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New Parity Rules for Mental and Physical Health Coverage Need Strong Enforcement

April 12, 2016 at 11:30 AM

A new federal regulation could significantly improve access to needed mental health and substance use disorder services for millions of Medicaid and Children’s Health Insurance Program (CHIP) beneficiaries.  But states and the Centers for Medicare and Medicaid Services (CMS) must enforce it strongly.

The new rule, which CMS released last week, applies the 2008 Mental Health Parity and Addiction Equity Act — the law that requires health plans to provide those services in “parity” with medical and surgical services — to insurers covering Medicaid and CHIP beneficiaries.  That means health plans must provide behavioral health services, such as psychotherapy or antipsychotic medications, to the same extent as similar physical health services, such as physical therapy or cancer drugs.

The law also prohibits plans from placing greater limits on behavioral health services than on medical and surgical benefits, either through financial limits (such as copays or caps on the number of appointments) or treatment limits (such as stricter prior authorization requirements for behavioral health services).

In many states, Medicaid beneficiaries receive mental health and substance use disorder services through a different health plan than the one providing their physical health services. The new regulation requires states to compare the benefits and treatment limits between the plans providing behavioral health and physical health services to ensure that they’re providing these benefits in parity.

CMS issued a regulation applying parity requirements to the private insurance market in 2013, and experience so far shows enforcement can be challenging.  Knee surgery is very different from treatment for schizophrenia, for example, making them hard to compare.  Early reports suggest that enforcement varies widely.  A 2015 survey of individuals with private insurance living with mental illness found that nearly one in three was denied mental health care because their insurer said it wasn’t medically necessary — more than twice the share who were denied general medical care.

The experience with private plans shows that CMS must enforce the Medicaid regulation robustly to give beneficiaries the services they need.  Roughly one-fifth of Medicaid beneficiaries have a behavioral health diagnosis; they use significantly more Medicaid-covered services and have much higher costs, accounting for nearly half of total Medicaid spending.  Providing timely care by complying with the parity rules may help states prevent unnecessary and costly use of the health care system and improve the health of Medicaid’s beneficiaries.


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