On March 29, 2016, CMS finalized its mental health and substance use disorder parity rule for the Medicaid program and the Children’s Health Insurance Program (CHIP). The Final Rule was issued in conjunction with the President’s attendance at the National Rx Drug Abuse and Heroin Summit in Atlanta, Georgia. As previously reported, CMS originally issued a proposed rule regarding Medicaid and CHIP mental health parity on April 6, 2015. 

The Final Rule aligns requirements for the Medicaid and CHIP programs with protections already required of private health plans. Specifically, the Final Rule applies the requirements of the Mental Health Parity and Addiction Equity Act of 2008, which generally requires that health insurance plans treat mental health and substance use disorder benefits on equal footing as medical and surgical benefits, to Medicaid Managed Care Organizations (MCOs), Medicaid Alternative Benefit Plans (ABPs), and CHIP. 

Many commenters stated that CMS’s proposed mental health parity rules impermissibly encroached on States’ flexibility to decide how to operate their Medicaid programs.  Currently, States maintain flexibility to provide services through a managed care delivery mechanism using entities other than Medicaid MCOs, such as prepaid inpatient health plans or prepaid ambulatory health plans. Despite these comments, CMS did not revise this aspect of its proposal. Accordingly, all States, regardless of how services are delivered to MCO enrollees, will be responsible for ensuring that the program is in compliance with the Final Rule parity requirements.

Additionally, the Final Rule requires that plans disclose information on mental health and substance use disorder benefits upon request, including the criteria for determinations of medical necessity. The Final Rule also requires the State to disclose the reason for any denial of reimbursement or payment for services with respect to mental health and substance use disorder benefits.

The Final Rule will be effective on May 31, 2016.  The Final Rule is available here.  CMS’s fact sheet is available here.

Reporter, Isabella E. Wood, Atlanta, +1 404 572 3527, iwood@kslaw.com.