Category: Health

FTC Closely Monitoring Healthcare Lead Generators As Open Enrollment Begins

The Federal Trade Commission is watching the healthcare lead generation industry closely.

On December 10, 2024, the Federal Trade Commission announced that it has sent warning letters to 21 companies that market or generate leads for healthcare plans. The letters were sent as open enrollment season for healthcare plans is ongoing. They provide guidance and provide about deceptive or unfair claims that likely violate laws enforced by the FTC.

The letters were sent to companies that provide marketing or advertising, including lead generation, related to Affordable Care Act Marketplace health insurance and healthcare-related products, such as limited benefit plans and medical discount programs.

“It is critical for consumers’ health and financial well-being that marketers of health plans be honest about the plans they and their partners are offering,” said FTC lawyer Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The FTC has been watching this important sector closely, especially during open enrollment season, and these warning letters put companies on notice that unlawfully marketing or advertising health plans to consumers can result in serious legal consequences.”

Based on information collected by FTC staff and the agency’s enforcement experience in this area, the types of claims FTC staff has warned about include those that may:

  • misrepresent the benefits included in a healthcare plan, including any insurance benefits;
  • misrepresent that a healthcare plan is major or comprehensive medical health insurance or the equivalent of such health insurance;
  • misrepresent the costs of healthcare plan; and
  • falsely claim that consumers who enroll in a healthcare plan will receive free offers, cash rewards, rebates, or other incentives.

Consult with a season FTC defense lawyer if you are a lead generator or marketer of health insurance leads in order to minimize risk of government scrutiny.

The letters provide examples of prior relevant FTC actions against marketers and lead generators that operate in this field, including Simple Health, Benefytt Technologies, Partners in Healthcare Association, and Consumer Health Benefits Association.

While the letters do not allege any wrongdoing by any of the recipients, they encourage the companies to conduct a thorough review of their advertisements to ensure they are complying with applicable laws and rules, and the letters note that the FTC is closely monitoring this marketplace for unlawful conduct that is harming consumers.

© 2024 Hinch Newman LLP
For more on the FTC, visit the NLR Antitrust Trade Regulation section

OIG Releases Special Fraud Alert About Suspect Payments in Marketing Arrangements Related to Medicare Advantage and Providers

On December 11, 2024, the Office of Inspector General for the U.S. Department of Health and Human Services (“OIG”) issued a special fraud alert warning about certain marketing schemes that involve questionable payments and referrals between Medicare Advantage (“MA”) health plans, health care professionals, and third-party marketers (e.g., agents and brokers) and that can mislead MA enrollees into choosing specific health plans or providers that may not be in the MA enrollees’ best interests or meet their needs (“MA Marketing Alert”). As we have previously advised, special fraud alerts are few and far between—OIG has only issued six in the past 20 years. The importance of the MA Marketing Alert, like its predecessors, should not be taken for granted because it may be instructive as to subsequent enforcement action taken by OIG and/or the U.S. Department of Justice (“DOJ”).

In the MA space, historical enforcement actions taken by both OIG, under their administrative authorities, and DOJ, under the False Claims Act (“FCA”), have related to alleged MA risk adjustment payment inflation schemes. See, e.g., DaVita, Sutter Health, Beaver Medical, Martin’s Point, and Cigna. While allegations of this nature continue to be a focus area (e.g., in OIG’s work plans), a light is also now being shone on inappropriate marketing schemes that could violate the Federal anti-kickback statute (“AKS”). And, based on historical empirical data connecting DOJ’s enforcement actions taken subsequent to OIG’s issuance of special fraud alerts, that light may broaden and brighten.

For example, in July 2022, OIG issued a special fraud alert about arrangements involving telemedicine companies. In a footnote, OIG provided three enforcement actions resolved under the FCA as examples of allegedly problematic arrangements. After providing the footnote examples, OIG described bullet-pointed “Suspect Characteristics” that tracked the allegedly inappropriate characteristics of the footnote examples. Since the alert’s issuance, DOJ has recovered millions under the FCA and also criminally charged and convicted many individuals and entities for allegedly submitting or causing the submission of more than $3.1 billion (in 2023 and 2024 pursuant to DOJ’s nationwide takedowns) in allegedly fraudulent Medicare claims resulting from telemedicine schemes.

