Medicaid and Children's Health Insurance Programs; Mental Health Parity and Addiction Equity Act of 2008; the Application of Mental Health Parity Requirements to Coverage Offered by Medicaid Managed Care Organizations, the Children's Health Insurance Program (CHIP), and Alternative Benefit Plans, 19417-19452 [2015-08135]
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Vol. 80
Friday,
No. 69
April 10, 2015
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
42 CFR Parts 438, 440, 456, et al.
Medicaid and Children’s Health Insurance Programs; Mental Health Parity
and Addiction Equity Act of 2008; the Application of Mental Health Parity
Requirements to Coverage Offered by Medicaid Managed Care
Organizations, the Children’s Health Insurance Program (CHIP), and
Alternative Benefit Plans; Proposed Rule
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DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
42 CFR Parts 438, 440, 456, and 457
[CMS–2333–P]
RIN 0938–AS24
Medicaid and Children’s Health
Insurance Programs; Mental Health
Parity and Addiction Equity Act of
2008; the Application of Mental Health
Parity Requirements to Coverage
Offered by Medicaid Managed Care
Organizations, the Children’s Health
Insurance Program (CHIP), and
Alternative Benefit Plans
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
AGENCY:
This proposed rule would
address application of certain
requirements set forth in the Public
Health Service Act, as amended by the
Paul Wellstone and Pete Domenici
Mental Health Parity and Addiction
Equity Act of 2008, to coverage offered
by Medicaid managed care
organizations, Medicaid Alternative
Benefit Plans, and Children’s Health
Insurance Programs.
DATES: To be assured consideration,
comments must be received at one of
the addresses provided below, no later
than 5 p.m. on June 9, 2015.
ADDRESSES: In commenting, please refer
to file code CMS–2333–P. Because of
staff and resource limitations, we cannot
accept comments by facsimile (FAX)
transmission.
You may submit comments in one of
four ways (please choose only one of the
ways listed):
1. Electronically. You may submit
electronic comments on this regulation
to https://www.regulations.gov. Follow
the ‘‘Submit a comment’’ instructions.
2. By regular mail. You may mail
written comments to the following
address ONLY: Centers for Medicare &
Medicaid Services, Department of
Health and Human Services, Attention:
CMS–2333–P, P.O. Box 8016, Baltimore,
MD 21244–8016.
Please allow sufficient time for mailed
comments to be received before the
close of the comment period.
3. By express or overnight mail. You
may send written comments to the
following address ONLY: Centers for
Medicare & Medicaid Services,
Department of Health and Human
Services, Attention: CMS–2333–P, Mail
Stop C4–26–05, 7500 Security
Boulevard, Baltimore, MD 21244–1850.
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SUMMARY:
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4. By hand or courier. Alternatively,
you may deliver (by hand or courier)
your written comments ONLY to the
following addresses prior to the close of
the comment period:
a. For delivery in Washington, DC—
Centers for Medicare & Medicaid
Services, Department of Health and
Human Services, Room 445–G, Hubert
H. Humphrey Building, 200
Independence Avenue SW.,
Washington, DC 20201.
(Because access to the interior of the
Hubert H. Humphrey Building is not
readily available to persons without
Federal government identification,
commenters are encouraged to leave
their comments in the CMS drop slots
located in the main lobby of the
building. A stamp-in clock is available
for persons wishing to retain a proof of
filing by stamping in and retaining an
extra copy of the comments being filed.)
b. For delivery in Baltimore, MD—
Centers for Medicare & Medicaid
Services, Department of Health and
Human Services, 7500 Security
Boulevard, Baltimore, MD 21244–1850.
If you intend to deliver your
comments to the Baltimore address, call
telephone number (410) 786–7195 in
advance to schedule your arrival with
one of our staff members.
Comments erroneously mailed to the
addresses indicated as appropriate for
hand or courier delivery may be delayed
and received after the comment period.
For information on viewing public
comments, see the beginning of the
SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: John
O’Brien or Jean Close at (410) 786–5529
(Alternative Benefit Plan), Debra
Dombrowski at (312) 353–1403
(Managed Care) or Amy Lutzky (410)
786–0721.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All
comments received before the close of
the comment period are available for
viewing by the public, including any
personally identifiable or confidential
business information that is included in
a comment. We post all comments
received before the close of the
comment period on the following Web
site as soon as possible after they have
been received: https://
www.regulations.gov. Follow the search
instructions on that Web site to view
public comments.
Comments received timely will also
be available for public inspection as
they are received, generally beginning
approximately 3 weeks after publication
of a document, at the headquarters of
the Centers for Medicare & Medicaid
Services, 7500 Security Boulevard,
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Baltimore, Maryland 21244, Monday
through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an
appointment to view public comments,
phone 1–800–743–3951.
Acronyms, Abbreviations, and Short
Forms
Because of the many terms to which
we refer by acronym, abbreviation, or
short form in this proposed rule, we are
listing the acronyms, abbreviation, and
short forms used and their
corresponding terms in alphabetical
order below.
2008 Extenders Act Tax Extenders and
Alternative Minimum Tax Relief Act of
2008 (Division C)
The Act Social Security Act
The Affordable Care Act Patient Protection
and Affordable Care Act (Pub. L. 111–
148, enacted on March 23, 2010), as
amended by the Health Care and
Education Reconciliation Act of 2010
(Pub. L. 111–152)
The Departments Departments of the
Treasury, Labor, and Health and Human
Services
ABP Alternative Benefit Plan
BBA Balanced Budget Act of 1997
CHIP Children’s Health Insurance Program
CHIPRA Children’s Health Insurance
Program Reauthorization Act of 2009
CMS Centers for Medicare and Medicaid
Services
The Code Internal Revenue Code of 1986
DOL Department of Labor
DSM Diagnostic and Statistical Manual of
Mental Disorders (current edition)
EHB Essential Health Benefit
EPSDT Early and Periodic Screening,
Diagnostic and Treatment
ERISA Employee Retirement Income
Security Act of 1974
FFS Fee for Service
HHS Department of Health and Human
Services
ICD International Classification of Diseases
MCE Managed Care Entity
MCO Managed Care Organization
MH Mental Health
MH/SUD Mental Health or Substance Use
Disorder
MHPA Mental Health Parity Act of 1996
MHPAEA Paul Wellstone and Pete
Domenici Mental Health Parity and
Addiction Equity Act of 2008
NQTL Nonquantitative Treatment
Limitation
PAHP Prepaid Ambulatory Health Plan
PHS Act Public Health Service Act
PIHP Prepaid Inpatient Health Plan
SHO State Health Official
SUD Substance Use Disorder
Treasury Department of the Treasury
Table of Contents
I. Executive Summary
II. Background
A. Introduction
B. Legislative Overview
III. Provisions of the Proposed Rule
A. Meaning of Terms
B. Parity Requirements for Aggregate,
Lifetime and Annual Limits
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C. Parity Requirements for Financial
Requirements and Treatment Limitations
D. Cumulative Financial Requirements
E. Compliance With Other Cost-sharing
Rules
F. Nonquantitative Treatment Limitations
(NQTLs)
G. Application to CHIP and EPSDT
Deemed Compliance
H. Availability of Information
I. Application to EHBs and other ABP
Benefits
J. Application of Parity Requirements to
the Medicaid State Plan
K. Scope and Applicability of the Proposed
Rule
L. Scope of Services
M. ABP State Plan Requirements
N. Increased Cost Exemption
O. Enforcement, Managed Care Rate Setting
and Contract Review and Approval
P. Applicability and Compliance
Q. Utilization Management
IV. Collection of Information Requirements
V. Response to Comments
VI. Regulatory Impact Statement
I. Executive Summary
This proposed rule addresses the
application of certain provisions added
to the Public Health Service Act (PHS
Act) (mental health parity requirements)
by the provisions of the Paul Wellstone
and Pete Domenici Mental Health Parity
and Addiction Equity Act of 2008
(MHPAEA) (Pub. L. 110–343, enacted
on October 3, 2008) to: (1) Medicaid
managed care organizations (MCOs) as
described in section 1903(m) of the
Social Security Act (the Act); (2)
Medicaid benchmark and benchmarkequivalent plans (referred to in this
proposed rule as Medicaid Alternative
Benefit Plans) as described in section
1937 of the Act; and (3) Children’s
Health Insurance Program (CHIP) under
title XXI of the Act.
Under section 1932(b)(8) of the Act,
Medicaid MCOs are required to comply
with the requirements of subpart 2 of
part A of title XXVII of the PHS Act, to
the same extent that those requirements
apply to a health insurance issuer that
offers group health insurance. Subpart 2
includes mental health parity
requirements added by MHPAEA at
section 2726 of the PHS Act (as
renumbered; formerly section 2705 of
the PHS Act). Under section 1937(b)(6)
of the Act, Medicaid Alternative Benefit
Plans (ABPs) that are not offered by an
MCO and that provide both medical and
surgical benefits and mental health or
substance use disorder benefits are
required to ensure that financial
requirements and treatment limitations
for such benefits comply with the
mental health parity requirements of the
PHS Act (referencing section 2705(a) of
the PHS Act, which is now renumbered
2726(a) of the PHS Act), in the same
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manner as such requirements apply to a
group health plan. The section 1937
provision applies only to ABPs that are
not offered by MCOs; ABPs offered by
MCOs are already required to comply
with these requirements under section
1932(b)(8) of the Act. Section 2103(c)(6)
of the Act requires that state CHIP plans
that provide both medical and surgical
benefits and mental health or substance
use disorder benefits shall ensure that
financial requirements and treatment
limitations for such benefits comply
with mental health parity requirements
of the PHS Act (referencing section
2705(a) of the PHS Act, now
renumbered as section 2726(a) of the
PHS Act) to the same extent as such
requirements apply to a group health
plan. In addition, section 2103(f)(2) of
the Act requires that CHIP benchmark or
benchmark equivalent plans comply
with all of the requirements of subpart
2 of part A of the title XXVII of the PHS
Act, which includes the mental health
parity requirements of the PHS Act,
insofar as such requirements apply to
health insurance issuers that offer group
health insurance coverage.
