Health insurance plans generally have limitations in benefits regarding the type of treatment a patient receives and where they receive treatment. For example, if a health plan provides no out-of-network coverage but a patient visits a provider not within the plan’s network, the plan may exclude payment.

Insurers can also limit benefits by encouraging patients to try less expensive treatments first. If those treatments are ineffective, the insurance company might pay for the higher cost option.

These types of limitations aren’t directly quantifiable and are known as non-quantitative treatment limitations (NQTLs). NQTLs can be relevant to both medical/surgical treatment as well as mental health/substance abuse disorder treatment, but federal law is primarily concerned with how they apply to the latter.

Under federal law, health plans must offer mental health/substance abuse disorder (MH/SUD) treatment in parity with medical/surgical (M/S) treatment. That means that benefit limitations, including NQTLs, must be no more stringent for MH/SUD benefits than for M/S benefits; NQTLs applied to MH/SUD treatments can't be more restrictive than those for M/S care.

What Are Non-Quantitative Treatment Limitations?

Health plans might impose two different limitations — quantitative treatment limitations and non-quantitative treatment limitations. Both constitute strategies, standards, processes, and other criteria that an insurer might use to limit a benefit's duration or the scope of benefits a plan provides.

While quantitative treatment limitations have a numerical value, such as the number of times a patient can see a provider or the number of days the patient is authorized to spend in a treatment facility, NQTLs have no numerical value, such as different pre-certification requirements imposed on different services.

The following list of general limitations are considered NQTLs:

• Prescription drug formularies:  A formulary is a list of the medications a health plan will cover. If a drug isn't on the list, a patient generally can't obtain benefits for it.
• Tiered network design: Some health plans rank healthcare providers or networks into tiers based on the cost of services, available discount, quality of the healthcare provider, or other factors. Participants of health plans using a tiered design are usually encouraged to seek care from a higher-tier provider, often through lower patient cost-sharing.
• Step therapy or fail-first policies: With step therapy or a fail-first policy, a health plan typically requires providers and patients to try one type of less expensive treatment that is expected to yield the same or similar results, before the health plan will authorize payment for a service that is more expensive. For instance, benefits may not be available for a given drug unless a different drug was already prescribed but failed to achieve the necessary result.
• Limitations based on medical necessity, appropriateness, or experimental nature: Health plans almost universally do not provide coverage for treatments that are deemed medically unnecessary or not clinically appropriate, or which are considered experimental or investigational. This determination is most often made by a clinician.

It is important to note that there is nothing inherently problematic regarding imposing NQTLs, as they are a necessary part of any health plan. Federal law, however, requires that NQTLs applied to MH/SUD benefits are applied no more stringently than NQTLs applied to M/S benefits. This is in an attempt to ensure appropriate care for individuals needing MH/SUD treatment and remove the stigma from obtaining treatment for MH/SUD illnesses.

NQTL and the Mental Health Parity and Addiction Equity Act

The Mental Health Parity and Addiction Equity Act (MHPAEA) was passed in 2008. It expanded on the groundwork laid by the Mental Health Parity Act (MHPA), passed 12 years prior. The original MHPA prevented large group health plans from placing annual or lifetime dollar limits on mental health benefits if those limits were less favorable than the ones on surgical or medical benefits.

The MHPAEA kept the original framework and included benefits for substance use disorders within its purview. To this day, the MHPAEA does not actually require health plans to cover MH/SUD treatment – but if the plan does so cover, the MHPAEA requires health plans to provide MH/SUD benefits in parity with (i.e. at an amount no lower than) M/S benefits.

MHPAEA was also amended under the Affordable Care Act (ACA) in 2010 to add regulations for:

• Group health plans of employers with more than 50 employees
• Non-federal government health plans for more than 50 employees, and
• Individual health plans bought on the market

The Consolidated Appropriations Act, 2021, then expanded this regulation a bit further than originally intended by either the MHPA or the MHPAEA. To ensure and prove that a given plan is in compliance with the parity requirements of the MHPAEA, health plans now need to perform a six-step NQTL analysis. This process aims to document parity (or lack thereof) and demonstrate whether the health plan compliantly applies its benefit limitations in parity with respect to MH/SUD benefits.

NQTL Analysis to Validate Parity: Five Primary Points

The Department of Labor has provided guidance including five items of specific information that health plans should include within a given written NQTL analysis:

1. The specific plan or coverage terms or other relevant terms regarding the NQTLs and a description of all MH/SUD and medical or surgical benefits to which each such term applies in each respective benefits classification;
2. The factors used to determine that the NQTLs will apply to MH/SUD benefits and medical or surgical benefits;
3. The evidentiary standards used for the factors identified, when applicable, provided that every factor shall be defined, and any other source or evidence relied upon to design and apply the NQTLs to MH/SUD benefits and medical or surgical benefits;
4. The comparative analyses demonstrating that the processes, strategies, evidentiary standards, and other factors used to apply the NQTLs to MH/SUD benefits, as written and in operation, are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, and other factors used to apply the NQTLs to medical/surgical benefits in the benefits classification; and
5. The specific findings and conclusions reached by the plan or issuer, including any results of the analyses that indicate that the plan or coverage is or is not in compliance with the MHPAEA requirements.

Learn About The Phia Group's NQTL Analysis Service

The Phia Group can not only help you perfect your health plan through plan drafting, subrogation, consulting, claim negotiation, fiduciary transfer, and other services, but we can also help perform the NQTL analysis required by the Department of Labor. Contact us today for all your health plan needs.