New York Imposes Extensive Behavioral Health Parity Compliance Rules

Health Highlights

On September 30, 2020, the New York State Department of Financial Services (DFS) and Department of Health (DOH) promulgated regulations requiring health insurers operating in the state to develop and implement a mental health and substance use disorder (MH/SUD) parity compliance program. Health plans are required to have these parity compliance programs in place by December 29, 2020, and must annually attest to the DFS or DOH that such programs are in place.

With these regulations, New York joins other states that have recently increased the rigor with which they scrutinize non-quantitative treatment limitations (NQTLs) for behavioral health conditions. While federal law obligates insurers to impose NQTLs on MH/SUD services no more stringently than on medical and surgical (med/surg) services, states, and in some cases individual litigants, principally enforce these parity rules against insurers under the federal Mental Health Parity and Addiction Equity Act (MHPAEA) and state counterparts. This has created some degree of state variability in what is an inherently thorny and unpredictable area of health plan compliance.

The New York regulations, which were authorized by the state budget enacted earlier this year, require health plans to adopt traditional elements of a compliance program that are specifically focused on behavioral health parity, including designating a compliance officer; implementing board and management reporting; implementing written policies and procedures; creating a mechanism for reporting, identifying and remediating noncompliance; and annual training of all employees, management, board members and agents.

In addition, the regulations require an ongoing assessment of parity compliance, which reflects the requirements of existing state and federal behavioral health parity laws, but they also require the review of additional metrics that health plans are likely not currently collecting. At a minimum, health plans must engage in ongoing reviews of the following:

  • A sample of the health plan’s denials for MH/SUD benefits to ensure they were consistent with the plan’s clinical criteria and no more stringently applied than to med/surg benefits.
  • The comparability of coverage within each MH/SUD benefit classification to ensure the continuum of services available for MH/SUD benefits is comparable to the continuum of services available for med/surg benefits.
  • The percentage of MH/SUD services provided by out-of-network providers compared to med/surg benefits to ensure that there is a process for recruitment and retention of MH/SUD providers and that there is an adequate network of such providers.
  • The health plan’s provider credentialing policies and procedures to ensure that the requirements placed on MH/SUD providers are comparable to those placed on med/surg providers.
  • The average length of time to negotiate a contract with providers, negotiated reimbursement rates and methods for determining the usual and customary rate in order to determine whether reimbursement for MH/SUD benefits is established using standards comparable to those applied to med/surg benefits.
  • The health plan’s policies for automatic or systematic nonpayment or down-coding of procedural codes used for MH/SUD benefits to ensure comparability with med/surg benefits.
  • All MH/SUD medications subject to NQTLs, including step-therapy protocols or other authorization requirements.
  • Any fail-first requirements applicable to MH/SUD benefits as compared to med/surg benefits.
  • Any restrictions based on geographic location, facility type, provider specialty or other criteria applicable to MH/SUD benefits to ensure comparability with med/surg benefits.

Health plans are also required to provide written notification to insureds and the DFS or DOH, and post on the plan’s website, any parity-related improper practice that they self-identify through their compliance program. The health plan must develop a plan to remediate any improper practice within 60 days of its identification.

This year’s enacted budget also contained provisions that require that penalties collected from health insurers for violations of the MH/SUD parity law fund the state’s behavioral health parity compliance fund. The health parity compliance fund will be used for initiatives that support parity implementation and enforcement, including the behavioral health ombudsman program. This may provide an incentive for the state to aggressively enforce the provisions of the recently promulgated regulations.

We note that the federal Department of Labor, in coordination with the Department of Health & Human Services and the Department of the Treasury, recently updated the 2020 MHPAEA Self-Compliance Tool, which notably also contains guidance on establishing a parity compliance program. However, unlike the New York requirements, the federal guidance merely describes best practices.

The combination of vague and wide-reaching federal substantive parity standards with newly extensive state compliance requirements will make this a high-stakes compliance area for health plans.

NOTE: Please reach out to the authors if you have any questions regarding this law or need assistance with the creation of the plan’s behavioral health parity compliance fund:



pursuant to New York DR 2-101(f)

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