While the MA Marketing Alert provides footnotes of only two enforcement actions resolved under the FCA as examples of allegedly problematic arrangements, the bullet point list of “Suspect Characteristics” is broader than and reaches beyond the footnote examples. This may signal OIG’s awareness of and current investigations into allegedly inappropriate arrangements relating to “Suspect Characteristics” that have yet to be settled or resolved.

It is possible that there may be forthcoming enforcement actions in these areas. And they may follow the same trend of enforcement actions taken by DOJ relating to telemedicine schemes after OIG’s July 2022 special fraud alert. We also note that the MA Marketing Alert aligns with the Centers for Medicare & Medicaid Services’ recently finalized regulatory updates relating to MA health plan marketing arrangements with agents, brokers, and Third-Party Marketing Organizations, which will be effective January 1, 2025, and prohibit such parties from creating direct or indirect incentives “that would reasonably be expected to inhibit an agent or broker’s ability to objectively assess and recommend which plan best fits the health care needs of a beneficiary.” Proskauer’s Health Care Group will continue to monitor these developments in and provide updates about these areas of scrutiny and enforcement.

© 2024 Proskauer Rose LLP.
For more mon Fraud, visit the NLR Criminal Law Business Crimes section

OSHA Issues Final Rule on Personal Protective Equipment for Construction Workers, but It Could Start Back at Square One

On December 11, 2024, the Occupational Safety and Health Administration (OSHA) issued a statement that it had finalized a rule amending 29 C.F.R. 1926.95(c) to require construction employers to make personal protective equipment (PPE) available that “properly fits” their employees.

Quick Hits

  • On December 11, 2024, OSHA finalized a rule requiring construction employers to provide properly fitting PPE, effective January 13, 2025, though it faces potential rollback due to political opposition.
  • The new OSHA rule aims to address PPE fit issues, particularly for smaller workers and women, but lacks clear guidance on defining “properly fitting” PPE, causing industry concern.
  • Despite OSHA’s assertion that the term “properly fits” is sufficiently clear, industry feedback highlights the need for more detailed regulatory text and clarification on compliance.

The regulation was published in the Federal Register on December 12, 2024. The added language to the construction standard mirrors the current PPE fit requirements found in the general industry and shipyard standards. In OSHA’s notice of proposed rulemaking (NPRM) issued on July 20, 2023, the agency set a comment period on the proposal through September 18, 2023. During that period, comments from industry skeptics and supporters alike mirrored those previously seen.

OSHA reiterated its primary claim that PPE that does not properly fit is an issue for “smaller construction workers,” particularly women, and that implementation of the standard could increase productivity and expand the market for differently sized PPE. Many supporters of the regulatory change submitted comments reflecting that female employees praised the change and bemoaning instances of working with improperly fitting PPE. The preamble highlighted instances in which female employees had created improvised PPE when their PPE did not properly fit.

The industry’s comments acknowledged the essential nature of PPE for all employees while also continuing to express concern about the lack of clarity and guidance on how this rule would be actually implemented by employers. The core of the industry’s concern remained that the rule creates a requirement that an employee’s PPE must “fit properly” but it does not provide an explanation for how “properly fitting” PPE will be defined. Many comments highlighted this hole would create a significant opportunity for employees to complain about whether the provided PPE “properly fit” them if the PPE was simply uncomfortable. There is also no guidance on what factors employers or OSHA’s investigators should consider when evaluating whether PPE properly fits and employee and is therefore compliant with the standard.

