State Issues Regulations Implementing the State’s Mental Health Parity Law

The Department of Insurance and Financial Institutions announced that its final rules implementing the Arizona Mental Health Parity Act (Jake’s Law) are effective September 4, 2022. These five rules provide guidance for plans issued in the state to report their compliance with the statute.

Jake’s Law implements the federal MHPAEA at the state level. MHPAEA generally establishes that health insurance issuers that provide mental health or substance use disorder (MH/SUD) benefits may not, among other things, impose less favorable benefit limitations on MH/SUD benefits than on medical/surgical benefits. Specifically, healthcare insurers cannot apply financial requirements or quantitative treatment limitations (QTLs) to MH/SUD policy benefits that are more restrictive than the predominant financial requirements or treatment limitations that apply to substantially all medical/surgical benefits. Healthcare insurers cannot impose nonquantitative treatment limitations (NQTLs) with respect to MH/SUD benefits in any classification unless the processes, strategies, evidentiary standards or other factors used in applying the NQTL to MH/SUD benefit classifications are comparable to those used with medical surgical/benefits classifications.

The rules provide a process by which plans issued in the state report their compliance with Jake’s Law. Issuers must file reports for each plan they offer, informing the state whether the plans cover MH/SUD benefits, and, if so, whether those benefits are in parity with medical/surgical benefits. Issuers are required to file a report for each plan every three years demonstrating its compliance with NQTL requirements, with an annual report requirement that provides any updates to the last triennial report as well as an attestation by an officer or director of the healthcare insurer that the healthcare plan follows MHPAEA. The new rules also provide an exhibit that lists all the required information for those reports.

In addition, the new rules require healthcare insurers that issue health plans in Arizona and whose policy forms are not exempt from the form filing requirement to demonstrate their compliance with the financial requirements and QTL parity requirements of MHPAEA through their form and rate filings with the Department.

Employers with plans issued in the state should be aware of these new requirements.

DIFI Notice of Final Rulemaking – Mental Health Parity »