On March 17, 2025, the Biden administration took a significant step toward improving mental health care in the United States by releasing a final rule that updates mental health parity compliance for group and individual health plans. This update, known as the Mental Health Parity Rule, ensures that mental health services are treated equally to physical health care, addressing long-standing disparities in coverage for behavioral health services. This new rule builds on the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) and clarifies how federal agencies oversee health plan coverage for mental health and substance use disorder benefits.
The newly finalized Mental Health Parity Rule, released on Monday, strengthens the enforcement of parity by requiring health plans to demonstrate that nonquantitative treatment limitations (NQTLs)—restrictions that are not expressed in numerical terms—are applied equally to both behavioral health and physical health benefits. These NQTLs include practices like prior authorizations, step therapy, and other medical management tools that have historically made it more difficult for individuals to access mental health care.
This final rule is designed to address significant gaps in how health plans manage behavioral health services compared to physical health services, ensuring that people seeking mental health care are not unfairly restricted or denied services. The updated guidelines will require health plans to take proactive steps to assess, remedy, and avoid any disparities between mental health and physical health coverage, as mandated by the Mental Health Parity Rule.
What’s in the Final Rule?
The final Mental Health Parity Rule takes aim at nonquantitative treatment limitations (NQTLs), which are non-numerical barriers to accessing care. These can include restrictions like prior authorizations, network adequacy requirements, step therapy protocols, and other methods that delay or limit access to necessary care. By requiring health plans to analyze these limitations for both mental health and physical health benefits, the Mental Health Parity Rule aims to level the playing field, ensuring that individuals seeking behavioral health care have equal access to services.
The rule’s core provisions include:
- Nonquantitative Treatment Limitations: Health plans will no longer be allowed to impose NQTLs on mental health benefits that are more restrictive than those applied to medical or surgical services. The Mental Health Parity Rule mandates that plans apply NQTLs in a manner that ensures equal access to both types of care, eliminating discriminatory practices.
- Data Collection and Analysis: Health plans will be required to collect data to assess the impact of NQTLs on access to both behavioral and physical health care. This analysis will help identify disparities in care, and health plans will be required to take corrective actions if disparities are found. These analyses must be submitted to federal agencies such as the Department of Labor (DOL), Department of Health and Human Services (HHS), Department of the Treasury (Treasury), as well as state regulators and plan members, in accordance with the Mental Health Parity Rule.
- Comparative Analyses: The rule also mandates that health plans conduct comparative analyses of the NQTLs applied to mental health and substance use disorder benefits, compared to those applied to medical and surgical benefits. These analyses must be detailed and demonstrate that NQTLs for mental health and substance use disorder services are comparable to those applied to physical health services.
- Required Corrective Actions: If a health plan is found to be in violation of the parity requirements, the federal agencies overseeing compliance (DOL, HHS, and Treasury) will require the health plan to stop using any noncompliant NQTLs and take steps to remedy the situation, as outlined in the Mental Health Parity Rule.
- Essential Health Benefits: The rule emphasizes the importance of ensuring that “essential” mental health and addiction treatment services are adequately covered. This includes ensuring that networks of providers are adequate to meet the needs of patients, and that out-of-network care does not become a barrier to treatment. Health plans will also be required to assess and address any gaps in network composition under the Mental Health Parity Rule.
- Self-Funded Non-Federal Governmental Plans: A significant change in the final rule is that it removes the ability of self-funded, non-federal governmental plans to opt out of MHPAEA compliance. This ensures that even these plans are subject to the same parity requirements as fully insured plans.
Why This Rule Matters
The final Mental Health Parity Rule represents a major victory for mental health advocates, who have long argued that people with mental health and substance use disorders have been treated unfairly by health insurers. Behavioral health care providers and patient advocacy groups have consistently pointed out that restrictive practices, like prior authorizations, step therapy, and high out-of-pocket costs, create significant barriers to care. These barriers often prevent individuals from accessing timely and appropriate mental health treatment, which can result in worse outcomes and unnecessary suffering.
As behavioral health advocates have noted, insurance companies have routinely treated mental health services as secondary to physical health services, despite the fact that mental and physical health are equally important to a person’s well-being. In many cases, providers have argued that they are paid less for delivering mental health care compared to medical care, which further exacerbates the disparity in care.
While the final rule does not address the financial aspect of these disparities, it does promise to improve access to care, which many advocates believe will have indirect financial benefits. For example, by ensuring that individuals can access behavioral health care when they need it, the Mental Health Parity Rule could prevent more costly interventions later, like emergency room visits or hospitalizations, which are often the result of untreated mental health issues.
Advocates Respond: Praise and Caution
Behavioral health advocates are generally supportive of the new rule, with many expressing that it is a step in the right direction to address inequities in mental health care. Rebecca Bagley, president and CEO of The Kennedy Forum, a nonprofit advocacy group, praised the rule’s stronger enforcement provisions, stating, “The cost of the status quo is simply too high for the country to continue to pay. The economic impacts of inequitable mental health and substance use care have national and global economic implications for the United States.”
According to research by RTI International, patients seeking behavioral health services are 3.5 times more likely to go out-of-network for care than those seeking physical health care, and reimbursement rates for behavioral health services are often far lower than for physical health services. This disparity in reimbursement and network coverage is even more pronounced when it comes to specialist care—patients are nine times more likely to go out-of-network to see a psychiatrist than they are to see other specialists.
On the other hand, insurance industry representatives have raised concerns about the final Mental Health Parity Rule, arguing that it may be overly burdensome or vague in some areas. Some worry that the rule will increase costs for insurers, who may face additional administrative hurdles as they comply with the new reporting and analysis requirements.
However, the Biden administration and behavioral health advocates maintain that the long-term benefits—both for patients and for the broader healthcare system—will outweigh any potential short-term challenges.
What’s Next?
The new Mental Health Parity Rule will apply to group health plans with new plan years beginning after January 1, 2025, and to individual health plans starting on January 1, 2026. Health plans will need time to adjust their policies and systems to comply with the new requirements. However, the rule’s requirements are clear: health plans must ensure that individuals seeking mental health care are no longer subjected to discriminatory treatment compared to those seeking physical health care.
In the coming months and years, we can expect ongoing monitoring and enforcement of these new rules by federal and state regulators. As more patients and providers begin to see the impact of these changes, the hope is that this rule will set the stage for future reforms in mental health care and contribute to a more equitable healthcare system for all Americans.
Conclusion: A Critical Step in Mental Health Care Reform
This final Mental Health Parity Rule is an essential milestone in the ongoing fight for mental health equity in the United States. By addressing the discriminatory practices that have long hindered access to behavioral health services, the Biden administration has made a clear statement that mental health care must be treated with the same urgency and importance as physical health care.
While there is still work to be done to address issues like reimbursement rates and workforce shortages in the behavioral health field, this new rule represents a significant and necessary step toward ensuring that all individuals, regardless of their mental health status, can access the care they need when they need it.
The final Mental Health Parity Rule’s emphasis on parity, transparency, and accountability should help level the playing field for those seeking mental health care and set the stage for a more equitable healthcare system in the years to come.