OSHA previously dismissed this issue, stating that “employers in general industry have had no issue understanding the phrase ‘properly fits’ with regard to PPE.” The preamble reflects that several commentors requested more detailed regulatory text and clarification of responsibilities and some included recommendations. The American Industrial Hygiene Association (AIHA) recommended an operational definition for compliance, while the National Institute for Occupational Safety and Health (NIOSH) agreed with OSHA but noted the term was not universally understood. Other comments highlighted the need to consider how the body changes during pregnancy in the determination of whether PPE “properly fits” but did not suggest a specific definition for the phrase.

Ultimately, OSHA came to the same conclusion as before that the phrase “‘properly fits’ provides employers with enough information that they can select PPE for their workers that will adequately protect them from the hazards of the worksite without creating additional hazards.” OSHA pointed to the minimal confusion in other sectors and few citations for improperly fitting PPE as a suggestion that most employers can comply with the standard using the phrase “properly fits” without a definition.

We previously warned that this lack of clarity would mean that employers would still have to determine whether the range of sizes they offer would comply with the requirement for properly fitting PPE. One question to resolve is whether the “universal fit” of the PPE would assist with compliance. OSHA did note in a footnote in the preamble that one comment included an objection to the term “universal fit” arguing that “[n]o PPE is universal fit, even the most adjustable PPE may not fit workers on the extremes of anthropometric data.”. In light of this comment, OSHA acknowledged that:

[A]t the tail ends of the distribution of human variation, some adjustable PPE will not fit. For the purposes of this analysis, however, OSHA maintains that some items of PPE that come in standard, adjustable sizes will fit nearly all individuals working in the construction industry and so maintains this designation for a limited number of items in this analysis.

While this does mean employers can use the “universal fit” as a blanket mode of compliance with the standard, OSHA’s comment indicates that use of “universal fit” should allow compliance with “nearly all individuals working in the construction industry[.]”

Ultimately, while this rule remains a likely rollback priority for the second Trump administration, employers should still be mindful of the January 13, 2025, effective date.

© 2024, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.
For more on OSHA, visit the NLR Health Law Managed Care section

Diagnosing Health Care: Health Policy Update: Impact of the 2024 U.S. Elections [Podcast]

New from the Diagnosing Health Care Podcast: The recent 2024 elections resulted in a new Trump administration and a Republican-controlled House and Senate.

From policymakers to stakeholders across the industry, everyone is wondering what health policy will look like in 2025 and beyond.

On this episode, Epstein Becker Green attorneys Ted Kennedy Jr., Leslie Norwalk, Philo Hall, and Alexis Boaz discuss the results of the 2024 elections and their impact on the health policy space. What will a second Trump administration look like? How might the election results affect the health care policies addressed during Congress’s 2024 lame-duck session?

©2024 Epstein Becker & Green, P.C. All rights reserved.
For more on Health Care Policy, visit the NLR Health Law Managed Care section

You See Health, Whistleblower Saw Fraud: Uncovering a $23 Million Healthcare Fraud Scheme

A whistleblower’s vigilance has led to the revelation of alleged Medicare and TRICARE fraud involving UCHealth, a healthcare system with locations throughout the state of Colorado. University of Colorado Health agreed to a $23 million settlement to resolve allegations of improper coding for emergency room visits subsequently billed to government-funded healthcare programs. The qui tam provisions of the False Claims Act empower whistleblowers—individuals with non-public knowledge of fraud against the government—to file a lawsuit on behalf of the government. The qui tam whistleblower in this case will receive $3.91 million or 17% of the settlement.

Summary of the Allegations

According to court documents, from November 1, 2017, through March 31, 2021, certain UCHealth hospitals allegedly engaged in a fraudulent practice concerning Evaluation & Management (E/M) emergency department facility claims. These claims, submitted to both Medicare and TRICARE, are intended to compensate hospitals for resources associated with patient visits, including medical evaluations and management.

UCHealth’s alleged fraudulent activity centered around the misuse of Current Procedural Terminology (CPT) codes, specifically CPT 99285. This code represents the “highest level of severity” in emergency department visits and requires comprehensive medical evaluations and examinations, and high-complexity decision-making. However, UCHealth reportedly manipulated the coding process by automatically assigning the highest severity code, CPT 99285, based on the frequency of vital sign monitoring rather than the actual severity of the patient’s condition or resource utilization. According to the settlement agreement, employees had complained about the overuse of the highest severity code, and the hospital system had been flagged by the Centers for Medicare & Medicaid Services (CMS) as being a “High Outlier” for that CPT code as well.

