CMS Releases Letter on Application of Parity to Medicaid

by Rebecca Farley on January 24, 2013

The Centers for Medicare and Medicaid Services has released a State Medicaid Directors Letter (SMDL) clarifying how the requirements of the 2008 parity law apply to Medicaid expansion plans under the Affordable Care Act.

The letter notes that all Medicaid Alternative Benefit plans (including benchmark equivalent and Secretary–approved benchmark plans) are required to meet the law’s parity requirements, regardless of whether services are delivered in managed care or non-managed care arrangements.  This includes evaluating Alternative Benefit Plans to ensure that financial requirements, treatment limitations, medical necessity criteria, and availability of out-of-network services are no more restrictive for mental health and substance use services than they are for medical/surgical services.

The letter also briefly addresses the application of parity to Medicaid Managed Care plans (MCOs). It notes that, “to the extent that the benefits offered by the MCO reflect the financial limitations, quantitative treatment limitations, nonquantitative treatment limitations, and disclosure requirements set forth in the Medicaid state plan,” CMS will not find the MCO to be in violation of parity. However, any additional limitations or financial requirements that the MCO wishes to impose must be evaluated to ensure they are comparable to and no more stringent than those on the medical/surgical side.

In his recent proposals on mental health and gun violence, President Obama promised that his Administration would soon release a final parity regulation. The National Council’s Chuck Ingoglia, Senior Vice President for Public Policy and Practice Improvement commented on the announcement in an article for the Connecticut Mirror, saying “we’re very thrilled that the President included this in his announcement…In a way, it’s long overdue.” The Interim Final Rule, which has been in effect for nearly two years, lacks critical details on the scope of behavioral health services that must be provided to comply with parity, a detailed description of how the parity law applies to managed care, and certain other critical issues. The Administration has not yet stated when the final rule will be released.


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