By Thomas L. Henderson
Administrators of ERISA-covered group health plans are required to provide extensive information to participants in those plans. A recent draft form letter promulgated by the United States Departments of Labor, Health and Human Services and Treasury, coaches participants to request even more information. Specifically, the letter urges participants to focus on obtaining comprehensive and detailed plan information concerning the parity of mental health and addiction benefits with available medical and surgical benefits under the plans. Based on the information they may obtain, participants may discover a new avenue to challenge denials of mental health and substance abuse benefits.
1. The Mental Health Parity and Addiction Act
Under the Mental Health Parity and Addiction Act, most health plans must ensure that the mental health and substance use benefits they offer are in parity with medical and surgery benefits offered. Also, any mental health and substance use limitations must be comparable to those applied to medical and surgery benefits. This includes financial requirements such as deductibles, co-pays and out of pocket limits as well as treatment limits. Six classifications of benefits are analyzed individually: in-patient in-network, in patient out-of-network, outpatient in-network, outpatient out-of-network, emergency, and prescription drugs.
2. ERISA Disclosure Requirements
ERISA requires administrators to make substantial disclosures to participants and beneficiaries. Of course, a summary plan description (SPD) must be provided within 90 days after an employee becomes a participant. The SPD must be written in a manner calculated to be understood by the average participant and must be sufficiently accurate and comprehensive to apprise participants of their rights and obligations under the plan. Additionally, when a modification or change to the plan is made that constitutes a material reduction in covered services or benefits, then a summary description of that must be provided no later than 60 days after the adoption of the modification or change.
In addition, upon a written request by a participant or beneficiary, the administrator must furnish the plan description, reports, contracts or other instruments under which the plan is established or operated. This provision requires the production of any documents indispensable to the operation of the plan, according to the Sixth Circuit Court of Appeals. Where there is any doubt as to a particular document, disclosure should be made where it would help participants understand their rights.
By far, however, the majority of disputes about ERISA’s disclosure requirements arise from requests for information after a claim for benefits has been denied. Plans are required to establish and maintain reasonable procedures for appeals of adverse benefit determinations. Among other requirements, to be deemed “reasonable,” plans must contain processes and safeguards to verify that claims are made in accordance with governing plan documents and that, where appropriate, plan provisions are applied consistently with respect to similarly situated claimants.
Also, the appeal must provide a “full and fair” review of the adverse determination. To be deemed “full and fair,” the participant must be provided, upon request and free of charge, copies of all documents, records and other information relevant to the claim for benefits. Information is relevant to a claim if it (1) was relied upon in making the benefit determination, (2) was submitted, considered, or generated in the course of making the determination, even if it was not relied upon, (3) demonstrates compliance with the obligation to treat claims in accordance with plan documents and consistent application with respect to similarly situated claimants, or (4) constitutes a statement of policy or guidance concerning the denied benefit.
B. The Letter
On June 18, 2017, Labor, HHS and Treasury released the form letter. According to the release, the letter is designed to help participants exercise their rights to mental health and substance abuse benefits. The information that employees should seek includes both general information about mental health and substance use benefits and specific information that may have resulted in the denial of such benefits, according to the background explaining the form.
Specifically, as to parity issues, the letter requests to be provided (1) the specific plan language regarding a plan limitation and identify all of the medical/surgical and mental health and substance use disorder benefits to which it applies; (2) the factors used in the development of plan limitations and the evidentiary standards used to evaluate the factors; (3) the methods and analysis used in the development of the limitation; and (4) any evidence that the limitation is applied no more stringently, as written and in operation, to mental health and substance use disorder benefits than to medical and surgical benefits.
C. Now what?
Obviously, administrators can expect to receive these requests when mental health/substance abuse benefits are denied. Responding to these requests will require much effort. Since responses to requests for information under ERISA must generally be given within 30 days of the request (or the administrator may be hit with monetary penalties), those efforts must begin before the requests come in. The first step will be to determine whether the plan even has all of this information. Certainly, the plan language will already have been determined, as well as the benefits to which a limitation applies. However, the remainder of the information required by this letter will most likely have to be researched by the employer, the insurer, the TPA and actuaries. Legal advice will be necessary to address the evidentiary standards and the comparative evidence as to the parity of limitations. Once all of that information is obtained, it will need to be analyzed to ensure compliance with the parity requirements and to ensure the response is legally adequate.
Another significant effect of the letter is that it paves the way for additional arguments for participants when their claims for such benefits are denied. Since ERISA requires a full and fair review of the claim denial, and requires consideration of the treatment of similarly situated individuals, a claim that the provisions are not in parity as required by the Act appears to be an issue properly raised on appeal. Generally, it is not difficult to provide the administrative record on the claim for benefits. To respond to this type of request, however, information and documents outside the record must be obtained, analyzed and provided. Once provided, the participant can raise arguments that the denial was based on plan provisions that are not in parity with medical and surgical provisions. Certainly, “parity” will often be in the eye of the beholder, and most likely to be finally decided by a Court.