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CMS announces proposed parity rule for Medicaid

April 8, 2015
by Gary A. Enos
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The federal Centers for Medicare & Medicaid Services (CMS) has announced its proposed rule that will extend the protections of the federal parity law for mental health and addictions to Medicaid and Children's Health Insurance Program (CHIP) beneficiaries. The proposed rule, to be formally published in the Federal Register on April 10, generally is modeled after CMS's 2013 parity regulations for group health plans, and does not establish a defined scope of services that Medicaid plans would have to offer in order to be in compliance with parity.

The rule, with which states would have to comply fully by 18 months after final publication, would extend to an estimated 22.5 million Americans the protections of the Mental Health Parity and Addiction Equity Act. As was the case in final parity regulations in the group insurance market, CMS's definition of treatment limitations that must be applied in a similar fashion to both behavioral and medical/surgical benefits under Medicaid would include both quantitative limits such as annual visits and non-quantitative items such as medical necessity determinations.

The proposed rule states that parity protections would apply to beneficiaries in Medicaid managed care programs, including those in states using a behavioral health carve-out structure. States would be responsible for ensuring that individuals covered in carve-out arrangements receive access to services that meet parity's requirements. The rule would not apply to Medicaid beneficiaries receiving their care in fee-for-service arrangements, although states have the option to extend parity protections to these individuals through their state plans.

“Now, states and Medicaid managed care plans will have the details they need to ensure that beneficiaries have access to the full protections promised to them under the parity law,” National Council for Behavioral Health president and CEO Linda Rosenberg said in an April 7 communication from the council about the proposed rule.

The National Council states that the proposed rule's broad definition of treatment limitations does not mean that there will be no differences in how these limitations are interpreted for behavioral and general health coverage. “For example, plans may design formulary restrictions that disproportionately affect mental health drugs, as long as those restrictions are based on objective standards that are applied equally to mental health and medical/surgical medications,” the council states.

The council adds that while some advocates had wanted a scope of services spelled out in the CMS rule, the rule does identify four classifications of services (inpatient, outpatient, prescription drug and emergency care) and states that if a Medicaid plan offers mental health and substance abuse coverage in any one of these categories, it must do so in all four.

Under the proposed rule, Medicaid plans would be required to furnish to beneficiaries and contracted providers their criteria for medical necessity determinations for mental health and substance abuse services. States also would have to provide to plan members an explanation for any denial of payment for services.

Public comments on the proposed rule are being accepted through June 9.