Medicaid Managed Care Meets the Mental Health Parity Act

The Mental Health Parity and Addiction Equity Act (MHPAEA) and Medicaid Managed Care

  • The National Institute of Mental Health (NIMH) estimates that 1 in 5, or about 43 million Americans, have a diagnosable mental disorder. Almost 10 million of these adults, 1 in 25, experience a serious functional impairment.
  • In a Centers for Medicare and Medicaid Services (CMS) study of 5.3 million individuals enrolled in both Medicare and Medicaid, 60% had diagnoses across at least three physical and mental health condition.
    • Of those with no mental or physical health condition, the average annual incurred cost was $875 per member per month (PMPM).
    • Of those with two comorbid conditions, the PMPM was on average $1,628.
    • For individuals with five or more conditions, the average PMPM was $3,940.
    • The prevalence of at least one mental health condition among all enrollees was estimated at 41%.

Thus, the transition to Medicaid Managed Care must now take into account how MHPAEA is implemented, given the population characteristics of those traditionally enrolled in CMS. In March of this year, CMS published 42 CFR Parts 431, 433, 438, 440, 457, and 495 [CMS-2390-F] RIN 0938-AS25, the final rule for Medicaid and Children's Health Insurance Program (CHIP) Programs; Medicaid Managed Care, CHIP Delivered in Managed Care, and Revisions Related to Third Party Liability. There are significant decisions and analyses that impact the governance of MHPAEA and the implementation of service care by managed care plans. 

  • Managed care plans are required to disclose their medical necessity criteria regarding any adverse benefit determination and the reasons for the determination. However, the explanation of the medical necessity criteria must only be consistent under the managed care plan's policies. There is no requirement from CMS for MCOs to explain how MCOs establish medical necessity criteria for mental health or substance abuse treatment although MCOs have to for medical treatment for medical illness. (page 60)
  • Managed care plans must provide notice that include the enrollee's and provider's rights to request an appeal of the managed care plan's adverse benefit determination and include information on exhausting the one level of managed care plan appeal and enrollee's rights to request a state fair hearing. This is to take effect for all grievance and appeal process. (page 61)
  • Individuals who make decisions on appeals and grievances must take all comments, documents, records, and other information submitted by the enrollee into account regardless of whether the information had been considered in the initial review. (page 63)
  • States are expected to monitor the managed care plan's appeals and grievances and make the necessary changes as appropriate when unsatisfactory patterns emerge. States are required to address the plan's performance of its appeal and grievance systems in the required managed care program assessment report. (page 67)
  • Updated record keeping requirements by the state must now include: a description of the reason for the appeal or grievance, the date received, the date of each review of review meeting if applicable, the resolution at each level, the date of resolution, and the name of the enrollee. All information must be made accessible to CMS and should be part of the state's monitoring of managed care programs and comprehensive quality strategy. (page 86)
  • Oversight of the Medical Loss Ratio (MLR) is necessary to ensure managed care plan compliance with the federal minimum standards for rate certification. States are responsible to confirm reconciliation of the MLR audited financial report and are required to develop an annual assessment on the performance of the managed care program. The findings are to be published annually on the state's website. (page 135)

Other essential rulings impact "waiver services", capitation payments for "covered services" and treatment length for sub-acute level of care and require that the state be recognized as responsible for monitoring and assessing fairness and accuracy of all of these elements. Thus, the governance of Medicaid Managed Care falls heavily on the state with room for variability in implementation and assessment.

However, clearly, for MHPAEA to take full effect nationally, it takes everyone to ensure access to care and true parity. Understanding MHPAEA is only one step. Implementation of MHPAEA is another step, and a very complex and demanding one. Governance and oversight now emerges as a vital cog in this effort to improve access to care, and the States face a difficult task ahead to enforce compliance with this landmark legislation of 2008.