after the Secretary directs the plan not to impose this nonquantitative treatment limitation, the plan violates the requirements of paragraph (c)(4)(v) of this section.

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(3) Provisions of other law. Compliance with the disclosure requirements in paragraphs (d)(1) and (2) of this section is not determinative of compliance with any other provision of applicable Federal or State law. In particular, in addition to those disclosure requirements, provisions of other applicable law require disclosure of information relevant to medical/surgical, mental health, and substance use disorder benefits. For example, ( print page 77715) ERISA section 104 and 29 CFR 2520.104b-1 provide that, for plans subject to ERISA, instruments under which the plan is established or operated must generally be furnished to plan participants within 30 days of request. Instruments under which the plan is established or operated include documents with information on medical necessity criteria for both medical/surgical benefits and mental health and substance use disorder benefits; the processes, strategies, evidentiary standards, and other factors used to apply a nonquantitative treatment limitation with respect to medical/surgical benefits and mental health or substance use disorder benefits under the plan; and the comparative analyses and other applicable information required by § 54.9812-2. In addition, 29 CFR 2560.503-1 and § 54.9815-2719 set forth rules regarding claims and appeals, including the right of claimants (or their authorized representative) who have received an adverse benefit determination (or a final internal adverse benefit determination) to be provided, upon request and free of charge, reasonable access to and copies of all documents, records, and other information relevant to the claimant's claim for benefits. This includes documents with information on medical necessity criteria for both medical/surgical benefits and mental health and substance use disorder benefits, as well as the processes, strategies, evidentiary standards, and other factors used to apply a nonquantitative treatment limitation with respect to medical/surgical benefits and mental health or substance use disorder benefits under the plan and the comparative analyses and other applicable information required by § 54.9812-2.

(e) * * *

(4) Coordination with EHB requirements. Nothing in paragraph (f) or (g) of this section or § 54.9812-2(g) changes the requirements of 45 CFR 147.150 and 156.115 providing that a health insurance issuer offering non-grandfathered health insurance coverage in the individual or small group market that is required to provide mental health and substance use disorder services, including behavioral health treatment services, as part of essential health benefits required under 45 CFR 156.110(a)(5) and 156.115(a), must comply with the requirements under section 2726 of the Public Health Service Act and its implementing regulations at 45 CFR 146.136 and 146.137 to satisfy the requirement to provide coverage for mental health and substance use disorder services, including behavioral health treatment, as part of essential health benefits.

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(i) * * *

(1) In general. Except as provided in paragraph (i)(2) of this section—

(i) This section applies to group health plans on the first day of the first plan year beginning on or after January 1, 2025, except that the requirements of paragraphs (c)(2)(ii)(A), (c)(4)(i)(B), and (c)(4)(iii) of this section apply on the first day of the first plan year beginning on or after January 1, 2026.

(ii) Until the applicability date in paragraph (i)(1)(i) of this section, plans are required to continue to comply with 26 CFR 54.9812-1, revised as of April 1, 2022.

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(j) Severability. If any provision of this section is held to be invalid or unenforceable by its terms, or as applied to any person or circumstance, or stayed pending further agency action, the provision shall be construed so as to continue to give the maximum effect to the provision permitted by law, unless such holding shall be one of invalidity or unenforceability, in which event the provision shall be severable from this section and shall not affect the remainder thereof or the application of the provision to persons not similarly situated or to dissimilar circumstances.

Par. 3. Add § 54.9812-2 to read as follows:

§ 54.9812-2

Nonquantitative treatment limitation comparative analysis requirements.

(a) Meaning of terms. Unless otherwise stated in this section, the terms of this section have the meanings indicated in § 54.9812-1(a)(2).

(b) In general. In the case of a group health plan that provides both medical/surgical benefits and mental health or substance use disorder benefits and that imposes any nonquantitative treatment limitation on mental health or substance use disorder benefits, the plan must perform and document a comparative analysis of the design and application of each nonquantitative treatment limitation applicable to mental health or substance use disorder benefits. Each comparative analysis must comply with the content requirements of paragraph (c) of this section and be made available to the Secretary, upon request, in the manner required by paragraphs (d) and (e) of this section.

(c) Comparative analysis content requirements. With respect to each nonquantitative treatment limitation applicable to mental health or substance use disorder benefits under a group health plan, the comparative analysis performed by the plan must include, at minimum, the elements specified in this paragraph (c). In addition to the comparative analysis for each nonquantitative treatment limitation, each plan must prepare and make available to the Secretary, upon request, a written list of all nonquantitative treatment limitations imposed under the plan.

(1) Description of the nonquantitative treatment limitation. The comparative analysis must include, with respect to the nonquantitative treatment limitation that is the subject of the comparative analysis:

(i) Identification of the nonquantitative treatment limitation, including the specific terms of the plan or other relevant terms regarding the nonquantitative treatment limitation, the policies or guidelines (internal or external) in which the nonquantitative treatment limitation appears or is described, and the applicable sections of any other relevant documents, such as provider contracts, that describe the nonquantitative treatment limitation;

(ii) Identification of all mental health or substance use disorder benefits and medical/surgical benefits to which the nonquantitative treatment limitation applies, including a list of which benefits are considered mental health or substance use disorder benefits and which benefits are considered medical/surgical benefits; and

(iii) A description of which benefits are included in each classification set forth in § 54.9812-1(c)(2)(ii)(A).

(2) Identification and definition of the factors and evidentiary standards used to design or apply the nonquantitative treatment limitation. The comparative analysis must include, with respect to every factor considered or relied upon to design the nonquantitative treatment limitation or apply the nonquantitative treatment limitation to mental health or substance use disorder benefits and medical/surgical benefits:

(i) Identification of every factor considered or relied upon, as well as the evidentiary standards considered or relied upon to design or apply each factor and the sources from which each evidentiary standard was derived, in determining which mental health or substance use disorder benefits and which medical/surgical benefits are subject to the nonquantitative treatment limitation; and

(ii) A definition of each factor, including:

(A) A detailed description of the factor;

(B) A description of each evidentiary standard used to design or apply each ( print page 77716) factor (and the source of each evidentiary standard) identified under paragraph (c)(2)(i) of this section; and

(C) A description of any steps the plan has taken to correct, cure, or supplement any information, evidence, sources, or standards that would otherwise have been considered biased or not objective under § 54.9812-1(c)(4)(i)(B)( 1) in the absence of such steps.

(3) Description of how factors are used in the design and application of the nonquantitative treatment limitation. The comparative analysis must include a description of how each factor identified and defined under paragraph (c)(2) of this section is used in the design or application of the nonquantitative treatment limitation to mental health and substance use disorder benefits and medical/surgical benefits in a classification, including:

(i) A detailed explanation of how each factor identified and defined in paragraph (c)(2) of this section is used to determine which mental health or substance use disorder benefits and which medical/surgical benefits are subject to the nonquantitative treatment limitation;

(ii) An explanation of the evidentiary standards or other information or sources (if any) considered or relied upon in designing or applying the factors or relied upon in designing and applying the nonquantitative treatment limitation, including in the determination of whether and how mental health or substance use disorder benefits or medical/surgical benefits are subject to the nonquantitative treatment limitation;

(iii) If the application of the factor depends on specific decisions made in the administration of benefits, the nature of the decisions, the timing of the decisions, and the professional designations and qualifications of each decision maker;

(iv) If more than one factor is identified and defined in paragraph (c)(2) of this section, an explanation of:

(A) How all of the factors relate to each other;

(B) The order in which all the factors are applied, including when they are applied;

(C) Whether and how any factors are given more weight than others; and

(D) The reasons for the ordering or weighting of the factors; and

(v) Any deviations or variations from a factor, its applicability, or its definition (including the evidentiary standards used to define the factor and the information or sources from which each evidentiary standard was derived), such as how the factor is used differently to apply the nonquantitative treatment limitation to mental health or substance use disorder benefits as compared to medical/surgical benefits, and a description of how the plan establishes such deviations or variations.

(4) Demonstration of comparability and stringency as written. The comparative analysis must evaluate whether, in any classification, under the terms of the plan as written, any processes, strategies, evidentiary standards, or other factors used in designing and applying the nonquantitative treatment limitation to mental health or substance use disorder benefits are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in designing and applying the nonquantitative treatment limitation with respect to medical/surgical benefits. The comparative analysis must include, with respect to the nonquantitative treatment limitation and the factors used in designing and applying the nonquantitative treatment limitation:

(i) Documentation of each factor identified and defined in paragraph (c)(2) of this section that was applied to determine whether the nonquantitative treatment limitation applies to mental health or substance use disorder benefits and medical/surgical benefits in a classification, including, as relevant:

(A) Quantitative data, calculations, or other analyses showing whether, in each classification in which the nonquantitative treatment limitation applies, mental health or substance use disorder benefits and medical/surgical benefits met or did not meet any applicable threshold identified in the relevant evidentiary standard to determine that the nonquantitative treatment limitation would or would not apply; and

(B) Records maintained by the plan documenting the consideration and application of all factors and evidentiary standards, as well as the results of their application;

(ii) In each classification in which the nonquantitative treatment limitation applies to mental health or substance use disorder benefits, a comparison of how the nonquantitative treatment limitation, as written, is designed and applied to mental health or substance use disorder benefits and to medical/surgical benefits, including the specific provisions of any forms, checklists, procedure manuals, or other documentation used in designing and applying the nonquantitative treatment limitation or that address the application of the nonquantitative treatment limitation;

(iii) Documentation demonstrating how the factors are comparably applied, as written, to mental health or substance use disorder benefits and medical/surgical benefits in each classification, to determine which benefits are subject to the nonquantitative treatment limitation; and

(iv) An explanation of the reasons for any deviations or variations in the application of a factor used to apply the nonquantitative treatment limitation, or the application of the nonquantitative treatment limitation, to mental health or substance use disorder benefits as compared to medical/surgical benefits, and how the plan establishes such deviations or variations, including:

(A) In the definition of the factors, the evidentiary standards used to define the factors, and the sources from which the evidentiary standards were derived;

(B) In the design of the factors or evidentiary standards; or

(C) In the application or design of the nonquantitative treatment limitation.

(5) Demonstration of comparability and stringency in operation. The comparative analysis must evaluate whether, in any classification, in operation, the processes, strategies, evidentiary standards, or other factors used in designing and applying the nonquantitative treatment limitation to mental health or substance use disorder benefits are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in designing and applying the limitation with respect to medical/surgical benefits. The comparative analysis must include, with respect to the nonquantitative treatment limitation and the factors used in designing and applying the nonquantitative treatment limitation:

(i) A comprehensive explanation of how the plan evaluates whether, in operation, the processes, strategies, evidentiary standards, or other factors used in designing and applying the nonquantitative treatment limitation to mental health or substance use disorder benefits in a classification are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in designing and applying the nonquantitative treatment limitation with respect to medical/surgical benefits, including:

(A) An explanation of any methodology and underlying data used to demonstrate the application of the nonquantitative treatment limitation, in operation; ( print page 77717)

(B) The sample period, inputs used in any calculations, definitions of terms used, and any criteria used to select the mental health or substance use disorder benefits and medical/surgical benefits to which the nonquantitative treatment limitation is applicable;

(C) With respect to a nonquantitative treatment limitation for which relevant data is temporarily unavailable as described in § 54.9812-1(c)(4)(iii)(A)( 3)( i), a detailed explanation of the lack of relevant data, the basis for the plan's conclusion that there is a lack of relevant data, and when and how the data will become available and be collected and analyzed; and

(D) With respect to a nonquantitative treatment limitation for which no data exist that can reasonably assess any relevant impact of the nonquantitative treatment limitation on relevant outcomes related to access to mental health and substance use disorder benefits and medical/surgical benefits as described in § 54.9812-1(c)(4)(iii)(A)( 3)( ii), a reasoned justification as to the basis for the conclusion that there are no data that can reasonably assess the nonquantitative treatment limitation's impact, an explanation of why the nature of the nonquantitative treatment limitation prevents the plan from reasonably measuring its impact, an explanation of what data was considered and rejected, and documentation of any additional safeguards or protocols used to ensure that the nonquantitative treatment limitation complies with § 54.9812-1(c)(4);

(ii) Identification of the relevant data collected and evaluated, as required under § 54.9812-1(c)(4)(iii)(A);

(iii) Documentation of the outcomes that resulted from the application of the nonquantitative treatment limitation to mental health or substance use disorder benefits and medical/surgical benefits, including:

(A) The evaluation of relevant data as required under § 54.9812-1(c)(4)(iii)(A); and

(B) A reasoned justification and analysis that explains why the plan concluded that any differences in the relevant data do or do not suggest the nonquantitative treatment limitation contributes to material differences in access to mental health or substance use disorder benefits as compared to medical/surgical benefits, in accordance with § 54.9812-1(c)(4)(iii)(B)( 2);

(iv) A detailed explanation of any material differences in access demonstrated by the outcomes evaluated under paragraph (c)(5)(iii) of this section, including:

(A) A reasoned explanation of any material differences in access that are not attributable to differences in the comparability or relative stringency of the nonquantitative treatment limitation as applied to mental health or substance use disorder benefits and medical/surgical benefits (including any considerations beyond a plan's control that contribute to the existence of material differences) and a detailed explanation of the bases for concluding that material differences are not attributable to differences in the comparability or relative stringency of the nonquantitative treatment limitation; and

(B) To the extent differences in access to mental health or substance use disorder benefits are attributable to generally recognized independent professional medical or clinical standards or carefully circumscribed measures reasonably and appropriately designed to detect or prevent and prove fraud and abuse that minimize the negative impact on access to appropriate mental health and substance use disorder benefits, and such standards or measures are used as the basis for a factor or evidentiary standard used to design or apply a nonquantitative treatment limitation, documentation explaining how any such differences are attributable to those standards or measures, as required in § 54.9812-1(c)(4)(iii)(B)( 2)( ii); and

(v) A discussion of the actions that have been or are being taken by the plan to address any material differences in access to mental health or substance use disorder benefits as compared to medical/surgical benefits, including the actions the plan has taken or is taking under § 54.9812-1(c)(4)(iii)(B)( 1) to address material differences to comply, in operation, with § 54.9812-1(c)(4), including, as applicable:

(A) A reasoned explanation of any material differences in access to mental health or substance use disorder benefits as compared to medical/surgical benefits that persist despite reasonable actions that have been or are being taken; and

(B) For a plan designing and applying one or more nonquantitative treatment limitations related to network composition, a discussion of the actions that have been or are being taken to address material differences in access to in-network mental health and substance use disorder benefits as compared to in-network medical/surgical benefits, including those listed in § 54.9812-1(c)(4)(iii)(C).

(6) Findings and conclusions. The comparative analysis must address the findings and conclusions as to the comparability of the processes, strategies, evidentiary standards, and other factors used in designing and applying the nonquantitative treatment limitation to mental health or substance use disorder benefits and medical/surgical benefits within each classification, and the relative stringency of their application, both as written and in operation, and include:

(i) Any findings or conclusions indicating that the plan is or is not (or might or might not be) in compliance with the requirements of § 54.9812-1(c)(4), including any additional actions the plan has taken or intends to take to address any potential areas of concern or noncompliance;

(ii) A reasoned and detailed discussion of the findings and conclusions described in paragraph (c)(6)(i) of this section;

(iii) Citations to any additional specific information not otherwise included in the comparative analysis that supports the findings and conclusions described in paragraph (c)(6)(i) of this section not otherwise discussed in the comparative analysis;

(iv) The date the analysis is completed and the title and credentials of all relevant persons who participated in the performance and documentation of the comparative analysis; and

(v) If the comparative analysis relies upon an evaluation by a reviewer or consultant considered by the plan to be an expert, an assessment of each expert's qualifications and the extent to which the plan ultimately relied upon each expert's evaluation in performing and documenting the comparative analysis of the design and application of the nonquantitative treatment limitation applicable to both mental health or substance use disorder benefits and medical/surgical benefits.

(d) Requirements related to submission of comparative analyses to the Secretary upon request —(1) Initial request by the Secretary for comparative analysis. A group health plan must make the comparative analysis required by paragraph (b) of this section available and submit it to the Secretary within 10 business days of receipt of a request from the Secretary (or an additional period of time specified by the Secretary).

(2) Additional information required after a comparative analysis is deemed to be insufficient. In instances in which the Secretary determines that the plan has not submitted sufficient information under paragraph (d)(1) of this section for the Secretary to determine whether the ( print page 77718) comparative analysis required in paragraph (b) of this section complies with paragraph (c) of this section or whether the plan complies with § 54.9812-1(c)(4), the Secretary will specify to the plan the additional information the plan must submit to the Secretary to be responsive to the request under paragraph (d)(1). Any such information must be provided to the Secretary by the plan within 10 business days after the Secretary specifies the additional information to be submitted (or an additional period of time specified by the Secretary).

(3) Initial determination of noncompliance, required action, and corrective action plan. In instances in which the Secretary reviewed the comparative analysis submitted under paragraph (d)(1) of this section and any additional information submitted under paragraph (d)(2) of this section, and made an initial determination that the plan is not in compliance with the requirements of § 54.9812-1(c)(4) or this section, the plan must respond to the initial determination by the Secretary and specify the actions the plan will take to bring the plan into compliance, and provide to the Secretary additional comparative analyses meeting the requirements of paragraph (c) of this section that demonstrate compliance with § 54.9812-1(c)(4), not later than 45 calendar days after the Secretary's initial determination that the plan is not in compliance.

(4) Requirement to notify participants and beneficiaries of final determination of noncompliance —(i) In general. If the Secretary makes a final determination of noncompliance, the plan must notify all participants and beneficiaries enrolled in the plan that the plan has been determined to not be in compliance with the requirements of § 54.9812-1(c)(4) or this section with respect to such plan. Such notice must be provided within 7 business days of receipt of the final determination of noncompliance, and the plan must provide a copy of the notice to the Secretary, any service provider involved in the claims process, and any fiduciary responsible for deciding benefit claims within the same timeframe.

(ii) Content of notice. The notice to participants and beneficiaries required in paragraph (d)(4)(i) of this section shall be written in a manner calculated to be understood by the average plan participant and must include, in plain language, the following information in a standalone notice:

(A) The following statement prominently displayed on the first page, in no less than 14-point font: “Attention! The Department of the Treasury has determined that [insert the name of group health plan] is not in compliance with the Mental Health Parity and Addiction Equity Act.”;

(B) A summary of changes the plan has made as part of its corrective action plan specified to the Secretary following the initial determination of noncompliance, including an explanation of any opportunity for a participant or beneficiary to have a claim for benefits submitted or reprocessed;

(C) A summary of the Secretary's final determination that the plan is not in compliance with § 54.9812-1(c)(4) or this section, including any provisions or practices identified as being in violation of § 54.9812-1(c)(4) or this section, additional corrective actions identified by the Secretary in the final determination notice, and information on how participants and beneficiaries can obtain from the plan a copy of the final determination of noncompliance;

(D) Any additional actions the plan is taking to come into compliance with § 54.9812-1(c)(4) or this section, when the plan will take such actions, and a clear and accurate statement explaining whether the Secretary has concurred with those actions; and

(E) Contact information for questions and complaints, and a statement explaining how participants and beneficiaries can obtain more information about the notice, including:

( 1) The plan's phone number and an email or web portal address; and

( 2) The Employee Benefits Security Administration's phone number and email or web portal address.

