CMS Releases Final Medicaid Mental Health Parity Rule

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By Nathaniel Weixel

March 29 — Millions of beneficiaries who receive services through Medicaid managed care organizations, Medicaid alternative benefit plans or CHIP must be provided access to the same mental health and substance use disorder benefits and protections of private plans under a final rule released March 29 by the CMS.

Medicaid is the single largest payer for mental health services in the U.S. and is increasingly playing a larger role in the reimbursement of substance use disorder services. The rule (CMS-2333-F, RIN 0938-AS24) is intended to create consistency between the commercial and Medicaid markets. It will cost just under $1 billion in federal and state funds between 2016 and 2020. The rule will benefit nearly 23 million Medicaid beneficiaries and 880,000 Children's Health Insurance Program beneficiaries in 2016, the Centers for Medicare & Medicaid Services said.

States and plans must be in compliance no later than 18 months after publication of the final rule, which will be published in the Federal Register March 30.

Rx Summit

The rule was released in conjunction with President Barack Obama's visit to a national drug abuse summit in Atlanta and is part of the administration's new efforts to combat the opiate abuse epidemic, including enforcement of the Mental Health Parity and Addiction Equity Act (MHPAEA) (see related article).

The rule requires plans to disclose information on mental health and substance use disorder benefits upon request, including the criteria for determinations of medical necessity. Essentially, the rule requires that each managed care enrollee in a state be provided access to a set of benefits that meets specific parity requirements, regardless of whether the mental health/substance abuse services are provided by the managed care organization or through another service delivery system, such as traditional Medicaid.

The final rule also requires a state to disclose the reason for any denial of reimbursement or payment for services with respect to mental health and substance use disorder benefits.

“Today’s rule eliminates a barrier to coverage for the millions of Americans who for too long faced a system that treated behavioral health as an unequal priority. It represents a critical step in our effort to ensure that everyone has access to the care they need,” Health and Human Services Secretary Sylvia Mathews Burwell said in a March 29 statement.

The MHPAEA originally applied to group health plans and group health insurance coverage, and was amended by the Affordable Care Act to also apply to individual health insurance coverage.

State Flexibility

State Medicaid programs vary in their coverage of mental health and substance abuse disorder (MH/SUD) services. For example, most MH/SUD services are optional under the traditional Medicaid benefits package. As a result, states can choose to cover some services and not others, or they can choose to cover these services but impose treatment limitations (for example, day or visit limits).

Many states told the CMS that the proposed rule impermissibly encroaches on states’ flexibility to decide how to operate their Medicaid programs. The comments indicated that the various delivery system arrangements that states use will become significantly more complex and difficult to administer.

The CMS disagreed. “We maintain that applying various parity provisions across the different delivery systems would allow states the most flexibility in designing delivery systems while ensuring that parity in coverage of medical/surgical and” mental health/substance abuse disorder services is provided to MCO enrollees, CMS said.

In addition, the CMS said the rule would continue flexibility in identifying a variety of delivery systems for Medicaid services provided to beneficiaries, while ensuring that enrollees of a Medicaid managed care organization receive the benefit of parity in services provided to them.

Advocacy Group

Angela Kimball, national director of advocacy and public policy at the National Alliance on Mental Illness, told Bloomberg BNA that enforcement of the parity law is essential to achieve the intent of the law. She said the final rule provides the necessary guidance states and plans have needed.

“The challenge has been plans, providers, and states all needed additional guidance on how it applies to coverage” for Medicaid and CHIP, Kimball said. “Medicaid serves some of the poorest residents, and not having a parity rule jeopardized their ability to get access to mental health care. [The rule] creates clarity that will help serve the lowest income Americans.”

Task Force

Separately from the proposed rule, the Obama administration created an interagency Mental Health and Substance Use Disorder Parity task force to promote enforcement of mental health and substance abuse parity laws.

“To realize the promise of coverage expansion and parity protections in helping individuals with mental health and substance use disorders, executive departments and agencies need to work together to ensure that Americans are benefiting from the federal parity protections the law intends,” Obama said in an executive memo.

According to the memo, the task force will:

  • advance access to mental health and substance use disorder treatment;
  • promote compliance with best practices for mental health and substance use disorder parity implementation; and
  • develop additional agency guidance as needed.

    The task force will comprise the heads of much of the administration's Cabinet: the departments of the Treasury, Defense, Justice, Labor, HHS and Veterans Affairs; the Office of Personnel Management; and the Office of National Drug Control Policy.

    The task force will make a public report on its findings and recommendations by Oct. 31, the administration said.

    Kimball said NAMI hopes the parity task force, combined with the final rule, helps to reduce the disparity of mental health treatment.

    To contact the reporter on this story: Nathaniel Weixel in Washington at

    To contact the editor responsible for this story: Janey Cohen at

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