Carlton Fields tax attorney Lowell Walters discusses a new group health plan documentation requirement for mental health parity compliance.
Hello. My name is Lowell Walters. I want to talk with you about some COVID-19 related legislation that was passed into law just at the end of December 2020 that imposes a new obligation on employers that provide health insurance benefits to employees.
Now, I’m an attorney at Carlton Fields and the focus of my practice is employee benefits, so health plans, retirement plans, fringe benefits – that’s what I do all day every day. And in our world the Consolidated Appropriations Act is a pretty big deal. You may have heard about that. It was passed last December, at the end of December signed into law. And it addresses many aspects of group health plans including flexible spending account carryover and spend down provisions, some individual protections against medical bills that aren’t covered by insurance. It also affects retirement plans including some options for helping employees that have student loans.
But what I want to talk with you about today is a provision in the Consolidated Appropriations Act that will make it easier for the Department of Labor and the Department of Health and Human Services to determine if your group health plan complies with certain aspects of the Mental Health Parity and Addiction Equity Act.
Now, most employers offering health insurance will have someone to help protect them from this kind of investigation from the DOL or HHS. If you offer a fully insured plan, then the insurance company will probably be there to help you satisfy these requirements. If you sponsor a self-insured health plan, you probably can look to your stop loss carrier, record keeper, third party administrator.
So, what I’m going to do is give a little bit of background and then I’m going to talk about what you as an employer should do if you do believe that there’s someone else there to help you take care of this obligation, and then, of course, what you should do if you’re on your own. Alright. Please note, what’s important here with this obligation like with many other obligations – even if you as an employer believe you have an insurance company or someone else there to help you comply with these requirements – the obligation is ultimately your obligation and any penalties would likely have to be paid by your organization, your company. Whether you could look to the insurer or someone else to help you offset that cost, that will depend on the relationship you have with that insurer or that service provider.
So, a little bit of background. The Mental Health Parity and Addiction Equity Act, most often abbreviated as MHPAEA – so, in that case, why bother to abbreviating it? It’s pretty much just as long as to say the full name of the law – or the MHPA because the initial law was just called the Mental Health Parity Act. It was then amended to include addiction services. But this provision prohibits group health plans from imposing greater restrictions on mental health benefits than it does on physical health benefits.
Now, a super easy example. If your group health plan allows participants to visit cardiologists with no copay obligation but there’s a $20 copay to see a psychologist, that should trigger warnings. Alright? I’m not going to sit here on video and tell you that’s definitely a violation, but certainly it would be cause for concern and should warrant some further investigation.
A harder situation is when there’s mental health benefit restrictions that do not involve money, and the term for this is non-quantitative treatment limitations. Sometimes that’s abbreviated as NQTL, but non-quantitative treatment limitations, quantitative meaning you can quantify it with a dollar sign. So, for example, that same employee maybe wants to see a cardiologist and they can go and see their cardiologist without getting a referral from their primary care physician. But, if they wanted to see a psychologist, they would need a referral from their primary care physician. That’s an example of potentially a non-quantitative treatment limitation.
Now, if your group health plan violates the Mental Health Parity and Addiction Equity Act, the IRS can impose penalties. The penalties are $100 for every day that your group health plan is in violation of that Act. So, certainly that can build up because these errors often are not caught for a long time. With the Department of Labor and the Department of Health and Human Services, it’s not just a penalty so much as they will force you to provide certain coverages that may have been declined or if you had a refusal to pay, you will now have to pay for those treatments. You may need to return copays or other co-insurance amounts. Actually, one of the things that I’m not sure of, the new requirement that I’m going to talk about is a documented assessment. So, it’s creating a new document and I wonder if that’s going to be added to the list of documents where if the DOL asks for a copy and you don’t provide it within 30 days, they can impose penalties of up to $110 per day. I’m not saying that would be imposed. I’m just wondering about that out loud. Also, you would be at risk for private lawsuits from participants who have been harmed. For example, a participant that, because of these additional obligations, didn’t get the treatment that they felt they needed and suffered harm as a result.