(iii) Manner of notice. The plan must make the notice required under paragraph (d)(4)(i) of this section available in paper form, or electronically (such as by email or an internet posting) if:

(A) The format is readily accessible;

(B) The notice is provided in paper form free of charge upon request; and

(C) In a case in which the electronic form is an internet posting, the plan timely notifies the participant or beneficiary in paper form (such as a postcard) or email, that the documents are available on the internet, provides the internet address, includes the statement required in paragraph (d)(4)(ii)(A) of this section, and notifies the participant or beneficiary that the documents are available in paper form upon request.

(e) Requests for a copy of a comparative analysis. In addition to making a comparative analysis available upon request to the Secretary, a plan must make available a copy of the comparative analysis required by paragraph (b) of this section when requested by:

(1) Any applicable State authority; and

(2) A participant or beneficiary (including a provider or other person acting as a participant's or beneficiary's authorized representative) who has received an adverse benefit determination related to mental health or substance use disorder benefits.

(f) Rule of construction. Nothing in this section or § 54.9812-1 shall be construed to prevent the Secretary from acting within the scope of existing authorities to address violations of § 54.9812-1 or this section.

(g) Applicability. The provisions of this section apply to group health plans described in § 54.9812-1(e), to the extent the plan is not exempt under § 54.9812-1(f) or (g), on the first day of the first plan year beginning on or after January 1, 2025, except the requirements of paragraphs (c)(2)(ii)(C), (c)(5)(i)(C) and (D), and (c)(5)(ii) through (v) of this section apply on the first day of the first plan year beginning on or after January 1, 2026.

(h) Severability. If any provision of this section is held to be invalid or unenforceable by its terms, or as applied to any person or circumstance, or stayed pending further agency action, the provision shall be construed so as to continue to give the maximum effect to the provision permitted by law, unless such holding shall be one of invalidity or unenforceability, in which event the provision shall be severable from this section and shall not affect the remainder thereof or the application of the provision to persons not similarly situated or to dissimilar circumstances.

DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Chapter XXV

For the reasons set forth in the preamble, the Department of Labor amends 29 CFR part 2590 as set forth below:

PART 2590—RULES AND REGULATIONS FOR GROUP HEALTH PLANS

4. The authority citation for part 2590 continues to read as follows:

Authority: 29 U.S.C. 1027, 1059, 1135, 1161-1168, 1169, 1181-1183, 1181 note, 1185, 1185a-n, 1191, 1191a, 1191b, and 1191c; sec. 101(g), Pub. L. 104-191, 110 Stat. 1936; sec. 401(b), Pub. L. 105-200, 112 Stat. 645 (42 U.S.C. 651 note); sec. 512(d), Pub. L. 110-343, 122 Stat. 3881; sec. 1001, 1201, and 1562(e), Pub. L. 111-148, 124 Stat. 119, as amended by Pub. L. 111-152, 124 Stat. 1029; ( print page 77719) Division M, Pub. L. 113-235, 128 Stat. 2130; Pub. L. 116-260, 134 Stat. 1182; Secretary of Labor's Order 1-2011, 77 FR 1088 (Jan. 9, 2012).

5. Amend § 2590.712 by:

a. Redesignating paragraph (a) as paragraph (a)(2) and adding paragraphs (a) heading and (a)(1);

b. In newly redesignated paragraph (a)(2):

i. Revising the introductory text;

ii. Adding the definitions of “DSM,” “Evidentiary standards,” “Factors,” and “ICD” in alphabetical order;

iii. Revising the definitions of “Medical/surgical benefits” and “Mental health benefits”;

iv. Adding the definitions of “Processes” and “Strategies” in alphabetical order; and

v. Revising the definitions of “Substance use disorder benefits” and “Treatment limitations”;

c. Revising paragraphs (c)(1)(ii), (c)(2)(i), (c)(2)(ii)(A) introductory text, (c)(2)(ii)(C), and (c)(3)(i)(A), (C), and (D);

d. In paragraph (c)(3)(iii), adding introductory text;

e. Revising paragraphs (c)(3)(iii)(A) and (B), (c)(3)(iv), (c)(4), (d)(3), (e)(4), and (i)(1); and

f. Adding paragraph (j).

The revisions and additions read as follows:

§ 2590.712

Parity in mental health and substance use disorder benefits.

(a) Purpose and meaning of terms —(1) Purpose. This section and § 2590.712-1 set forth rules to ensure parity in aggregate lifetime and annual dollar limits, financial requirements, and quantitative and nonquantitative treatment limitations between mental health and substance use disorder benefits and medical/surgical benefits, as required under ERISA section 712. A fundamental purpose of ERISA section 712, this section, and § 2590.712-1 is to ensure that participants and beneficiaries in a group health plan (or health insurance coverage offered by an issuer in connection with a group health plan) that offers mental health or substance use disorder benefits are not subject to more restrictive aggregate lifetime or annual dollar limits, financial requirements, or treatment limitations with respect to those benefits than the predominant dollar limits, financial requirements, or treatment limitations that are applied to substantially all medical/surgical benefits covered by the plan or coverage in the same classification, as further provided in this section and § 2590.712-1. Accordingly, in complying with the provisions of ERISA section 712, this section, and § 2590.712-1, plans and issuers must not design or apply financial requirements and treatment limitations that impose a greater burden on access (that is, are more restrictive) to mental health or substance use disorder benefits under the plan or coverage than they impose on access to medical/surgical benefits in the same classification of benefits. The provisions of ERISA section 712, this section, and § 2590.712-1 should be interpreted in a manner that is consistent with the purpose described in this paragraph (a)(1).

(2) Meaning of terms. For purposes of this section and § 2590.712-1, except where the context clearly indicates otherwise, the following terms have the meanings indicated:

* * * * *

DSM means the American Psychiatric Association's Diagnostic and Statistical Manual of Mental Disorders. For the purpose of this definition, the most current version of the DSM as of November 22, 2024, is the Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition, Text Revision published in March 2022. A subsequent version of the DSM published after November 22, 2024, will be considered the most current version beginning on the first day of the plan year that is one year after the date the subsequent version is published.

Evidentiary standards are any evidence, sources, or standards that a group health plan (or health insurance issuer offering coverage in connection with such a plan) considered or relied upon in designing or applying a factor with respect to a nonquantitative treatment limitation, including specific benchmarks or thresholds. Evidentiary standards may be empirical, statistical, or clinical in nature, and include: sources acquired or originating from an objective third party, such as recognized medical literature, professional standards and protocols (which may include comparative effectiveness studies and clinical trials), published research studies, payment rates for items and services (such as publicly available databases of the “usual, customary and reasonable” rates paid for items and services), and clinical treatment guidelines; internal plan or issuer data, such as claims or utilization data or criteria for assuring a sufficient mix and number of network providers; and benchmarks or thresholds, such as measures of excessive utilization, cost levels, time or distance standards, or network participation percentage thresholds.

Factors are all information, including processes and strategies (but not evidentiary standards), that a group health plan (or health insurance issuer offering coverage in connection with such a plan) considered or relied upon to design a nonquantitative treatment limitation, or to determine whether or how the nonquantitative treatment limitation applies to benefits under the plan or coverage. Examples of factors include, but are not limited to: provider discretion in determining a diagnosis or type or length of treatment; clinical efficacy of any proposed treatment or service; licensing and accreditation of providers; claim types with a high percentage of fraud; quality measures; treatment outcomes; severity or chronicity of condition; variability in the cost of an episode of treatment; high cost growth; variability in cost and quality; elasticity of demand; and geographic location.

* * * * *

ICD means the World Health Organization's International Classification of Diseases adopted by the Department of Health and Human Services through 45 CFR 162.1002. For the purpose of this definition, the most current version of the ICD as of November 22, 2024, is the International Classification of Diseases, 10th Revision, Clinical Modification adopted for the period beginning on October 1, 2015. Any subsequent version of the ICD adopted through 45 CFR 162.1002 after November 22, 2024, will be considered the most current version beginning on the first day of the plan year that is one year after the date the subsequent version is adopted.

Medical/surgical benefits means benefits with respect to items or services for medical conditions or surgical procedures, as defined under the terms of the group health plan (or health insurance coverage offered by an issuer in connection with such a plan) and in accordance with applicable Federal and State law, but does not include mental health benefits or substance use disorder benefits. Notwithstanding the preceding sentence, any condition or procedure defined by the plan or coverage as being or as not being a medical condition or surgical procedure must be defined consistent with generally recognized independent standards of current medical practice (for example, the most current version of the ICD). To the extent generally recognized independent standards of current medical practice do not address whether a condition or procedure is a medical condition or surgical procedure, plans and issuers may define the condition or procedure in ( print page 77720) accordance with applicable Federal and State law.

Mental health benefits means benefits with respect to items or services for mental health conditions, as defined under the terms of the group health plan (or health insurance coverage offered by an issuer in connection with such a plan) and in accordance with applicable Federal and State law, but does not include medical/surgical benefits or substance use disorder benefits. Notwithstanding the preceding sentence, any condition defined by the plan or coverage as being or as not being a mental health condition must be defined consistent with generally recognized independent standards of current medical practice. For the purpose of this definition, to be consistent with generally recognized independent standards of current medical practice, the definition must include all conditions covered under the plan or coverage, except for substance use disorders, that fall under any of the diagnostic categories listed in the mental, behavioral, and neurodevelopmental disorders chapter (or equivalent chapter) of the most current version of the ICD or that are listed in the most current version of the DSM. To the extent generally recognized independent standards of current medical practice do not address whether a condition is a mental health condition, plans and issuers may define the condition in accordance with applicable Federal and State law.

Processes are actions, steps, or procedures that a group health plan (or health insurance issuer offering coverage in connection with such a plan) uses to apply a nonquantitative treatment limitation, including actions, steps, or procedures established by the plan or issuer as requirements in order for a participant or beneficiary to access benefits, including through actions by a participant's or beneficiary's authorized representative or a provider or facility. Examples of processes include, but are not limited to: procedures to submit information to authorize coverage for an item or service prior to receiving the benefit or while treatment is ongoing (including requirements for peer or expert clinical review of that information); provider referral requirements that are used to determine when and how a participant or beneficiary may access certain services; and the development and approval of a treatment plan used in a concurrent review process to determine whether a specific request should be granted or denied. Processes also include the specific procedures used by staff or other representatives of a plan or issuer (or the service provider of a plan or issuer) to administer the application of nonquantitative treatment limitations, such as how a panel of staff members applies the nonquantitative treatment limitation (including the qualifications of staff involved, number of staff members allocated, and time allocated), consultations with panels of experts in applying the nonquantitative treatment limitation, and the degree of reviewer discretion in adhering to criteria hierarchy when applying a nonquantitative treatment limitation.

Strategies are practices, methods, or internal metrics that a plan (or health insurance issuer offering coverage in connection with such a plan) considers, reviews, or uses to design a nonquantitative treatment limitation. Examples of strategies include, but are not limited to: the development of the clinical rationale used in approving or denying benefits; the method of determining whether and how to deviate from generally accepted standards of care in concurrent reviews; the selection of information deemed reasonably necessary to make medical necessity determinations; reliance on treatment guidelines or guidelines provided by third-party organizations in the design of a nonquantitative treatment limitation; and rationales used in selecting and adopting certain threshold amounts to apply a nonquantitative treatment limitation, professional standards and protocols to determine utilization management standards, and fee schedules used to determine provider reimbursement rates, used as part of a nonquantitative treatment limitation. Strategies also include the method of creating and determining the composition of the staff or other representatives of a plan or issuer (or the service provider of a plan or issuer) that deliberates, or otherwise makes decisions, on the design of nonquantitative treatment limitations, including the plan's or issuer's methods for making decisions related to the qualifications of staff involved, number of staff members allocated, and time allocated; breadth of sources and evidence considered; consultations with panels of experts in designing the nonquantitative treatment limitation; and the composition of the panels used to design a nonquantitative treatment limitation.

Substance use disorder benefits means benefits with respect to items or services for substance use disorders, as defined under the terms of the group health plan (or health insurance coverage offered by an issuer in connection with such a plan) and in accordance with applicable Federal and State law, but does not include medical/surgical benefits or mental health benefits. Notwithstanding the preceding sentence, any disorder defined by the plan or coverage as being or as not being a substance use disorder must be defined consistent with generally recognized independent standards of current medical practice. For the purpose of this definition, to be consistent with generally recognized independent standards of current medical practice, the definition must include all disorders covered under the plan or coverage that fall under any of the diagnostic categories listed as a mental or behavioral disorder due to psychoactive substance use (or equivalent category) in the mental, behavioral, and neurodevelopmental disorders chapter (or equivalent chapter) of the most current version of the ICD or that are listed as a Substance-Related and Addictive Disorder (or equivalent category) in the most current version of the DSM. To the extent generally recognized independent standards of current medical practice do not address whether a disorder is a substance use disorder, plans and issuers may define the disorder in accordance with applicable Federal and State law.

Treatment limitations include limits on benefits based on the frequency of treatment, number of visits, days of coverage, days in a waiting period, or other similar limits on the scope or duration of treatment. Treatment limitations include both quantitative treatment limitations, which are expressed numerically (such as 50 outpatient visits per year), and nonquantitative treatment limitations (such as standards related to network composition), which otherwise limit the scope or duration of benefits for treatment under a plan or coverage. (See paragraph (c)(4)(ii) of this section for an illustrative, non-exhaustive list of nonquantitative treatment limitations.) A complete exclusion of all benefits for a particular condition or disorder, however, is not a treatment limitation for purposes of this definition.

* * * * *

(c) * * *

(1) * * *

(ii) Type of financial requirement or treatment limitation. When reference is made in this paragraph (c) to a type of financial requirement or treatment limitation, the reference to type means its nature. Different types of financial requirements include deductibles, copayments, coinsurance, and out-of-pocket maximums. Different types of quantitative treatment limitations ( print page 77721) include annual, episode, and lifetime day and visit limits. See paragraph (c)(4)(ii) of this section for an illustrative, non-exhaustive list of nonquantitative treatment limitations.

* * * * *

(2) * * *

(i) General rule. A group health plan (or health insurance coverage offered by an issuer in connection with a group health plan) that provides both medical/surgical benefits and mental health or substance use disorder benefits may not apply any financial requirement or treatment limitation to mental health or substance use disorder benefits in any classification that is more restrictive than the predominant financial requirement or treatment limitation of that type applied to substantially all medical/surgical benefits in the same classification. Whether a financial requirement or treatment limitation is a predominant financial requirement or treatment limitation that applies to substantially all medical/surgical benefits in a classification is determined separately for each type of financial requirement or treatment limitation. A plan or issuer may not impose any financial requirement or treatment limitation that is applicable only with respect to mental health or substance use disorder benefits and not to any medical/surgical benefits in the same benefit classification. The application of the rules of this paragraph (c)(2) to financial requirements and quantitative treatment limitations is addressed in paragraph (c)(3) of this section; the application of the rules of this paragraph (c)(2) to nonquantitative treatment limitations is addressed in paragraph (c)(4) of this section.

(ii) * * *

(A) In general. If a plan (or health insurance coverage) provides any benefits for a mental health condition or substance use disorder in any classification of benefits described in this paragraph (c)(2)(ii), it must provide meaningful benefits for that mental health condition or substance use disorder in every classification in which medical/surgical benefits are provided. For purposes of this paragraph (c)(2)(ii)(A), whether the benefits provided are meaningful benefits is determined in comparison to the benefits provided for medical conditions and surgical procedures in the classification and requires, at a minimum, coverage of benefits for that condition or disorder in each classification in which the plan (or coverage) provides benefits for one or more medical conditions or surgical procedures. A plan (or coverage) does not provide meaningful benefits under this paragraph (c)(2)(ii)(A) unless it provides benefits for a core treatment for that condition or disorder in each classification in which the plan (or coverage) provides benefits for a core treatment for one or more medical conditions or surgical procedures. For purposes of this paragraph (c)(2)(ii)(A), a core treatment for a condition or disorder is a standard treatment or course of treatment, therapy, service, or intervention indicated by generally recognized independent standards of current medical practice. If there is no core treatment for a covered mental health condition or substance use disorder with respect to a classification, the plan (or coverage) is not required to provide benefits for a core treatment for such condition or disorder in that classification (but must provide benefits for such condition or disorder in every classification in which medical/surgical benefits are provided). In determining the classification in which a particular benefit belongs, a plan (or health insurance issuer) must apply the same standards to medical/surgical benefits and to mental health or substance use disorder benefits. To the extent that a plan (or health insurance coverage) provides benefits in a classification and imposes any separate financial requirement or treatment limitation (or separate level of a financial requirement or treatment limitation) for benefits in the classification, the rules of this paragraph (c) apply separately with respect to that classification for all financial requirements or treatment limitations (illustrated in examples in paragraph (c)(2)(ii)(C) of this section). The following classifications of benefits are the only classifications used in applying the rules of this paragraph (c), in addition to the permissible sub-classifications described in paragraph (c)(3)(iii) of this section:

* * * * *

(C) Examples. The rules of this paragraph (c)(2)(ii) are illustrated by the following examples. In each example, the group health plan is subject to the requirements of this section and provides both medical/surgical benefits and mental health and substance use disorder benefits. With regard to the examples in this paragraph (c)(2)(ii)(C), references to any particular core treatment are included for illustrative purposes only. Plans and issuers must consult generally recognized independent standards of current medical practice to determine the applicable core treatment, therapy, service, or intervention for any covered condition or disorder.

( 1) Example 1 —( i) Facts. A group health plan offers inpatient and outpatient benefits and does not contract with a network of providers. The plan imposes a $500 deductible on all benefits. For inpatient medical/surgical benefits, the plan imposes a coinsurance requirement. For outpatient medical/surgical benefits, the plan imposes copayments. The plan imposes no other financial requirements or treatment limitations.

( ii) Conclusion. In this paragraph (c)(2)(ii)(C)( 1) ( Example 1), because the plan has no network of providers, all benefits provided are out-of-network. Because inpatient, out-of-network medical/surgical benefits are subject to separate financial requirements from outpatient, out-of-network medical/surgical benefits, the rules of this paragraph (c) apply separately with respect to any financial requirements and treatment limitations, including the deductible, in each classification.