This proposed rule would incorporate
these requirements into our regulations.
II. Background
A. Introduction
On September 26, 1996, the Congress
enacted the Mental Health Parity Act of
1996 (Pub. L. 104–204) (MHPA), which
required parity in aggregate lifetime and
annual dollar limits for mental health
benefits and medical/surgical benefits.
Those mental health parity provisions
were codified in section 712 of ERISA,
section 2726 of the PHS Act
(renumbered under section 1001 of the
Affordable Care Act), and section 9812
of the Code, and applied to
employment-related group health plans
and health insurance coverage offered in
connection with a group health plan.
The Balanced Budget Act of 1997 (Pub.
L. 105–33, enacted on August 5, 1997)
(BBA) added sections 1932(b)(8) and
2103(f)(2) of the Act to generally apply
certain aspects of MHPA, including the
provisions of section 2726 of the PHS
Act, to Medicaid MCOs and CHIP
benefits.
MHPAEA was enacted as sections 511
and 512 of the Tax Extenders and
Alternative Minimum Tax Relief Act of
2008 (Division C of Pub. L. 110–343)
(the 2008 Extenders Act). MHPAEA
amends the Employee Retirement
Income Security Act of 1974 (ERISA),
the PHS Act, and the Internal Revenue
Code of 1986 (the Code). The changes
made by MHPAEA consist of new
standards, including parity for
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substance use disorder benefits, as well
as amendments to the existing mental
health parity provisions enacted in
MHPA.
In 2009, section 502 of the Children’s
Health Insurance Program
Reauthorization Act of 2009 (Pub. L.
111–3) (CHIPRA) amended section
2103(c) of the Act by adding paragraph
(6), which requires that CHIP plans that
provide both medical and surgical
benefits and mental health or substance
use disorder benefits comply with the
provisions of section 2705(a) of the PHS
Act, as amended by MHPAEA, in the
same manner as a group health plan.
The Patient Protection and Affordable
Care Act (Pub. L. 111–148) was enacted
on March 23, 2010 and the Health Care
and Education Reconciliation Act of
2010 (Pub. L. 111–152) was enacted on
March 30, 2010 (collectively referred to
as the ‘‘Affordable Care Act’’). Section
1001 of the Affordable Care Act
reorganized and renumbered certain
provisions of the PHS Act, including
renumbering section 2705 of the PHS
Act as section 2726 of the PHS Act. The
Affordable Care Act did not make
conforming changes to cross-references
to the renumbered provisions, and
contained new cross-references to the
former section numbers. But there was
no indication that Congress intended to
alter the meaning of the existing crossreferences. As a result, we read the
cross-references to continue to refer to
the same section originally referenced,
as renumbered. We believe it is clear
that the new cross-references were also
intended to refer to the renumbered
provisions.
The Affordable Care Act expanded the
application of section 2705(a) of the
PHS Act, as amended by MHPAEA, and
renumbered as section 2726(a) of the
PHS Act, to benefits in Medicaid ABPs
delivered outside of a MCO. ABPs
delivered through a MCO would already
have to comply with these requirements
under section 1932(b)(8) of the Act.
Also, effective on March 23, 2010,
section 2001(c) of the Affordable Care
Act modified the benefit provisions of
section 1937 of the Act. Specifically,
section 2001(c) of the Affordable Care
Act added mental health benefits and
prescription drug coverage to the list of
benefits that must be included in
benchmark-equivalent coverage;
required the inclusion of essential
health benefits (EHBs) beginning in
2014; and directed that plans described
in section 1937 of the Act (now known
as ABPs) that include medical/surgical
benefits and mental health or substance
use disorder benefits ensure that the
financial requirements and treatment
limitations applicable to such mental
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health or substance use disorder (MH/
SUD) benefits comply with the mental
health parity provisions of the PHS Act.
In 2013, we released a State Health
Official (SHO) letter that provided
guidance to states regarding the
implementation of requirements under
MHPAEA to Medicaid benchmark and
benchmark-equivalent plans (referred to
in the letter as ABPs) as described in
section 1937 of the Act, CHIP under title
XXI of the Act, and MCOs as described
in section 1903(m) of the Act.1 We
previously issued a SHO letter on
November 4, 2009, concerning the
application of section 502 of CHIPRA.2
The Departments of Health and
Human Services (HHS), Labor, and the
Treasury (collectively the Departments)
published interim final regulations
implementing MHPAEA on February 2,
2010 (75 FR 5410), and final regulations
applicable to group health plans and
health insurance issuers on November
13, 2013 (78 FR 68240) (MHPAEA final
regulations).3 The MHPAEA final
regulations do not apply to Medicaid
MCOs, ABPs, or CHIP state plans. In
this proposed rule, we are proposing
regulations to address how the
MHPAEA requirements in section 2726
of the PHS Act, as implemented in the
MHPAEA final regulations, will apply
to MCOs, ABPs and CHIP.
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III. Provisions of the Proposed Rule
This proposed rule generally mirrors
the policies set forth in the MHPAEA
final regulations to implement the
statutory provisions that require MCOs,
ABPs and CHIP to comply with certain
requirements of section 2726 of the PHS
Act (mental health parity requirements).
State Medicaid programs vary in their
coverage of MH/SUD services. For
example, most MH/SUD services are
optional services under the traditional
Medicaid benefits package, so states can
choose to cover some services and not
others, or can choose to cover these
services but impose treatment
limitations (for example, day or visit
1 https://www.medicaid.gov/federal-policyguidance/downloads/sho-13-001.pdf.
2 https://downloads.cms.gov/cmsgov/archiveddownloads/SMDL/downloads/SHO110409.pdf.
3 The MHPAEA final regulations generally apply
to group health plans and health insurance issuers
on the first day of the first plan year beginning on
or after July 1, 2014. The preamble to the MHPAEA
final regulations stated that each plan or issuer
subject to the interim final regulations, issued on
February 2, 2010 (75 FR 5410), must continue to
comply with the applicable provisions of the
interim final regulations until the corresponding
provisions of these final regulations become
applicable to that plan or issuer (78 FR 68252 and
253). Note: For ease of reference, the citations to
provisions of the MHPAEA final rules throughout
this document will only refer to the provisions
adopted by HHS in 45 CFR part 146.
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limits). Additionally, states have the
flexibility to provide services through a
managed care delivery mechanism using
entities other than MCOs, such as
prepaid inpatient health plans (PIHPs)
or prepaid ambulatory health plans
(PAHPs). PIHPs and PAHPs are defined
in § 438.2 as entities that provide
medical services on the basis of prepaid
capitation payments but provide a more
limited benefit package than a
comprehensive MCO defined in section
1903(m) of the Act and are subject to the
requirements for managed care entities
as specified in 42 CFR part 438. These
entities are not described in section
1932 of the Act, which refers only to the
application of mental health parity
requirements to Medicaid MCOs. In
many instances, states will provide the
medical/surgical services through an
MCO, but will not include in the MCO
benefit package some or all of their MH/
SUD state plan services. Instead, these
services will be delivered through a
PIHP or a PAHP or a non-managed care
delivery system, typically fee-for-service
(FFS). In many states, MCOs provide
some MH/SUD services (for example,
emergency department services
regardless of presenting condition, or
MH/SUD medications), and PIHPs,
PAHPs, or FFS provide a more robust
set of services for those individuals with
serious mental health conditions or
substance use disorders. These unique
state MH/SUD delivery systems are an
important distinction between Medicaid
coverage and coverage available through
the commercial market. Because the
statutory provisions making mental
health parity requirements applicable to
MCOs do not explicitly address the
situation in which medical/surgical
benefits and MH/SUD benefits included
in coverage are furnished through
separate but interrelated and
interdependent service delivery
systems, additional guidance is needed.
As a general matter, this proposed
rule would require that each MCO
enrollee in a state must be provided
access to a set of benefits that meets the
requirements of this rule regardless of
whether the MH/SUD services are
provided by the MCO or through
another service delivery system. We
propose to apply MHPAEA in this way
as we interpret section 1932(b)(8) of the
Act to require that, if a state uses private
health plans, or MCOs, to provide any
of its state plan benefits under an MCO
contract, enrollees in those MCOs
(whether under a voluntary or
mandatory managed care program) must
receive the protections of MHPAEA
parity requirements for MH/SUD
services. We are concerned that the
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exclusion of MH/SUD services from
MCO contracts could result in the
elimination of the application of section
1932(b)(8) of the Act. To ensure that the
goal of parity is met, we are proposing
to require, by relying on our authority
in section 1902(a)(4) of the Act to
specify methods ‘‘necessary for the
proper and efficient operation of the
state plan,’’ that if MH/SUD state plan
services are provided to MCO enrollees
through a PIHP, PAHP, or under
Medicaid FFS (because such services
are carved out of the MCO contract
scope), MCO enrollees will still receive
the MHPAEA parity protections for MH/
SUD state plan services. Specifically,
states that do not provide all services
through the MCO will be required to
provide evidence of compliance with
this rule when they submit MCO
contracts to the CMS Regional Office for
review and approval. Contracts with
PIHPs and PAHPs would also be
required to provide that the PIHPs and
PAHPs take steps necessary to ensure
such compliance with this proposed
rule. For states that offer MH/SUD
services to MCO enrollees through FFS
(other than when the services are part of
an ABP, as discussed below), states
would similarly be obligated to ensure
that MH/SUD services provided on a
FFS basis, when combined with services
furnished by the MCO, comply with
MHPAEA. In such an instance, the state
would have the option of either (1)
making changes to the non-ABP state
plan to provide MH/SUD services
through the FFS system in a manner
that is on parity with the MCO-provided
medical/surgical services consistent
with this proposed rule or (2) including
relevant MH/SUD services in the MCO
contract (or PIHP or PAHP contract as
applicable), in which case the managed
care entity would have to comply with
this proposed rule. Failure to adopt
these additional requirements using our
authority under section 1902(a)(4) of the
Act, as well as section 1932(b)(8) of the
Act would result in de facto
nullification of the MHPAEA
protections that are provided in section
1932(b)(8) of the Act if states carved out
MH/SUD benefits from the MCO
contract.
