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The October Deadline for Compliance with Medicaid Mental Health Parity Requirements


PG Alert

October 9, 2017

By Helaine Fingold and Kevin Malone*

October 2 represented a major milestone in the almost decade-long implementation of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).1 In particular, most2 state Medicaid agencies were required to demonstrate their compliance by October 2 with the long-awaited final rule implementing MHPAEA (Final Rule),3 which was published by the Centers for Medicare & Medicaid Services (CMS) on March 30, 2016. Although MHPAEA does not apply to benefits for beneficiaries who receive services only through Medicaid fee-for-service (FFS), through a complex patchwork of legal authorities, states are required to implement the Final Rule’s provisions for services provided through Medicaid managed care organizations (MCOs), Medicaid benchmark or benchmark-equivalent plans (Alternative Benefit Plans or ABPs), and the Children’s Health Insurance Program (CHIP).

States manage and deliver physical and behavioral health benefits within their Medicaid and CHIP plans in different ways, such as using integrated managed care plans or behavioral health carve-outs through Prepaid Inpatient Health Plans (PIHPs) or Prepaid Ambulatory Health Plans (PAHPs). The Final Rule requires states to document MHPAEA compliance across their entire delivery system for covered beneficiaries. Further, because much of the MHPAEA compliance documentation process focuses on the collection of information documenting processes, strategies, evidentiary standards, and other factors used to apply non-quantitative treatment limitations (NQTL) (in writing and in operation), each entity involved in the delivery system must cooperate in providing information to the state. Due to these complexities that are unique to the Final Rule, MHPAEA compliance in Medicaid is certainly more complex than its application to the commercial market.

This alert describes the key requirements of the Final Rule that states were required to deliver on October 2 and discusses the likely next steps for CMS, states, and MCOs.

Medicaid Parity Compliance Requirements

States, MCOs, PIHPs, and PAHPs must evaluate financial requirements (FRs) and quantitative treatment limitations (QTLs) on mental health/substance use disorder (MH/SUD) benefits to make sure that they are no more restrictive than those that apply to medical/surgical (M/S) benefits in the same classification of services (inpatient, outpatient, emergency, prescription drugs).4 The Final Rule also prohibits states, MCOs, PIHPs, or PAHPs from imposing a NQTL, as written and in operation, on MH/SUD benefits in any classification unless it is “comparably and no more stringently” applied to M/S benefits in the classification. Specifically, any processes, strategies, evidentiary standards, or other factors used in applying the NQTL to MH/SUD benefits must be comparable to and applied no more stringently than those used in applying the NQTL to M/S benefits.5

State Obligation to Demonstrate Parity Compliance

By October 2, states were required to document the findings from their MHPAEA analysis, including identifying any remediation activities in a parity compliance plan. If it identifies any MHPAEA compliance deficiencies, CMS gave states two non-exclusive options to become parity-compliant:

  • Amend state plan(s) and/or regulation(s) to ensure that the service package complies with MHPAEA final rules regarding Medicaid, CHIP, and ABPs.
  • Amend contracts with MCOs, PIHPs, and/or PAHPs to add services to the benefit package and/or eliminate limits and/or requirements on benefits determined not to be in compliance with parity requirements. Services not included in the state plan may need to be incorporated into actuarially sound, updated capitation rates.

For those states that disclosed compliance deficiencies, CMS also required that states follow-up by demonstrating compliance once they become so.

Next Steps

Many states have been working feverishly throughout 2017 to collect information both internally and from contracted MCOs, PIHPs, and PAHPs to perform the MHPAEA analysis (or, in some instances, directing MCOs to perform the analysis as allowed by the Final Rule) and have been taking or mandating actions immediately to remedy any deficiencies prior to October 2. A number of states have requested, and at least one has received, an extension on the October 2 deadline, an indication that some states are attempting to remediate all MHPAEA issues prior to making the public disclosure and the remediation process is taking longer than anticipated.

The Final Rule provides no future deadlines or recurring general obligations related to MHPAEA compliance and public disclosure by states. In addition, the Final Rule provides no specific standards for states with regards to the details of the October 2 disclosure or any procedures for enforcing compliance with the October deadline. As such, the quality and consistency of the October 2 disclosure is likely to vary considerably across states and CMS is unlikely to take a hard line in response.

Looking past October 2, the MHPAEA compliance of ABPs and CHIP plans’ will continue to be assessed during the CMS review process, and the MHPAEA compliance of Medicaid MCO template contracts will continue to be assessed during the standard review by the CMS Regional Office. However, it is unclear whether CMS will ever explicitly define a consistent national effort to ensure state, MCO, PIHP, and PAHP compliance with the detailed NQTL requirements. As such, the October 2 deadline may ultimately be seen as the high-water mark in the national effort to address Medicaid MHPAEA compliance across the delivery system in a substantive manner.

We would like to thank Helaine I. Fingold (Epstein Becker and Green PC, Baltimore, MD) and Kevin J. Malone (Epstein Becker and Green PC, Washington, DC) for authoring this Alert.

1 The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), enacted on October 3, 2008 as Sections 511 and 512 of the Tax Extenders and Alternative Minimum Tax Relief Act of 2008 (Division C of Pub. L. No. 110–343).
2 An unidentified number of states (including the District of Columbia) were granted extensions from the October 2 deadline due to reasons the Centers for Medicare & Medicaid Services found compelling, such as the timing of managed care organization procurements.
3 Medicaid and Children's Health Insurance Programs; Mental Health Parity and Addiction Equity Act of 2008; the Application of Mental Health Parity Requirements to Coverage Offered by Medicaid Managed Care Organizations, the Children's Health Insurance Program (CHIP), and Alternative Benefit Plans, 81 Fed. Reg. 18390.
4 Cumulative quantitative treatment limitations, such as separate annual or lifetime day or visit limits for M/S and MH/SUD benefits, could be used. Unlike the commercial parity rules, the Medicaid parity rules allow these cumulative quantitative treatment limitations to apply separately for M/S and MH/SUD benefits.
5 The Final Rule also includes requirements related to disclosure of information on medical necessity criteria and adverse determinations that are not discussed in this brief.
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