( 2) Example 2 —( i) Facts. A plan imposes a $500 deductible on all benefits. The plan has no network of providers. The plan generally imposes a 20 percent coinsurance requirement with respect to all benefits, without distinguishing among inpatient, outpatient, emergency care, or prescription drug benefits. The plan imposes no other financial requirements or treatment limitations.

( ii) Conclusion. In this paragraph (c)(2)(ii)(C)( 2) ( Example 2), because the plan does not impose separate financial requirements (or treatment limitations) based on classification, the rules of this paragraph (c) apply with respect to the deductible and the coinsurance across all benefits.

( 3) Example 3 —( i) Facts. Same facts as in paragraph (c)(2)(ii)(C)( 2)( i) of this section ( Example 2), except the plan exempts emergency care benefits from the 20 percent coinsurance requirement. The plan imposes no other financial requirements or treatment limitations.

( ii) Conclusion. In this paragraph (c)(2)(ii)(C)( 3) ( Example 3), because the plan imposes separate financial requirements based on classifications, the rules of this paragraph (c) apply with respect to the deductible and the coinsurance separately for benefits in the emergency care classification and all other benefits.

( 4) Example 4 —( i) Facts. Same facts as in paragraph (c)(2)(ii)(C)( 2)( i) of this section ( Example 2), except the plan also imposes a preauthorization requirement for all inpatient treatment in order for benefits to be paid. No such requirement applies to outpatient treatment.

( ii) Conclusion. In this paragraph (c)(2)(ii)(C)( 4) ( Example 4), because the plan has no network of providers, all benefits provided are out-of-network. Because the plan imposes a separate treatment limitation based on classifications, the rules of this paragraph (c) apply with respect to the deductible and coinsurance separately for inpatient, out-of-network benefits and all other benefits.

( 5) Example 5 —( i) Facts. A plan covers treatment for autism spectrum disorder (ASD), a mental health condition, and covers outpatient, out-of-network developmental ( print page 77722) screenings for ASD but excludes all other benefits for outpatient treatment for ASD, including applied behavior analysis (ABA) therapy, when provided on an out-of-network basis. The plan generally covers the full range of outpatient treatments (including core treatments) and treatment settings for medical conditions and surgical procedures when provided on an out-of-network basis. Under the generally recognized independent standards of current medical practice consulted by the plan, developmental screenings alone do not constitute a core treatment for ASD.

( ii) Conclusion. In this paragraph (c)(2)(ii)(C)( 5) ( Example 5), the plan violates the rules of this paragraph (c)(2)(ii). Although the plan covers benefits for ASD in the outpatient, out-of-network classification, it only covers developmental screenings, so it does not cover a core treatment for ASD in the classification. Because the plan generally covers the full range of medical/surgical benefits, including a core treatment for one or more medical conditions or surgical procedures in the classification, it fails to provide meaningful benefits for treatment of ASD in the classification.

( 6) Example 6 —( i) Facts. Same facts as in paragraph (c)(2)(ii)(C)( 5) of this section ( Example 5), except that the plan is an HMO that does not cover the full range of medical/surgical benefits, including a core treatment for any medical conditions or surgical procedures in the outpatient, out-of-network classification (except as required under ERISA sections 716 and 717), but covers benefits for medical conditions and surgical procedures in the inpatient, in-network; outpatient, in-network; emergency care; and prescription drug classifications.

( ii) Conclusion. In this paragraph (c)(2)(ii)(C)( 6) ( Example 6), the plan does not violate the rules of this paragraph (c)(2)(ii). Because the plan does not provide meaningful benefits, including for a core treatment for any medical condition or surgical procedure in the outpatient, out-of-network classification (except as required under ERISA sections 716 and 717), the plan is not required to provide meaningful benefits for any mental health conditions or substance use disorders in that classification. Nevertheless, the plan must provide meaningful benefits for each mental health condition and substance use disorder for which the plan provides benefits in every classification in which meaningful medical/surgical benefits are provided as required under paragraph (c)(2)(ii)(A) of this section. This example does not address whether the plan has complied with other applicable requirements of this section in excluding coverage of ABA therapy in the outpatient, out-of-network classification.

( 7) Example 7 —( i) Facts. A plan provides extensive benefits, including for core treatments for many medical conditions and surgical procedures in the outpatient, in-network classification, including nutrition counseling for diabetes and obesity. The plan also generally covers diagnosis and treatment for eating disorders, which are mental health conditions, including coverage for nutrition counseling to treat eating disorders in the outpatient, in-network classification. Nutrition counseling is a core treatment for eating disorders, in accordance with generally recognized independent standards of current medical practice consulted by the plan.

( ii) Conclusion. In this paragraph (c)(2)(ii)(C)( 7) ( Example 7), the plan does not violate the rules of this paragraph (c)(2)(ii). The coverage of diagnosis and treatment for eating disorders, including nutrition counseling, in the outpatient, in-network classification results in the plan providing meaningful benefits for the treatment of eating disorders in the classification, as determined in comparison to the benefits provided for medical conditions or surgical procedures in the classification.

( 8) Example 8 —( i) Facts. A plan provides extensive benefits for the core treatments for many medical conditions and surgical procedures in the outpatient, in-network and prescription drug classifications. The plan provides coverage for diagnosis and treatment for opioid use disorder, a substance use disorder, in the outpatient, in-network classification, by covering counseling and behavioral therapies and, in the prescription drug classification, by covering medications to treat opioid use disorder (MOUD). Counseling and behavioral therapies and MOUD, in combination, are one of the core treatments for opioid use disorder, in accordance with generally recognized independent standards of current medical practice consulted by the plan.

( ii) Conclusion. In this paragraph (c)(2)(ii)(C)( 8) ( Example 8), the plan does not violate the rules of this paragraph (c)(2)(ii). The coverage of counseling and behavioral therapies and MOUD, in combination, in the outpatient, in-network classification and prescription drug classification, respectively, results in the plan providing meaningful benefits for the treatment of opioid use disorder in the outpatient, in-network and prescription drug classifications.

(3) * * *

(i) * * *

(A) Substantially all. For purposes of this paragraph (c)(3), a type of financial requirement or quantitative treatment limitation is considered to apply to substantially all medical/surgical benefits in a classification of benefits if it applies to at least two-thirds of all medical/surgical benefits in that classification. (For purposes of this paragraph (c)(3)(i)(A), benefits expressed as subject to a zero level of a type of financial requirement are treated as benefits not subject to that type of financial requirement, and benefits expressed as subject to a quantitative treatment limitation that is unlimited are treated as benefits not subject to that type of quantitative treatment limitation.) If a type of financial requirement or quantitative treatment limitation does not apply to at least two-thirds of all medical/surgical benefits in a classification, then that type cannot be applied to mental health or substance use disorder benefits in that classification.

* * * * *

(C) Portion based on plan payments. For purposes of this paragraph (c)(3), the determination of the portion of medical/surgical benefits in a classification of benefits subject to a financial requirement or quantitative treatment limitation (or subject to any level of a financial requirement or quantitative treatment limitation) is based on the dollar amount of all plan payments for medical/surgical benefits in the classification expected to be paid under the plan for the plan year (or for the portion of the plan year after a change in plan benefits that affects the applicability of the financial requirement or quantitative treatment limitation).

(D) Clarifications for certain threshold requirements. For any deductible, the dollar amount of plan payments includes all plan payments with respect to claims that would be subject to the deductible if it had not been satisfied. For any out-of-pocket maximum, the dollar amount of plan payments includes all plan payments associated with out-of-pocket payments that are taken into account towards the out-of-pocket maximum as well as all plan payments associated with out-of-pocket payments that would have been made towards the out-of-pocket maximum if it had not been satisfied. The rules of this paragraph (c)(3)(i)(D) apply for any other thresholds at which the rate of plan payment changes. (See also PHS Act section 2707 and Affordable Care Act section 1302(c), which establish annual limitations on out-of-pocket maximums for all non-grandfathered health plans.)

* * * * *

(iii) Special rules. Unless specifically permitted under this paragraph (c)(3)(iii), sub-classifications are not permitted when applying the rules of paragraph (c)(3) of this section.

(A) Multi-tiered prescription drug benefits. If a plan (or health insurance coverage) applies different levels of financial requirements to different tiers of prescription drug benefits based on reasonable factors determined in accordance with the rules in paragraph (c)(4) of this section (relating to requirements for nonquantitative treatment limitations) and without regard to whether a drug is generally prescribed with respect to medical/surgical benefits or with respect to mental health or substance use disorder benefits, the plan (or health insurance coverage) satisfies the parity requirements of this paragraph (c) with ( print page 77723) respect to prescription drug benefits. Reasonable factors include cost, efficacy, generic versus brand name, and mail order versus pharmacy pick-up.

(B) Multiple network tiers. If a plan (or health insurance coverage) provides benefits through multiple tiers of in-network providers (such as an in-network tier of preferred providers with more generous cost-sharing to participants than a separate in-network tier of participating providers), the plan may divide its benefits furnished on an in-network basis into sub-classifications that reflect network tiers, if the tiering is based on reasonable factors determined in accordance with the rules in paragraph (c)(4) of this section (such as quality, performance, and market standards) and without regard to whether a provider provides services with respect to medical/surgical benefits or mental health or substance use disorder benefits. After the sub-classifications are established, the plan or issuer may not impose any financial requirement or treatment limitation on mental health or substance use disorder benefits in any sub-classification that is more restrictive than the predominant financial requirement or treatment limitation that applies to substantially all medical/surgical benefits in the sub-classification using the methodology set forth in paragraph (c)(3)(i) of this section.

* * * * *

(iv) Examples. The rules of paragraphs (c)(3)(i) through (iii) of this section are illustrated by the following examples. In each example, the group health plan is subject to the requirements of this section and provides both medical/surgical benefits and mental health and substance use disorder benefits.

(A) Example 1 —( 1) Facts. ( i) For inpatient, out-of-network medical/surgical benefits, a group health plan imposes five levels of coinsurance. Using a reasonable method, the plan projects its payments for the upcoming year as follows:

Table 1 to Paragraph (c)(3)(iv) (A)( 1)( i)

Coinsurance rate	0%	10%	15%	20%	30%	Total.
Projected payments	$200x	$100x	$450x	$100x	$150x	$1,000x.
Percent of total plan costs	20%	10%	45%	10%	15%
Percent subject to coinsurance level	N/A	12.5% (100x/800x)	56.25% (450x/800x)	12.5% (100x/800x)	18.75% (150x/800x)

( ii) The plan projects plan costs of $800x to be subject to coinsurance ($100x + $450x + $100x + $150x = $800x). Thus, 80 percent ($800x/$1,000x) of the benefits are projected to be subject to coinsurance, and 56.25 percent of the benefits subject to coinsurance are projected to be subject to the 15 percent coinsurance level.

( 2) Conclusion. In this paragraph (c)(3)(iv)(A) ( Example 1), the two-thirds threshold of the substantially all standard is met for coinsurance because 80 percent of all inpatient, out-of-network medical/surgical benefits are subject to coinsurance. Moreover, the 15 percent coinsurance is the predominant level because it is applicable to more than one-half of inpatient, out-of-network medical/surgical benefits subject to the coinsurance requirement. The plan may not impose any level of coinsurance with respect to inpatient, out-of-network mental health or substance use disorder benefits that is more restrictive than the 15 percent level of coinsurance.

(B) Example 2 —( 1) Facts. ( i) For outpatient, in-network medical/surgical benefits, a plan imposes five different copayment levels. Using a reasonable method, the plan projects payments for the upcoming year as follows:

Table 2 to Paragraph (c)(3)(iv) (B)( 1)( i)

Copayment amount	$0	$10	$15	$20	$50	Total.
Projected payments	$200x	$200x	$200x	$300x	$100x	$1,000x.
Percent of total plan costs	20%	20%	20%	30%	10%
Percent subject to copayments	N/A	25% (200x/800x)	25% (200x/800x)	37.5% (300x/800x)	12.5% (100x/800x)

( ii) The plan projects plan costs of $800x to be subject to copayments ($200x + $200x + $300x + $100x = $800x). Thus, 80 percent ($800x/$1,000x) of the benefits are projected to be subject to a copayment.

( 2) Conclusion. In this paragraph (c)(3)(iv)(B) ( Example 2), the two-thirds threshold of the substantially all standard is met for copayments because 80 percent of all outpatient, in-network medical/surgical benefits are subject to a copayment. Moreover, there is no single level that applies to more than one-half of medical/surgical benefits in the classification subject to a copayment (for the $10 copayment, 25%; for the $15 copayment, 25%; for the $20 copayment, 37.5%; and for the $50 copayment, 12.5%). The plan can combine any levels of copayment, including the highest levels, to determine the predominant level that can be applied to mental health or substance use disorder benefits. If the plan combines the highest levels of copayment, the combined projected payments for the two highest copayment levels, the $50 copayment and the $20 copayment, are not more than one-half of the outpatient, in-network medical/surgical benefits subject to a copayment because they are exactly one-half ($300x + $100x = $400x; $400x/$800x = 50%). The combined projected payments for the three highest copayment levels—the $50 copayment, the $20 copayment, and the $15 copayment—are more than one-half of the outpatient, in-network medical/surgical benefits subject to the copayments ($100x + $300x + $200x = $600x; $600x/$800x = 75%). Thus, the plan may not impose any copayment on outpatient, in-network mental health or substance use disorder benefits that is more restrictive than the least restrictive copayment in the combination, the $15 copayment.

(C) Example 3 —( 1) Facts. A plan imposes a $250 deductible on all medical/surgical benefits for self-only coverage and a $500 deductible on all medical/surgical benefits for family coverage. The plan has no network of providers. For all medical/surgical benefits, the plan imposes a coinsurance requirement. The plan imposes no other financial requirements or treatment limitations.

( 2) Conclusion. In this paragraph (c)(3)(iv)(C) ( Example 3), because the plan has no network of providers, all benefits are provided out-of-network. Because self-only and family coverage are subject to different deductibles, whether the deductible applies to substantially all medical/surgical benefits is determined separately for self-only medical/surgical benefits and family medical/surgical benefits. Because the coinsurance is applied without regard to coverage units, the predominant coinsurance that applies to substantially all medical/surgical benefits is determined without regard to coverage units.

(D) Example 4 —( 1) Facts. A plan applies the following financial requirements for prescription drug benefits. The requirements are applied without regard to whether a drug is generally prescribed with respect to medical/surgical benefits or with respect to mental health or substance use disorder benefits. Moreover, the process for certifying a particular drug as “generic”, “preferred brand name”, “non-preferred brand name”, or “specialty” complies with the rules of paragraph (c)(4) of this section (relating to requirements for nonquantitative treatment limitations).

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Table 3 to Paragraph ( c )(3)( iv )(D)( 1)

	Tier 1	Tier 2	Tier 3	Tier 4
Tier description	Generic drugs	Preferred brand name drugs	Non-preferred brand name drugs (which may have Tier 1 or Tier 2 alternatives)	Specialty drugs.
Percent paid by plan	90%	80%	60%	50%.

( 2) Conclusion. In this paragraph (c)(3)(iv)(D) ( Example 4), the financial requirements that apply to prescription drug benefits are applied without regard to whether a drug is generally prescribed with respect to medical/surgical benefits or with respect to mental health or substance use disorder benefits; the process for certifying drugs in different tiers complies with paragraph (c)(4) of this section; and the bases for establishing different levels or types of financial requirements are reasonable. The financial requirements applied to prescription drug benefits do not violate the parity requirements of this paragraph (c)(3).

(E) Example 5 —( 1) Facts. A plan has two -tiers of network of providers: a preferred provider tier and a participating provider tier. Providers are placed in either the preferred tier or participating tier based on reasonable factors determined in accordance with the rules in paragraph (c)(4) of this section, such as accreditation, quality and performance measures (including customer feedback), and relative reimbursement rates. Furthermore, provider tier placement is determined without regard to whether a provider specializes in the treatment of mental health conditions or substance use disorders, or medical/surgical conditions. The plan divides the in-network classifications into two sub-classifications (in-network/preferred and in-network/participating). The plan does not impose any financial requirement or treatment limitation on mental health or substance use disorder benefits in either of these sub-classifications that is more restrictive than the predominant financial requirement or treatment limitation that applies to substantially all medical/surgical benefits in each sub-classification.

( 2) Conclusion. In this paragraph (c)(3)(iv)(E) ( Example 5), the division of in-network benefits into sub-classifications that reflect the preferred and participating provider tiers does not violate the parity requirements of this paragraph (c)(3).

(F) Example 6 —( 1) Facts. With respect to outpatient, in-network benefits, a plan imposes a $25 copayment for office visits and a 20 percent coinsurance requirement for outpatient surgery. The plan divides the outpatient, in-network classification into two sub-classifications (in-network office visits and all other outpatient, in-network items and services).The plan or issuer does not impose any financial requirement or quantitative treatment limitation on mental health or substance use disorder benefits in either of these sub-classifications that is more restrictive than the predominant financial requirement or quantitative treatment limitation that applies to substantially all medical/surgical benefits in each sub-classification.

( 2) Conclusion. In this paragraph (c)(3)(iv)(F) ( Example 6), the division of outpatient, in-network benefits into sub-classifications for office visits and all other outpatient, in-network items and services does not violate the parity requirements of this paragraph (c)(3).

(G) Example 7 —( 1) Facts. Same facts as in paragraph (c)(3)(iv)(F)( 1) of this section ( Example 6), but for purposes of determining parity, the plan divides the outpatient, in-network classification into outpatient, in-network generalists and outpatient, in-network specialists.

( 2) Conclusion. In this paragraph (c)(3)(iv)(G) ( Example 7), the division of outpatient, in-network benefits into any sub-classifications other than office visits and all other outpatient items and services violates the requirements of paragraph (c)(3)(iii)(C) of this section.

* * * * *

(4) Nonquantitative treatment limitations. Consistent with paragraph (a)(1) of this section, a group health plan (or health insurance coverage offered by an issuer in connection with a group health plan) may not impose any nonquantitative treatment limitation with respect to mental health or substance use disorder benefits in any classification that is more restrictive, as written or in operation, than the predominant nonquantitative treatment limitation that applies to substantially all medical/surgical benefits in the same classification. For purposes of this paragraph (c)(4), a nonquantitative treatment limitation is more restrictive than the predominant nonquantitative treatment limitation that applies to substantially all medical/surgical benefits in the same classification if the plan or issuer fails to meet the requirements of paragraph (c)(4)(i) or (iii) of this section. In such a case, the plan (or health insurance coverage) will be considered to violate ERISA section 712(a)(3)(A)(ii), and the nonquantitative treatment limitation may not be imposed by the plan (or health insurance coverage) with respect to mental health or substance use disorder benefits in the classification.