We considered alternatives such as
requiring, based as well on our authority
at section 1902(a)(4) of the Act, that all
state plan MH/SUD services be included
under MCO contracts as the way to
ensure that MCO enrollees receive the
full protections of MHPAEA as we
believe the Congress intended in section
1932(b)(8) of the Act, again relying on
our authority under section 1902(a)(4) of
the Act. But, we believe that the
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approach we are proposing would allow
states the most flexibility when
applying mental health parity
requirements to their Medicaid services
across delivery systems. Given that
there are many different delivery system
configurations that carve out MH/SUD
services, this would allow states to
comport with parity requirements for
MCO enrollees without completely
carving out MH/SUD services from their
MCO or dropping MH/SUD coverage
altogether. We solicit comments on
whether to require that all state plan
MH/SUD services be included under
MCO contracts.
We recognize that this proposed
regulation would require an analysis by
the state to determine if the overall
delivery system complies with the
provisions of this proposed rule when
all services are not included in the
benefit package of a single MCO. In
states where the MCO has sole
responsibility for offering MH/SUD
services, the MCO would be responsible
for undertaking the parity analysis and
informing the state what changes will be
needed to the MCO contract to comply
with the provisions of this proposed
rule. As proposed in § 438.920, states
would be required to make available to
the public their methods of complying
with these proposed rules within 18
months after the rule is finalized.
In states where some or all MH/SUD
services are provided through some
combination of MCOs, PIHPs, PAHPs or
FFS, the state would have the
responsibility for undertaking the parity
analysis across these delivery systems
and determining if the benefits and any
financial requirements or treatment
limitations are consistent with proposed
§ 438.920(b). The state, based on this
analysis, would take the necessary steps
to ensure mental health parity
compliance for its Medicaid MCO
enrollees. As previously discussed, we
believe that the provisions of section
1902(a)(4) of the Act authorize CMS to
adopt rules that require the state to
perform the parity analysis when MH/
SUD services are offered across delivery
systems because we believe that this
administrative responsibility is
necessary and essential for full
implementation of section 1932(b)(8) of
the Act. In addition, we are proposing
at § 438.920(b) that the state make
available documentation of compliance
with these proposed regulations to the
general public within 18 months of the
effective date of this rule and post it on
the state Medicaid Web site.
For beneficiaries who are not enrolled
in a MCO (FFS only), and thus not
covered by section 1932(b)(8) of the Act,
our proposed rule would not affect
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coverage (other than when the services
are part of an alternative benefit plan, as
discussed below). However, we
encourage states to provide state plan
benefits in a way that comports with the
mental health parity requirements of
section 2726 of the PHS Act.
We note that payment to MCOs must
be actuarially sound under section
1903(m) of the Act; regulations
implementing that requirement are
currently codified at § 438.6 and are
applicable to other managed care
entities based on separate statutory
authority. In particular, § 438.6(e)
provides that actuarially sound rates
may only be based on the cost to
provide services covered under the state
plan. As part of our proposal to
implement the mental health parity
requirements, we propose to revise
§ 438.6(e) to specify development of
actuarially sound rates for MCOs, PIHPs
and PAHPs that provide MH/SUD
services may take into account the cost
of providing services beyond those
specified in the state plan which are
necessary for the MCO, PIHP or PAHP
to comply with the mental health parity
requirements. Proposed § 438.6(e) 4
would require that states base the
capitation rates set for MCOs, PIHPs,
and PAHPs, where MH/SUD benefits are
provided under contract with these
entities, on their provision of a benefit
package that is compliant with these
proposed parity requirements even if
services go beyond what is in the state
plan; the additional non-state plan
services that are used to develop the
capitation rates would have to be
necessary to comply with the
requirements of new subpart K of part
438. This would ensure that states
maintain an actuarially sound ratesetting structure that provides for
payment of capitation rates to managed
care plans rate that reflect the full scope
of benefits the managed care plans are
obligated to provide. To the extent this
new subpart K would obligate an MCO,
PIHP or PAHP to provide services that
are not otherwise included in the state
plan, costs associated with services that
would not be included but for the parity
requirements should be part of the
actuarially sound capitation rates. We
believe that proposed § 438.6(e) is
sufficiently specific to only permit
states to include those services needed
for compliance with these proposed
rules. Section 438.6(e) allows a state’s
rate-setting structure to account for
services covered by an MCO, PIHP, or
4 Our proposal is for this provision to be codified
as part of the regulations controlling rate setting for
MCOs, PIHPs and PAHPs and the paragraph
designation may vary.
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PAHP in excess of services and/or
treatment limits that are listed in the
state plan only to the extent that such
services are necessary for the MCO,
PIHP or PAHP to comply with § 438.910
of this rule. However, we are concerned
about the potential for inappropriately
broad readings of the regulation text and
consequent use of this proposed section
to include non-State plan services in
rate setting for to the MCO, PIHP or
PAHP benefit package that are not
strictly necessary for compliance with
these proposed parity requirements. We
request comments on this risk and how
we might mitigate it, such as a need for
more prescriptive language or specific
oversight activities to ensure that
managed care plans and states develop
rates that include only state plan
services and the additional services
necessary for compliance with subpart
K. For states that offer MH/SUD services
to MCO enrollees through FFS (other
than when the services are part of an
alternative benefit plan, as discussed
below), states would similarly be
obligated to ensure that MH/SUD
services provided on a FFS basis, when
combined with services furnished by an
MCO, comply with the proposed parity
provisions in part 438, subpart K. To
ensure this full implementation of
section 1932(b)(8) of the Act, we rely on
our authority under section 1902(a)(4) of
the Act to require methods of
administration necessary for the proper
and efficient administration of the state
plan. If a state provides MH/SUD
benefits to MCO enrollees through FFS,
the state would have the option of either
(1) making changes to the non-ABP state
plan to provide MH/SUD services
through the FFS system in a manner
that is on parity with the MCO-provided
medical/surgical services consistent
with this rule, or (2) including relevant
MH/SUD services in a MCO contract (or
PIHP or PAHP contract when relevant),
in which case the managed care entity
would have to comply with this rule.
To ensure the appropriate application
of mental health parity requirements to
Medicaid services, we propose to amend
current regulations to apply mental
health parity requirements under
section 2726 of the PHS Act to services
provided to enrollees of Medicaid MCOs
regardless of delivery system or
limitations in the state plan.
Specifically, we propose amending part
438 by adding a new subpart K to
extend these mental health parity
requirements to MCOs, and to PIHPs
and PAHPs as applicable, to ensure that
all enrollees of the MCO are provided
access to a MHPAEA-compliant set of
services when the state plan includes
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some MH/SUD services. Second, we are
proposing to add a new provision in
§ 438.6 to require that all MCO
contracts, and any PIHP and PAHP
contracts providing services to MCO
enrollees, ensure that enrollees receive
services that are in compliance with the
requirements of new subpart K insofar
as those requirements are applicable.
We would not apply mental health
parity requirements to state plan
services provided to beneficiaries
covered only through a FFS delivery
system, even if care for other
beneficiaries is delivered through a
managed care delivery system.
However, as indicated in our 2013 SHO
letter, we strongly encourage states to
consider changes to the state plan
benefit package to comport with the
mental health parity requirements of
section 2726 of the PHS Act. Several
states have already implemented the
necessary changes in their state plan (for
example, adding SUD outpatient
services and removing or aligning
treatment limitations) to make their
MH/SUD benefits consistent for all
Medicaid beneficiaries. For clarity, we
are not applying mental health parity
requirements under section 2726 of the
PHS Act to Medicare Parts A, B, or D
services covered by Medicaid MCOs,
such as those covered by integrated
plans for people who are dually eligible
for Medicare and Medicaid; Medicare
benefits are controlled by the Medicare
statute and regulations, which are not
within the scope of this proposed rule.
The proposed rules pertaining to
ABPs and CHIP cross-reference the
proposed rules governing MCOs, PIHPs
or PAHPs when states are using these
organizations as their delivery system
for ABP or CHIP benefits. Regardless of
whether services are delivered in
managed care or non-managed care
arrangements, all Medicaid ABPs
(including benchmark equivalent and
Secretary–approved benchmark plans)
and CHIP plans are required to meet the
financial requirements and treatment
limitations component of the mental
health parity provisions set forth at
section 2726(a) of the PHS Act.
Section 2726 of the PHS Act contains
an increased cost exemption that is
available for group health plans and
health insurance issuers that make
changes to comply with the law and
incur an increased cost of at least 2
percent in the first year that mental
health parity requirements apply to the
plan or coverage, or an increased cost of
at least 1 percent in any subsequent
plan or policy year. Plans or issueroffered coverage that comply with the
parity requirements for one -full plan
year and that satisfy the conditions for
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the increased cost exemption are
exempt from the parity requirements for
the following plan or policy year, and
the exemption lasts for one plan or
policy year.
This proposed rule does not include
an increased cost exemption for MCOs,
PIHPs, or PAHPs, and we do not believe
that these Medicaid managed care
entities will incur any net increase in
costs because we are also proposing
here that the actuarially sound payment
methodology will take costs of
compliance with parity requirements
into account. As noted, we are
proposing to allow states to include the
cost of providing services beyond what
is specified in the state plan which may
include adding services or removing or
aligning treatment limitations in
managed care benefits into the
actuarially sound rate methodology so
long as those services beyond what is
specified in the state plan are necessary
to comply with mental health parity
requirements. These changes to the
managed care rate setting process would
authorize states, in instances where they
choose not to change their state plan, to
include the cost of services beyond what
is specified in the state plan into the
capitation rate development to the
extent the services are required to be
provided by the MCO, PIHP or PAHP
and outlined under contract to comply
with this proposed rule. Therefore, the
Medicaid program rather than the plan
will bear the costs of these changes.
