CMS Final Rule Extends Parity to Medicaid Plans

A final rule issued by the Centers for Medicare and Medicaid Services (CMS) in late March affirms that federal parity requirements regarding mental illness, including substance use disorders, apply to all types of Medicaid plans—including Medicaid managed care plans, Medicaid alternative benefit plans (ABPs), and the Children’s Health Insurance Program (CHIP).

The new rule mirrors the essential features of the final rule issued last year for the Mental Health Parity and Addictions Equity Act, which mandated similar requirements across general and mental health insurance benefits for nonquantitative treatment limits, benefit classifications, and all other measurable and nonmeasurable components of insurance benefits. Now, CMS has extended the same requirements to managed care organizations (MCOs), Medicaid ABPs, and CHIP, affecting some 23 million enrollees. (Last year’s rule applied to private plans and some Medicare plans.)

These programs must comply with the requirements no later than October 2, 2017. Medicaid fee-for-service plans are exempted only for beneficiaries who receive all services via fee for service.

APA leaders greeted the rule with approval. “The final rule has hopefully closed any possible loopholes or workarounds to the parity requirements,” said APA President Renée Binder, M.D., in comments to Psychiatric News. “This is a significant achievement considering that states have often had to have complex managed care arrangements to provide these benefits. Many of our recommendations to the proposed rule were adopted. There was considerable health plan industry pressure to dilute the essential features of the parity rule, but its approach was not adopted by CMS. The end result is that Medicaid patients will enjoy the same protections under the parity law that commercially insured patients get.”

The final rule includes the following provisions:

• MCO, ABP, and CHIP plans must ensure that the total benefits package provided to enrollees align with mental health parity requirements, regardless of the service delivery system. States can continue to operate carved-out alternate delivery systems for state plan specialty mental health and substance use disorder treatment services, but they must align with the rule as well.

• Parity protections apply to Medicaid long-term-care services, meaning that states must include long-term-care services in the appropriate classification of benefits covered under the rule for the purposes of a parity analysis. This precludes states from arbitrarily classifying services such as residential treatment centers for psychiatric or substance use treatment from being deemed long-term care and not subject to parity.

• Plans must disclose information on benefits for mental illness and substance use treatment upon request, including the criteria for determinations of medical necessity.

• States must disclose the reason for any denial of reimbursement or payment for services with respect to mental illness and substance use disorder benefits.

Depending on how the state structures the total benefits package for managed care enrollees, either the MCO or the state must conduct a parity compliance analysis to ensure that the benefits package complies with the final parity rule. CMS expects to include provisions in the MCO contracts to ensure that they can see the results of the MCO parity analysis, allowing states to exercise adequate program oversight and ensure that enrollees are receiving services that comply with the final parity rule.

The provisions of the final rule apply to the total benefit package provided to MCO enrollees, regardless of the service delivery system. That means states must assure parity for all mental health and substance use disorder services for individuals who are enrolled in an MCO, whether the services are carved out to a prepaid inpatient health plan (PIHP), a prepaid ambulatory health plan (PAHP), or fee-for-service (FFS) plan.

The final rule was issued concurrently with the National Rx Drug Abuse and Heroin Summit in Atlanta on March 29, where President Obama spoke. At the summit, the president also announced the creation of an interagency task force to be chaired by the Domestic Policy Council whose charge is to advance treatment access for mental illness, including substance use disorders. ■