(i) Requirements related to design and application of a nonquantitative treatment limitation —(A) In general. A plan (or health insurance coverage) may not impose a nonquantitative treatment limitation with respect to mental health or substance use disorder benefits in any classification unless, under the terms of the plan (or health insurance coverage), as written and in operation, any processes, strategies, evidentiary standards, or other factors used in designing and applying the nonquantitative treatment limitation to mental health or substance use disorder benefits in the classification are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in designing and applying the limitation with respect to medical/surgical benefits in the classification.

(B) Prohibition on discriminatory factors and evidentiary standards. For purposes of determining comparability and stringency under paragraph (c)(4)(i)(A) of this section, a plan (or health insurance coverage) may not rely upon discriminatory factors or evidentiary standards to design a nonquantitative treatment limitation to be imposed on mental health or substance use disorder benefits. A factor or evidentiary standard is discriminatory if the information, evidence, sources, or standards on which the factor or evidentiary standard are based are biased or not objective in a manner that discriminates against mental health or substance use disorder benefits as compared to medical/surgical benefits.

( 1) Information, evidence, sources, or standards are considered to be biased or not objective in a manner that discriminates against mental health or substance use disorder benefits as compared to medical/surgical benefits if, based on all the relevant facts and circumstances, the information, evidence, sources, or standards systematically disfavor access or are specifically designed to disfavor access to mental health or substance use disorder benefits as compared to medical/surgical benefits. For purposes of this paragraph (c)(4)(i)(B)( 1), relevant facts and circumstances may include, but are not limited to, the reliability of the source of the information, evidence, sources, or standards, including any underlying data; the independence of the information, evidence, sources, and ( print page 77725) standards relied upon; the analyses and methodologies employed to select the information and the consistency of their application; and any known safeguards deployed to prevent reliance on skewed data or metrics. Information, evidence, sources, or standards are not considered biased or not objective for this purpose if the plan or issuer has taken the steps necessary to correct, cure, or supplement any information, evidence, sources, or standards that would have been biased or not objective in the absence of such steps.

( 2) For purposes of this paragraph (c)(4)(i)(B), historical plan data or other historical information from a time when the plan or coverage was not subject to ERISA section 712 or was not in compliance with ERISA section 712 are considered to be biased or not objective in a manner that discriminates against mental health or substance use disorder benefits as compared to medical/surgical benefits, if the historical plan data or other historical information systematically disfavor access or are specifically designed to disfavor access to mental health or substance use disorder benefits as compared to medical/surgical benefits, and the plan or issuer has not taken the steps necessary to correct, cure, or supplement the data or information.

( 3) For purposes of this paragraph (c)(4)(i)(B), generally recognized independent professional medical or clinical standards and carefully circumscribed measures reasonably and appropriately designed to detect or prevent and prove fraud and abuse that minimize the negative impact on access to appropriate mental health and substance use disorder benefits are not information, evidence, sources, or standards that are biased or not objective in a manner that discriminates against mental health or substance use disorder benefits as compared to medical/surgical benefits. However, plans and issuers must comply with the other requirements in this paragraph (c)(4), as applicable, with respect to such standards or measures that are used as the basis for a factor or evidentiary standard used to design or apply a nonquantitative treatment limitation.

(ii) Illustrative, non-exhaustive list of nonquantitative treatment limitations. Nonquantitative treatment limitations include—

(A) Medical management standards (such as prior authorization) limiting or excluding benefits based on medical necessity or medical appropriateness, or based on whether the treatment is experimental or investigative;

(B) Formulary design for prescription drugs;

(C) For plans with multiple network tiers (such as preferred providers and participating providers), network tier design;

(D) Standards related to network composition, including but not limited to, standards for provider and facility admission to participate in a network or for continued network participation, including methods for determining reimbursement rates, credentialing standards, and procedures for ensuring the network includes an adequate number of each category of provider and facility to provide services under the plan or coverage;

(E) Plan or issuer methods for determining out-of-network rates, such as allowed amounts; usual, customary, and reasonable charges; or application of other external benchmarks for out-of-network rates;

(F) Refusal to pay for higher-cost therapies until it can be shown that a lower-cost therapy is not effective (also known as fail-first policies or step therapy protocols);

(G) Exclusions based on failure to complete a course of treatment; and

(H) Restrictions based on geographic location, facility type, provider specialty, and other criteria that limit the scope or duration of benefits for services provided under the plan or coverage.

(iii) Required use of outcomes data —(A) In general. To ensure that a nonquantitative treatment limitation applicable to mental health or substance use disorder benefits in a classification, in operation, is no more restrictive than the predominant nonquantitative treatment limitation applied to substantially all medical/surgical benefits in the classification, a plan or issuer must collect and evaluate relevant data in a manner reasonably designed to assess the impact of the nonquantitative treatment limitation on relevant outcomes related to access to mental health and substance use disorder benefits and medical/surgical benefits and carefully consider the impact as part of the plan's or issuer's evaluation. As part of its evaluation, the plan or issuer may not disregard relevant outcomes data that it knows or reasonably should know suggest that a nonquantitative treatment limitation is associated with material differences in access to mental health or substance use disorder benefits as compared to medical/surgical benefits. The Secretary, jointly with the Secretary of the Treasury and the Secretary of Health and Human Services, may specify in guidance the type, form, and manner of collection and evaluation for the data required under this paragraph (c)(4)(iii)(A).

( 1) Relevant data generally. For purposes of this paragraph (c)(4)(iii)(A), relevant data could include, as appropriate, but are not limited to, the number and percentage of claims denials and any other data relevant to the nonquantitative treatment limitation required by State law or private accreditation standards.

( 2) Relevant data for nonquantitative treatment limitations related to network composition. In addition to the relevant data set forth in paragraph (c)(4)(iii)(A)( 1) of this section, relevant data for nonquantitative treatment limitations related to network composition could include, as appropriate, but are not limited to, in-network and out-of-network utilization rates (including data related to provider claim submissions), network adequacy metrics (including time and distance data, and data on providers accepting new patients), and provider reimbursement rates (for comparable services and as benchmarked to a reference standard).

( 3) Unavailability of data. ( i) If a plan or issuer newly imposes a nonquantitative treatment limitation for which relevant data is initially temporarily unavailable and the plan or issuer therefore cannot comply with this paragraph (c)(4)(iii)(A), the plan or issuer must include in its comparative analysis, as required under § 2590.712-1(c)(5)(i)(C), a detailed explanation of the lack of relevant data, the basis for the plan's or issuer's conclusion that there is a lack of relevant data, and when and how the data will become available and be collected and analyzed. Such a plan or issuer also must comply with this paragraph (c)(4)(iii)(A) as soon as practicable once relevant data becomes available.

( ii) If a plan or issuer imposes a nonquantitative treatment limitation for which no data exist that can reasonably assess any relevant impact of the nonquantitative treatment limitation on relevant outcomes related to access to mental health and substance use disorder benefits and medical/surgical benefits, the plan or issuer must include in its comparative analysis, as required under § 2590.712-1(c)(5)(i)(D), a reasoned justification as to the basis for the conclusion that there are no data that can reasonably assess the nonquantitative treatment limitation's impact, why the nature of the nonquantitative treatment limitation prevents the plan or issuer from reasonably measuring its impact, an explanation of what data was ( print page 77726) considered and rejected, and documentation of any additional safeguards or protocols used to ensure the nonquantitative treatment limitation complies with this section. If a plan or issuer becomes aware of data that can reasonably assess any relevant impact of the nonquantitative treatment limitation, the plan or issuer must comply with this paragraph (c)(4)(iii)(A) as soon as practicable.

( iii) Consistent with paragraph (a)(1) of this section, paragraphs (c)(4)(iii)(A)( 3)( i) and ( ii) of this section shall only apply in very limited circumstances and, where applicable, shall be construed narrowly.

(B) Material differences. To the extent the relevant data evaluated under paragraph (c)(4)(iii)(A) of this section suggest that the nonquantitative treatment limitation contributes to material differences in access to mental health and substance use disorder benefits as compared to medical/surgical benefits in a classification, such differences will be considered a strong indicator that the plan or issuer violates this paragraph (c)(4).

( 1) Where the relevant data suggest that the nonquantitative treatment limitation contributes to material differences in access to mental health and substance use disorder benefits as compared to medical/surgical benefits in a classification, the plan or issuer must take reasonable action, as necessary, to address the material differences to ensure compliance, in operation, with this paragraph (c)(4) and must document the actions that have been or are being taken by the plan or issuer to address material differences in access to mental health or substance use disorder benefits, as compared to medical/surgical benefits, as required by § 2590.712-1(c)(5)(iv).

( 2) For purposes of this paragraph (c)(4)(iii)(B), relevant data are considered to suggest that the nonquantitative treatment limitation contributes to material differences in access to mental health or substance use disorder benefits as compared to medical/surgical benefits if, based on all relevant facts and circumstances, and taking into account the considerations outlined in this paragraph (c)(4)(iii)(B)( 2), the difference in the data suggests that the nonquantitative treatment limitation is likely to have a negative impact on access to mental health or substance use disorder benefits as compared to medical/surgical benefits.

( i) Relevant facts and circumstances, for purposes of this paragraph (c)(4)(iii)(B)( 2), may include, but are not limited to, the terms of the nonquantitative treatment limitation at issue, the quality or limitations of the data, causal explanations and analyses, evidence as to the recurring or non-recurring nature of the results, and the magnitude of any disparities.

( ii) Differences in access to mental health or substance use disorder benefits attributable to generally recognized independent professional medical or clinical standards or carefully circumscribed measures reasonably and appropriately designed to detect or prevent and prove fraud and abuse that minimize the negative impact on access to appropriate mental health and substance use disorder benefits, which are used as the basis for a factor or evidentiary standard used to design or apply a nonquantitative treatment limitation, are not considered to be material for purposes of this paragraph (c)(4)(iii)(B). To the extent a plan or issuer attributes any differences in access to the application of such standards or measures, the plan or issuer must explain the bases for that conclusion in the documentation prepared under § 2590.712-1(c)(5)(iv)(A).

(C) Nonquantitative treatment limitations related to network composition. For purposes of applying paragraph (c)(4)(iii)(A) of this section with respect to nonquantitative treatment limitations related to network composition, a plan or issuer must collect and evaluate relevant data in a manner reasonably designed to assess the aggregate impact of all such nonquantitative treatment limitations on access to mental health and substance use disorder benefits and medical/surgical benefits. Examples of possible actions that a plan or issuer could take to comply with the requirement under paragraph (c)(4)(iii)(B)( 1) of this section to take reasonable action, as necessary, to address any material differences in access with respect to nonquantitative treatment limitations related to network composition, to ensure compliance with this paragraph (c)(4), include, but are not limited to:

( 1) Strengthening efforts to recruit and encourage a broad range of available mental health and substance use disorder providers and facilities to join the plan's or issuer's network of providers, including taking actions to increase compensation or other inducements, streamline credentialing processes, or contact providers reimbursed for items and services provided on an out-of-network basis to offer participation in the network;

( 2) Expanding the availability of telehealth arrangements to mitigate any overall mental health and substance use disorder provider shortages in a geographic area;

( 3) Providing additional outreach and assistance to participants and beneficiaries enrolled in the plan or coverage to assist them in finding available in-network mental health and substance use disorder providers and facilities; and

( 4) Ensuring that provider directories are accurate and reliable.

(iv) Prohibition on separate nonquantitative treatment limitations applicable only to mental health or substance use disorder benefits. Consistent with paragraph (c)(2)(i) of this section, a group health plan (or health insurance coverage offered by an issuer in connection with such a plan) may not apply any nonquantitative treatment limitation that is applicable only with respect to mental health or substance use disorder benefits and does not apply with respect to any medical/surgical benefits in the same benefit classification.

(v) Effect of final determination of noncompliance under § 2590.712-1. (A) If a group health plan (or health insurance issuer offering coverage in connection with a group health plan) receives a final determination from the Secretary that the plan or issuer is not in compliance with the requirements of ERISA section 712(a)(8) or § 2590.712-1 with respect to a nonquantitative treatment limitation, the nonquantitative treatment limitation violates this paragraph (c)(4) and the Secretary may direct the plan or issuer not to impose the nonquantitative treatment limitation with respect to mental health or substance use disorder benefits in the relevant classification, unless and until the plan or issuer demonstrates to the Secretary compliance with the requirements of this section or takes appropriate action to remedy the violation.

(B) A determination by the Secretary of whether to require cessation of a nonquantitative treatment limitation under this paragraph (c)(4)(v) will be based on an evaluation of the relevant facts and circumstances involved in the specific final determination and the nature of the underlying nonquantitative treatment limitation and will take into account the interest of plan participants and beneficiaries and feedback from the plan or issuer.

(vi) Examples. The rules of this paragraph (c)(4) are illustrated by the following examples. In each example, the group health plan is subject to the requirements of this section and provides both medical/surgical benefits and mental health and substance use disorder benefits.

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(A) Example 1 (not comparable and more stringent factors for reimbursement rate methodology, in operation) —( 1) Facts. A plan's reimbursement rate methodology for outpatient, in-network providers is based on a variety of factors. As written, for mental health, substance use disorder, and medical/surgical benefits, all reimbursement rates for physicians and non-physician practitioners for the same Current Procedural Terminology (CPT) code are based on a combination of factors, such as the nature of the service, duration of the service, intensity and specialization of training, provider licensure and type, number of providers qualified to provide the service in a given geographic area, and market need (demand). In operation, the plan utilizes an additional strategy to further reduce reimbursement rates for mental health and substance use disorder non-physician providers from those paid to mental health and substance use disorder physicians by the same percentage for every CPT code, but does not apply the same reductions for non-physician medical/surgical providers.

( 2) Conclusion. In this paragraph (c)(4)(vi)(A) ( Example 1), the plan violates the rules of this paragraph (c)(4). Because the plan reimburses non-physician providers of mental health and substance use disorder services by reducing their reimbursement rate from the rate for physician providers of mental health and substance use disorder services by the same percentage for every CPT code but does not apply the same reductions to non-physician providers of medical/surgical services from the rate for physician providers of medical/surgical services, in operation, the factors used in designing and applying the nonquantitative treatment limitation to mental health and substance use disorder benefits in the outpatient, in-network classification are not comparable to, and are applied more stringently than, the factors used in designing and applying the limitation with respect to medical/surgical benefits in the same classification. As a result, the nonquantitative treatment limitation with respect to mental health or substance use disorder benefits in the outpatient, in-network classification is more restrictive than the predominant nonquantitative treatment limitation that applies to substantially all medical/surgical benefits in the same classification.

(B) Example 2 (strategy for exclusion for experimental or investigative treatment more stringently applied to ABA therapy in operation) —( 1) Facts. A plan, as written, generally excludes coverage for all treatments that are experimental or investigative for both medical/surgical benefits and mental health and substance use disorder benefits in the outpatient, in-network classification. As a result, the plan generally excludes, as experimental, a treatment or procedure when no professionally recognized treatment guidelines include the treatment or procedure as a clinically appropriate standard of care for the condition or disorder and fewer than two randomized controlled trials are available to support the treatment's use with respect to the given condition or disorder. The plan provides benefits for the treatment of ASD, which is a mental health condition, but, in operation, the plan excludes coverage for ABA therapy to treat children with ASD, deeming it experimental. More than one professionally recognized treatment guideline defines clinically appropriate standards of care for ASD and more than two randomized controlled trials are available to support the use of ABA therapy as one intervention to treat certain children with ASD.

( 2) Conclusion. In this paragraph (c)(4)(vi)(B) ( Example 2), the plan violates the rules of this paragraph (c)(4). As written, the plan excludes coverage of experimental treatment of medical conditions and surgical procedures, mental health conditions, and substance use disorders when no professionally recognized treatment guidelines define clinically appropriate standards of care for the condition or disorder as including the treatment or procedure at issue, and fewer than two randomized controlled trials are available to support the treatment's use with respect to the given condition or procedure. However, in operation, the plan deviates from this strategy with respect to ABA therapy because more than one professionally recognized treatment guideline defines clinically appropriate standards of care for ASD as including ABA therapy to treat certain children with ASD and more than two randomized controlled trials are available to support the use of ABA therapy to treat certain children with ASD. Therefore, in operation, the strategy used to design the nonquantitative treatment limitation for benefits for the treatment of ASD, which is a mental health condition, in the outpatient, in-network classification is not comparable to, and is applied more stringently than, the strategy used to design the nonquantitative treatment limitation for medical/surgical benefits in the same classification. As a result, the nonquantitative treatment limitation with respect to mental health or substance use disorder benefits in the outpatient, in-network classification is more restrictive than the predominant nonquantitative treatment limitation that applies to substantially all medical/surgical benefits in the same classification.

(C) Example 3 (step therapy protocol with exception for severe or irreversible consequences, discriminatory factor) —( 1) Facts. A plan's written terms include a step therapy protocol that requires participants and beneficiaries who are prescribed certain drugs to try and fail a generic or preferred brand name drug before the plan will cover the drug originally prescribed by a participant's or beneficiary's attending provider. The plan provides an exception to this protocol that was developed solely based on a methodology developed by an external third-party organization. The third-party organization's methodology, which is not based on a generally recognized independent professional medical or clinical standard, identifies instances in which a delay in treatment with a drug prescribed for a medical condition or surgical procedure could result in either severe or irreversible consequences. However, with respect to a drug prescribed for a mental health condition or a substance use disorder, the third-party organization's methodology only identifies instances in which a delay in treatment could result in both severe and irreversible consequences, and the plan does not take any steps to correct, cure, or supplement the methodology.

( 2) Conclusion. In this paragraph (c)(4)(vi)(C) ( Example 3), the plan violates the rules of paragraph (c)(4)(i)(B) of this section. The source upon which the factor used to apply the step therapy protocol is based is biased or not objective in a manner that discriminates against mental health or substance use disorder benefits as compared to medical/surgical benefits because it addresses instances in which a delay in treatment with a drug prescribed for a medical condition or surgical procedure could result in either severe or irreversible consequences, but only addresses instances in which a delay in treatment with a drug prescribed for a mental health condition or substance use disorder could result in both severe and irreversible consequences, and the plan fails to take the steps necessary to correct, cure, or supplement the methodology so that it is not biased and is objective. Based on the relevant facts and circumstances, this source systematically disfavors access or is specifically designed to disfavor access to mental health or substance use disorder benefits as compared to medical/surgical benefits. Therefore, the factor used to apply the step therapy protocol is discriminatory for purposes of determining comparability and stringency under paragraph (c)(4)(i)(A) of this section, and may not be relied upon by the plan.

