HHS's Centers for Medicare & Medicaid Services (CMS) has issued guidance addressing a provision under recent legislation that eliminated the ability of self-funded non-federal governmental plans to opt out of complying with the Mental Health Parity and Addiction Equity Act (MHPAEA) (CMS Bulletin (June 7, 2023); Consolidated Appropriations Act, 2023 (CAA-23), Pub. L. No. 117-328 (Dec. 29, 2022)). CMS's guidance addresses a special rule in the legislation that allows certain collectively bargained plans to temporarily extend their opt-out election, after which they must come into compliance with MHPAEA.

As background, self-funded non-federal governmental plans may opt out of compliance with certain provisions under the Public Health Service Act (PHSA). Before the CAA-23 was enacted in December 2022, this list included a compliance opt-out for MHPAEA. MHPAEA generally prohibits coverage limits in health plans that apply more restrictively to mental health/substance use disorder (MH/SUD) benefits than for medical/surgical benefits. For more information, see Mental Health Parity (MHPAEA) Toolkit and Practice Note, Mental Health Parity Requirements Under the CAA-21.

As noted, the CAA-23 eliminated the ability of self-funded non-federal governmental plans to opt out of MHPAEA compliance. This CAA-23 sunset provision prohibits:

(PHSA § 2722(a)(2) (42 U.S.C. § 300gg-21(a)(3)), as amended by the CAA-23.)

However, the above provision regarding renewals includes a special rule for certain collectively bargained plans. This rule applies to self-funded non-federal governmental health plans that:

These plans may extend the MHPAEA compliance opt-out election until the date that the term of the last CBA expires.

CMS's guidance addresses the procedures for eligible plans to extend their MHPAEA compliance opt-out elections, as permitted under the CAA-23. Under these procedures, plans must send an email to [email protected] and include documentation:

CMS will review the submitted documentation and determine whether the plan is eligible for an extension. After CMS informs the plan sponsor of its eligibility, the plan sponsor must submit an opt-out election renewal (using the Health Insurance Oversight System (HIOS)) to extend its current opt-out. This renewal opt-out must be submitted prior to either:

The end date of this renewal of the MHPAEA compliance opt-out is the same as the end date of the last affiliated CBA.

CMS may take enforcement action, including imposing civil money penalties, against plans that fail to comply with the PHSA and MHPAEA.

Although MHPAEA has been a group health plan compliance requirement for many years, plans and their service providers are struggling to comply with certain mental health parity provisions enacted in recent years—including complicated comparative analysis requirements added under the Consolidated Appropriations Act, 2021 (CAA-21) (see Practice Note, Mental Health Parity Requirements Under the CAA-21: Comparative Analysis (CA) Disclosures: Compliance with NQTL Requirements and Legal Update, In 2022 MHPAEA Report, DOL Highlights Robust Enforcement of CAA-21 and Widespread Noncompliance). Coupled with aggressive enforcement by the administrative agencies, the expanded MHPAEA requirements will make for a challenging regulatory landscape for self-funded non-federal governmental plans that lose their MHPAEA compliance opt-out under the CAA-23.

After the CAA-23, self-funded non-federal governmental plans may elect to opt-out of only the following three PHSA provisions:

For more information, see Group Health Plans and Health Insurance Toolkit.