President Biden Proposes Extending MHPAEA’s Reach

President Biden recently released his Fiscal Year 2023 budget, which touched on the Mental Health Parity and Addiction Equity Act (MHPAEA). The Act, in short, requires health plans to cover mental health and substance abuse disorder benefits on the same terms and to the same extent that it covers medical and surgical benefits.

The proposal asks for $275 million over 10 years to increase the Department of Labor’s ability to enforce MHPAEA. Notably, the budget also asks Congress to amend ERISA to allow the DOL to hold third-party contractors responsible for violations of MHPAEA. Currently, plan sponsors are ultimately responsible for compliance with MHPAEA, even though in practice plan vendors control many aspects of the coverage of mental health and substance abuse disorder benefits. For example, plan vendors control provider networks, decide the allowable amount for claims, conduct utilization management and prior authorization, and design drug formularies. Plan sponsors do not provide much input into the intricacies of benefit management and instead must rely on these vendors to design limitations that comply with MHPAEA. Allowing the DOL to hold these third-party vendors responsible would be a major change that may force broader compliance.