This is different from the circumstances
of the commercial market and removes
the rationale for an increased cost
exemption for Medicaid MCOs, PIHPs
and PAHPs. In addition, we understand
that few if any issuers and group health
plans have sought an increased cost
exemption in the commercial market.
Therefore, in this proposed rule, we are
not extending the cost exemption
provision to the Medicaid and CHIP
programs.
We recognize that state budgeting and
contracting processes may necessitate
additional time for compliance with
these new contracting and rate setting
parameters. We propose to afford states
up to 18 months after the date of the
publication of the final rule to comply
with the finalized provisions of this
proposed rule. This proposal would
allow states to come into compliance
with these regulations and take the
actions to make the necessary budget
requests to add new services or
additional service units. Some states
have a biannual budget cycle and may
need this length of time to develop and
obtain approval of these budget
requests. In addition, states would need
to make the necessary contract changes
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to their MCOs, PIHPs, or PAHPs once
the budget has been approved. Some
states may choose to request approval
from CMS to make changes to their nonABP state plan for services delivered
through FFS. We believe that 18 months
should provide states with sufficient
time to implement the necessary policy,
contract and budget changes to comply
with the final regulations and are
proposing a delayed compliance
deadline accordingly. We invite
comments on this proposal regarding
the delay of required compliance and
the treatment of a cost-based exemption.
The statutory requirements applying
mental health parity requirements to
CHIP are structured differently than the
statutory direction to apply those
requirements to Medicaid MCOs. For
CHIP programs, sections 2103(c)(6) and
2103(f)(2) of the Act generally provide
that MH/SUD parity requirements apply
to all delivery systems, including FFS
and managed care. Except where the
CHIP state plan provides full coverage
of EPSDT and the MHPAEA
requirements are deemed as met, the
MHPAEA parity requirements apply to
the CHIP state plan in the same manner
as the law applies to health insurance
issuers and group health plans. Our
proposal reflects this in the proposed
regulations for part 457.
For CHIP enrollees in an MCO, we
propose to apply all mental health
parity provisions of section 2726 of the
PHS Act. In addition to the language at
sections 2103(c)(6) and section
2103(f)(2) of the Act previously
discussed, section 2103(f)(3) of the Act
makes applicable to CHIP MCOs certain
requirements under section 1932 of the
Act, including section 1932(b)(8) of the
Act which requires that MCOs comply
with MHPAEA parity requirements.
Furthermore, we propose to require
parity in connection with coverage
provided by PIHPs and PAHPs to CHIP
MCO enrollees.
For ABP benefits offered only through
FFS delivery systems, financial
requirements and treatment limitations
under section 2726(a) of the PHS Act are
the only mental health parity provisions
that apply (based on section 1937(b)(6)
of the Act). Section 2726(a)(3)(B) of the
PHS Act excludes from the definition of
the term ‘‘financial requirement’’
aggregate lifetime or annual dollar limits
on benefits, and thus these are not
included in the ‘‘financial requirements
and treatment limitations’’ parity
requirements applicable to Medicaid
ABPs furnished through FFS service
delivery systems. (Annual and lifetime
limits are addressed separately under
MHPAEA from financial requirements,
at sections 2726(a)(1) and (2) of the PHS
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Act.). In addition, the following mental
health parity provisions are not
applicable to FFS delivery systems for
Medicaid ABP benefits because they are
not ‘‘financial or treatment limitations:’’
those regarding access to out-of-network
providers and the increased cost
exemption. For ABP benefits provided
through an MCO, PIHP or PAHP, our
proposal is to require compliance with
the part 438 provisions addressing
MHPAEA parity requirements for
Medicaid managed care.
A. Meaning of Terms (§ 438.900,
§ 440.395, § 457.496)
The definitions of terms in this
proposed rule include most terms
included in the MHPAEA final
regulation at 45 CFR 146.136(a). This
proposed rule proposes to modify or
add several terms to reflect the
terminology used in the Medicaid
program and CHIP statutes, regulations
or policies. Some terms that are not
relevant to the Medicaid program or
CHIP are not included in this proposed
rule. For each term described in this
proposed rule, when appropriate, we
have identified where we have
modified, added or deleted language
that deviates from those definitions in
the MHPAEA final regulations. The
proposed terms are as follows:
For the definition of ‘‘Aggregate
lifetime dollar limit,’’ we are proposing
to replace the words ‘‘group health plan
(or health insurance coverage offered in
connection with such a plan) for any
coverage unit’’ with ‘‘MCO, PIHP or
PAHP’’ or ‘‘ABP’’ to reflect the common
terms for health plans in the Medicaid
program. For CHIP, we are proposing to
replace these words with ‘‘CHIP state
plan or a Managed Care Entity (MCE).’’
In § 440.395, we are proposing to add
the term ‘‘Alternative Benefit Plans’’.
For the definition of ‘‘Annual dollar
limit,’’ we are proposing to replace the
words ‘‘group health plan (or health
insurance coverage offered in
connection with such a plan) for any
coverage unit’’ with ‘‘MCO, PIHP or
PAHP’’ to reflect the common terms for
health plans in the Medicaid program
and ‘‘a CHIP state plan or a MCE’’ for
CHIP.
We are proposing to add the
definition of ‘‘Early and Periodic
Screening, Diagnostic and Treatment
(EPSDT) benefits’’. Under section
1905(r) of the Act, EPSDT is a required
benefit under the Medicaid program for
categorically needy individuals under
age 21. The EPSDT benefit is optional
for the medically needy population and
if elected for that population, the EPSDT
benefit must be made available to all
Medicaid eligible individuals under age
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21. Under the EPSDT benefit, states
must provide for screening, vision,
hearing and dental services at intervals
which meet reasonable standards of
medical and dental practice established
after consultation with recognized
medical and dental organizations
involved in child health care. States
must also provide for medically
necessary screening, vision, hearing and
dental services regardless of whether
such services coincide with established
periodicity schedules for these services.
Additionally, the Act requires that other
necessary health care, diagnostic
services, treatment, and other measures
described in section 1905(a) of the Act
to correct or ameliorate defects and
physical and mental illnesses, and
conditions identified by the screening
services, must be provided to EPSDT
beneficiaries whether or not such
services are otherwise covered under
the Medicaid state plan.
In the proposed ABP parity rules, we
are also proposing to add the definition
of ‘‘essential health benefits (EHB).’’
Since 2014, all non-grandfathered
health insurance coverage in the
individual and small group markets,
Medicaid benchmark and benchmarkequivalent plans (now also known as
ABPs), and Basic Health Programs (if
applicable) must cover EHBs, which
include items and services in 10
statutory benefit categories, that are
substantially equal in scope to a typical
employer health plan. Consistent with
the requirements set forth in 45 CFR
part 156, EHBs are comprised of (1)
Ambulatory patient services; (2)
Emergency services; (3) Hospitalization;
(4) Maternity and newborn care; (5)
Mental health and substance use
disorder services, including behavioral
health treatment; (6) Prescription drugs;
(7) Rehabilitative and habilitative
services and devices; (8) Laboratory
services; (9) Preventive and wellness
services and chronic disease
management; and (10) Pediatric
services, including oral and vision care.
We are proposing a different
definition for the term ‘‘medical/
surgical benefits,’’ to reflect that the
state defines these benefits in the
Medicaid and CHIP contexts. Under
existing Medicaid law, the state has the
responsibility of identifying what is a
covered benefit for MCOs, PIHPs,
PAHPs, ABPs, and CHIP; MCOs, PIHPs
or PAHPs are responsible for providing
the covered benefits identified by the
state. This is different from the
MHPAEA final regulations, where
medical/surgical benefits are defined
under the terms of the group health plan
or health insurance coverage and in
accordance with applicable federal or
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19423
state law. We are also proposing that the
definition of ‘‘medical/surgical
services’’ clearly exclude long term care
services in the Medicaid and CHIP
context. We believe this clarification is
consistent with the intent of the
MHPAEA final regulations, as the kinds
of long term care services included in
benefit packages for Medicaid and CHIP
beneficiaries are not commonly
provided in the commercial market as
part of health benefits coverage. We are
seeking comments on our proposal to
exclude long term care services from the
definition of medical/surgical services.
This proposed rule further provides that
states define which benefits are
medical/surgical consistent with
generally recognized independent
standards of current medical practice
(for example, the most current version
of the International Classification of
Diseases (ICD) or state guidelines).
We propose to define ‘‘mental health
benefits’’ and ‘‘substance use disorder
benefits’’, under these regulations, as
benefits for items and services for
mental health conditions and substance
use disorders, respectively, as defined
by the state and in accordance with
applicable federal and state law. Thus,
our proposal here for the terms ‘‘mental
health benefits’’ and ‘‘substance use
disorder benefits’’ in this Medicaid and
CHIP context also varies from the
MHPAEA final regulations, similar to
our proposed definition for medical/
surgical benefits, to reflect that the state
(not the MCO, PIHP or PAHP) is
responsible for defining these benefits.
This proposed rule also proposes that
when states define what benefits are
MH/SUD benefits, the definitions must
be consistent with generally recognized
independent standards of current
medical practice. Consistent with the
MHPAEA final regulations, this
requirement is included to ensure that
a benefit is not misclassified to avoid
complying with the parity requirements.
The word ‘‘generally’’ in the
requirement ‘‘to be consistent with
generally recognized independent
standards of current medical practice’’
is not meant to imply that the standard
must be a national standard, but instead
that a standard is largely accepted in the
relevant medical community. There are
many different sources that would meet
this requirement. For example, a state
may follow the most current version of
the Diagnostic and Statistical Manual of
Mental Disorders (current edition)
(DSM), ICD, or a state guideline. All of
these would be considered acceptable
resources to determine whether benefits
for a particular condition are classified
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as medical/surgical or MH/SUD benefits
for purposes of these rules.
