On April 6, 2015, the Centers for Medicare & Medicaid Services (“CMS”) released a proposed rule that would extend provisions of the Mental Health Parity and Addiction Equity Act of 2008 (the “Mental Health Parity Act”) to Medicaid managed care organizations (“MCOs”) and the Children’s Health Insurance Program (“CHIP”). The Mental Health Parity Act requires health plans that provide mental health and substance abuse disorder benefits to ensure that any financial requirements (e.g., co-pays, deductibles) and treatment limitations (e.g., limitations on visits) applicable to those benefits are no more restrictive than the requirements or limitations applied to medical/surgical benefits. The proposed rule was published in the Federal Register on April 10, 2015 at 80 Federal Register 19418. (Proposed rule). Comments to the proposed rule are due on June 9, 2015.

The proposed rule was drafted to ensure that all Medicaid beneficiaries who receive benefits through MCOs or under alternative benefit plans would have access to mental health and substance use disorders benefits regardless of whether they received those benefits through an MCO or another system. In addition, the proposed rule would also apply to CHIP, whether the care is provided through an MCO or a fee-for-service program.

Presently, a number of states that provide medical benefits through Medicaid MCOs carve out mental health and substance abuse services through other arrangements, which can include prepaid inpatient health plans (“PIHPs”), prepaid ambulatory health plans (“PAHPs”), or even fee-for-service. Under the proposed rule, states would continue to have flexibility in selecting different delivery systems to provide services to Medicaid beneficiaries, but would have to ensure that enrollees of a Medicaid MCOs receive the benefit of mental health and substance abuse parity when provided through these alternative models. States, for example, would be required under the proposed rule to include contract provisions requiring compliance with the Mental Health Parity Act in all applicable contracts with Medicaid MCOs and entities providing services through alternative arrangements such as PIHPs and PAHPs. Further, states would have to provide CMS with evidence of compliance with the Mental Health Parity Act in their provision of mental health and substance services to Medicaid beneficiaries.

In addition, the proposed rule would require Medicaid, MCOs, PIHPs, PAHPs and other alternative benefit plans to make their medical necessity criteria for mental health and substance abuse disorder benefits available to any enrollee or contracted provider upon request. Such Medicaid plans must also make available to enrollees the reason for any denial of reimbursement for services related to mental health and substance use disorder benefits.