New York’s Department of Financial Services has issued new insurance regulations establishing a mental health and substance use disorder parity compliance program. The program is to ensure parity between medical and surgical services and mental health and substance use disorder services.

The program applies to individual and group accident and health insurance plans, hospital service corporations, health service corporations, student health plans, municipal cooperative health benefit plans and HMOs. Note: this compliance obligation does not directly impact employers, though employers may be interested to note the types of prohibited acts.

Insurers shall adopt and implement a compliance program which shall include designation of an individual who shall be responsible for assessing, monitoring, and managing parity compliance; written policies and procedures that implement the compliance program and describe how the insurer’s parity compliance is assessed, monitored, and managed; and training on federal and state mental health and substance use disorder parity requirements.

The following are improper practices related to mental health and substance use disorder benefits:

• Implementing a utilization review policy that uses standards to determine the level of documentation for mental health and substance use that are not comparable to or are applied more stringently than the standards used to determine the level of documentation for medical or surgical conditions;
• Requiring preauthorization, concurrent, or retrospective utilization review for a higher percentage of mental health or substance use disorder benefits as compared to medical or surgical benefits;
• Implementing a methodology for developing and applying provider reimbursement rates for mental health or substance use disorder benefits that is not comparable to or is applied more stringently than the methodology for developing and applying provider reimbursement rates for medical or surgical benefits; and
• Implementing claim edits or system configurations that provide for higher rates of approval for claims for inpatient medical or surgical benefits than for inpatient mental health or substance use disorder benefits.

Insurers shall also monitor for and detect improper practices and remediate or develop a plan to remediate any improper practices as soon as practicable.Insurers will need to submit a report to the Superintendent of Insurance by December 31, 2021 and annually thereafter.

Not only are states making efforts to ensure compliance with mental health parity law, but so is the federal Department of Labor.The Department of Labor recently updated its mental health parity self-compliance tool (see our prior Benefit Beat article).

It is also worth noting there is significant litigation arising from mental health parity challenges.It is prudent for plan sponsors of insured and self-funded health plans to make every effort to affirm that their insurers or third party administrators are attending to this important compliance matter.