The Centers for Medicare & Medicaid Services (“CMS”) issued a proposed rule, on April 10, 2015, addressing the application of the Mental Health Parity and Addiction Equity Act of 2008 (“MHPAEA”) to the Medicaid and CHIP programs. The MHPAEA requires certain health insurance products, including coverage in the commercial group insurance market and ERISA plans, to offer any mental health and substance use disorder benefits covered by the plan at “parity” with medical or surgery benefits offered by the plan. Plans subject to the parity requirement may not impose financial requirements or treatment limitations on mental health or substance use disorder benefits that are more restrictive than comparable requirements that apply to medical or surgical benefits. CMS issued final regulations implementing the MHPAEA in 2013, but these regulations did not apply to governmental programs.

Application to Medicaid and CHIP Benefit Packages

The MHPAEA does not always apply to benefits provided pursuant to a Medicaid state plan. However, as a result of changes made by the Affordable Care Act, when a state offers a Medicaid alternative benefit plan or ABP (previously known as a benchmark plan), the state is required to ensure that the ABP meets the requirements of parity. The proposed rule offers a detailed methodology for evaluating financial and treatment limitations applicable to mental health and substance use disorder benefits provided through ABPs to determine whether they are offered at parity with medical/surgical benefits. The proposed methodology is similar to the methodologies in the regulations implementing the MHPAEA for non-governmental plans. The MHPAEA applies directly to benefits offered through CHIP state plans, and the proposed rule describes a similar methodology for determining their compliance with the parity requirement.

While ABPs may be used for other Medicaid populations, ABPs are most notable because they are required for the adult Medicaid expansion population in states that have chosen to cover them. ABPs are also required to offer the essential health benefits defined by the Affordable Care Act, which include mental health and substance use disorder benefits. For populations not receiving an ABP, mental health benefits and substance use disorder benefits are optional Medicaid services, which may be curtailed or limited by the state, if they are offered at all.

Medicaid Managed Care

The proposed rule also would require states to ensure that Medicaid beneficiaries who receive benefits through a Medicaid managed care plan have access to benefits that meet the requirements of parity. This requirement marks a change in CMS policy. Previously, CMS issued guidance that addressed the application of the MHPAEA to Medicaid managed care organizations and prepaid health plans, and stated that, while such plans could not impose their own policies or limitations on mental health or substance use disorder services that were not offered at parity with limitations on medical/surgical benefits, the plan would not be found in violation if the benefits offered by the plan reflect limitations set forth in the Medicaid state plan and the plan’s approved contract with the state (which generally were not subject to the MHPAEA). The proposed rule would require the state to ensure that all enrollees in a Medicaid managed care plan have access to services that comply with the MHPAEA, and would modify Medicaid managed care regulations to allow the plan to be reimbursed for benefits not covered under the state plan to the extent necessary to do so. The state would be required to document compliance with this rule within 18 months of the effective date of the final rule.

The proposed rule also addresses states that provide mental health benefits and/or substance use disorder benefits through a separate delivery system. At the time a state submits a Medicaid managed care plan contract for review and approval to CMS, the state must provide documentation of how the MHPAEA is met for enrollees of the plan, even if the enrollees receive mental health or substance use disorder benefits through a delivery system other than through the network of the plan.

Comments on the proposed rule are due by June 9, 2015.

Originally, this article was an alert sent to the American Health Lawyers Association’s (AHLA) Regulation, Accreditation and Payment Practice Group and the Behavioral Health Task Force Members. For more information, visit AHLA’s website.