Upcoding Fraud Scheme

Upcoding and improper billing to Medicare and TRICARE are forms of healthcare fraud that involve misrepresenting the services provided to obtain higher reimbursements than justified. Upcoding occurs when a healthcare provider submits claims for more expensive services or procedures than were actually performed, such as billing for a comprehensive exam when only a basic consultation was provided. Improper billing includes practices such as double billing for the same service, billing for services not rendered, or charging for medically unnecessary procedures. These fraudulent activities exploit government-funded programs, increasing costs for taxpayers and undermining the integrity of healthcare systems.

The Whistleblower’s Journey

The case began when Timothy Sanders, a concerned individual, filed a qui tam lawsuit on April 28, 2021, under the False Claims Act. This legal action initiated an investigation into UCHealth’s billing practices. Whistleblowers are integral in exposing fraudulent activities within healthcare systems, as they possess insider knowledge that can lead to substantial recoveries for the government. By filing a qui tam lawsuit, individuals, such as the healthcare fraud whistleblower in this case, can bring fraudulent activities to light, potentially leading to significant financial repercussions for the involved parties. With whistleblowers, as the Principal Deputy Assistant Attorney General said, “We will pursue health care providers that defraud the taxpayers by knowingly submitting inflated or unsupported claims.”

© 2024 by Tycko & Zavareei LLP
For more on Fraud, visit the NLR Criminal Law Business Crimes section

Holy Hemp: New Jersey Court Partially Invalidates Hemp Law

On Oct. 10, 2024, a New Jersey Federal District Court made a big decision on hemp. The Court largely invalidated New Jersey’s recent attempt to tighten controls on “intoxicating hemp products” like Delta-8 and Delta-10, which were previously sold in gas stations, smoke shops, and convenience stores without much oversight. The state had put forward amendments aimed at restricting these products to those over 21 and regulating them like cannabis. New Jersey argued that it was time to clamp down on these sales, citing public health concerns and the rising number of minors getting their hands on these potent, unregulated products.

NJ Gov. Phil Murphy had signed off on these amendments despite admitting the law wasn’t perfect. For him, protecting minors was the priority. And today, the Court shared that sentiment—partially. It kept in place only the part that prevents the sale of these products to minors.

As for the rest of the amendment? The Court struck it down. The reason? It found that New Jersey’s approach violated federal law, essentially treating hemp products from out-of-state differently from those produced locally under the New Jersey Cannabis Regulatory Commission’s new process. This selective control crossed the line, according to the Dormant Commerce Clause of the Constitution and provisions in the Federal Farm Act, which stops states from blocking the transport of hemp products.

The Court’s decision made it clear that New Jersey does have the power to regulate these sales, but the amendments need legislative fine-tuning to meet federal standards. So, while New Jersey’s push to regulate intoxicating hemp is on pause, this is far from over.

Here’s where the decision makes things complicated for sellers: By Oct. 12, shops were supposed to pull these hemp products from the shelves, including Delta-8 drinks and THC-A gummies. That means, until New Jersey’s Cannabis Regulatory Commission issues new rules, those products are off-limits.

For anyone in the hemp or cannabis business in New Jersey, it’s a loud reminder—stay compliant, stay updated, and be ready to adapt quickly to changes.

by: Benjamin Sheppard of Norris McLaughlin P.A.
©2024 Norris McLaughlin P.A., All Rights Reserved

For more news on Hemp Legality, visit the NLR Biotech, Food, & Drug section.