This proposed rule duplicates the
definition of the term ‘‘treatment
limitations’’ in the MHPAEA final
regulations, including distinguishing
between a quantitative and a
nonquantitative treatment limitation
(NQTL). This proposed rule proposes
that the parity requirements in the
statute apply to both quantitative
treatment limitations and NQTLs. A
quantitative treatment limitation is a
restriction that is expressed
numerically, such as a limit of 50
outpatient visits per year. A NQTL is a
restriction that is not expressed
numerically, but otherwise limits the
scope or duration of benefits for
treatment, such as requirements for
prior authorization for services. A nonexhaustive list of NQTLs is included in
proposed § 438.910(d)(2), § 440.395(b)
and § 457.496. This list, as well as the
application of these regulations to
NQTLs, is further discussed later in this
proposed rule. However, these
regulations propose that a permanent
exclusion of all benefits for a specific
condition or disorder is not a treatment
limitation.
B. Parity Requirements for Aggregate
Lifetime and Annual Dollar Limits
Proposed §§ 438.905 and 457.496(c)
address the parity requirements for
aggregate lifetime and annual dollar
limits. The application of these
requirements is generally the same as
under the MHPAEA final regulations
(45 CFR 146.136(b)). We note that for
managed care arrangements, we are
using our authority in section 1902(a)(4)
of the Act to require PIHPs and PAHPs
to comply with mental health parity
requirements for MCO enrollees.
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C. Parity Requirements for Financial
Requirements and Treatment
Limitations
Sections 438.910, 440.395(b), and
457.496(d) of this proposed rule set
forth parity requirements for financial
requirements and treatment limitations.
1. Clarification of Terms
In addition to proposing the meaning
of terms in § 438.900, § 440.395, and
§ 457.496, this proposed rule clarifies
certain terms that have been given
specific meanings for purposes of
MHPAEA.
a. Classification of Benefits
For the purposes of this proposed
rule, ‘‘classification of benefits’’ means
a classification as described in
§ 438.910, § 440.395(b), and
§ 457.496(d). This proposed rule would
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modify the classification of benefits set
forth in the regulations that were
adopted by the Departments, as
discussed in section III.C.2.a of this
proposed rule, and would provide that
the parity requirements for financial
requirements and treatment limitations
are applied on a classification-byclassification basis.
b. Type
This proposed rule uses the term
‘‘type’’ to refer to financial requirements
and treatment limitations of the same
nature. Different types of financial
requirements and treatment limitations
include copayments, coinsurance,
annual visit limits, and episode visit
limits. States sometimes apply more
than one financial requirement or
treatment limitation to benefits. Also,
this proposed rule specifies that a
financial requirement or treatment
limitation must be compared only to
financial requirements or treatment
limitations of the same type within a
classification. For example, copayments
are compared only to other copayments,
and annual visit limits are compared
only to other annual visit limits;
copayments are not compared to
coinsurance, and annual visit limits are
not compared to episode visit limits.
c. Level
In this proposed rule, a ‘‘level’’ of a
type of financial requirement or
treatment limitation refers to the
magnitude (such as, the dollar,
percentage, day, or visit amount) of the
financial requirement or treatment
limitation. For example, a plan might
impose a 20 unit annual limit on
outpatient visits or a $3 copayment
depending on the medical/surgical or
MH/SUD benefit.
2. General Parity Requirement for
Financial Requirements and Treatment
Limitations
The general parity requirement
proposed in § 438.910(b), § 440.395(b),
and § 457.496(d) of this proposed rule
prohibits a MCO, PIHP, or PAHP (when
providing benefits to an MCO enrollee),
or ABP (when used in a non-managed
care arrangement), or CHIP state plan
from applying any financial requirement
or treatment limitation to MH/SUD
benefits in any classification that is
more restrictive than the predominant
financial requirement or treatment
limitation of that type applied to
substantially all medical/surgical
benefits in the same classification. For
this purpose, the general parity
requirement of MHPAEA applies
separately for each type of financial
requirement or treatment limitation (for
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example, unit limits are compared to
unit limits). This general parity
requirement also applies to NQTLs,
which is discussed later in this
proposed rule.
a. Classifications of Benefits
The MHPAEA final regulations at 45
CFR 146.136(c)(2)(ii) set forth the
following classifications of benefits:
Inpatient in-network; inpatient out-ofnetwork; outpatient in-network;
outpatient out-of-network; emergency
care; and prescription drugs. Under
those MHPAEA regulations, if a group
health plan or health insurance coverage
provides MH/SUD benefits in any
classification of benefits, MH/SUD
benefits must be provided in every
classification in which medical/surgical
benefits are provided. The parity
requirements are applied to financial
requirements and treatment limitations
within each classification separately.
The benefit structure of traditional
Medicaid (non-ABP state plan services),
ABPs and CHIP may vary significantly
from commercial health insurance
coverage. For example, nursing facility
long-term care services are a mandatory
service in traditional Medicaid, but are
not commonly provided in the
commercial market as part of health
benefits coverage. Additional long term
care services and supports, such as
personal care, home and community
based services, or long term psychosocial rehabilitation programs, are also
commonly included in benefit packages
for all or targeted populations of
Medicaid and CHIP beneficiaries, but
these benefits are not typically provided
in a commercial environment.
Additionally, the cost-sharing structure
and out-of-network coverage of
Medicaid and CHIP services is often
different than benefits provided in the
commercial market. Therefore, issues
arise over how similar or different the
classifications should be for the
Medicaid and CHIP programs. Our
proposal follows the general structure of
the classifications used in the MHPAEA
final regulations with a significant
distinction. For this proposed rule, we
eliminated the in-network and out-ofnetwork distinctions for the inpatient
and outpatient classifications and
propose four classifications: Inpatient;
Outpatient; Emergency care; and
Prescription drugs. We propose these
classifications for the following reasons:
• Medicaid and CHIP are held to
certain cost-sharing requirements for
either managed care or non-managed
care delivery systems. The dollar
amount the beneficiary pays varies by
income, and whether services are
received through a network model does
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not impact the amount for which the
beneficiary is responsible.
• When CHIP or ABPs use a FFS
delivery system or other non-managed
care arrangement, payment is made for
services to beneficiaries furnished by
any qualified providers that have signed
a Medicaid or CHIP provider agreement.
Absent a waiver of section
1902(a)(23)(A) of the Act, beneficiaries
have a choice from among qualified
providers and are not limited to a
network.
• In a Medicaid managed care
environment, § 438.206(b)(4) states that
if a managed care plan’s provider
network is unable to provide necessary
services covered under the contract to a
particular enrollee, the MCO, PIHP or
PAHP must adequately (and on a timely
basis) cover these services out-ofnetwork for the enrollee for as long as
the MCO, PIHP or PAHP is unable to
provide them in network. This
provision is not specific to medical/
surgical services or MH/SUD services.
We understand there may be continued
concerns that access to out-of-network
providers is provided by MCOs, PIHPs
and PAHPs in compliance with
MHPAEA. To address this concern, we
are proposing to add access to out-ofnetwork providers to the illustrative list
of NQTLs.
For purposes of applying parity
requirements to Medicaid, the
classifications of benefits should relate
to how states construct and manage
their Medicaid benefits. All Medicaid
benefits provided, with the exception of
long term care services, should fall into
one of the classifications of benefits.
We are proposing that parity
requirements for financial requirements
and treatment limitations are generally
applied on a classification-byclassification basis. The four
classifications proposed in this rule are
the only classifications to be used for
purposes of applying the parity
requirements of MHPAEA to Medicaid
and CHIP. Moreover, these
classifications must be used for all
financial requirements and treatment
limitations to the extent that a MCO,
PIHP, PAHP, ABP or CHIP provides
benefits in a classification and imposes
any separate financial requirement or
treatment limitation (or separate level of
a financial requirement or treatment
limitation) for benefits in the
classification.
The MHPAEA final regulations
discussed the application of parity
requirements to intermediate services
(such as residential treatment, partial
hospitalization, and intensive outpatient
treatment) provided under the health
plan. Specifically, the MHPAEA final
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regulations required group health plans
and issuers to assign covered
intermediate MH/SUD benefits to a
benefit classification in the same
manner they assign comparable
intermediate medical/surgical benefits
to a classification. The MHPAEA final
regulations do not specifically define
intermediate services; nor do the
Medicaid and CHIP programs define
intermediate services within state plan
benefits. Therefore, we are not
proposing to specify an intermediate
classification to be used in the parity
analysis for Medicaid or CHIP programs.
As in the MHPAEA final rule, we
propose to allow the applicable
regulated entity (the MCO, PIHP or
PAHP, or state in connection with the
ABP and CHIP) to assign intermediate
level services to any of the
classifications listed, but assignment to
those classifications must be done in a
consistent manner for medical/surgical
services and MH/SUD services. We
request comment on this approach, as
well as alternatives.
Similar to the MHPAEA final rule,
this proposed rule would not define
what services are included in the
inpatient, outpatient, or emergency care
classifications. These terms are subject
to the design of a state’s managed care
program and their meanings may differ
depending on the benefit packages.
State health insurance laws may define
these terms and in the event that these
are not defined we would expect each
regulated entity within a state to define
these classifications in a similar
manner. Further, each regulated
managed care plan (MCOs, PIHPs and
PAHPs) or the state in connection with
ABP or CHIP must apply these terms
uniformly for both medical/surgical
benefits and MH/SUD benefits.
a CHIP state plan from applying any
financial requirement or treatment
limitation to MH/SUD benefits in any
classification that is more restrictive
than the ‘‘predominant’’ financial
requirement or treatment limitation of
that type applied to ‘‘substantially all’’
medical/surgical benefits in the same
classification. In these paragraphs of the
proposed regulations, we propose
standards similar to those in the
MHPAEA final regulations for
determining the portion of medical/
surgical benefits subject to a financial
requirement or quantitative treatment
limitation for purposes of the parity
analysis. Under this proposed rule, the
portion of medical/surgical benefits in a
classification subject to a financial
requirement or quantitative treatment
limitation would be based on the dollar
amount of all payments for medical/
surgical benefits in the classification
expected to be paid during a specific
year. For MCOs, PIHPS and PAHPs, this
would be dollar amounts for payment
during a contract year. For ABPs and
CHIP state plans, it would be for the
year starting the effective date of the
approved ABP or CHIP state plan;
effective dates for these plans will vary
based on the date the ABP or CHIP state
plan was approved by CMS. For
purposes of this calculation, the MCOs,
PIHPs and PAHPs (when such
organizations are responsible for MH/
SUD benefit) would collectively (with
the assistance of the state) determine the
total amount projected to be expended
(including FFS) to determine the twothirds threshold as discussed below. We
are requesting comment on the
approach to determine the threshold
when there are multiple managed care
delivery systems (for example, MCOs,
PIHPs and PAHPs).