(D) Example 4 (use of historical plan data and plan steps to correct, cure, or supplement) —( 1) Facts. A plan's methodology for calculating provider reimbursement rates relies only on historical plan data on total plan spending for each specialty, divided between mental health and substance use disorder providers and medical/surgical providers, from a time when the plan was not subject to ERISA section 712. The plan has used these historical plan data for many years to establish base reimbursement rates in all provider specialties for which it provides medical/surgical, mental health, and substance use disorder benefits in the inpatient, in-network classification. In evaluating the use of these historical plan data in the design of the methodology for calculating provider reimbursement rates, the plan determined, based on all the relevant facts and circumstances, that the historical plan data systematically disfavor access or are specifically designed to disfavor access to mental health or substance use disorder benefits as compared to medical/surgical benefits. To ensure this information about historical reimbursement rates is not biased and is objective, the plan supplements its methodology to develop the base reimbursement rates for mental health and substance use disorder providers in accordance with additional information, evidence, sources, and standards that reflect the increased demand for mental health and substance use disorder benefits in the inpatient, in-network classification and to ( print page 77728) attract sufficient mental health and substance use disorder providers to the network, so that the relevant facts and circumstances indicate the supplemented information, evidence, sources, or standards do not systematically disfavor access and are not specifically designed to disfavor access to mental health and substance use disorder benefits as compared to medical/surgical benefits.

( 2) Conclusion. In this paragraph (c)(4)(vi)(D) ( Example 4), the plan does not violate the rules of paragraph (c)(4)(i)(B) of this section with respect to the plan's methodology for calculating provider reimbursement rates in the inpatient, in-network classification. The relevant facts and circumstances indicate that the plan's use of only historical plan data to design its methodology for calculating provider reimbursement rates in the inpatient, in-network classification would otherwise be considered to be biased or not objective in a manner that discriminates against mental health or substance use disorder benefits as compared to medical/surgical benefits under paragraph (c)(4)(i)(B)( 2) of this section, since the historical data systematically disfavor access or are specifically designed to disfavor access to mental health or substance use disorder benefits as compared to medical/surgical benefits. However, the plan took the steps necessary to supplement the information, evidence, sources, and standards to reasonably reflect the increased demand for mental health and substance use disorder benefits in the inpatient, in-network classification, and adjust the methodology to increase reimbursement rates for those benefits, thereby ensuring that the information, evidence, sources, and standards relied upon by the plan for this purpose are not biased and are objective. Therefore, the factors and evidentiary standards used to design the plan's methodology for calculating provider reimbursement rates in the inpatient, in-network classification are not discriminatory.

(E) Example 5 (generally recognized independent professional medical or clinical standards and more stringent prior authorization requirement in operation) —( 1) Facts. The provisions of a plan state that it relies on, and does not deviate from, generally recognized independent professional medical or clinical standards to inform the factor used to design prior authorization requirements for both medical/surgical and mental health and substance use disorder benefits in the prescription drug classification. The generally recognized independent professional medical standard for treatment of opioid use disorder that the plan utilizes—in this case, the American Society of Addiction Medicine national practice guidelines—does not support prior authorization every 30 days for buprenorphine/naloxone. However, in operation, the plan requires prior authorization for buprenorphine/naloxone combination for treatment of opioid use disorder, every 30 days, which is inconsistent with the generally recognized independent professional medical standard on which the factor used to design the limitation is based. The plan's factor used to design prior authorization requirements for medical/surgical benefits in the prescription drug classification relies on, and does not deviate from, generally recognized independent professional medical or clinical standards.

( 2) Conclusion. In this paragraph (c)(4)(vi)(E) ( Example 5), the plan violates the rules of this paragraph (c)(4). The American Society of Addiction Medicine national practice guidelines on which the factor used to design prior authorization requirements for substance use disorder benefits is based are generally recognized independent professional medical or clinical standards that are not considered to be biased or not objective in a manner that discriminates against mental health and substance use disorder benefits under paragraph (c)(4)(i)(B)( 3) of this section. However, the plan must comply with other requirements in this paragraph (c)(4), as applicable, with respect to such standards or measures that are used as the basis for a factor or evidentiary standard used to design or apply a nonquantitative treatment limitation. In operation, the plan's factor used to design and apply prior authorization requirements with respect to substance use disorder benefits is not comparable to, and is applied more stringently than, the same factor used to design and apply prior authorization requirements for medical/surgical benefits, because the factor relies on, and does not deviate from, generally recognized independent professional medical or clinical standards for medical/surgical benefits, but deviates from the relevant guidelines for substance use disorder benefits. As a result, the nonquantitative treatment limitation with respect to substance use disorder benefits in the prescription drug classification is more restrictive than the predominant nonquantitative treatment limitation that applies to substantially all medical/surgical benefits in the same classification.

(F) Example 6 (plan claims no data exist to reasonably assess impact of nonquantitative treatment limitation on access; medical necessity criteria) —( 1) Facts. A plan approves or denies claims for mental health and substance use disorder benefits and for medical/surgical benefits in the inpatient, in-network and outpatient, in-network classifications based on medical necessity criteria. The plan states in its comparative analysis that no data exist that can reasonably assess any relevant impact of the medical necessity criteria nonquantitative treatment limitation on relevant outcomes related to access to mental health or substance use disorder benefits as compared to the plan's medical necessity criteria nonquantitative treatment limitation's impact on relevant outcomes related to access to medical/surgical benefits in the relevant classifications, without further explanation.

( 2) Conclusion. In this paragraph (c)(4)(vi)(F) ( Example 6), the plan violates this paragraph (c)(4). The plan does not comply with paragraph (c)(4)(iii)(A)( 3)( ii) of this section because the plan did not include in its comparative analysis, as required under § 2590.712-1(c)(5)(i)(D), a reasoned justification as to the basis for its conclusion that there are no data that can reasonably assess the nonquantitative treatment limitation's impact, an explanation of why the nature of the nonquantitative treatment limitation prevents the plan from reasonably measuring its impact, an explanation of what data was considered and rejected, and documentation of any additional safeguards or protocols used to ensure the nonquantitative treatment limitation complies with this paragraph (c)(4). Data that could reasonably assess the medical necessity criteria nonquantitative treatment limitation's impact might include, for example, the number and percentage of claims denials, or the number and percentage of claims that were approved for a lower level of care than the level requested on the initial claim. Therefore, because the plan has not collected and evaluated relevant data in a manner reasonably designed to assess the impact of the nonquantitative treatment limitation on relevant outcomes related to access to mental health and substance use disorder benefits and medical/surgical benefits in the relevant classifications, the plan violates the requirements of paragraph (c)(4)(iii) of this section, and violates the requirements under § 2590.712-1(c)(5)(i)(D) because it did not include sufficient information in its comparative analysis with respect to the lack of relevant data.

(G) Example 7 (concurrent review data collection; no material difference in access)—(1) Facts. A plan follows a written process to apply a concurrent review nonquantitative treatment limitation to all medical/surgical benefits and mental health and substance use disorder benefits within the inpatient, in-network classification. Under this process, a first-level review is conducted in every instance in which concurrent review applies and an authorization request is approved by the first-level reviewer only if the clinical information submitted by the facility meets the plan's criteria for a continued stay. If the first-level reviewer is unable to approve the authorization request because the clinical information submitted by the facility does not meet the plan's criteria for a continued stay, it is sent to a second-level reviewer who will either approve or deny the request. The plan collects relevant data, including the number of referrals to second-level review, and the number of denials of claims for medical/surgical benefits and mental health and substance use disorder benefits subject to concurrent review as compared to the total number of claims subject to concurrent review, in the inpatient, in-network classification. The plan also collects and evaluates the number of denied claims for medical/surgical benefits and mental health and substance use disorder benefits that are overturned on appeal in the inpatient, in-network classification. The plan evaluates the relevant data and determines that, based on the relevant facts and circumstances, the data do not suggest that the concurrent review nonquantitative treatment limitation contributes to material differences in access to mental health or substance use disorder benefits as compared to medical/surgical benefits in the classification Upon requesting the plan's comparative analysis for the concurrent review nonquantitative treatment limitation and reviewing the relevant data, the Secretary does not request additional data ( print page 77729) and agrees that the data do not suggest material differences in access.

( 2) Conclusion. In this paragraph (c)(4)(vi)(G) ( Example 7), the plan does not violate the rules of paragraph (c)(4)(iii) of this section. The plan collected and evaluated relevant data in a manner reasonably designed to assess the impact of the nonquantitative treatment limitation on relevant outcomes related to access to mental health and substance use disorder benefits and medical/surgical benefits and considered the impact as part of its evaluation. Because the relevant data evaluated do not suggest that the nonquantitative treatment limitation contributes to material differences in access to mental health and substance use disorder benefits as compared to medical/surgical benefits in the inpatient, in-network classification, under paragraph (c)(4)(iii)(B) of this section, there is no strong indicator that the plan violates this paragraph (c)(4).

(H) Example 8 (material difference in access for prior authorization requirement with reasonable action) —( 1) Facts. A plan requires prior authorization that a treatment is medically necessary for all inpatient, in-network medical/surgical benefits and for all inpatient, in-network mental health and substance use disorder benefits. The plan collects and evaluates relevant data in a manner reasonably designed to assess the impact of the prior authorization requirement on relevant outcomes related to access to mental health and substance use disorder benefits and medical/surgical benefits in the inpatient, in-network classification. The plan's written process for prior authorization states that the plan approves inpatient, in-network benefits for medical conditions and surgical procedures and mental health and substance use disorder benefits for periods of 1, 3, and 7 days, after which a treatment plan must be submitted by the patient's attending provider and approved by the plan. Approvals for mental health and substance use disorder benefits are most commonly given only for 1 day, after which a treatment plan must be submitted by the patient's attending provider and approved by the plan. The relevant data show that approvals for 7 days are most common for medical conditions and surgical procedures under this plan. Based on all the relevant facts and circumstances, the difference in the relevant data suggests that the nonquantitative treatment limitation is likely to have a negative impact on access to mental health and substance use disorder benefits as compared to medical/surgical benefits. Therefore, the data suggest that the nonquantitative treatment limitation contributes to material differences in access. To address these material differences in access, the plan consults more recent medical guidelines to update the factors that inform its medical necessity nonquantitative treatment limitations. Based on this review, the plan modifies the limitation so that inpatient, in-network prior authorization requests for mental health or substance use disorder benefits are approved for similar periods to what is approved for medical/surgical benefits. The plan includes documentation of this action as part of its comparative analysis.

( 2) Conclusion. In this paragraph (c)(4)(vi)(H) ( Example 8), the plan does not violate the rules of paragraph (c)(4)(iii) of this section. While relevant data for the plan's prior authorization requirements suggested that the nonquantitative treatment limitation contributes to material differences in access to mental health and substance use disorder benefits as compared to inpatient, in-network medical/surgical benefits under paragraph (c)(4)(iii)(B) of this section, the plan has taken reasonable action, as necessary, to ensure compliance, in operation, with this paragraph (c)(4) by updating the factors that inform its prior authorization nonquantitative treatment limitation for inpatient, in-network mental health and substance use disorder benefits so that these benefits are approved for similar periods to what is approved for medical/surgical benefits. The plan also documents its action taken to address material differences in access to inpatient, in-network benefits as required by paragraph (c)(4)(iii)(B)( 1) of this section.

(I) Example 9 (differences attributable to generally recognized independent professional medical or clinical standards) —( 1) Facts. A group health plan develops a medical management requirement for all inpatient, out-of-network benefits for both medical/surgical benefits and mental health and substance use disorder benefits to ensure treatment is medically necessary. The factors and evidentiary standards used to design and apply the medical management requirement rely on independent professional medical or clinical standards that are generally recognized by health care providers and facilities in relevant clinical specialties. The processes, strategies, evidentiary standards, and other factors used in designing and applying the medical management requirement to mental health and substance use disorder benefits are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, and other factors used in designing and applying the requirement with respect to medical/surgical benefits. The plan collects and evaluates relevant data in a manner reasonably designed to assess the impact of the medical management nonquantitative treatment limitation on relevant outcomes related to access to mental health and substance use disorder benefits and medical/surgical benefits, and considers the impact as part of the plan's evaluation, as required by paragraph (c)(4)(iii)(A) of this section. Within the inpatient, out-of-network classification, the application of the medical management requirement results in a higher percentage of denials for mental health and substance use disorder claims than medical/surgical claims, because the benefits were found to be medically necessary for a lower percentage of mental health and substance use disorder claims. The plan correctly determines that these differences in access are attributable to the generally recognized independent professional medical or clinical standards used as the basis for the factors and evidentiary standards used to design or apply the limitation and adequately explains the bases for that conclusion as part of its comparative analysis.

( 2) Conclusion. In this paragraph (c)(4)(vi)(I) ( Example 9), the plan does not violate the rules of this paragraph (c)(4). Generally recognized independent professional medical or clinical standards of care are not considered to be information, evidence, sources, or standards that are biased and not objective in a manner that discriminates against mental health or substance use disorder benefits as compared to medical/surgical benefits, and the plan otherwise complies with the requirements in paragraph (c)(4)(i) of this section. Additionally, the plan does not violate paragraph (c)(4)(iii) of this section because it has collected and evaluated relevant data, the differences in access are attributable to the generally recognized independent professional medical or clinical standards that are used as the basis for the factors and evidentiary standards used to design or apply the medical management nonquantitative treatment limitation, and the plan explains the bases for this conclusion in its comparative analysis. As a result, the nonquantitative treatment limitation with respect to mental health or substance use disorder benefits in the inpatient, out-of-network classification is no more restrictive than the predominant nonquantitative treatment limitation that applies to substantially all medical/surgical benefits in the same classification.

(J) Example 10 (material differences in access for standards for provider admission to a network with reasonable action) —( 1) Facts. A plan applies nonquantitative treatment limitations related to network composition in the inpatient, in-network and outpatient, in-network classifications. The plan's networks are constructed by separate service providers for medical/surgical benefits and mental health and substance use disorder benefits. The processes, strategies, evidentiary standards, and other factors used in designing and applying the nonquantitative treatment limitations related to network composition for mental health or substance use disorder benefits in the outpatient, in-network and inpatient, in-network classifications are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, and other factors used in designing and applying the nonquantitative treatment limitations with respect to medical/surgical benefits in the classifications, as required under paragraph (c)(4)(i) of this section. In order to ensure, in operation, that the nonquantitative treatment limitations are no more restrictive than the predominant nonquantitative treatment limitations applied to substantially all medical/surgical benefits in the classification, the plan collects and evaluates relevant data in a manner reasonably designed to assess the aggregate impact of all the nonquantitative treatment limitations related to network composition on relevant outcomes related to access to mental health and substance use disorder benefits as compared with access to medical/surgical benefits and considers the impact as part of the plan's evaluation. The plan considers relevant data that is known, or reasonably should be known, including metrics relating to the time and distance from ( print page 77730) plan participants and beneficiaries to network providers in rural and urban regions; the number of network providers accepting new patients; the proportions of mental health and substance use disorder and medical/surgical providers and facilities that provide services in rural and urban regions who are in the plan's network; provider reimbursement rates (for comparable services and benchmarked to a reference standard, as appropriate); and in-network and out-of-network utilization rates (including data related to the dollar value and number of provider claims submissions). The plan determines that the relevant data suggest that the nonquantitative treatment limitations in the aggregate contribute to material differences in access to mental health and substance use disorder benefits compared to medical/surgical benefits in the classifications because, based on all the relevant facts and circumstances, the differences in the data suggest that the nonquantitative treatment limitations related to network composition are likely to have a negative impact on access to mental health or substance use disorder benefits as compared to medical/surgical benefits. The plan takes reasonable actions, as necessary, to address the material differences in access, to ensure compliance, in operation, with this paragraph (c)(4), by strengthening its efforts to recruit and encourage a broad range of available providers and facilities to join the plan's network of providers, including by taking actions to increase compensation and other inducements, streamline credentialing processes, contact providers reimbursed for items and services provided on an out-of-network basis to offer participation in the network, and develop a process to monitor the effects of such efforts; expanding the availability of telehealth arrangements to mitigate overall provider shortages in certain geographic areas; providing additional outreach and assistance to participants and beneficiaries enrolled in the plan to assist them in finding available in-network providers and facilities; and ensuring that the plan's provider directories are accurate and reliable. The plan documents the efforts that it has taken to address the material differences in access that the data revealed, and the plan includes the documentation as part of its comparative analysis submission.

( 2) Conclusion. In this paragraph (c)(4)(vi)(J) ( Example 10), the plan does not violate the rules of this paragraph (c)(4). The plan's nonquantitative treatment limitations related to network composition comply with the rules of paragraph (c)(4)(i) of this section. Additionally, the plan collects and evaluates relevant data, as required under paragraph (c)(4)(iii)(A) of this section, in a manner reasonably designed to assess the aggregate impact of all such nonquantitative treatment limitations on relevant outcomes related to access to mental health and substance use disorder benefits and medical/surgical benefits, as required under paragraph (c)(4)(iii)(C) of this section. While the data suggest that the nonquantitative treatment limitations contribute to material differences in access to mental health and substance use disorder benefits as compared to medical/surgical benefits, the plan has taken reasonable action, as necessary, to ensure compliance with this paragraph (c)(4). The plan also documents the actions that have been and are being taken by the plan to address material differences as required by § 2590.712-1(c)(5)(iv). As a result, the network composition nonquantitative treatment limitations with respect to mental health or substance use disorder benefits in the inpatient, in-network and outpatient, in-network classifications are no more restrictive than the predominant nonquantitative treatment limitations that apply to substantially all medical/surgical benefits in the same classifications.

(K) Example 11 (separate EAP exhaustion treatment limitation applicable only to mental health or substance use disorder benefits) —( 1) Facts. An employer maintains both a major medical plan and an employee assistance program (EAP). The EAP provides, among other benefits, a limited number of mental health or substance use disorder counseling sessions, which, together with other benefits provided by the EAP, are not significant benefits in the nature of medical care. Participants are eligible for mental health or substance use disorder benefits under the major medical plan only after exhausting the counseling sessions provided by the EAP. No similar exhaustion requirement applies with respect to medical/surgical benefits provided under the major medical plan.

( 2) Conclusion. In this paragraph (c)(4)(vi)(K) ( Example 11), the requirement that limits eligibility for mental health and substance use disorder benefits under the major medical plan until EAP benefits are exhausted is a nonquantitative treatment limitation subject to the parity requirements of this paragraph (c)(4). Because the limitation does not apply to medical/surgical benefits, it is a separate nonquantitative treatment limitation applicable only to mental health and substance use disorder benefits that violates paragraph (c)(4)(iv) of this section. Additionally, this EAP would not qualify as excepted benefits under § 2590.732(c)(3)(vi)(B)( 1) because participants in the major medical plan are required to use and exhaust benefits under the EAP (making the EAP a gatekeeper) before an individual is eligible for benefits under the plan.