Affordable Care Act Proposed Rule Would Broaden Access to Over-the-Counter Contraception Without Cost Sharing

Employer-sponsored health plans would be required to cover over-the-counter contraception, including condoms and emergency contraception, without a prescription and without cost sharing under newly proposed Affordable Care Act (ACA) regulations

Quick Hits

  • Proposed rules issued by the DOL, HHS, and Treasury are designed to increase coverage for over-the-counter contraceptives, such as condoms, spermicides, and emergency contraception, without a prescription.
  • If finalized, the proposed rules would be the first time that male contraceptives will be covered under the ACA preventive care requirements.
  • The public has until December 27, 2024, to submit comments on the proposed rules.

Fully insured and self-insured health plans would have to cover every Food and Drug Administration (FDA)-approved contraceptive drug or drug-led combination product without cost sharing, unless the plan or insurer covers a therapeutic equivalent without cost sharing, under rules proposed by the U.S. Departments of Health and Human Services, Labor, and Treasury.

Employer-sponsored health plans and insurers also would have to tell participants that over-the-counter contraception without a prescription is covered at no cost, under the proposed rules published October 28, 2024, in the Federal Register.

The ACA requires most group health plans to cover preventive care at no cost to patients. Preventive care under the ACA includes FDA-approved contraceptives for women, such as birth control pills, injectable contraceptives, contraceptive patches, implantable rods, intrauterine devices, diaphragms, sponges, vaginal rings, emergency contraception medication, and sterilization procedures for women. In 2022, the Health Resources and Services Administration (HRSA) issued updated guidelines that define which healthcare services are considered preventive for women.

Without a prescription, over-the-counter products were not included in the ACA’s coverage requirement. The proposed rule would change that.

In guidance issued earlier this year, the departments noted that they are still identifying plans that are out of compliance with the contraceptive care requirements. Employers that violate the ACA mandate can be fined $100 for each day in the noncompliance period for each affected employee. At first, the ACA granted exemptions to churches and other religious organizations that hold instilling religious values as their purpose and primarily employ people who share their religious beliefs. The criteria to qualify for an exemption were broadened later. Without an exemption, nongovernmental employers can use a self-certification form to instruct their health insurer to exclude contraceptive coverage from the group health plan and provide payments to patients for contraceptive services separate from the health plan.

In July 2020, the Supreme Court of the United States ruled that private employers with religious or moral objections can be exempt from the contraceptive mandate.

Seven states—California, Colorado, Maryland, New Jersey, New Mexico, New York, and Washington—already have laws requiring state-regulated health insurance policies to cover certain over-the-counter contraceptives without a prescription and without cost sharing.

Next Steps

Employers may want to review the coverage of contraceptives under their medical plans both to ensure that no improper restrictions are put on them currently and also to clarify how their coverage would need to expand if these proposed rules became final in a substantially similar form.

This article was co-authored by Leah J. Shepherd, who is a writer in Ogletree Deakins’ Washington, D.C., office.

© 2024, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.
For more news on ACA OTC Contraception Regulations, visit the NLR Health Law & Managed Care section.

Federal District Court in Florida Holds FCA’s Qui Tam Provisions Unconstitutional

In the Supreme Court’s 2022 decision in United States ex rel. Polansky v. Executive Health Resources, Inc., three justices expressed concern that the False Claims Act’s qui tam provisions violate Article II of the Constitution and called for a case presenting that question. Justice Clarence Thomas penned a dissent explaining that private relators wield significant executive authority yet are not appointed as “Officers of the United States” under Article II. Justice Brett Kavanaugh and Justice Amy Coney Barrett, concurring in the main opinion, agreed with Justice Thomas that this constitutional issue should be considered in an appropriate case.

Earlier this year, several defendants in a non-intervened qui tam lawsuit in the Middle District of Florida took up the challenge. The qui tam, styled United States ex rel. Zafirov v. Florida Medical Associates, LLC et al., involves allegations of Medicare Advantage coding fraud. After several years of litigation, the defendants moved for judgment on the pleadings, arguing the relator’s qui tam action was unconstitutional, citing Justice Thomas’s dissent in Polansky.

The defendants’ motion prompted a statement of interest from the United States and participation as amici by the U.S. Chamber of Commerce and the Anti-Fraud Coalition. The Court also asked for supplemental briefs on Founding-era historical evidence regarding federal qui tam enforcement.