3. Applying the General Parity
Requirement to Financial Requirements
and Quantitative Treatment Limitations
Sections 438.910(c), 440.395(b) and,
457.496(d) of this proposed rule address
the application of the general parity
requirement of MHPAEA to financial
requirements and quantitative treatment
limitations in MCOs, PIHPs, PAHPs,
ABP or CHIP state plans.
b. ‘‘Substantially all’’
a. Determining the Portion of Medical/
Surgical Benefits Subject to a Financial
Requirement or Quantitative Treatment
Limitation
As noted above, the general parity
requirement proposed in § 438.910(b),
§ 440.395(b), and § 457.496(d) of this
proposed rule prohibits a MCO, PIHP, or
PAHP, or ABP state plan (when used in
a non-managed care arrangement), or
CHIP state plan or MCE contracting with
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Similar to the MHPAEA final
regulations, the first step in applying the
general parity requirement of MHPAEA
to a given financial requirement or
quantitative treatment limitation is to
determine whether a type of financial
requirement or quantitative treatment
limitation applies to substantially all
medical/surgical benefits in a
classification. This proposed rule would
define ‘‘substantially all’’ as meaning at
least two-thirds of the medical/surgical
benefits in that classification as
measured by the total dollar amount of
payments for medical/surgical benefits
in the classification expected to be paid
within a measurement year. In this
proposed rule, we would apply
‘‘substantially all’’ consistent with the
MHPAEA final regulations.
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c. ‘‘Predominant’’
If a type of financial requirement or
quantitative treatment limitation applies
to substantially all medical/surgical
benefits in a classification, the second
step is to determine the predominant
level of that type of financial
requirement or quantitative treatment
limitation that may be applied to MH/
SUD benefits in the classification.
Under this proposed rule, the level of a
type of financial requirement or
quantitative treatment limitation would
be the predominant level if it applies to
more than one-half of medical/surgical
benefits subject to the financial
requirement or quantitative treatment
limitation in that classification. If a
single level of a type of financial
requirement or quantitative treatment
limitation applies to more than one-half
of medical/surgical benefits subject to
the financial requirement or quantitative
treatment limitation in a classification
(based on expected payments, as
discussed earlier in this proposed rule),
the applicable regulated entity (under
proposed §§ 438.910(b), 440.395(b), or
457.496(d)) may not apply that
particular financial requirement or
quantitative treatment limitation to MH/
SUD benefits at a level that is higher (for
example, more expensive beneficiary
cost-sharing) or more restrictive than the
level that has been determined to be
predominant for medical/surgical
benefits. As proposed in § 438.920(b),
states that choose to use PIHPs, PAHPs
or the FFS delivery system to provide
some of the MH/SUD benefits to MCO
enrollees would be required to complete
an analysis to determine if the benefits
comply with these rules. For example,
all projected payments for services
provided to the MCO enrollees
(regardless of whether the payments are
made by the MCO, PIHP, PAHP or FFS)
would need to be considered in
determining if the level of financial
requirement or treatment limitation is
the predominant level. If no single level
applies to more than one-half of
medical/surgical benefits subject to the
financial requirement or quantitative
treatment limitation in a classification,
multiple levels of the same type of
financial requirement or quantitative
treatment limitation can be combined by
the state, in cases where some MH/SUD
services are provided outside the MCO,
or the MCO, in cases where all services
are carved-in, until the portion of
medical/surgical benefits subject to the
financial requirement or quantitative
treatment limitation exceeds one-half.
For any combination of levels that
applies to more than one-half of
medical/surgical benefits subject to the
financial requirement or quantitative
treatment limitation in a classification,
the state or the MCO may not apply that
particular financial requirement or
quantitative treatment limitation to MH/
SUD benefits at a level that is more
restrictive than the least restrictive level
within the combination. The state or the
MCO may combine projected payments
for benefits subject to the most
restrictive levels first, with each less
restrictive level added to the
combination until the combination
applies to more than one-half of the
benefits subject to the financial
requirement or treatment limitation. The
following example illustrates the
application of quantitative treatment
limitations to medical/surgical and MH/
SUD benefits.
Example. Facts. A state is providing a
comprehensive service package through
an MCO. The MCO is currently
providing coverage of services with
limits that are consistent with the
approved state plan. The MCO benefit
package includes:
• Inpatient Hospital services for
medical/surgical—30 days per year limit
• Inpatient Hospital services for MH/
SUD—30 days per year limit
• Primary Care Physician Services for
medical/surgical—unlimited
• Specialist Physician Services for
medical/surgical—50 visits per year
• Outpatient MH services—20 visits
per year limit
• Physical Therapy—20 visits per
year limit
• Occupational Therapy—20 visits
per year limit
• Emergency Services—Unlimited for
medical/surgical or MH/SUD
The MCO projects its payments as
follows for medical/surgical benefits:
TABLE 1—EXAMPLE OF QUANTITATIVE TREATMENT LIMIT
Benefit/classification—medical/surgical
Projected payment
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Inpatient Hospital .......................................................................................................
Inpatient total ......................................................................................................
Physician Services .....................................................................................................
Specialist Services .....................................................................................................
Physical Therapy .......................................................................................................
Occupational Therapy ................................................................................................
Outpatient total ...................................................................................................
Emergency Services ..................................................................................................
Emergency total ..................................................................................................
Example. Conclusion. In this
example, the MCO would be able to
maintain some level of day and visit
limits on benefits in both the inpatient
and outpatient MH/SUD classifications
because both classifications meet the
‘‘substantially all’’ standard—in other
words, more than two-thirds of the
medical/surgical benefits in each
classification are subject to those types
of limits (100 percent of all medical/
surgical inpatient benefits are subject to
a day limit, and 73 percent of all
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$400x
400x
150x
250x
75x
75x
550x
100x
100x
medical/surgical outpatient benefits are
subject to a visit limit).
With regards to the level of the
quantitative treatment limitation on
inpatient MH/SUD services, the MCO
may maintain its 30 day limit because
100 percent of all inpatient medical/
surgical benefits are also subject to a 30
day limit, making it the predominant
level.
However, with regards to the level of
the quantitative treatment limitation on
outpatient MH/SUD services, the MCO
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Percent of total
costs
100
100
27
46
13.5
13.5
100
100
100
Percent of
classification
subject to a limit
100
100
0
46
13.5
13.5
73
0
0
may not maintain its current limit of 20
visits per year. Of the total amount of
outpatient medical/surgical benefits
subject to a visit limit ($400x), 62.5
percent ($250x) are subject to a 50 visit
limit (specialist services), and only 37.5
percent ($150x) are subject to a 20 visit
limit (physical therapy and
occupational therapy). Because the 20
visit limitation is not the predominant
level (that is, it does not apply to at least
50 percent of the medical/surgical
benefits in the classification subject to
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the visit limit), the MCO would need to
either remove the visit limits altogether
on outpatient MH/SUD services or
increase the visit limitation to at least 50
visits per year to align with the least
restrictive level of visit limits on
outpatient medical/surgical benefits.
Lastly, because there are currently
unlimited emergency visits under the
medical/surgical benefits, the MCO
would need to maintain unlimited visits
for emergency services for MH/SUD,
and would not be able to impose any
limits on MH/SUD unless limits were
also imposed on medical/surgical
services and such limits were consistent
with parity requirements.
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4. Special Rules for Multi-Tiered
Prescription Drug Benefits and Other
Benefits (§§ 438.910(c)(2),
440.395(b)(3)(ii), 457.496(d)(3)(ii))
In addition, the MHPAEA final
regulations at 45 CFR
146.136(c)(3)(iii)(A) permit plans under
certain circumstances to apply different
levels of financial requirements to
different tiers of prescription drugs and
still satisfy the parity requirements. This
proposed rule would allow a MCO,
PIHP, PAHP, ABP or CHIP state plan to
subdivide the prescription drug
classification into tiers based on
reasonable factors as described in the
proposed regulations and without
regard to whether a drug is generally
prescribed for medical/surgical benefits
or for MH/SUD benefits.
The MHPAEA final regulations at 45
CFR 146.136(c)(3)(iii)(C) permit a subclassification for office visits, separate
from other outpatient items and
services. Other sub-classifications not
specifically permitted, such as separate
sub-classifications for generalists and
specialists, cannot be used for purposes
of determining parity. We propose to
retain this approach to subclassifications in the application of
these parity requirements established in
parts 438, 440 and 457 (that is, to
services provided to enrollees in
Medicaid MCOs, and to ABPs and
CHIP). After the sub-classifications are
established, a MCO, PIHP, PAHP, ABP
or CHIP state plan may not impose any
financial requirement or quantitative
treatment limitation on MH/SUD
benefits in any sub-classification (for
example, office visits or non-office
visits) that is more restrictive than the
predominant financial requirement or
quantitative treatment limitation that
applies to substantially all medical/
surgical benefits in the subclassification, using the parity analysis
for financial requirements and
quantitative treatment limitations.
