Finally we have the tools we need to ensure Medicaid appropriately serves behavioral health consumers. Last week, the Centers for Medicare and Medicaid Services (CMS) finalized the regulation that applies the 2008 Mental Health Parity and Addiction Equity Act (MHPEA) to Medicaid and the Children’s Health Insurance Program (CHIP). MHPEA, also known as the “federal parity law,” requires many health insurance plans to cover substance use and mental health services equally to, or at parity with, other covered medical benefits.

This regulation is the hammer we’ve been looking for – the powerful tool necessary to ensure full implementation of mental health and substance use disorders parity for millions of Americans covered by public health insurance programs. It is also an important lever for state advocates to use to address lingering behavioral health coverage and access disparities faced by people with substance use disorders and mental illness. 

Many key provisions of the rule were finalized as proposed:

  • All mental health and substance use disorders benefits offered through Medicaid managed care organizations (MCOs) are subject to parity requirements, even if the Medicaid MCO “carves out” or contracts these benefits to a separate company. All CHIP services must comply with parity – including both fee-for-service and managed care.
  • There are no exemptions from parity requirements due to increased costs associated with improving the scope of behavioral health services in Medicaid. MCOs may include the cost of these services when contracting with state Medicaid programs.
  • MCOs must be more transparent about their policies. They must disclose the criteria they use to decide if a treatment is medically necessary for substance use disorders or mental illness and must provide explanations when they deny coverage. States must also publicly post documentation of compliance with parity rules.

In a few areas, CMS improved the regulation based on feedback (thanks to those of you who weighed in!)

  • Long-term services and supports (LTSS) – In the proposed rule, CMS initially excluded LTSS from parity protections. After overwhelming comments opposing this exclusion, the final rule includes LTSS. CMS will provide additional information to states about how to apply parity to these services.
  • CHIP Compliance – CMS revised its proposal that CHIP programs  covering the Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) benefit would be automatically considered parity compliant. In states that only offer limited EPSDT benefits, the state will be required to provide CMS with an analysis of their CHIP state plan that demonstrates parity compliance.

The regulation doesn’t officially go into effect for 18 months, but state Medicaid and CHIP programs can demonstrate their commitment to meeting consumer needs by implementing its provisions immediately.  Consumer advocates are available to assist by highlighting coverage issues faced by consumers with mental illness and substance use disorders.

It’s also important to educate providers and consumers about the new requirements, so they can more easily identify problems that may be parity violations and bring them to the attention of Medicaid officials.  

While the final regulation is good news, it does not guarantee robust enforcement. We still need better tracking of consumer complaints to Medicaid and other state agencies. And we need federal and state regulators to monitor Medicaid and CHIP programs to be sure they fully implement parity. If everyone works together, we can achieve the breadth and equity of treatment for substance use disorders and mental illness that our families and communities so desperately need.