So, you know, compliance with Mental Health Parity requirements is a big concern of the DOL and the Department of Health and Human Services. The DOL actually releases a fact sheet every year about Mental Health Parity and their investigations. Just to give you an idea, they may start an investigation in one year and it may take two, three, four years to close it. What they gave us information about the investigations that wrapped up and were closed in 2020. We don’t know when these investigations began. But, they closed 180 investigations in 2020 and they noted that since 2011 they’ve closed about 4,000 investigations. And, again, that doesn’t include whatever investigations are continuing on an ongoing basis. Of those 180, 53 were closed very quickly because they determined that the Mental Health Parity Act simply did not apply to those plans that they were looking at. As far as the plans where the Mental Health Parity Act did apply, 16 involved employers that offered a self-insured product and a commercially insured product; 25 involved organizations that solely offered commercially insured group health plans; and 86 involved self-insured plans. Out of that mass number of investigations, only 4, only 4 found that the group health plan actually had violated the Mental Health Parity Act. So, that’s, to me, my personal opinion, that seems like a very low rate of violation, which, frankly, is good news and seems consistent in what they released in 2019. They released in 2019 they had closed 186 investigations and found only 9 group health plans that have violated the Mental Health Parity and Addiction Equity Act. So, good news. The odds of your having a violation in your group health plan seems to be relatively low. However, again, this new requirement is a requirement for you to create a document and conduct an assessment. I think the idea is this is going to shift more of the burden off of the DOL, off of the Department of HHS and put that obligation on the employer, on the group health plan.
Although, again, it doesn’t seem like these investigations have been successful in finding problems, the Department of Labor did point to another organization, the Centers for Medicare and Medicaid Services. Now, they conducted a market-wide investigation. I believe their focus was on insurance companies, whether it was insurance companies providing stop loss or insurance companies providing commercially insured products for individual employers, individual companies. Anyway, the results of that investigation, they cite over $650,000 needing to be returned to employees for what employees paid for mental health benefits that they shouldn’t have had to pay. So, that does seem significant. I think that’s what’s going into this new requirement.
Now, the Department of Labor has also always offered a Mental Health Parity Act self-compliance tool. This self-compliance tool is a document that an employer or an insurance company can download, look at, and review it alongside their group health plan to confirm that their group health plan complies. The DOL says that when they investigate group health plans, this is what their investigators use to assess compliance, so it seems like it is an appropriate tool. Now, whereas that had always been voluntary, and for the most part it may still be viewed as voluntary, the Consolidated Appropriations Act requires group health plans to – now I’m going to quote them – ‘perform and document comparative analyses of the design and application of non-quantitative treatment limitations.’ So, basically you need to assess whether the non-dollar obligations imposed on mental health benefits – whether that complies with the Mental Health Parity Act. And then it goes on to explain that you need to provide that written analysis to the Department of Labor, the Department of Health and Human Services, or any state authorities upon their request. You don’t submit it automatically. This is not like a 5500. But if they request it, you must provide it. And I would think the expectation is that mass letters will go out, not full investigations, but letters will simply go out saying, ‘Hey, send us a copy of this document.’ And then if you don’t provide a copy of that document, well, maybe there would be further questions and maybe a more formal investigation. And that should cut down on that time. And, again, since it doesn’t seem like they have a high success rate, at least cutting down on the time they’re spending on this probably would be viewed as a win by the DOL.
So, with that in mind, I have a very short, simple to-do list for employers that think that their insurer, their stop loss carrier, TPA, or someone else will be handling this for them.
Step 1: Contact them to confirm that they’re aware of this rule. Honestly, they probably are. Contact them to make sure that they are going to be handling this and they don’t view this as something outside of their scope of services.
Number 2: Request a copy of that document once they’ve completed it. Alright. You are required to have this document available, so if they’re providing it for you, make sure they give you a copy.
Now, if you know that this is going to be your own obligation or you’ve reached out to the insurance company you work with and it turns out this is not a service they will be providing, well, number 1, I’d recommend that you contact me. The DOL put out a publication about the warning signs of when your group health plan may have a non-quantitative treatment limitation that violates the Mental Health Parity Act. So, that’s just a 3-page document you can review to kind of get a preliminary assessment of whether your group health plan may have a problem. And then when you contact me, also ask for a copy of the DOL’s assessment tool. Or, alternatively, if you don’t want to reach out to me at , you can go to the Department of Labor’s website, dol.gov and do a search. Probably if you do a search for MHPAEA, you can come up with those two documents. They are available on the website. And then once you have those documents, take out your group health plan and conduct that self-assessment right then and there.
So, that’s what I wanted to share today about this new obligation under the Consolidated Appropriations Act. If you have any questions about what I discussed or I mentioned something in here that you haven’t read about elsewhere such as helping employees with student loans or increasing FSA carryovers and allowing spend downs, feel free to reach out to me by email, or you can give me a call. If you have any questions that I’ve not dealt with here at all but employee benefits related or you would like me to discuss a future topic in a later video segment, please don’t hesitate to let me know.
Thank you very much.