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In the MHPAEA final regulations, the
Departments recognized that tiered
networks have become an important
tool for health plan efforts to manage
care and control costs. Therefore, for
purposes of applying the financial
requirement and treatment limitation
rules under MHPAEA, the MHPAEA
final regulations provide that if a plan
(or health insurance coverage) provides
benefits through multiple tiers of innetwork providers (such as an innetwork tier of preferred providers with
more generous cost-sharing to
participants than a separate in-network
tier of participating providers in any
classification), the plan may divide its
benefits furnished on an in-network
basis into sub-classifications that reflect
those network tiers, if the tiering is done
without regard to whether a provider is
a MH/SUD provider or a medical/
surgical provider. While network tiers
may also be used in Medicaid managed
care, we do not believe that the use of
network tiers for the purposes of the
parity analysis is needed. As discussed
later in section F. of this proposed rule,
Medicaid cost-sharing rules apply
regardless of network status.
Additionally, any quantitative treatment
limitation outlined in the contract must
be applied to the service broadly and
therefore cannot have separate
limitations based on network tiers. We
recognize there may be network tiers
used to commonly refer enrollees or for
purposes of building the network and
have varying payment rates to
providers, but the use of multiple
network tiers for NQTLs is discussed in
section E. of this proposed rule.
D. Cumulative Financial Requirements
(§ 438.910(c)(3), § 440.395(b)(3)(iii),
§ 457.496(d)(3)(iii))
While financial requirements such as
copayments and coinsurance generally
apply separately to each covered
expense, other financial requirements
(in particular, deductibles) accumulate
across covered expenses. In the case of
deductibles, generally an amount of
otherwise covered expenses must be
accumulated before the plan pays
benefits. Financial requirements that
determine whether and to what extent
benefits are provided based on
accumulated amounts are defined in
these proposed rules as cumulative
financial requirements. The MHPAEA
final regulations provide that a group
health plan or issuer may not apply
cumulative financial requirements or
cumulative quantitative treatment
limitations to MH/SUD benefits in a
classification that accumulate separately
from any such cumulative financial
requirements or cumulative quantitative
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19427
treatment limitations established for
medical/surgical benefits in the same
classification. As in the MHPAEA final
rule at 45 CFR 146.136(c)(2)(v), we
propose that any separate cumulative
financial requirement (separate for
mental health, substance use or
medical/surgical) will not be permitted
for entities subject to our proposed
requirements (namely, MCOs, PIHPs
and PAHPs in connection with coverage
provided to MCO enrollees, and in ABP
and CHIP). However, we propose to
permit quantitative treatment
limitations to accumulate separately for
medical/surgical and MH/SUD services
as long as they comply with the general
parity requirement. We are proposing to
allow this separate accumulation of
treatment limits in Medicaid and CHIP
for several reasons. First, benefits for
MCO beneficiaries must be provided in
at least the same amount, duration and
scope as set forth in the state plan.
Requiring plans to have cumulative
limits across medical/surgical benefits
and MH/SUD benefits within a
classification may incentivize MCOs to
retain the quantitative treatment
limitation level applied on the medical/
surgical benefits in the state plan as the
total cumulative limit for both medical/
surgical and MH/SUD benefits. This
would comply with the requirements of
parity, but would not meet the
requirements of providing at least what
is in the state plan. In addition, we
believe that requiring quantitative
treatment limitations within a
classification of benefits to accumulate
jointly toward a unified limit level may
be operationally challenging for states
with multiple delivery systems.
Specifically, in Medicaid the state
determines which entities will provide
the specific medical/surgical and MH/
SUD benefits covered under their
respective contracts, including if some
services will be provided under FFS.
These potentially complex service
delivery arrangements in Medicaid in
turn determine whether the MCO or the
state have the responsibility for
complying with parity requirements. In
commercial coverage, the parity
obligations remain with the same
entity—the group health plan or
issuer—that determines which entities
will provide each individual medical/
surgical or MH/SUD benefits. Due to the
difficulty that the MCO will face in
administering unified treatment limits
that accumulate across entities that the
MCO has no contractual relationship
with, we propose to permit the MCO,
PIHP or PAHP to maintain separate
treatment limitations, provided such
limit for MH/SUD benefits is no more
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restrictive than the predominant limit
applied to substantially all medical/
surgical benefits in a given
classification.
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E. Compliance With Other Cost-Sharing
Rules (§ 438.910(c)(4))
States and the MCOs, PIHPs and
PAHPs that contract with states are
bound by the existing Medicaid and
CHIP cost-sharing rules (§ 438.108 and
part 457, subpart E). As previously
indicated, the Medicaid program and
CHIP are held to strict cost-sharing
requirements for both managed care and
non-managed care delivery systems. We
emphasize here that all financial
requirements included in a MHPAEA
analysis must also be in compliance
with both existing cost-sharing rules
and the requirements of this proposed
rule. Compliance with the parity
requirements does not mean that a state,
or MCO, PIHP or PAHP can violate
existing cost-sharing requirements.
Therefore, some cost-sharing structures
in a state’s Medicaid program or CHIP
may need to change to be compliant
with MHPAEA. To clarify this, we
propose at § 438.910(c)(4) to reiterate
that requirement with a cross-reference
to the cost-sharing rules applicable to
MCOs, PIHPs and PAHPs.
F. Nonquantitative Treatment
Limitations (NQTLs) (§ 438.910(d),
§ 440.395(b)(4), and § 457.496(d)(4))
MCOs, PIHPs, PAHPs, ABP and CHIP
state plans may impose a variety of
limits affecting the scope or duration of
benefits that are not expressed
numerically (nonquantitative treatment
limitations or NTQLs). Nonetheless,
such nonquantitative provisions are also
treatment limitations affecting the scope
or duration of benefits. Sections
438.910(d), 440.395(b)(4), and
457.496(d)(4) of this proposed rule
would prohibit the imposition of any
NQTL to MH/SUD benefits unless
certain requirements are met. In
addition, this proposed rule provides an
illustrative list of NQTLs, including
medical management standards;
prescription drug formulary design;
standards for provider admission to
participate in a network; and
conditioning benefits on completion of
a course of treatment.
Under the MHPAEA final regulations
at 45 CFR 146.136(c)(4), an NQTL may
not be imposed for MH/SUD benefits in
any classification unless, under the
terms of the plan (or health insurance
coverage) as written and in operation,
any factors used in applying the NQTL
to MH/SUD benefits in a classification
are comparable to and applied no more
stringently than factors used in applying
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the limitation for medical surgical/
benefits in the classification. For these
purposes, factors mean the processes,
strategies, evidentiary standards, or
other considerations used in
determining limitations on coverage of
services. The phrase ‘‘applied no more
stringently’’ requires that any processes,
strategies, evidentiary standards, or
other factors that are comparable on
their face be applied in the same
manner to medical/surgical benefits and
MH/SUD benefits.
We propose to duplicate this
approach to NQTLs in the application of
parity requirements to Medicaid MCOs,
PIHPs and PAHPs providing services to
MCO enrollees, ABPs, and CHIP state
plans. For states that are using a nonmanaged care delivery system for their
ABPs and CHIP, the state (through its
ABP and CHIP state plan) may only
impose an NQTL on a MH/SUD benefit
in any classification if it has written and
operable processes, strategies,
evidentiary standards or other factors
used in applying—to MH/SUD benefits
in that classification—the NQTL that are
comparable to or less restrictive and
applied no more stringently than any
processes, strategies, evidentiary
standards, or other factors used in
applying the limitation for medical/
surgical services in that classification.
In addition, we propose to add
another example of an NQTL regarding
standards for accessing out-of-network
providers. As discussed earlier in this
proposed rule, in the context of CHIP or
ABPs that use a FFS delivery system or
other non-managed care arrangement,
beneficiaries may choose from any
qualified provider that has signed a
Medicaid or CHIP provider agreement
and are not limited to a network. In a
Medicaid managed care environment, if
a provider network is unable to provide
necessary services covered under the
contract to a particular enrollee, the
MCO, PIHP or PAHP must adequately
(and on a timely basis) cover these
services out-of-network for the enrollee
as long as the MCO, PIHP or PAHP is
unable to provide them in-network.5 To
address continued concerns about
access to these services out-of-network
when they cannot be provided innetwork, these proposed rules would
add this example of an NQTL, so that
providing access to out-of-network
providers for MH/SUD benefits in any
classification would have to use the
same processes, strategies, evidentiary
standards, or other factors as are used in
providing access to out-of-network
providers for medical/surgical benefits
within the same classification. If MCOs,
5 See
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PIHPs or PAHPs, and ABPs provided
through managed care, are found to be
in compliance with § 438.206(b)(4), that
would be evidence that they are in
compliance with proposed
§ 438.910(d)(3), although the state will
want to review how the plan is doing
this in practice. This additional example
of an NQTL is not relevant for states that
are using a non-managed care delivery
system for ABPs and CHIP state plan,
since providers must be enrolled in
Medicaid or CHIP and would not be
considered out-of-network.
We note that we propose to use in
§ 438.910(d)(2)(iii), the example of an
NQTL pertaining to network design for
MCOs, PIHPs and PAHPs with multiple
network tiers because although network
tiers may not be used to impose
financial requirements or quantitative
treatment limitations in Medicaid and
CHIP, we believe MCOs, PIHPs and
PAHPs may still use them in developing
NQTLs. For example, the MCO, PIHP or
PAHP may use network tiers when
recommending providers to enrollees, or
how they structure their provider
directories. MCOs, PIHPs and PAHPs
with multiple network tiers should be
constructing them and providing
beneficiary access to them in a way that
is consistent with the parity standard for
NQTLs.
The examples below illustrate the
operation of the requirements for
NQTLs.
Example 1. Facts. A MCO requires
prior authorization that a treatment is
medically necessary for all inpatient
medical/surgical benefits and for all
inpatient MH/SUD benefits. In practice,
inpatient benefits for medical/surgical
conditions are routinely approved for 7
days, after which a treatment plan must
be submitted by the patient’s attending
provider and approved by the MCO.
Conversely, for inpatient MH/SUD
benefits, routine approval is given only
for 1 day, after which a treatment plan
must be submitted by the beneficiary’s
attending provider and approved by the
MCO.
