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Vorys Health Care Advisors

Mental Health Parity Requirements and Medicaid

Posted in Behavioral Health, Medicaid

The U. S. Department of Health and Human Services announced on Friday final regulations implementing the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).  The MHPAEA is intended to align insured health care benefits for mental and substance use disorders (M/SUD) with those for medical and surgical care.

The MHPAEA requires certain group health plans to ensure that financial requirements (e.g., copays and deductibles) and treatment limitations that are applicable to M/SUD benefits are no more restrictive than the predominant requirements or limitations applied to substantially all medical and surgical benefits.  The MHPAEA does not mandate that a plan must provide M/SUD benefits.  Rather, it requires that if a plan provides medical, surgical, and M/SUD benefits, it must provide them in an equitable fashion.

The MHPAEA supplements the provisions that were included in the Mental Health Parity Act of 1996 (MHPA), which required parity with respect to aggregate lifetime and annual dollar limits for mental health benefits.  The MHPA did not, however, apply to substance use disorder benefits; MHPAEA continues the MHPA parity rules for mental health benefits and extends them to benefits for substance use disorders.

Importantly, these final regulations apply to group health plans and health insurance issuers, but they do not apply to Medicaid managed care organizations (MCOs), Medicaid alternative benefit plans (ABPs), or the Children’s Health Insurance Program (CHIP).  However, MHPAEA requirements are incorporated by reference into statutory provisions that do apply to those entities.  On January 16, 2013, the Centers for Medicare & Medicaid Services (CMS) released a State Health Official (SHO) letter regarding the application of the MHPAEA requirements to Medicaid MCOs, ABPs, and CHIP.  In this guidance, CMS adopted the basic framework of MHPAEA and applied the statutory principles as appropriate across these Medicaid and CHIP authorities.  The letter essentially says the following –

  • Alternative benefit plans – including those for Medicaid expansion populations – must meet MHPAEA requirements.
  • MHPAEA applies to CHIPs, regardless of whether the CHIPs operate through a managed care or fee-for-service system.  Also, to the extent the CHIP provides full coverage of the early periodic screening, diagnosis, and treatment (EPSDT) Medicaid benefit, it is deemed to have met the parity requirements.
  • Parity requirements apply to MCOs that contract with a state Medicaid program to provide both physical and behavioral health benefits.  The letter specifically indicates the following:

In light of Medicaid regulations that direct states to reimburse MCOs based only on state plan services, CMS will not find MCOs out of compliance with MHPAEA to the extent that the benefits offered by the MCO reflect the financial limitations, quantitative treatment limitations, nonquantitative treatment limitations, and disclosure requirements set forth in the Medicaid state plan and as specified in CMS approved contracts.  However, this does not preclude state use of current Medicaid flexibilities to amend their Medicaid state plans or demonstrations/waiver projects to address financial limitations, quantitative treatment limitations, nonquantitative treatment limitations, and disclosure requirements in ways that promote parity.  Any additional or alternative treatment limitations put in place by the MCO, however, must comply with mental health and substance use disorder parity requirements.

What this all means is that, although the final regulations do not technically apply to ABPs, CHIPs, and MCOs, they essentially do to the extent described in the SHO letter.  The letter also states that CMS intends to issue additional guidance that will assist states in their efforts to implement the MHPAEA requirements in their Medicaid programs.