Section 230.1 sets forth the health care plans to which the new Part applies.

Section 230.2 defines terms that apply to the new Part.

Section 230.3 provides that health care plans must adopt and implement a mental health and substance use disorder parity compliance program and provides the minimum requirements for such program, sets forth provisions regarding the prohibition of improper practices and annual certification requirements, and provides for exemptions from electronic filing and submission requirements under limited circumstances.

1. Statutory authority: The authority of the Superintendent of Financial Services (“Superintendent”) to promulgate new Part 230 to 11 NYCRR (Insurance Regulation 218) derives from Financial Services Law sections 202 and 302 and Insurance Law sections 301, 316, 1124, 3201, 3216, 3217, 3221, and Articles 43 and 47 of the Insurance Law.

Financial Services Law section 202 establishes the office of the Superintendent.

Financial Services Law section 302 and Insurance Law section 301, in pertinent part, authorize the Superintendent to prescribe regulations interpreting the Insurance Law and to effectuate any power granted to the Superintendent in the Insurance Law, Financial Services Law, or any other law.

Insurance Law section 316 authorizes the Superintendent to promulgate regulations requiring the submission or filing of records by electronic transmission.

Insurance Law section 1124 sets forth requirements for an institution of higher education to establish, maintain, or otherwise participate in a student health plan in New York State.

Insurance Law section 3201 subjects policy forms to the Superintendent’s approval.

Insurance Law sections 3216, 3221, and 4303 set forth requirements for individual, group, and blanket accident and health insurance policies and for subscriber contractors issued by corporations organized under Insurance Law Article 43, and provide that the respective policy forms subject to each section comply with the mental health and substance use disorder treatment requirements under the federal Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (“MHPAEA”), codified at 29 U.S.C. § 1185a.

Insurance Law section 3217 authorizes the Superintendent to issue regulations to establish minimum standards, including standards for full and fair disclosure, for the form, content and sale of accident and health insurance policies and subscriber contracts of corporations organized under Insurance Law Article 32 and Article 43 and Public Health Law Article 44.

Insurance Law Article 43 sets forth requirements for non-profit medical and dental indemnity and health and hospital service corporations.

Insurance Law Article 47 allows for public employers to develop municipal cooperative health benefit plans, establishes standards for such plans, and authorizes the Superintendent to authorize and regulate such plans.

2. Legislative objectives: Insurance Law sections 3216, 3221, and 4303 subject insurers to certain mental health treatment and substance use disorder parity requirements in accordance with the MHPAEA. Part QQQ of Chapter 58 of the Laws of 2020 added Insurance Law section 344, entitled “Mental health and substance use disorder parity compliance programs”, which provides that penalties collected for violations of Insurance Law sections 3216, 3221, and 4303 must be deposited in a fund established pursuant to State Finance Law section 99-HH.

This proposed rule accords with the public policy objectives that the Legislature sought to advance in Part QQQ of Chapter 58 by establishing requirements for mental health and substance use parity compliance programs (a “compliance program”) to ensure that insurers authorized to write accident and health insurance in this State, Article 43 corporations, student health plans certified pursuant to Insurance Law section 1124, municipal cooperative health benefit plans, and health maintenance organizations (collectively, “health care plans”) provide comparable coverage for benefits to treat mental health and substance use disorder as required under both state and federal law. The proposed rule also requires that such a compliance program establish corporate governance for parity compliance, identify discrepancies in coverage of services for the treatment of mental health conditions and substance use disorder, and ensure appropriate identification and remediation of improper practices.

3. Needs and benefits: The State finds that access to treatment for mental health and substance use disorder services is critical to abate the opioid and suicide epidemics affecting families throughout the State. Further, in accordance with state and federal law, health care plans are required to ensure that they offer coverage and benefits for the treatment of mental health conditions and substance use disorder as comparable as the coverage they provide for medical and surgical conditions. It is therefore in the public interest that a health care plan implement a compliance program to effectuate and monitor parity compliance.

4. Costs: Health care plans may incur additional costs to comply with the rule, including compliance costs associated with establishing and maintaining a compliance program. Specifically, health care plans will be responsible for creating written policies and procedures that implement the program and describe how parity compliance is assessed, monitored and maintained, including methodologies to identify and test all financial requirements and both quantitative and non-quantitative treatment limitations. Furthermore, the compliance program must identify and remediate improper practices, as well as training and education for all employees and other agents engaged in functions that are subject to state mental health and substance use disorder parity requirements. In addition, health care plans must electronically file each year a written certification with the Superintendent. However, any costs associated with the compliance program should be minimal because health care plans already will have undertaken significant measures to ensure compliance with state and federal mental health and substance use disorder parity requirements.

