Draft parity rule for Medicaid and CHIP does not disappoint

On April 6, the U.S. Department of Health and Human Services (HHS) released a draft rule to implement federal parity legislation in Medicaid and the Children’s Health Insurance Program (CHIP). The proposed rule is available online.

We have been awaiting this rule ever since the original rule for large-group private insurance programs was released early in 2010. Both rules proceed from the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act passed in 2008, after being championed by Representative Patrick Kennedy and his father, Senator Ted Kennedy.

The new rule does not disappoint. Intended to extend parity of medical and behavioral health benefits and treatment limitations to Medicaid managed care programs, alternative benefit plans and CHIP, it will bring parity protection to an estimated 22 million additional Americans. Its major provisions include:

• Parity protection for enrollees under Medicaid managed care organizations, even in situations where mental health and substance use benefits are carved out of health benefits and administered separately. Although such carve-outs are beginning to gradually disappear in favor of integrated programs, many states still have them. Hence, this provision is extremely important for our field.
• Parity protection for enrollees under Medicaid alternative benefit plans, other than those covered by plans developed as a result of the implementation of state Medicaid Expansions under the Patient Protection and Affordable Care Act (ACA), who already had such protection.
• Parity protection for children and adolescents insured under CHIP, whether through a managed care organization or not, which also is a huge win for behavioral healthcare.

States will be given an 18 month period to comply with the new rule, once it is adopted in final form. Comments on the draft rule issued yesterday are due back to HHS by June 9.

Several other major points also are worth mentioning about the draft rule. These include:

• If a state’s mental health and substance use benefits under the covered plans do not meet parity requirements, then the state will need to supplement these benefits to bring them into compliance and develop actuarially sound payment rates, even though such benefits are optional under the state's Medicaid plan.
• The rule does not apply to freestanding fee-for-service plans not operated by a managed care organization, although fee-for-service components of managed plans are included.
• The rule does not apply to Medicare, even for dual eligibles who are receiving both Medicaid and Medicare under a managed care organization. It only applies to Medicaid.
• The rule does not incorporate an exemption for increased cost of services because any increased cost will be borne by the states.

Finalization of the current draft rule is a critical next step. Subsequently, HHS will need to provide technical assistance to state Medicaid directors and state health insurance commissioners so that implementation of parity in the Medicaid and CHIP programs is both accurate and effective. Furthermore, HHS also will need to set up data collection systems and review processes to assure that states continue to be compliant with parity requirements. 

We can add the estimated 22 million Medicaid and CHIP enrollees who will receive parity protection under this new rule to the more than 62 million who received this protection under the ACA and the 176 million already protected earlier under large-group private plans. Thus, one can begin to see the enormous impact of the Wellstone-Domenici parity legislation. We can expect such changes to have a salutary effect upon the accessibility, availability and quality of mental health and substance use services as we go forward.