What the New CMS Final Parity Rule Means for MCOs in Illinois

The new final rule from the Centers for Medicare & Medicaid Services (CMS) provides guidance on how provisions of the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) apply to Medicaid managed care organizations (MCOs), Medicaid alternative benefit plains (ABPs), and the Children’s Health Insurance Program (CHIP). This final rule, released March 29, 2016 and in effect on May 31, 2016, was intended to create consistency between how MHPAEA applies to the commercial and to the Medicaid markets. This new final rule does not add many additional requirements for MCOs in Illinois, since Public Act 99-0480 applied similar parity requirements in 215 ILCS 5/370c and 215 ILCS 5/370c.1 to Medicaid. The final rule does, however, include three important improvements in ensuring compliance with parity.

  • First, the final rule clarifies that long-term services must be covered and are subject to parity protections.
  • Second, Medicaid MCOs must use the same processes for providing access to MH/SUD out-of-network providers as they do for accessing medical/surgical out-of-network providers.
  • Third, states must review all MCO practices in order to ensure that they comply with MHPAEA and the new final rule and this information must be made publicly available. Illinois law goes beyond the scope of the new final rule by applying 370c and 370c.1 to Medicaid fee-for-service and setting certain minimum requirements for coverage.

Extending Parity to Long-Term Care Services

Unlike the proposed rule, the final rule includes long-term care services (medical/surgical, mental health, and substance use disorder services) within those services to which parity protections apply. 81 FR 18393. Each MCO or ABP may assign long term-care services to any one of four classifications (inpatient, outpatient, pharmacy and emergency), but this assignment must be done using the same reasonable standards for both medical/surgical and MH/SUD services. Requiring that long-term care services are also subject to parity protections helps to ensure that coverage for many important MH/SUD treatment options are available for Medicaid beneficiaries.

Comparable Factors for Accessing Out-of-Network Providers

 The final rule requires that the factors used in determining access to MH/SUD out-of-network providers for be comparable to the same factors and processes applied to medical/surgical out-of-network providers. 81 FR 18400. Unlike the proposed rule, MCOs are not required to use the “same” factors, but the factors used must be “comparable.” The final rule requires that the factors used to apply nonquantitative treatment limitations (“NQTLs”) to MH/SUD benefits must be comparable to and no more stringently applied than the factors used in applying NQTLs to medical/surgical benefits in the same classification. 81 FR 18404.

Requiring States to Ensure Compliance and Public Disclose Information

States are required to ensure compliance with the requirements of the final rule for all enrollees whose benefits are subject to this rule. 81 FR 18418. States are also required to provide assurance of compliance with parity upon submission of ABP or CHIP state plan amendments to CMS for approval and all applicable MCO, PIHP, and PAHP contracts must include provisions requiring compliance with parity.

One of the most important changes in the new final rule is that information related to parity compliance must be made publicly available. Medical necessity determinations and the reasons for any denial of reimbursement or payment must be publicly disclosed. States are required to make documentation of parity compliance available to the general public within 18 months of the final rule’s publication (i.e. October 2017).

Additional Parity Protections in Illinois

Although the final rule does not extend parity to Medicaid fee-for-service, Illinois has applied the parity requirements of 370c and 370c.1 to fee-for-service and MCOs, ensuring that parity protections equally apply to these plans. In addition to requiring parity between medical/surgical and MH/SUD benefits, Illinois requires a certain minimal level of benefits which must be covered. A plan must cover no less than forty-five days of inpatient treatment (215 ILCS 5/370c(b)(4)(A)(i)), sixty visits for outpatient treatment including group and individual outpatient treatment (215 ILCS 5/370c(b)(4)(A)(ii)), and an additional twenty days of outpatient speech therapy for the treatment of pervasive developmental disorders for plans delivered, issued, renewed, or modified after January 1, 2007 (215 ILCS 5/370c(b)(4)(A)(iii)). In addition, medication management visits may not be counted towards the minimum number outpatient visits. Very importantly, medical necessity determinations for substance use disorder treatment must be based on the Criteria of the American Society of Addiction Medicine, and no other criteria may be used (215 ILCS 5/370c(b)(3)).

Next Steps and Gaps to Fill

While the final rule, 370c, and 370c.1 provide substantial parity protections for Medicaid beneficiaries, additional steps are needed to ensure that MH/SUD benefits are on equal ground with other medical benefits. First, CMS must issue further guidance as to how states can assure parity compliance, particularly when different entities are administering benefits for MH/SUD benefits and medical/surgical benefits. It is unlikely that states can do this adequately without more detailed instructions. Second, the Illinois Department of Healthcare and Family Services must make a serious commitment to fulfilling the requirements of the final rule, 370c, and 370c.1.

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