This proposed rule may impose compliance costs on the Department of Financial Services (“Department”) because the Department will be required to monitor whether health care plans are maintaining a compliance program that meets the requirements of this rule, identify improper practices, and assess whether health care plans are remediating improper practices in a timely manner. However, such costs are not expected to be substantial and will be assumed by the Department as a usual and ordinary expense.

5. Local government mandates: The rule does not impose any program, service, duty or responsibility on any county, city, town, village, school district, fire district or other special district.

6. Paperwork: Health care plans will incur additional paperwork to comply with this rule because they will need to provide written policies and procedures that implement the compliance program within their organizations. Health care plans also must provide written notification to affected insureds regarding identified improper practices.

7. Duplication: This rule does not duplicate, overlap, or conflict with any existing state or federal rules or other legal requirements.

8. Alternatives: The Department considered several alternatives. The governance provisions specify that an experienced individual be designated to manage the compliance program and report directly to the company CEO or senior manager. The Department considered but decided against defining “experienced individual” because health care plans should have the freedom to decide who is best suited for this role based on their unique organizational structure and other related factors. For instance, depending on the health care plan, this could be a compliance manager, corporate counsel, or a third-party agent. Conversely, the Department did not allow the same leeway with the specific requirement to report directly to the CEO or other senior manager as opposed to any other employee chosen by the health care plan. The Department settled on specific high-ranking individuals in order to maintain accountability and ensure that oversight of the compliance program exists at the highest possible level.

Regarding the improper practices section of the rule, the Department considered limiting the degree to which quantitative findings are used as a basis for non-quantitative treatment limitation compliance to avoid mislabeling any potentially benign quantitative inconsistencies between mental health or substance use disorder benefits and medical or surgical benefits as improper, specifically for utilization review and for the implementation of claim edits or system configurations through auto-adjudication. Ultimately, the Department decided that quantitative disparities in the aforementioned areas should be identified as improper after weighing the risk of overinclusion against the widespread harm that could result from noncompliance, as this type of analysis lays the foundation of parity compliance.

Finally, the Department considered alternative certification dates and remediation deadlines. An earlier certification date of January 1, 2021 was initially contemplated but the Department felt December 31, 2021 was more appropriate in order to allow health care plans sufficient time to comply with the rule. Similarly, the Department replaced language requiring the remediation of improper practices within 60 days with language requiring either the remediation of improper practices or the development of a remediation plan, within 60 days. The Department understands that health care plans may need more than 60 days to remediate certain improper practices but believes that non-compliant health care plans should be held accountable by requiring them, at a minimum, to develop a remediation plan within that timeframe.

9. Federal standards: The rule does not exceed any minimum standards of the federal government for the same or similar subject areas.

10. Compliance schedule: The rule will take effect 90 days after publication of the Notice of Adoption in the State Register.

1. Effect of rule: SAPA section 102(8) defines a small business to mean “any business which is resident in this State, independently owned and operated, and employs one hundred or less individuals.” This rule affects all insurers authorized to write accident and health insurance in this State, Article 43 corporations, student health plans certified pursuant to Insurance Law section 1124, municipal cooperative health benefit plans, and health maintenance organizations (collectively, “health care plans”) equally, including insurers that are small businesses, if any. Part QQQ of Chapter 58 of the Laws of 2020 added Insurance Law section 344, entitled “Mental health and substance use disorder parity compliance programs”, which provides that penalties collected for violations of Insurance Law sections 3216, 3221 and 4303 related to mental health and substance use disorder parity compliance must be deposited in a fund established pursuant to State Finance Law section 99-hh. This rule establishes mental health and substance use disorder parity compliance program (a “compliance program”) requirements to ensure that health care plans provide comparable coverage for benefits to treat mental health and substance use disorder as required under both state and federal law. This rule further requires that a compliance program establish corporate governance for parity compliance, identify discrepancies in coverage of services for the treatment of mental health conditions and substance use disorder, and ensure appropriate identification and remediation of improper practices.

This rule does not affect local governments.

2. Compliance requirements: Health care plans, including any that is a small business, may be subject to additional reporting, recordkeeping, or other compliance requirements because implementing a compliance program requires a health care plan to maintain a record of ongoing assessment and monitoring of parity compliance, including methodologies to identify and test all financial requirements and both quantitative and non-quantitative treatment limitations. In addition, health care plans, including those that are a small business, must electronically file each year a written certification with the Superintendent of Financial Services (“Superintendent”). However, these additional compliance requirements should be minimal because current state and federal law already requires health care plans, including those that may be small businesses, to comply with mental health parity and substance use disorder requirements.

No local government will have to undertake any reporting, recordkeeping, or other affirmative acts to comply with this rule because the rule does not apply to any local government.

3. Professional services: No health care plan, including one that is a small business, affected by this rule should need to retain professional services, such as lawyers or auditors, to comply with this rule.