On September 30, 2024, Judge Kathryn Kimball Mizelle granted the defendants’ motion, agreeing the relator was unconstitutionally appointed and dismissing her complaint. Judge Mizelle, who clerked for Justice Thomas, held a private FCA relator exercises significant authority that is constitutionally reserved to the executive branch, including the right to bring an enforcement action on behalf of the United States and recover money for the U.S. Treasury. In doing so, a relator chooses which claims to prosecute, which theories to raise, which defendants to sue, and which arguments to make on appeal, resulting in precedent that binds the United States. Yet, a relator is not appointed by the president, a department head, or a court of law under Article II, making the qui tam device unconstitutional.

Judge Mizelle distinguished historical qui tam statutes, which were largely abandoned early in our nation’s history, on the ground that few gave a relator the level of authority the FCA does. And while the FCA itself dates back to the Civil War, the statute largely remained dormant (aside from a flurry of use in the 1930s and 40s) until the 1986 amendments set off a new wave of qui tam litigation.

The ruling is significant for the future of the FCA. As Judge Mizelle’s opinion explains, most FCA actions are brought by relators as opposed to the government itself. If the decision is upheld on appeal, a number of outcomes are possible. If the FCA is to continue as a significant source of revenue generation for the government, the DOJ must devote more resources to bringing FCA actions directly. Congress may also consider amending the FCA’s qui tam provisions to limit relators’ authority to conduct FCA litigation, thereby maintaining the statute as a viable avenue for whistleblowing.

One thing is almost certain, however. FCA defendants across the country will likely raise similar arguments in light of Judge Mizelle’s ruling. Whether in Zafirov or another case, it appears the Supreme Court will get to decide the constitutionality of the FCA’s qui tam provisions sooner rather than later.

© 2024 Bradley Arant Boult Cummings LLP
For more on Qui Tam Provisions, visit the NLR Criminal Law Business Crimes section.

Supreme Court Declines to Hear “Willfulness” Case

On Monday, October 7, 2024, the U.S. Supreme Court declined to consider a petition for certiorari in United States ex rel. Hart v. McKesson Corp., Case No. 23-1293, where relator, Adam Hart (“Relator”), sought review of a Second Circuit decision upholding the dismissal of Relator’s complaint against pharmaceutical distributor, McKesson Corporation (“McKesson”).

The case involved allegations that McKesson violated the Anti-Kickback Statute (“AKS”), which prohibits offering, paying, soliciting, or receiving remuneration to induce the purchase of goods and services paid for by a federal health program. Relator, a former McKesson employee, filed a qui tam action, claiming McKesson provided valuable business management tools—valued at over $150,000—to oncology practices at no cost, in order to induce them to purchase oncology pharmaceuticals from McKesson.

The Second Circuit dismissed Relator’s federal claims, reasoning that the allegations failed to meet the mens rea (intent) element under the AKS. The Court held that, to act willfully under the AKS, a defendant must know that its conduct is unlawful, either under the AKS or other law. Since Relator’s allegations did not plausibly suggest McKesson acted with knowledge of illegality, his federal False Claims Act claims based on the federal AKS were dismissed.

The Supreme Court’s refusal to hear Relator’s case preserves the existing circuit split regarding the interpretation of “willfulness” under the AKS. The Second Circuit, along with the Eleventh Circuit, has adopted the view that the AKS is violated when a defendant intends to violate a legal standard. This contrasts with the Fifth Circuit, which interprets the mens rea element to prohibit acts done knowingly and willfully, as opposed to by mistake or accident, and the Eight Circuit, which requires intent to commit an act known to be wrongful, but not necessarily known to be unlawful.

As it stands, the unresolved split among the circuits on this critical issue remains, and providers should be mindful that, at least in the Second and Eleventh Circuits, the stricter interpretation of “willfulness” under the AKS will continue to apply.

© Polsinelli PC, Polsinelli LLP in California
For more news on Anti-Kickback Litigation, visit the NLR Health Law & Managed Care section.