(L) Example 12 (separate exclusion for treatment in a residential facility applicable only to mental health and substance use disorder benefits) —( 1) Facts. A plan generally covers inpatient, in-network and inpatient, out-of-network treatment without any limitations on setting, including skilled nursing facilities and rehabilitation hospitals, provided other medical necessity standards are satisfied. The plan has an exclusion for treatment at residential facilities, which the plan defines as an inpatient benefit for mental health and substance use disorder benefits. This exclusion was not generated through any broader nonquantitative treatment limitation (such as medical necessity or other clinical guideline).

( 2) Conclusion. In this paragraph (c)(4)(vi)(L) ( Example 12), the plan violates the rules of paragraph (c)(4)(iv) of this section. The exclusion of treatment at residential facilities is a separate nonquantitative treatment limitation applicable only to mental health and substance use disorder benefits in the inpatient, in-network and inpatient, out-of-network classifications because the plan does not apply a comparable exclusion with respect to any medical/surgical benefits in the same benefit classification.

(M) Example 13 (impermissible nonquantitative treatment limitation imposed following a final determination of noncompliance and direction by the Secretary) —( 1) Facts. Following an initial request by the Secretary for a plan's comparative analysis of the plan's exclusion of mental health and substance use disorder benefits for failure to complete a course of treatment in the inpatient, in-network classification under § 2590.712-1(d), the plan submits a comparative analysis for the nonquantitative treatment limitation. After review of the comparative analysis, as well as additional information submitted by the plan after the Secretary determines that the plan has not submitted sufficient information to be responsive to the request, the Secretary makes an initial determination that the comparative analysis fails to demonstrate that the processes, strategies, evidentiary standards, and other factors used in designing and applying the nonquantitative treatment limitation to mental health or substance use disorder benefits in the inpatient, in-network classification are comparable to, and applied no more stringently than, those used in designing and applying the limitation to medical/surgical benefits in the classification. Under § 2590.712-1(d)(3), the plan submits a corrective action plan and additional comparative analyses within 45 calendar days after the initial determination. However, the corrective action plan does not alter or eliminate the exclusion or alter the processes, strategies, evidentiary standards, and other factors used in designing and applying the exclusion. Moreover, the additional comparative analysis still does not include sufficient information. The Secretary then determines that the additional comparative analyses do not demonstrate compliance with the requirements of this paragraph (c)(4). Accordingly, the plan receives a final determination of noncompliance with ERISA section 712(a)(8) and § 2590.712-1 from the Secretary, which concludes that the plan did not demonstrate compliance through the comparative analysis process. After considering the relevant facts and circumstances, and considering the interests of plan participants and beneficiaries, as well as feedback from the plan, the Secretary directs the plan not to impose the nonquantitative treatment limitation by a certain date, unless and until the plan demonstrates compliance to the Secretary or takes appropriate action to remedy the violation. The plan makes no changes to its plan terms by that date and continues to impose the exclusion of benefits for failure to complete a course of treatment in the inpatient, in-network classification.

( 2) Conclusion. In this paragraph (c)(4)(vi)(M) ( Example 13), by continuing to impose the exclusion of mental health and ( print page 77731) substance use disorder benefits for failure to complete a course of treatment in the inpatient, in-network classification after the Secretary directs the plan not to impose this nonquantitative treatment limitation, the plan violates the requirements of paragraph (c)(4)(v) of this section.

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(d) * * *

(3) Provisions of other law. Compliance with the disclosure requirements in paragraphs (d)(1) and (2) of this section is not determinative of compliance with any other provision of applicable Federal or State law. In particular, in addition to those disclosure requirements, provisions of other applicable law require disclosure of information relevant to medical/surgical, mental health, and substance use disorder benefits. For example, ERISA section 104 and § 2520.104b-1 of this chapter provide that, for plans subject to ERISA, instruments under which the plan is established or operated must generally be furnished to plan participants within 30 days of request. Instruments under which the plan is established or operated include documents with information on medical necessity criteria for both medical/surgical benefits and mental health and substance use disorder benefits; the processes, strategies, evidentiary standards, and other factors used to apply a nonquantitative treatment limitation with respect to medical/surgical benefits and mental health or substance use disorder benefits under the plan; and the comparative analyses and other applicable information required by § 2590.712-1. In addition, § 2560.503-1 of this chapter and § 2590.715-2719 set forth rules regarding claims and appeals, including the right of claimants (or their authorized representative) who have received an adverse benefit determination (or a final internal adverse benefit determination) to be provided, upon request and free of charge, reasonable access to and copies of all documents, records, and other information relevant to the claimant's claim for benefits. This includes documents with information on medical necessity criteria for both medical/surgical benefits and mental health and substance use disorder benefits, as well as the processes, strategies, evidentiary standards, and other factors used to apply a nonquantitative treatment limitation with respect to medical/surgical benefits and mental health or substance use disorder benefits under the plan and the comparative analyses and other applicable information required by § 2590.712-1.

(e) * * *

(4) Coordination with EHB requirements. Nothing in paragraph (f) or (g) of this section or § 2590.712-1(g) changes the requirements of 45 CFR 147.150 and 156.115 providing that a health insurance issuer offering non-grandfathered health insurance coverage in the individual or small group market that is required to provide mental health and substance use disorder services, including behavioral health treatment services, as part of essential health benefits required under 45 CFR 156.110(a)(5) and 156.115(a), must comply with the requirements under section 2726 of the Public Health Service Act and its implementing regulations at 45 CFR 146.136 and 146.137 to satisfy the requirement to provide coverage for mental health and substance use disorder services, including behavioral health treatment, as part of essential health benefits.

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(i) * * *

(1) In general. Except as provided in paragraph (i)(2) of this section—

(i) This section applies to group health plans and health insurance issuers offering group health insurance coverage on the first day of the first plan year beginning on or after January 1, 2025, except that the requirements of paragraphs (c)(2)(ii)(A), (c)(4)(i)(B), and (c)(4)(iii) of this section apply on the first day of the first plan year beginning on or after January 1, 2026.

(ii) Until the applicability date in paragraph (i)(1)(i) of this section, plans and issuers are required to continue to comply with 29 CFR 2590.712, revised as of July 1, 2022.

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(j) Severability. If any provision of this section is held to be invalid or unenforceable by its terms, or as applied to any person or circumstance, or stayed pending further agency action, the provision shall be construed so as to continue to give the maximum effect to the provision permitted by law, unless such holding shall be one of invalidity or unenforceability, in which event the provision shall be severable from this section and shall not affect the remainder thereof or the application of the provision to persons not similarly situated or to dissimilar circumstances.

6. Add § 2590.712-1 to read as follows:

§ 2590.712-1

Nonquantitative treatment limitation comparative analysis requirements.

(a) Meaning of terms. Unless otherwise stated in this section, the terms of this section have the meanings indicated in § 2590.712(a)(2).

(b) In general. In the case of a group health plan (or health insurance issuer offering coverage in connection with a group health plan) that provides both medical/surgical benefits and mental health or substance use disorder benefits and that imposes any nonquantitative treatment limitation on mental health or substance use disorder benefits, the plan or issuer must perform and document a comparative analysis of the design and application of each nonquantitative treatment limitation applicable to mental health or substance use disorder benefits. Each comparative analysis must comply with the content requirements of paragraph (c) of this section and be made available to the Secretary, upon request, in the manner required by paragraphs (d) and (e) of this section.

(c) Comparative analysis content requirements. With respect to each nonquantitative treatment limitation applicable to mental health or substance use disorder benefits under a group health plan (or health insurance coverage offered in connection with a group health plan), the comparative analysis performed by the plan or issuer must include, at minimum, the elements specified in this paragraph (c). In addition to the comparative analysis for each nonquantitative treatment limitation, each plan or issuer must prepare and make available to the Secretary, upon request, a written list of all nonquantitative treatment limitations imposed under the plan or coverage, which must be provided to the named fiduciaries of the plan who are required to include a certification as part of each comparative analysis, as required under paragraph (c)(6)(vi) of this section.

(1) Description of the nonquantitative treatment limitation. The comparative analysis must include, with respect to the nonquantitative treatment limitation that is the subject of the comparative analysis:

(i) Identification of the nonquantitative treatment limitation, including the specific terms of the plan or coverage or other relevant terms regarding the nonquantitative treatment limitation, the policies or guidelines (internal or external) in which the nonquantitative treatment limitation appears or is described, and the applicable sections of any other relevant documents, such as provider contracts, that describe the nonquantitative treatment limitation;

(ii) Identification of all mental health or substance use disorder benefits and medical/surgical benefits to which the nonquantitative treatment limitation applies, including a list of which benefits are considered mental health or ( print page 77732) substance use disorder benefits and which benefits are considered medical/surgical benefits; and

(iii) A description of which benefits are included in each classification set forth in § 2590.712(c)(2)(ii)(A).

(2) Identification and definition of the factors and evidentiary standards used to design or apply the nonquantitative treatment limitation. The comparative analysis must include, with respect to every factor considered or relied upon to design the nonquantitative treatment limitation or apply the nonquantitative treatment limitation to mental health or substance use disorder benefits and medical/surgical benefits:

(i) Identification of every factor considered or relied upon, as well as the evidentiary standards considered or relied upon to design or apply each factor and the sources from which each evidentiary standard was derived, in determining which mental health or substance use disorder benefits and which medical/surgical benefits are subject to the nonquantitative treatment limitation; and

(ii) A definition of each factor, including:

(A) A detailed description of the factor;

(B) A description of each evidentiary standard used to design or apply each factor (and the source of each evidentiary standard) identified under paragraph (c)(2)(i) of this section; and

(C) A description of any steps the plan or issuer has taken to correct, cure, or supplement any information, evidence, sources, or standards that would otherwise have been considered biased or not objective under § 2590.712(c)(4)(i)(B)( 1) in the absence of such steps.

(3) Description of how factors are used in the design and application of the nonquantitative treatment limitation. The comparative analysis must include a description of how each factor identified and defined under paragraph (c)(2) of this section is used in the design or application of the nonquantitative treatment limitation to mental health and substance use disorder benefits and medical/surgical benefits in a classification, including:

(i) A detailed explanation of how each factor identified and defined in paragraph (c)(2) of this section is used to determine which mental health or substance use disorder benefits and which medical/surgical benefits are subject to the nonquantitative treatment limitation;

(ii) An explanation of the evidentiary standards or other information or sources (if any) considered or relied upon in designing or applying the factors or relied upon in designing and applying the nonquantitative treatment limitation, including in the determination of whether and how mental health or substance use disorder benefits or medical/surgical benefits are subject to the nonquantitative treatment limitation;

(iii) If the application of the factor depends on specific decisions made in the administration of benefits, the nature of the decisions, the timing of the decisions, and the professional designations and qualifications of each decision maker;

(iv) If more than one factor is identified and defined in paragraph (c)(2) of this section, an explanation of:

(A) How all of the factors relate to each other;

(B) The order in which all the factors are applied, including when they are applied;

(C) Whether and how any factors are given more weight than others; and

(D) The reasons for the ordering or weighting of the factors; and

(v) Any deviations or variations from a factor, its applicability, or its definition (including the evidentiary standards used to define the factor and the information or sources from which each evidentiary standard was derived), such as how the factor is used differently to apply the nonquantitative treatment limitation to mental health or substance use disorder benefits as compared to medical/surgical benefits, and a description of how the plan or issuer establishes such deviations or variations.

(4) Demonstration of comparability and stringency as written. The comparative analysis must evaluate whether, in any classification, under the terms of the plan (or health insurance coverage) as written, any processes, strategies, evidentiary standards, or other factors used in designing and applying the nonquantitative treatment limitation to mental health or substance use disorder benefits are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in designing and applying the nonquantitative treatment limitation with respect to medical/surgical benefits. The comparative analysis must include, with respect to the nonquantitative treatment limitation and the factors used in designing and applying the nonquantitative treatment limitation:

(i) Documentation of each factor identified and defined in paragraph (c)(2) of this section that was applied to determine whether the nonquantitative treatment limitation applies to mental health or substance use disorder benefits and medical/surgical benefits in a classification, including, as relevant:

(A) Quantitative data, calculations, or other analyses showing whether, in each classification in which the nonquantitative treatment limitation applies, mental health or substance use disorder benefits and medical/surgical benefits met or did not meet any applicable threshold identified in the relevant evidentiary standard to determine that the nonquantitative treatment limitation would or would not apply; and

(B) Records maintained by the plan or issuer documenting the consideration and application of all factors and evidentiary standards, as well as the results of their application;

(ii) In each classification in which the nonquantitative treatment limitation applies to mental health or substance use disorder benefits, a comparison of how the nonquantitative treatment limitation, as written, is designed and applied to mental health or substance use disorder benefits and to medical/surgical benefits, including the specific provisions of any forms, checklists, procedure manuals, or other documentation used in designing and applying the nonquantitative treatment limitation or that address the application of the nonquantitative treatment limitation;

(iii) Documentation demonstrating how the factors are comparably applied, as written, to mental health or substance use disorder benefits and medical/surgical benefits in each classification, to determine which benefits are subject to the nonquantitative treatment limitation; and

(iv) An explanation of the reasons for any deviations or variations in the application of a factor used to apply the nonquantitative treatment limitation, or the application of the nonquantitative treatment limitation, to mental health or substance use disorder benefits as compared to medical/surgical benefits, and how the plan or issuer establishes such deviations or variations, including:

(A) In the definition of the factors, the evidentiary standards used to define the factors, and the sources from which the evidentiary standards were derived;

(B) In the design of the factors or evidentiary standards; or

(C) In the application or design of the nonquantitative treatment limitation.

(5) Demonstration of comparability and stringency in operation. The comparative analysis must evaluate whether, in any classification, in operation, the processes, strategies, evidentiary standards, or other factors used in designing and applying the ( print page 77733) nonquantitative treatment limitation to mental health or substance use disorder benefits are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in designing and applying the limitation with respect to medical/surgical benefits. The comparative analysis must include, with respect to the nonquantitative treatment limitation and the factors used in designing and applying the nonquantitative treatment limitation:

(i) A comprehensive explanation of how the plan or issuer evaluates whether, in operation, the processes, strategies, evidentiary standards, or other factors used in designing and applying the nonquantitative treatment limitation to mental health or substance use disorder benefits in a classification are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in designing and applying the nonquantitative treatment limitation with respect to medical/surgical benefits, including:

(A) An explanation of any methodology and underlying data used to demonstrate the application of the nonquantitative treatment limitation, in operation;

(B) The sample period, inputs used in any calculations, definitions of terms used, and any criteria used to select the mental health or substance use disorder benefits and medical/surgical benefits to which the nonquantitative treatment limitation is applicable;

(C) With respect to a nonquantitative treatment limitation for which relevant data is temporarily unavailable as described in § 2590.712(c)(4)(iii)(A)( 3)( i), a detailed explanation of the lack of relevant data, the basis for the plan's or issuer's conclusion that there is a lack of relevant data, and when and how the data will become available and be collected and analyzed; and

(D) With respect to a nonquantitative treatment limitation for which no data exist that can reasonably assess any relevant impact of the nonquantitative treatment limitation on relevant outcomes related to access to mental health and substance use disorder benefits and medical/surgical benefits as described in § 2590.712(c)(4)(iii)(A)( 3)( ii), a reasoned justification as to the basis for the conclusion that there are no data that can reasonably assess the nonquantitative treatment limitation's impact, an explanation of why the nature of the nonquantitative treatment limitation prevents the plan or issuer from reasonably measuring its impact, an explanation of what data was considered and rejected, and documentation of any additional safeguards or protocols used to ensure that the nonquantitative treatment limitation complies with § 2590.712(c)(4);

(ii) Identification of the relevant data collected and evaluated, as required under § 2590.712(c)(4)(iii)(A);

(iii) Documentation of the outcomes that resulted from the application of the nonquantitative treatment limitation to mental health or substance use disorder benefits and medical/surgical benefits, including:

(A) The evaluation of relevant data as required under § 2590.712(c)(4)(iii)(A); and

(B) A reasoned justification and analysis that explains why the plan or issuer concluded that any differences in the relevant data do or do not suggest the nonquantitative treatment limitation contributes to material differences in access to mental health or substance use disorder benefits as compared to medical/surgical benefits, in accordance with § 2590.712(c)(4)(iii)(B)( 2);

(iv) A detailed explanation of any material differences in access demonstrated by the outcomes evaluated under paragraph (c)(5)(iii) of this section, including:

(A) A reasoned explanation of any material differences in access that are not attributable to differences in the comparability or relative stringency of the nonquantitative treatment limitation as applied to mental health or substance use disorder benefits and medical/surgical benefits (including any considerations beyond a plan's or issuer's control that contribute to the existence of material differences) and a detailed explanation of the bases for concluding that material differences are not attributable to differences in the comparability or relative stringency of the nonquantitative treatment limitation; and

(B) To the extent differences in access to mental health or substance use disorder benefits are attributable to generally recognized independent professional medical or clinical standards or carefully circumscribed measures reasonably and appropriately designed to detect or prevent and prove fraud and abuse that minimize the negative impact on access to appropriate mental health and substance use disorder benefits, and such standards or measures are used as the basis for a factor or evidentiary standard used to design or apply a nonquantitative treatment limitation, documentation explaining how any such differences are attributable to those standards or measures, as required in § 2590.712(c)(4)(iii)(B)( 2)( ii); and

(v) A discussion of the actions that have been or are being taken by the plan or issuer to address any material differences in access to mental health or substance use disorder benefits as compared to medical/surgical benefits, including the actions the plan or issuer has taken or is taking under § 2590.712(c)(4)(iii)(B)( 1) to address material differences to comply, in operation, with § 2590.712(c)(4), including, as applicable:

(A) A reasoned explanation of any material differences in access to mental health or substance use disorder benefits as compared to medical/surgical benefits that persist despite reasonable actions that have been or are being taken; and

(B) For a plan or issuer designing and applying one or more nonquantitative treatment limitations related to network composition, a discussion of the actions that have been or are being taken to address material differences in access to in-network mental health and substance use disorder benefits as compared to in-network medical/surgical benefits, including those listed in § 2590.712(c)(4)(iii)(C).