No local government will need professional services to comply with this rule because the rule does not apply to any local government.

4. Compliance costs: Health care plans, including those that are small businesses, may incur additional costs to comply with the rule associated with the aforementioned compliance requirements Specifically, health care plans will be responsible for creating written policies and procedures that implement the program and describe how parity compliance is assessed, monitored and maintained, including methodologies to identify and test all financial requirements and both quantitative and non-quantitative treatment limitations. Furthermore, the compliance program must identify and remediate improper practices, as well as training and education for all employees and other agents engaged in functions that are subject to state mental health and substance use disorder parity requirements. In addition, health care plans must provide written notification to affected insureds and the Superintendent regarding identified improper practices, and must electronically file each year a written certification with the Superintendent. However, any costs associated with the compliance program should be minimal because health care plans already will have undertaken significant measures to ensure compliance with state and federal mental health and substance use disorder parity requirements.

No local government will incur any costs to comply with this amendment because the amendment does not apply to any local government.

5. Economic and technological feasibility: Health care plans, including those that are small businesses, should not incur any economic or technological impact as a result of the rule.

This rule does not apply to any local government; therefore, no local government should experience any economic or technological impact as a result of the rule.

6. Minimizing adverse impact: The rule attempts to minimize any adverse impact on a health care plan, including one that may be a small business, by permitting a health care plan to apply to the Superintendent to apply for an exemption from having to file an annual certification electronically based upon undue hardship, impracticability, or good cause.

No local government should be adversely impacted by this rule because the rule does not apply to any local government.

7. Small business and local government participation: The Department of Financial Services (“Department”) complied with SAPA section 202-b(6) by posting the proposed rule on its website for informal outreach and notifying trade organizations that represent the interests of small businesses that the proposed rule had been posted. The Department also will comply with SAPA section 202-b(6) by publishing the proposed amendment in the State Register and posting the proposed amendment on its website again.

1. Types and estimated numbers of rural areas: Insurers authorized to write accident and health insurance in this state, Article 43 corporations, student health plans certified pursuant to Insurance Law section 1124, municipal cooperative health benefit plans. and health maintenance organizations (collectively, “health care plans”) affected by this rule operate in every county in this state, including rural areas as defined by State Administrative Procedure Act section 102(10).

2. Reporting, recordkeeping and other compliance requirements; and professional services: Health care plans, including those located in rural areas, may be subject to additional reporting, recordkeeping, or other compliance requirements because implementing a mental health and substance use disorder parity compliance program (a “compliance program”) requires a health care plan to maintain a record of ongoing assessment and monitoring of parity compliance, including methodologies to identify and test all financial requirements and both quantitative and non-quantitative treatment limitations. In addition, health care plans must electronically file each year a written certification with the Superintendent of Financial Services (“Superintendent”). However, these additional compliance requirements should be minimal because current state and federal law already requires health care plans, including those located in rural areas, to comply with mental health and substance use disorder parity requirements.

A health care plan, including a health care plan in a rural area, should not need to retain professional services, such as lawyers or auditors, to comply with this rule.

3. Costs: Health care plans, including those located in rural areas, may incur additional costs to comply with the rule. Specifically, health care plans will be responsible for creating written policies and procedures that implement the program and describe how parity compliance is assessed, monitored and maintained, including methodologies to identify and test all financial requirements and both quantitative and non-quantitative treatment limitations. Furthermore, the compliance program must identify and remediate improper practices, as well as training and education for all employees and other agents engaged in functions that are subject to state mental health and substance use disorder parity requirements. In addition, health care plans must provide written notification to affected insureds and the Superintendent regarding identified improper practices and must electronically file each year a written certification with the Superintendent. However, any costs associated with the compliance program should be minimal because health care plans already will have undertaken significant measures to ensure compliance with state and federal mental health and substance use disorder parity requirements.

4. Minimizing adverse impact: This rule uniformly affects health care plans that are located in both rural and non-rural areas of New York State. This rule should not have an adverse impact on rural areas.

5. Rural area participation: Health care plans, including health care plans in rural areas, had an opportunity to participate in the rule making process when the Department of Financial Services (“Department”) posted the proposed rule on its website on June 5, 2020 for one week for informal outreach and notified trade organizations that the proposed rule had been posted. Health care plans, including those in rural areas, also will have an opportunity to participate in the rulemaking process when the proposed rule is published in the State Register and again posted on the Department’s website.

This rule should not adversely impact jobs or employment opportunities in New York State. The rule establishes mental health and substance use disorder parity compliance program requirements to ensure that health care plans are providing comparable coverage for benefits to treat mental health and substance use disorder as required under both state and federal law. As a result, there should be no impact on jobs or employment opportunities.