Mental Health Parity and Addiction Equity Act Final Rules (“Final Rules”) Are Released: Plans and Issuers Must Prepare for January 1, 2025 Effective Date (US)

The long-awaited Final Rules amending the Mental Health Parity and Addiction Equity Act (“MHPAEA”) were released on September 9, 2024, with the bulk of the requirements going into effect on January 1, 2025. As we previously reported here, in August 2023, the Departments of Labor, Health and Human Services (“HHS”) and Treasury (together, the “Departments”) published proposed rules further regulating insurance coverage for treatment for mental health and substance use disorders. Although the Final Rules appear less burdensome than the proposed rules, they do impose significant changes to the obligations of group health plans and health insurance issuers with a short time to achieve compliance. The key provisions are summarized below.

Key Changes in the Final Rules

The Final Rules’ stated intent is to “strengthen consumer protections consistent with MHPAEA’s fundamental purpose,” which includes reducing burdens on access to benefits for individuals in group health plans or with group or individual health insurance coverage seeking treatment for mental health and substance use disorders (“MH/SUD”) as compared to accessing benefits for the treatment of medical/surgical (“M/S”) conditions.

The Final Rules purport to achieve that goal through four key changes to the MHPAEA:

  • Mandating content requirements for performing a comparative analysis of the design and application of each non-quantitative treatment limitation (“NQTL”) applicable to MH/SUD benefits.
  • Setting forth design and application requirements and relevant data evaluation requirements to ensure compliance with NQTL rules.
  • Increasing scrutiny of network adequacy for MH/SUD benefits.
  • Introducing core treatment coverage requirements to the meaningful benefit standard.

Comparative Analysis Content Requirements

Since 2021, insurance plans and issuers offering plans that cover both M/S and MH/SUD benefits and impose NQTLs on MH/SUD benefits must have a written comparative analysis demonstrating that the factors used to apply an NQTL to MH/SUD benefits are comparable to and applied no more stringently than those used to apply that same NQTL to M/S benefits, as set forth in the 2021 Consolidated Appropriations Act (“CAA”). The Final Rules expand upon the NQTL analysis required by the CAA and include six specific content elements:

  1. a description of the NQTL;
  2. identification and definition of the factors and evidentiary standards used to design or apply the NQTL;
  3. a description of how factors are used in the design or application of the NQTL;
  4. a demonstration of comparability and stringency, as written;
  5. a demonstration of comparability and stringency, in operation, including the required data, evaluation of that data, explanation of any material differences in access, and description of reasonable actions taken to address such differences; and
  6. findings and conclusions.

Upon request, plans and issuers must provide written comparative analyses to U.S. regulators, plan beneficiaries, participants, or enrollees who have received an adverse benefit determination related to MH/SUD benefits, and participants and beneficiaries in plans governed by ERISA at any time. Plans and issuers only have 10 business days to respond to a request from the relevant Secretary to review its comparative analyses and, if an initial determination of noncompliance is made, the plan or issuer only has 45 calendar days to respond with specific actions it will take to bring the plan into compliance and provide additional comparative analyses that demonstrate compliance. Upon a final determination of noncompliance, notice must be given to all participants, beneficiaries, and enrollees within seven business days after the relevant Secretary’s determination.

Demonstrating Compliance with NQTL Rules

The Final Rules also require that a NQTL applicable to MH/SUD benefits in a classification is no more restrictive than the predominant NQTL applied to M/S benefits in the same classification. In order to ensure compliance with NQTL rules, plans and issuers must satisfy two sets of requirements: (1) the design and application requirements, and (2) the relevant data evaluation requirements. For example, under the design and application requirements, a plan cannot reimburse non-physician providers of MH/SUD services by reducing the rates for physician providers of MH/SUD services unless it applies the same reduction to non-physician providers of M/S services from the rate for physician providers of such services. Under the relevant data evaluation requirements, to compare the impact of NQTLs related to network composition on access to MH/SUD versus M/S benefits, a plan should evaluate metrics relating to the time and distance from plan participants and beneficiaries to network providers, the number of network providers accepting new patients, provider reimbursement rates, and in-network and out-of-network utilization rates.

