On April 15, the Centers for Medicare and Medicaid Services issued its proposed rule for implementation of the Mental Health Parity and Addiction Equity Act (“MHPAEA”) to Medicaid managed care organizations, Medicaid alternative benefit plans and the Children’s Health Insurance Program.
Enacted in 2008, the MHPAEA is intended to ensure “parity” or fairness between mental health and substance abuse benefits and medical surgical benefits offered by a health plan. Those plans that offer mental health coverage must provide the same level of benefits for mental health and/or substance use treatment as they do for medical and surgical care. Generally, MHPAEA prohibits group health plans from applying financial requirements (e.g., copayments and deductibles) or treatment limits (e.g., number of annual visits) for mental health substance use disorder services that are more restrictive than those applied to the group health plan’s medical and surgical benefits. Plans may continue to offer stand-alone medical/surgical coverage as the MHPAEA does not mandate mental health coverage, but if they do, parity is required.
The most recent rule governing Medicaid plans follows the Affordable Care Act’s expansion of the MHPAEA to all small group plans and individual market plans created after March 23, 2010, to comply with federal parity requirements. Qualified health plans offered through the health insurance marketplace in every state must now include parity coverage.
Under the proposed rule, states that have contracts with managed care organizations will be required to meet the parity requirements regarding financial and treatment limitations consistent with the regulation applicable to private plans and insurers. States will have the flexibility to include the cost of providing additional services or removing limitations in their capitation rate methodology.
This change in the rate-setting process will allow Medicaid managed care organizations to comply with the rule by including the additional costs necessary for extra services or remove service limitations without charging the state plan. In addition, the proposed rule requires plans (or in some instances the state) to make available upon request to beneficiaries and contracting providers the criteria for medical necessity determinations with respect to mental health and substance use disorder benefits.
The proposed rule directs the state to make available to the enrollee the reason for any denial of reimbursement or payment for services with respect to mental health and substance use disorder benefits. The stated goal is to prevent inequities between beneficiaries with mental health or substance use disorder conditions with the commercial market and Medicaid.
Coverage for residential treatment has been the subject of some confusion and, in some cases, litigation. Health plans and insurers sought to distinguish residential treatment for mental health conditions from skilled and unskilled nursing benefits available as medical/surgical benefits. Plan exclusions for substance use disorder treatment in settings outside a hospital (such as a free-standing or a residential treatment center) were standard within the industry. The Final Regulations effective July 1, 2014 (applicable on January 1, 2015 for calendar year plans) now clarify that if a plan covers skilled nursing facilities or rehabilitation hospitals as inpatient benefits, then the plan must cover residential treatment for mental health conditions. If a plan provides home health as an outpatient benefit, then the plan must cover intensive outpatient or partial hospitalization for mental health conditions.
The CMS’ proposed rule follows the national and state trend to acknowledge the treatment of mental health conditions as congruent with other medical conditions and foreclose payors of all types from benefit carve-outs that limit or reduce coverage. As carve-outs are eliminated, we expect that future activity will focus on the medical necessity component, with payors using the same principles from the medical side to establish robust behavioral health guidelines that seek to provide/cover the “right treatment at the right time.”
– John West is a shareholder with the law firm Brownstein Hyatt Farber Schreck.