(6) Findings and conclusions. The comparative analysis must address the findings and conclusions as to the comparability of the processes, strategies, evidentiary standards, and other factors used in designing and applying the nonquantitative treatment limitation to mental health or substance use disorder benefits and medical/surgical benefits within each classification, and the relative stringency of their application, both as written and in operation, and include:

(i) Any findings or conclusions indicating that the plan or coverage is or is not (or might or might not be) in compliance with the requirements of § 2590.712(c)(4), including any additional actions the plan or issuer has taken or intends to take to address any potential areas of concern or noncompliance;

(ii) A reasoned and detailed discussion of the findings and conclusions described in paragraph (c)(6)(i) of this section;

(iii) Citations to any additional specific information not otherwise included in the comparative analysis that supports the findings and conclusions described in paragraph (c)(6)(i) of this section not otherwise discussed in the comparative analysis;

(iv) The date the analysis is completed and the title and credentials of all relevant persons who participated ( print page 77734) in the performance and documentation of the comparative analysis;

(v) If the comparative analysis relies upon an evaluation by a reviewer or consultant considered by the plan or issuer to be an expert, an assessment of each expert's qualifications and the extent to which the plan or issuer ultimately relied upon each expert's evaluation in performing and documenting the comparative analysis of the design and application of the nonquantitative treatment limitation applicable to both mental health or substance use disorder benefits and medical/surgical benefits; and

(vi) A certification by one or more named fiduciaries that they have engaged in a prudent process to select one or more qualified service providers to perform and document a comparative analysis in connection with the imposition of any nonquantitative treatment limitations that apply to mental health and substance use disorder benefits under the plan in accordance with applicable law and regulations, and have satisfied their duty to monitor those service providers as required under part 4 of ERISA with respect to the performance and documentation of such comparative analysis.

(d) Requirements related to submission of comparative analyses to the Secretary upon request —(1) Initial request by the Secretary for comparative analysis. A group health plan (or health insurance issuer offering coverage in connection with a group health plan) must make the comparative analysis required by paragraph (b) of this section available and submit it to the Secretary within 10 business days of receipt of a request from the Secretary (or an additional period of time specified by the Secretary).

(2) Additional information required after a comparative analysis is deemed to be insufficient. In instances in which the Secretary determines that the plan or issuer has not submitted sufficient information under paragraph (d)(1) of this section for the Secretary to determine whether the comparative analysis required in paragraph (b) of this section complies with paragraph (c) of this section or whether the plan or issuer complies with § 2590.712(c)(4), the Secretary will specify to the plan or issuer the additional information the plan or issuer must submit to the Secretary to be responsive to the request under paragraph (d)(1). Any such information must be provided to the Secretary by the plan or issuer within 10 business days after the Secretary specifies the additional information to be submitted (or an additional period of time specified by the Secretary).

(3) Initial determination of noncompliance, required action, and corrective action plan. In instances in which the Secretary reviewed the comparative analysis submitted under paragraph (d)(1) of this section and any additional information submitted under paragraph (d)(2) of this section, and made an initial determination that the plan or issuer is not in compliance with the requirements of § 2590.712(c)(4) or this section, the plan or issuer must respond to the initial determination by the Secretary and specify the actions the plan or issuer will take to bring the plan or coverage into compliance, and provide to the Secretary additional comparative analyses meeting the requirements of paragraph (c) of this section that demonstrate compliance with § 2590.712(c)(4), not later than 45 calendar days after the Secretary's initial determination that the plan or issuer is not in compliance.

(4) Requirement to notify participants and beneficiaries of final determination of noncompliance —(i) In general. If the Secretary makes a final determination of noncompliance, the plan or issuer must notify all participants and beneficiaries enrolled in the plan or coverage that the plan or issuer has been determined to not be in compliance with the requirements of § 2590.712(c)(4) or this section with respect to such plan or coverage. Such notice must be provided within 7 business days of receipt of the final determination of noncompliance, and the plan or issuer must provide a copy of the notice to the Secretary, any service provider involved in the claims process, and any fiduciary responsible for deciding benefit claims within the same timeframe.

(ii) Content of notice. The notice to participants and beneficiaries required in paragraph (d)(4)(i) of this section shall be written in a manner calculated to be understood by the average plan participant and must include, in plain language, the following information in a standalone notice:

(A) The following statement prominently displayed on the first page, in no less than 14-point font: “Attention! The Department of Labor has determined that [insert the name of group health plan or health insurance issuer] is not in compliance with the Mental Health Parity and Addiction Equity Act.”;

(B) A summary of changes the plan or issuer has made as part of its corrective action plan specified to the Secretary following the initial determination of noncompliance, including an explanation of any opportunity for a participant or beneficiary to have a claim for benefits submitted or reprocessed;

(C) A summary of the Secretary's final determination that the plan or issuer is not in compliance with § 2590.712(c)(4) or this section, including any provisions or practices identified as being in violation of § 2590.712(c)(4) or this section, additional corrective actions identified by the Secretary in the final determination notice, and information on how participants and beneficiaries can obtain from the plan or issuer a copy of the final determination of noncompliance;

(D) Any additional actions the plan or issuer is taking to come into compliance with § 2590.712(c)(4) or this section, when the plan or issuer will take such actions, and a clear and accurate statement explaining whether the Secretary has concurred with those actions; and

(E) Contact information for questions and complaints, and a statement explaining how participants and beneficiaries can obtain more information about the notice, including:

( 1) The plan's or issuer's phone number and an email or web portal address; and

( 2) The Employee Benefits Security Administration's phone number and email or web portal address.

(iii) Manner of notice. The plan or issuer must make the notice required under paragraph (d)(4)(i) of this section available in paper form, or electronically (such as by email or an internet posting) if:

(A) The format is readily accessible;

(B) The notice is provided in paper form free of charge upon request; and

(C) In a case in which the electronic form is an internet posting, the plan or issuer timely notifies the participant or beneficiary in paper form (such as a postcard) or email, that the documents are available on the internet, provides the internet address, includes the statement required in paragraph (d)(4)(ii)(A) of this section, and notifies the participant or beneficiary that the documents are available in paper form upon request.

(e) Requests for a copy of a comparative analysis. In addition to making a comparative analysis available upon request to the Secretary, a plan or issuer must make available a copy of the comparative analysis required by paragraph (b) of this section when requested by:

(1) Any applicable State authority;

(2) A participant or beneficiary (including a provider or other person acting as a participant's or beneficiary's authorized representative) who has ( print page 77735) received an adverse benefit determination related to mental health or substance use disorder benefits; and

(3) Participants and beneficiaries, who may request the comparative analysis at any time under ERISA section 104.

(f) Rule of construction. Nothing in this section or § 2590.712 shall be construed to prevent the Secretary from acting within the scope of existing authorities to address violations of § 2590.712 or this section.

(g) Applicability. The provisions of this section apply to group health plans and health insurance issuers offering group health insurance coverage described in § 2590.712(e), to the extent the plan or issuer is not exempt under § 2590.712(f) or (g), on the first day of the first plan year beginning on or after January 1, 2025, except the requirements of paragraphs (c)(2)(ii)(C), (c)(5)(i)(C) and (D), and (c)(5)(ii) through (v) of this section apply on the first day of the first plan year beginning on or after January 1, 2026.

(h) Severability. If any provision of this section is held to be invalid or unenforceable by its terms, or as applied to any person or circumstance, or stayed pending further agency action, the provision shall be construed so as to continue to give the maximum effect to the provision permitted by law, unless such holding shall be one of invalidity or unenforceability, in which event the provision shall be severable from this section and shall not affect the remainder thereof or the application of the provision to persons not similarly situated or to dissimilar circumstances.

Department of Health and Human Services

For the reasons set forth in the preamble, the Department of Health and Human Services amends 45 CFR parts 146 and 147 as set forth below:

PART 146—REQUIREMENTS FOR THE GROUP HEALTH INSURANCE MARKET

7. The authority citation for part 146 continues to read as follows:

Authority: 42 U.S.C. 300gg-1 through 300gg-5, 300gg-11 through 300gg-23, 300gg-91, and 300gg-92.

8. Amend § 146.136 by:

a. Redesignating paragraph (a) as paragraph (a)(2) and adding paragraphs (a) heading and (a)(1);

b. In newly redesignated paragraph (a)(2):

i. Revising the introductory text;

ii. Adding the definitions of “DSM,” “Evidentiary standards,” “Factors,” and “ICD” in alphabetical order;

iii. Revising the definitions of “Medical/surgical benefits” and “Mental health benefits”;

iv. Adding the definitions of “Processes” and “Strategies” in alphabetical order; and

v. Revising the definitions of “Substance use disorder benefits” and “Treatment limitations”;

c. Revising paragraphs (c)(1)(ii), (c)(2)(i), (c)(2)(ii)(A) introductory text, (c)(2)(ii)(C), and (c)(3)(i)(A), (C), and (D);

d. In paragraph (c)(3)(iii), adding introductory text;

e. Revising paragraphs (c)(3)(iii)(A) and (B), (c)(3)(iv), (c)(4), (d)(3), (e)(4), and (i)(1); and

f. Adding paragraph (j).

The revisions and additions read as follows:

§ 146.136

Parity in mental health and substance use disorder benefits.

(a) Purpose and meaning of terms —(1) Purpose. This section and § 146.137 set forth rules to ensure parity in aggregate lifetime and annual dollar limits, financial requirements, and quantitative and nonquantitative treatment limitations between mental health and substance use disorder benefits and medical/surgical benefits, as required under PHS Act section 2726. A fundamental purpose of PHS Act section 2726, this section, and § 146.137 is to ensure that participants and beneficiaries in a group health plan (or health insurance coverage offered by an issuer in connection with a group health plan) that offers mental health or substance use disorder benefits are not subject to more restrictive aggregate lifetime or annual dollar limits, financial requirements, or treatment limitations with respect to those benefits than the predominant dollar limits, financial requirements, or treatment limitations that are applied to substantially all medical/surgical benefits covered by the plan or coverage in the same classification, as further provided in this section and § 146.137. Accordingly, in complying with the provisions of PHS Act section 2726, this section, and § 146.137, plans and issuers must not design or apply financial requirements and treatment limitations that impose a greater burden on access (that is, are more restrictive) to mental health or substance use disorder benefits under the plan or coverage than they impose on access to medical/surgical benefits in the same classification of benefits. The provisions of PHS Act section 2726, this section, and § 146.137 should be interpreted in a manner that is consistent with the purpose described in this paragraph (a)(1).

(2) Meaning of terms. For purposes of this section and § 146.137, except where the context clearly indicates otherwise, the following terms have the meanings indicated:

* * * * *

DSM means the American Psychiatric Association's Diagnostic and Statistical Manual of Mental Disorders. For the purpose of this definition, the most current version of the DSM as of November 22, 2024, is the Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition, Text Revision published in March 2022. A subsequent version of the DSM published after November 22, 2024, will be considered the most current version beginning on the first day of the plan year that is one year after the date the subsequent version is published.

Evidentiary standards are any evidence, sources, or standards that a group health plan (or health insurance issuer offering coverage in connection with such a plan) considered or relied upon in designing or applying a factor with respect to a nonquantitative treatment limitation, including specific benchmarks or thresholds. Evidentiary standards may be empirical, statistical, or clinical in nature, and include: sources acquired or originating from an objective third party, such as recognized medical literature, professional standards and protocols (which may include comparative effectiveness studies and clinical trials), published research studies, payment rates for items and services (such as publicly available databases of the “usual, customary and reasonable” rates paid for items and services), and clinical treatment guidelines; internal plan or issuer data, such as claims or utilization data or criteria for assuring a sufficient mix and number of network providers; and benchmarks or thresholds, such as measures of excessive utilization, cost levels, time or distance standards, or network participation percentage thresholds.

Factors are all information, including processes and strategies (but not evidentiary standards), that a group health plan (or health insurance issuer offering coverage in connection with such a plan) considered or relied upon to design a nonquantitative treatment limitation, or to determine whether or how the nonquantitative treatment limitation applies to benefits under the plan or coverage. Examples of factors include, but are not limited to: provider discretion in determining a diagnosis or type or length of treatment; clinical efficacy of any proposed treatment or service; licensing and accreditation of ( print page 77736) providers; claim types with a high percentage of fraud; quality measures; treatment outcomes; severity or chronicity of condition; variability in the cost of an episode of treatment; high cost growth; variability in cost and quality; elasticity of demand; and geographic location.

* * * * *

ICD means the World Health Organization's International Classification of Diseases adopted by the Department of Health and Human Services through § 162.1002 of this subtitle. For the purpose of this definition, the most current version of the ICD as of November 22, 2024, is the International Classification of Diseases, 10th Revision, Clinical Modification adopted for the period beginning on October 1, 2015. Any subsequent version of the ICD adopted through § 162.1002 of this subtitle after November 22, 2024, will be considered the most current version beginning on the first day of the plan year that is one year after the date the subsequent version is adopted.

Medical/surgical benefits means benefits with respect to items or services for medical conditions or surgical procedures, as defined under the terms of the group health plan (or health insurance coverage offered by an issuer in connection with such a plan) and in accordance with applicable Federal and State law, but does not include mental health benefits or substance use disorder benefits. Notwithstanding the preceding sentence, any condition or procedure defined by the plan or coverage as being or as not being a medical condition or surgical procedure must be defined consistent with generally recognized independent standards of current medical practice (for example, the most current version of the ICD). To the extent generally recognized independent standards of current medical practice do not address whether a condition or procedure is a medical condition or surgical procedure, plans and issuers may define the condition or procedure in accordance with applicable Federal and State law.

Mental health benefits means benefits with respect to items or services for mental health conditions, as defined under the terms of the group health plan (or health insurance coverage offered by an issuer in connection with such a plan) and in accordance with applicable Federal and State law, but does not include medical/surgical benefits or substance use disorder benefits. Notwithstanding the preceding sentence, any condition defined by the plan or coverage as being or as not being a mental health condition must be defined consistent with generally recognized independent standards of current medical practice. For the purpose of this definition, to be consistent with generally recognized independent standards of current medical practice, the definition must include all conditions covered under the plan or coverage, except for substance use disorders, that fall under any of the diagnostic categories listed in the mental, behavioral, and neurodevelopmental disorders chapter (or equivalent chapter) of the most current version of the ICD or that are listed in the most current version of the DSM. To the extent generally recognized independent standards of current medical practice do not address whether a condition is a mental health condition, plans and issuers may define the condition in accordance with applicable Federal and State law.

Processes are actions, steps, or procedures that a group health plan (or health insurance issuer offering coverage in connection with such a plan) uses to apply a nonquantitative treatment limitation, including actions, steps, or procedures established by the plan or issuer as requirements in order for a participant or beneficiary to access benefits, including through actions by a participant's or beneficiary's authorized representative or a provider or facility. Examples of processes include, but are not limited to: procedures to submit information to authorize coverage for an item or service prior to receiving the benefit or while treatment is ongoing (including requirements for peer or expert clinical review of that information); provider referral requirements that are used to determine when and how a participant or beneficiary may access certain services; and the development and approval of a treatment plan used in a concurrent review process to determine whether a specific request should be granted or denied. Processes also include the specific procedures used by staff or other representatives of a plan or issuer (or the service provider of a plan or issuer) to administer the application of nonquantitative treatment limitations, such as how a panel of staff members applies the nonquantitative treatment limitation (including the qualifications of staff involved, number of staff members allocated, and time allocated), consultations with panels of experts in applying the nonquantitative treatment limitation, and the degree of reviewer discretion in adhering to criteria hierarchy when applying a nonquantitative treatment limitation.

Strategies are practices, methods, or internal metrics that a plan (or health insurance issuer offering coverage in connection with such a plan) considers, reviews, or uses to design a nonquantitative treatment limitation. Examples of strategies include, but are not limited to: the development of the clinical rationale used in approving or denying benefits; the method of determining whether and how to deviate from generally accepted standards of care in concurrent reviews; the selection of information deemed reasonably necessary to make medical necessity determinations; reliance on treatment guidelines or guidelines provided by third-party organizations in the design of a nonquantitative treatment limitation; and rationales used in selecting and adopting certain threshold amounts to apply a nonquantitative treatment limitation, professional standards and protocols to determine utilization management standards, and fee schedules used to determine provider reimbursement rates, used as part of a nonquantitative treatment limitation. Strategies also include the method of creating and determining the composition of the staff or other representatives of a plan or issuer (or the service provider of a plan or issuer) that deliberates, or otherwise makes decisions, on the design of nonquantitative treatment limitations, including the plan's or issuer's methods for making decisions related to the qualifications of staff involved, number of staff members allocated, and time allocated; breadth of sources and evidence considered; consultations with panels of experts in designing the nonquantitative treatment limitation; and the composition of the panels used to design a nonquantitative treatment limitation.

Substance use disorder benefits means benefits with respect to items or services for substance use disorders, as defined under the terms of the group health plan (or health insurance coverage offered by an issuer in connection with such a plan) and in accordance with applicable Federal and State law, but does not include medical/surgical benefits or mental health benefits. Notwithstanding the preceding sentence, any disorder defined by the plan or coverage as being or as not being a substance use disorder must be defined consistent with generally recognized independent standards of current medical practice. For the purpose of this definition, to be consistent with generally recognized independent standards of current ( print page 77737) medical practice, the definition must include all disorders covered under the plan or coverage that fall under any of the diagnostic categories listed as a mental or behavioral disorder due to psychoactive substance use (or equivalent category) in the mental, behavioral, and neurodevelopmental disorders chapter (or equivalent chapter) of the most current version of the ICD or that are listed as a Substance-Related and Addictive Disorder (or equivalent category) in the most current version of the DSM. To the extent generally recognized independent standards of current medical practice do not address whether a disorder is a substance use disorder, plans and issuers may define the disorder in accordance with applicable Federal and State law.

Treatment limitations include limits on benefits based on the frequency of treatment, number of visits, days of coverage, days in a waiting period, or other similar limits on the scope or duration of treatment. Treatment limitations include both quantitative treatment limitations, which are expressed numerically (such as 50 outpatient visits per year), and nonquantitative treatment limitations (such as standards related to network composition), which otherwise limit the scope or duration of benefits for treatment under a plan or coverage. (See paragraph (c)(4)(ii) of this section for an illustrative, non-exhaustive list of nonquantitative treatment limitations.) A complete exclusion of all benefits for a particular condition or disorder, however, is not a treatment limitation for purposes of this definition.

* * * * *

(c) * * *

(1) * * *

(ii) Type of financial requirement or treatment limitation. When reference is made in this paragraph (c) to a type of financial requirement or treatment limitation, the reference to type means its nature. Different types of financial requirements include deductibles, copayments, coinsurance, and out-of-pocket maximums. Different types of quantitative treatment limitations include annual, episode, and lifetime day and visit limits. See paragraph (c)(4)(ii) of this section for an illustrative, non-exhaustive list of nonquantitative treatment limitations.