Design and Application

Plans and issuers must examine the factors used to design and apply an NQTL to MH/SUD benefits to ensure such factors are comparable to those used with respect to M/S benefits in the same classification. The Final Rules also prohibit using information that discriminates against MH/SUD benefits as compared to M/S benefits, meaning information that systematically disfavors or was specifically designed to disfavor access to MH/SUD benefits. Appropriate information and other factors to use in designing and applying an NQTL to MH/SUD benefits include generally recognized independent professional medical or clinical standards.

Relevant Data Evaluation

The relevant data evaluation requirement means plans and issuers must collect and evaluate data to ensure, in operation, that an NQTL applicable to MH/SUD benefits is not more restrictive than the NQTL applied to M/S benefits in the same classification. The Final Rules anticipate that the relevant data for any given NQTL will depend on the facts and circumstances and provide flexibility for plans to determine what should be collected and evaluated. Examples of relevant data provided in the Final Rules include the number and percentage of claim denials, utilization rates, and network adequacy rates.

Network Adequacy

The Final Rules demonstrate the Departments’ increased scrutiny of network adequacy issues for MH/SUD benefits. For NQTLs related to network composition standards, a plan or issuer must collect data to assess the NQTLs’ aggregate impact on access to MH/SUD benefits and M/S benefits. By way of example, suppose the evaluated data suggests that an NQTL contributes to a material difference in access to MH/SUD benefits compared to M/S benefits. In that case, plans and issuers must act to address any material differences in access. The Final Rules provide examples of reasonable compliance actions, including increased recruiting efforts for MH/SUD providers, expanding telehealth options under the plan, and ensuring that provider directories are accurate and reliable. A plan must document the actions that it takes to address differences in access to in-network MH/SUD providers as compared to in-network M/S providers.

Meaningful Benefit Standard

The Final Rules require plans to provide “meaningful” benefits for MH/SUD disorders in every classification in which the plan provides M/S benefits. Benefits are “meaningful,” for MHPAEA purposes, when they cover core treatments for that condition, meaning a standard treatment or course of treatment, therapy, service, or intervention indicated by generally recognized independent standards of current medical practice.

The Final Rules provide examples to demonstrate the application of the meaningful benefits standard. In one example, a plan covers the full range of outpatient treatments (including core treatments) and treatment settings for M/S benefits when provided on an out-of-network basis. The same plan covers outpatient, out-of-network developmental screenings for a mental health condition but excludes all other benefits, such as therapeutic intervention, for outpatient treatment when provided on an out-of-network basis. The Departments view therapeutic intervention, however, as a core treatment for the mental health condition under generally recognized independent standards of current medical practice. Per the Final Rules, the Departments interpret such exclusion as a violation because the plan does not cover a core treatment for the mental health disorder in the outpatient, out-of-network classification. Since the plan’s coverage for M/S benefits includes a core treatment in the classification, the Final Rules opine that the plan fails to provide meaningful benefits for treatment of the mental health disorder.

Effective Dates

The new requirements of the Final Rules will go into effect on different dates. Plans and issuers have until January 1, 2026, to comply with the meaningful benefits standard, the prohibition on discriminatory factors and evidentiary standards, the relevant data evaluation requirements, and the related requirements in the provisions for comparative analyses. During this time, plans and issuers should assess whether their mental health provider networks are adequate, and also consider expanding the scope of MH/SUD benefits across classifications to meet new parity requirements.

The other requirements, including most of the new requirements affecting comparative analyses, go into effect on January 1, 2025. Accordingly, plans and issuers should the time remaining this year to develop a plan to prepare NQTL comparative analyses within the three-month compliance period, and have processes in place to quickly address any material changes to benefit design in the future.

© Copyright 2024 Squire Patton Boggs (US) LLP
For more on MHPAEA, visit the NLR Health Law Managed Care section.