New federal rule means big changes in coverage of behavioral healthcare

Landmark regulations issued by the Biden administration are intended to establish coverage parity for behavioral healthcare services.

A newly published final rule prohibits group health plans, along with health insurers offering group or individual insurance coverage, from restricting access to mental-health and substance-use disorder (SUD) benefits as compared with medical and surgical benefits.

The rule, issued by HHS and the Departments of Labor and Treasury, seeks to further implement principles codified in a 2008 law, the Mental Health Parity and Addiction Equity Act (MHPAEA). That statute requires that “the financial requirements and treatment limitations applicable to mental health or substance use disorder benefits be ‘no more restrictive’ than the predominant requirements and limitations applicable to substantially all medical/surgical benefits,” according to a description in the final rule.

Starting in 2025, per the new regulations, plans cannot implement “nonquantitative treatment limitations” that are more restrictive than those that generally apply to medical/surgical benefits in the same classification (e.g., in-network, out-of-network, emergency care, prescription drugs).

Such limitations frequently have pertained to prior authorization and other medical management techniques, standards related to the composition of provider networks, and methodologies to determine out-of-network reimbursement rates.

Other key requirements

For health plans offering benefits that cover mental-health and SUD conditions, the final rule calls for ensuring the benefits are meaningful as determined by whether the benefits are comparable to medical/surgical benefits in the same classification and cover at least one core treatment in each classification. Plans should determine what constitutes a core treatment by referring to updated, evidence-based medical and clinical information.

Compliance with the rule will be monitored via results of a comparative self-analysis conducted by plans that cover both medical/surgical and mental-health/SUD benefits. The analysis must include specified content elements that provide insight into the relative coverage limits applied to both categories.

The departments can then review a plan’s analysis, with plans required to submit the analysis within 10 business days of the request. State authorities also must have access to the analysis upon request. The same goes for any plan enrollee who has received an adverse benefit determination related to mental-health and SUD coverage and for enrollees in ERISA plans at any time.

Required follow-up actions after federal authorities review the analysis may include providing additional information if needed within 10 business days. Initial determinations of noncompliance allow the health plan 45 calendar days to specify the actions it will take to comply and to provide additional comparative analyses. A final determination of noncompliance requires the plan to notify all enrollees within seven days and, at the discretion of the departments, could require modifying the limitation applied to mental-health/SUD benefits.

The provisions about meaningful benefits and the comparative analysis are among those that take effect for plan years starting in 2026 rather than 2025. Also, all requirements for individual-insurance plans do not begin until 2026.

Industry reaction

Provider groups have supported the regulations since the proposed rule was released in 2023, saying the requirements will improve access to vital care and relieve administrative burdens.

“Health plans have violated MHPAEA for more than 15 years, and this final rule is a step in the right direction to protect patients and hold health plans accountable for those failures,” Bruce Scott, MD, president of the American Medical Association, said in a statement.

The insurance lobby has opposed the regulations, as have groups representing employers. AHIP, the Blue Cross Blue Shield Association and the ERISA Industry Committee were among the groups issuing a joint statement that the final rule will bring unintended consequences.

For example, by requiring an influx of behavioral healthcare providers for plans to meet the requirements, the new rule could affect healthcare quality and standards, they said.

“There are proven solutions to increase access to mental health and substance use disorder care, including more effectively connecting patients to available providers, expanding telehealth resources and improving training for primary care providers,” the groups wrote. “However, this rule promotes none of these solutions. Instead of expanding the workforce or meaningfully improving access to mental health support, the final rule will complicate compliance so much that it will be impossible to operationalize, resulting in worse patient outcomes.”

 Ashley Thompson, senior vice president of public policy with the American Hospital Association (AHA), which supports the rule, acknowledged systemic challenges with respect to network adequacy.

“We recognize the challenges that exist to establish networks of behavioral health providers considering the dire shortages but encourage the administration to work with AHA and other stakeholders to alleviate those challenges without compromising on the goals of parity and access,” Thompson said in a statement.

The motivation for the rule

Despite the existing statutory language on parity, barriers to behavioral healthcare persist 16 years after the MHPAEA was passed, the rule states.

The rule notes that “America continues to experience a mental-health and a substance use disorder crisis affecting people across all demographics, with marginalized communities disproportionately impacted.”

In 2022, there were 15.4 million U.S. adults living with a serious mental illness and 59.3 million living with any mental illness, according to statistics cited in the rule. The latter number represented nearly a quarter of all American adults.

SUDs likewise have been prevalent, with 54.6 million people ages 12 and older classified as needing treatment for substance use in 2022 but only 24% of that group receiving treatment.

Employers and health plans improved their coverage of behavioral healthcare services amid the COVID-19 pandemic, yet the disparity compared with medical and surgical benefits continued to grow, the rule notes. For example, a study found that out-of-network use was 3.5 times higher for behavioral-healthcare office visits than for medical/surgical office visits.

That gap cannot be fully explained by shortages of behavioral healthcare providers, according to the RTI International study cited in the rule. It also stems from the manner in which health plans set up their networks, reimbursement rates and coverage protocols.