* * * * *

(2) * * *

(i) General rule. A group health plan (or health insurance coverage offered by an issuer in connection with a group health plan) that provides both medical/surgical benefits and mental health or substance use disorder benefits may not apply any financial requirement or treatment limitation to mental health or substance use disorder benefits in any classification that is more restrictive than the predominant financial requirement or treatment limitation of that type applied to substantially all medical/surgical benefits in the same classification. Whether a financial requirement or treatment limitation is a predominant financial requirement or treatment limitation that applies to substantially all medical/surgical benefits in a classification is determined separately for each type of financial requirement or treatment limitation. A plan or issuer may not impose any financial requirement or treatment limitation that is applicable only with respect to mental health or substance use disorder benefits and not to any medical/surgical benefits in the same benefit classification. The application of the rules of this paragraph (c)(2) to financial requirements and quantitative treatment limitations is addressed in paragraph (c)(3) of this section; the application of the rules of this paragraph (c)(2) to nonquantitative treatment limitations is addressed in paragraph (c)(4) of this section.

(ii) * * *

(A) In general. If a plan (or health insurance coverage) provides any benefits for a mental health condition or substance use disorder in any classification of benefits described in this paragraph (c)(2)(ii), it must provide meaningful benefits for that mental health condition or substance use disorder in every classification in which medical/surgical benefits are provided. For purposes of this paragraph (c)(2)(ii)(A), whether the benefits provided are meaningful benefits is determined in comparison to the benefits provided for medical conditions and surgical procedures in the classification and requires, at a minimum, coverage of benefits for that condition or disorder in each classification in which the plan (or coverage) provides benefits for one or more medical conditions or surgical procedures. A plan (or coverage) does not provide meaningful benefits under this paragraph (c)(2)(ii)(A) unless it provides benefits for a core treatment for that condition or disorder in each classification in which the plan (or coverage) provides benefits for a core treatment for one or more medical conditions or surgical procedures. For purposes of this paragraph (c)(2)(ii)(A), a core treatment for a condition or disorder is a standard treatment or course of treatment, therapy, service, or intervention indicated by generally recognized independent standards of current medical practice. If there is no core treatment for a covered mental health condition or substance use disorder with respect to a classification, the plan (or coverage) is not required to provide benefits for a core treatment for such condition or disorder in that classification (but must provide benefits for such condition or disorder in every classification in which medical/surgical benefits are provided). In determining the classification in which a particular benefit belongs, a plan (or health insurance issuer) must apply the same standards to medical/surgical benefits and to mental health or substance use disorder benefits. To the extent that a plan (or health insurance coverage) provides benefits in a classification and imposes any separate financial requirement or treatment limitation (or separate level of a financial requirement or treatment limitation) for benefits in the classification, the rules of this paragraph (c) apply separately with respect to that classification for all financial requirements or treatment limitations (illustrated in examples in paragraph (c)(2)(ii)(C) of this section). The following classifications of benefits are the only classifications used in applying the rules of this paragraph (c), in addition to the permissible sub-classifications described in paragraph (c)(3)(iii) of this section:

* * * * *

(C) Examples. The rules of this paragraph (c)(2)(ii) are illustrated by the following examples. In each example, the group health plan is subject to the requirements of this section and provides both medical/surgical benefits and mental health and substance use disorder benefits. With regard to the examples in this paragraph (c)(2)(ii)(C), references to any particular core treatment are included for illustrative purposes only. Plans and issuers must consult generally recognized independent standards of current medical practice to determine the applicable core treatment, therapy, service, or intervention for any covered condition or disorder.

( 1) Example 1 —( i) Facts. A group health plan offers inpatient and outpatient benefits and does not contract with a network of providers. The plan imposes a $500 deductible on all benefits. For inpatient medical/surgical benefits, the plan imposes a coinsurance requirement. For outpatient medical/surgical benefits, the plan imposes copayments. The plan imposes no other financial requirements or treatment limitations.

( ii) Conclusion. In this paragraph (c)(2)(ii)(C)( 1) ( Example 1), because the plan has no network of providers, all benefits provided are out-of-network. Because ( print page 77738) inpatient, out-of-network medical/surgical benefits are subject to separate financial requirements from outpatient, out-of-network medical/surgical benefits, the rules of this paragraph (c) apply separately with respect to any financial requirements and treatment limitations, including the deductible, in each classification.

( 2) Example 2 —( i) Facts. A plan imposes a $500 deductible on all benefits. The plan has no network of providers. The plan generally imposes a 20 percent coinsurance requirement with respect to all benefits, without distinguishing among inpatient, outpatient, emergency care, or prescription drug benefits. The plan imposes no other financial requirements or treatment limitations.

( ii) Conclusion. In this paragraph (c)(2)(ii)(C)( 2) ( Example 2), because the plan does not impose separate financial requirements (or treatment limitations) based on classification, the rules of this paragraph (c) apply with respect to the deductible and the coinsurance across all benefits.

( 3) Example 3 —( i) Facts. Same facts as in paragraph (c)(2)(ii)(C)( 2)( i) of this section ( Example 2), except the plan exempts emergency care benefits from the 20 percent coinsurance requirement. The plan imposes no other financial requirements or treatment limitations.

( ii) Conclusion. In this paragraph (c)(2)(ii)(C)( 3) ( Example 3), because the plan imposes separate financial requirements based on classifications, the rules of this paragraph (c) apply with respect to the deductible and the coinsurance separately for benefits in the emergency care classification and all other benefits.

( 4) Example 4 —( i) Facts. Same facts as in paragraph (c)(2)(ii)(C)( 2)( i) of this section ( Example 2), except the plan also imposes a preauthorization requirement for all inpatient treatment in order for benefits to be paid. No such requirement applies to outpatient treatment.

( ii) Conclusion. In this paragraph (c)(2)(ii)(C)( 4) ( Example 4), because the plan has no network of providers, all benefits provided are out-of-network. Because the plan imposes a separate treatment limitation based on classifications, the rules of this paragraph (c) apply with respect to the deductible and coinsurance separately for inpatient, out-of-network benefits and all other benefits.

( 5) Example 5 —( i) Facts. A plan covers treatment for autism spectrum disorder (ASD), a mental health condition, and covers outpatient, out-of-network developmental screenings for ASD but excludes all other benefits for outpatient treatment for ASD, including applied behavior analysis (ABA) therapy, when provided on an out-of-network basis. The plan generally covers the full range of outpatient treatments (including core treatments) and treatment settings for medical conditions and surgical procedures when provided on an out-of-network basis. Under the generally recognized independent standards of current medical practice consulted by the plan, developmental screenings alone do not constitute a core treatment for ASD.

( ii) Conclusion. In this paragraph (c)(2)(ii)(C)( 5) ( Example 5), the plan violates the rules of this paragraph (c)(2)(ii). Although the plan covers benefits for ASD in the outpatient, out-of-network classification, it only covers developmental screenings, so it does not cover a core treatment for ASD in the classification. Because the plan generally covers the full range of medical/surgical benefits, including a core treatment for one or more medical conditions or surgical procedures in the classification, it fails to provide meaningful benefits for treatment of ASD in the classification.

( 6) Example 6 —( i) Facts. Same facts as in paragraph (c)(2)(ii)(C)( 5) of this section ( Example 5), except that the plan is an HMO that does not cover the full range of medical/surgical benefits including a core treatment for any medical conditions or surgical procedures in the outpatient, out-of-network classification (except as required under PHS Act sections 2799A-1 and 2799A-2), but covers benefits for medical conditions and surgical procedures in the inpatient, in-network; outpatient, in-network; emergency care; and prescription drug classifications.

( ii) Conclusion. In this paragraph (c)(2)(ii)(C)( 6) ( Example 6), the plan does not violate the rules of this paragraph (c)(2)(ii). Because the plan does not provide meaningful benefits including for a core treatment for any medical condition or surgical procedure in the outpatient, out-of-network classification (except as required under PHS Act sections 2799A-1 and 2799A-2), the plan is not required to provide meaningful benefits for any mental health conditions or substance use disorders in that classification. Nevertheless, the plan must provide meaningful benefits for each mental health condition and substance use disorder for which the plan provides benefits in every classification in which meaningful medical/surgical benefits are provided as required under paragraph (c)(2)(ii)(A) of this section. This example does not address whether the plan has complied with other applicable requirements of this section in excluding coverage of ABA therapy in the outpatient, out-of-network classification.

( 7) Example 7 —( i) Facts. A plan provides extensive benefits, including for core treatments for many medical conditions and surgical procedures in the outpatient, in-network classification, including nutrition counseling for diabetes and obesity. The plan also generally covers diagnosis and treatment for eating disorders, which are mental health conditions, including coverage for nutrition counseling to treat eating disorders in the outpatient, in-network classification. Nutrition counseling is a core treatment for eating disorders, in accordance with generally recognized independent standards of current medical practice consulted by the plan.

( ii) Conclusion. In this paragraph (c)(2)(ii)(C)( 7) ( Example 7), the plan does not violate the rules of this paragraph (c)(2)(ii). The coverage of diagnosis and treatment for eating disorders, including nutrition counseling, in the outpatient, in-network classification results in the plan providing meaningful benefits for the treatment of eating disorders in the classification, as determined in comparison to the benefits provided for medical conditions or surgical procedures in the classification.

( 8) Example 8 —( i) Facts. A plan provides extensive benefits for the core treatments for many medical conditions and surgical procedures in the outpatient, in-network and prescription drug classifications. The plan provides coverage for diagnosis and treatment for opioid use disorder, a substance use disorder, in the outpatient, in-network classification, by covering counseling and behavioral therapies and, in the prescription drug classification, by covering medications to treat opioid use disorder (MOUD). Counseling and behavioral therapies and MOUD, in combination, are one of the core treatments for opioid use disorder, in accordance with generally recognized independent standards of current medical practice consulted by the plan.

( ii) Conclusion. In this paragraph (c)(2)(ii)(C)( 8) ( Example 8), the plan does not violate the rules of this paragraph (c)(2)(ii). The coverage of counseling and behavioral therapies and MOUD, in combination, in the outpatient, in-network classification and prescription drug classification, respectively, results in the plan providing meaningful benefits for the treatment of opioid use disorder in the outpatient, in-network and prescription drug classifications.

(3) * * *

(i) * * *

(A) Substantially all. For purposes of this paragraph (c)(3), a type of financial requirement or quantitative treatment limitation is considered to apply to substantially all medical/surgical benefits in a classification of benefits if it applies to at least two-thirds of all medical/surgical benefits in that classification. (For purposes of this paragraph (c)(3)(i)(A), benefits expressed as subject to a zero level of a type of financial requirement are treated as benefits not subject to that type of financial requirement, and benefits expressed as subject to a quantitative treatment limitation that is unlimited are treated as benefits not subject to that type of quantitative treatment limitation.) If a type of financial requirement or quantitative treatment limitation does not apply to at least two-thirds of all medical/surgical benefits in a classification, then that type cannot be applied to mental health or substance use disorder benefits in that classification.

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(C) Portion based on plan payments. For purposes of this paragraph (c)(3), the determination of the portion of medical/surgical benefits in a classification of benefits subject to a financial requirement or quantitative treatment limitation (or subject to any level of a financial requirement or quantitative treatment limitation) is based on the dollar amount of all plan payments for medical/surgical benefits in the classification expected to be paid under the plan for the plan year (or for ( print page 77739) the portion of the plan year after a change in plan benefits that affects the applicability of the financial requirement or quantitative treatment limitation).

(D) Clarifications for certain threshold requirements. For any deductible, the dollar amount of plan payments includes all plan payments with respect to claims that would be subject to the deductible if it had not been satisfied. For any out-of-pocket maximum, the dollar amount of plan payments includes all plan payments associated with out-of-pocket payments that are taken into account towards the out-of-pocket maximum as well as all plan payments associated with out-of-pocket payments that would have been made towards the out-of-pocket maximum if it had not been satisfied. The rules of this paragraph (c)(3)(i)(D) apply for any other thresholds at which the rate of plan payment changes. (See also PHS Act section 2707 and Affordable Care Act section 1302(c), which establish annual limitations on out-of-pocket maximums for all non-grandfathered health plans.)

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(iii) Special rules. Unless specifically permitted under this paragraph (c)(3)(iii), sub-classifications are not permitted when applying the rules of paragraph (c)(3) of this section.

(A) Multi-tiered prescription drug benefits. If a plan (or health insurance coverage) applies different levels of financial requirements to different tiers of prescription drug benefits based on reasonable factors determined in accordance with the rules in paragraph (c)(4) of this section (relating to requirements for nonquantitative treatment limitations) and without regard to whether a drug is generally prescribed with respect to medical/surgical benefits or with respect to mental health or substance use disorder benefits, the plan (or health insurance coverage) satisfies the parity requirements of this paragraph (c) with respect to prescription drug benefits. Reasonable factors include cost, efficacy, generic versus brand name, and mail order versus pharmacy pick-up.

(B) Multiple network tiers. If a plan (or health insurance coverage) provides benefits through multiple tiers of in-network providers (such as an in-network tier of preferred providers with more generous cost-sharing to participants than a separate in-network tier of participating providers), the plan may divide its benefits furnished on an in-network basis into sub-classifications that reflect network tiers, if the tiering is based on reasonable factors determined in accordance with the rules in paragraph (c)(4) of this section (such as quality, performance, and market standards) and without regard to whether a provider provides services with respect to medical/surgical benefits or mental health or substance use disorder benefits. After the sub-classifications are established, the plan or issuer may not impose any financial requirement or treatment limitation on mental health or substance use disorder benefits in any sub-classification that is more restrictive than the predominant financial requirement or treatment limitation that applies to substantially all medical/surgical benefits in the sub-classification using the methodology set forth in paragraph (c)(3)(i) of this section.

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(iv) Examples. The rules of paragraphs (c)(3)(i) through (iii) of this section are illustrated by the following examples. In each example, the group health plan is subject to the requirements of this section and provides both medical/surgical benefits and mental health and substance use disorder benefits.

(A) Example 1 —( 1) Facts. ( i) For inpatient, out-of-network medical/surgical benefits, a group health plan imposes five levels of coinsurance. Using a reasonable method, the plan projects its payments for the upcoming year as follows:

Table 1 to Paragraph ( c )(3)( iv )(A)( 1)( i)

Coinsurance rate	0%	10%	15%	20%	30%	Total.
Projected payments	$200x	$100x	$450x	$100x	$150x	$1,000x.
Percent of total plan costs	20%	10%	45%	10%	15%
Percent subject to coinsurance level	N/A	12.5% (100x/800x)	56.25% (450x/800x)	12.5% (100x/800x)	18.75% (150x/800x)

( ii) The plan projects plan costs of $800x to be subject to coinsurance ($100x + $450x + $100x + $150x = $800x). Thus, 80 percent ($800x/$1,000x) of the benefits are projected to be subject to coinsurance, and 56.25 percent of the benefits subject to coinsurance are projected to be subject to the 15 percent coinsurance level.

( 2) Conclusion. In this paragraph (c)(3)(iv)(A) ( Example 1), the two-thirds threshold of the substantially all standard is met for coinsurance because 80 percent of all inpatient, out-of-network medical/surgical benefits are subject to coinsurance. Moreover, the 15 percent coinsurance is the predominant level because it is applicable to more than one-half of inpatient, out-of-network medical/surgical benefits subject to the coinsurance requirement. The plan may not impose any level of coinsurance with respect to inpatient, out-of-network mental health or substance use disorder benefits that is more restrictive than the 15 percent level of coinsurance.

(B) Example 2 —( 1) Facts. ( i) For outpatient, in-network medical/surgical benefits, a plan imposes five different copayment levels. Using a reasonable method, the plan projects payments for the upcoming year as follows:

Table 2 to Paragraph ( c )(3)( iv )(B)( 1)( i)

Copayment amount	$0	$10	$15	$20	$50	Total.
Projected payments	$200x	$200x	$200x	$300x	$100x	$1,000x.
Percent of total plan costs	20%	20%	20%	30%	10%
Percent subject to copayments	N/A	25% (200x/800x)	25% (200x/800x)	37.5% (300x/800x)	12.5% (100x/800x)

( ii) The plan projects plan costs of $800x to be subject to copayments ($200x + $200x + $300x + $100x = $800x). Thus, 80 percent ($800x/$1,000x) of the benefits are projected to be subject to a copayment.

( 2) Conclusion. In this paragraph (c)(3)(iv)(B) ( Example 2), the two-thirds threshold of the substantially all standard is met for copayments because 80 percent of all outpatient, in-network medical/surgical benefits are subject to a copayment. Moreover, there is no single level that applies to more than one-half of medical/surgical benefits in the classification subject to a copayment (for the $10 copayment, 25%; for the $15 copayment, 25%; for the $20 copayment, 37.5%; and for the $50 copayment, 12.5%). The plan can combine any levels of copayment, including the highest levels, to determine the predominant level that can be applied to mental health or substance use disorder benefits. If the plan combines the highest levels of copayment, the combined projected payments for the two highest copayment levels, the $50 copayment and the $20 copayment, are not more than one-half of the outpatient, in-network ( print page 77740) medical/surgical benefits subject to a copayment because they are exactly one-half ($300x + $100x = $400x; $400x/$800x = 50%). The combined projected payments for the three highest copayment levels—the $50 copayment, the $20 copayment, and the $15 copayment—are more than one-half of the outpatient, in-network medical/surgical benefits subject to the copayments ($100x + $300x + $200x = $600x; $600x/$800x = 75%). Thus, the plan may not impose any copayment on outpatient, in-network mental health or substance use disorder benefits that is more restrictive than the least restrictive copayment in the combination, the $15 copayment.

(C) Example 3 —( 1) Facts. A plan imposes a $250 deductible on all medical/surgical benefits for self-only coverage and a $500 deductible on all medical/surgical benefits for family coverage. The plan has no network of providers. For all medical/surgical benefits, the plan imposes a coinsurance requirement. The plan imposes no other financial requirements or treatment limitations.

( 2) Conclusion. In this paragraph (c)(3)(iv)(C) ( Example 3), because the plan has no network of providers, all benefits are provided out-of-network. Because self-only and family coverage are subject to different deductibles, whether the deductible applies to substantially all medical/surgical benefits is determined separately for self-only medical/surgical benefits and family medical/surgical benefits. Because the coinsurance is applied without regard to coverage units, the predominant coinsurance that applies to substantially all medical/surgical benefits is determined without regard to coverage units.

(D) Example 4 —( 1) Facts. A plan applies the following financial requirements for prescription drug benefits. The requirements are applied without regard to whether a drug is generally prescribed with respect to medical/surgical benefits or with respect to mental health or substance use disorder benefits. Moreover, the process for certifying a particular drug as “generic”, “preferred brand name”, “non-preferred brand name”, or “specialty” complies with the rules of paragraph (c)(4) of this section (relating to requirements for nonquantitative treatment limitations).

Table 3 to Paragraph ( c )(3)( iv )(D)( 1)

	Tier 1	Tier 2	Tier 3	Tier 4
Tier description	Generic drugs	Preferred brand name drugs	Non-preferred brand name drugs (which may have Tier 1 or Tier 2 alternatives)	Specialty drugs.
Percent paid by plan	90%	80%	60%	50%.