Example 1. Conclusion. In this
example, the MCO violates the NQTL
provision of this proposed rule
(§ 438.910(d)) because it is applying a
stricter NQTL in practice to MH/SUD
benefits than is applied to medical/
surgical benefits.
Example 2. Facts. A MCO applies
concurrent review to inpatient care
where there are high levels of variation
in length of stay (as measured by a
coefficient of variation exceeding 0.8).
In practice, the application of this
standard affects 60 percent of MH/
SUDs, but only 30 percent of medical/
surgical conditions.
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Example 2. Conclusion. In this
example, the MCO complies with the
NQTL provisions of this proposed rule
because the evidentiary standard used
by the MCO is applied no more
stringently for MH/SUD benefits than
for medical/surgical benefits, even
though it results in an overall difference
in the application of concurrent review
for MH/SUDs than for medical/surgical
conditions.
Example 3. Facts. A MCO requires
prior approval that a course of treatment
is medically necessary for outpatient
medical/surgical and MH/SUD benefits
and uses comparable criteria in
determining whether a course of
treatment is medically necessary. For
MH/SUD treatments that do not have
prior approval, no benefits will be paid;
for medical/surgical treatments that do
not have prior approval, providers will
only receive a 25 percent reduction in
payments for these treatments from the
MCO.
Example 3. Conclusion. In this
example, the MCO violates the NQTL
provision of this proposed rule.
Although the same NQTL—medical
necessity—is applied both to MH/SUD
benefits and to medical/surgical benefits
for outpatient services, it is not applied
in a comparable way. The penalty for
failure to obtain prior approval for MH/
SUD benefits is not comparable to the
penalty for failure to obtain prior
approval for medical/surgical benefits.
Example 4. Facts. A MCO generally
covers medically appropriate
treatments. For both medical/surgical
benefits and MH/SUD benefits,
evidentiary standards used in
determining whether a treatment is
medically appropriate are based on
recommendations made by panels of
experts with appropriate training and
experience in the fields of medicine
involved. The evidentiary standards are
applied in a manner that is based on
clinically appropriate standards of care
for a condition.
Example 4. Conclusion. In this
example, the MCO complies with the
NQTL provision of the proposed rule
because the processes for developing the
evidentiary standards used to determine
medical appropriateness and the
application of these standards to MH/
SUD benefits are comparable to and are
applied no more stringently than for
medical/surgical benefits. This is the
result even if the application of the
evidentiary standards does not result in
similar numbers of visits, days of
coverage, or other benefits utilized for
MH/SUDs as it does for any particular
medical/surgical condition.
Example 5. Facts. Training and state
licensing requirements often vary
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among types of providers. A MCO
applies a general standard that any
provider must meet the highest
licensing requirement related to
supervised clinical experience under
applicable state law in order to
participate in the MCO’s provider
network. Therefore, the MCO requires
master’s-level mental health therapists
to have post-degree, supervised clinical
experience but does not impose this
requirement on master’s-level general
medical providers because the scope of
their licensure under applicable state
law already requires supervised clinical
experience. In addition, the MCO does
not require post-degree, supervised
clinical experience for psychiatrists or
Ph.D. level psychologists since their
licensing already requires supervised
training.
Example 5. Conclusion. In this
example, the MCO complies with the
provision of this proposed rule
pertaining to NQTLs. The requirement
that master’s-level mental health
therapists must have supervised clinical
experience to join the network is
permissible, as long as the MCO
consistently applies the same standard
to all providers, even though it may
have a disparate impact on certain
mental health providers.
Example 6. Facts. A state contracts
with an external utilization review
entity to review inpatient admissions for
all beneficiaries participating in its ABP.
All inpatient services in the ABP are
delivered on a FFS basis. The state’s
utilization review contractor considers a
wide array of factors in designing
medical management techniques for
both MH/SUD and medical/surgical
inpatient benefits, such as cost of
treatment; high cost growth; variability
in cost and quality; elasticity of
demand; provider discretion in
determining diagnosis, or type or length
of treatment; clinical efficacy of any
proposed treatment or service; licensing
and accreditation of providers; and
claim types with a high percentage of
fraud. Based on application of these
factors in a comparable fashion, prior
authorization is required for some (but
not all) inpatient MH/SUD benefits, as
well as for some (but not all) medical/
surgical benefits. The evidence
considered in developing its medical
management techniques includes
consideration of a wide array of
recognized medical literature and
professional standards and protocols
(including comparative effectiveness
studies and clinical trials). This
evidence and how it was used to
develop these medical management
techniques is also well documented by
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19429
the state’s utilization review
organization.
Example 6. Conclusion. In this
example, the state and its utilization
review contractor comply with the
NQTL rules. Under the terms of the ABP
as written and in operation, the
processes, strategies, evidentiary
standards, and other factors considered
by the contractor in implementing the
prior authorization requirement for MH/
SUD inpatient benefits are comparable
to, and applied no more stringently
than, those applied to medical/surgical
benefits.
Example 7. Facts. A MCO provides
coverage for medically appropriate
medical/surgical benefits, as well as
MH/SUD benefits. The MCO excludes
coverage for inpatient SUD services
when obtained outside of the state.
There is no similar exclusion for
medical/surgical benefits within the
same classification.
Example 7. Conclusion. In this
example, the MCO violates the NQTL
provisions of this proposed rule. The
MCO is imposing a NQTL that restricts
benefits based on geographic location.
Because there is no comparable
exclusion that applies to medical/
surgical benefits, this exclusion may not
be applied to MH/SUD benefits.
Example 8. Facts. A state’s CHIP
program requires prior authorization for
all outpatient MH/SUD services after the
ninth visit and will only approve up to
5 additional visits per authorization. For
outpatient medical/surgical benefits, the
state’s CHIP program allows an initial
visit without prior authorization. After
the initial visit, benefits must be preapproved based on the individual
treatment plan recommended by the
attending provider based on that
individual’s specific medical condition.
There is no explicit, predetermined cap
on the amount of additional visits
approved per authorization.
Example 8. Conclusion. In this
example, the state’s CHIP program
violates the NQTL provisions of the
proposed rule. Although the same
NQTL—prior authorization to determine
medical appropriateness—is applied to
both MH/SUD benefits and medical/
surgical benefits for outpatient services,
it is not applied in a comparable way.
While the state CHIP plan is more
generous in the number of visits
initially provided without preauthorization for MH/SUD benefits,
treating all MH/SUDs in the same
manner, while providing for
individualized treatment of medical
conditions, is not a comparable
application of this NQTL.
Example 9. Facts. A state provides an
ABP that is compliant with EHB
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requirements, including the provision of
MH/SUD services. The state aligns its
ABP’s outpatient benefits with those
described in the state plan and applies
the same prior authorization
requirements. For outpatient MH/SUD
services, prior authorization is required
for each individual treatment session. In
contrast, for outpatient medical/surgical
services, a series of treatments is
provided under a single authorization.
Example 9. Conclusion. In this
example, the state’s ABP design does
not comply with the NQTL provisions
of this proposed rule. Although the
same NQTL—prior authorization to
determine medical appropriateness—is
applied to both MH/SUD benefits and
medical/surgical benefits for outpatient
services, it is not applied in a
comparable way.
Example 10. Facts. A state’s ABP
requires preauthorization for all
outpatient substance use disorder
services. The state APB does not require
preauthorization for any medical/
surgical services.
Example 10. Conclusion. The state
ABP does not comply with the NQTL
requirements in this proposed rule. If a
state plan requires preauthorization for
each outpatient SUD service it cannot
remain in compliance if there is no
comparable limitation on medical/
surgical services.
Example 11. Facts. In cases where an
MCO is unable to provide necessary
outpatient services to a particular
enrollee, the MCO requires that the
enrollee must get prior approval in
order to see any outpatient out-ofnetwork provider. The MCO approves
the use of an out-of-network provider
for medical/surgical outpatient services
if there is not an in-network provider
within 10 miles of the person’s
residence. Approval of an out-ofnetwork provider for outpatient MH/
SUD services is only authorized if there
is not an in-network provider within 30
miles of a person’s residence.
Example 11. Conclusion. In this
example, the MCO violates the NQTL
provisions of this proposed rule. The
MCO is imposing a restriction that
limits access to out-of-network
providers. Although the same
nonquantitative treatment limitation is
applied to both the MH/SUD benefits
and to medical/surgical benefits for
outpatient services, it is not applied in
a comparable way.
G. Application to CHIP and EPSDT
Deemed Compliance (§ 457.496(b))
The CHIPRA applies MH/SUD parity
requirements to the entire ‘‘state child
health plan’’ including, but not limited
to, any MCOs that contract with the
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state CHIP. Specifically, section 502 of
the CHIPRA requires that state child
health plans ensure financial
requirements and treatment limitations
applicable to MH/SUD benefits comply
with the requirements of section 2726(a)
of the PHS Act (as renumbered) ‘‘in the
same manner’’ as such requirements
apply to a group health plan. Therefore,
if a CHIP state plan provides both
medical/surgical benefits and MH/SUD
benefits, any treatment limitations,
lifetime or annual dollar limits or
financial requirements (such as out-ofpocket costs) on MH/SUD benefits must
comply with the provisions of section
2726 of the PHS Act made applicable to
CHIP by section 502 of the CHIPRA
adding section 2103(c)(6) to the Act and
by section 2103(f)(2) of the Act. Section
2103(c)(6)(B) of the Act also specifies
that state CHIP plans are deemed to
satisfy the requirement under section
2103(c)(6)(A) of the Act to ensure that
financial requirements and treatment
limitations comply with the provisions
of section 2726 of the PHS Act if they
provide coverage of EPSDT benefits (as
defined under title XIX of the Act). For
individuals receiving EPSDT services
through the CHIP state plan, proposed
§ 457.496(b) provides that the state will
be deemed to meet parity requirements
for financial requirements and treatment
limitations. However, states that do
apply NQTLs to EPSDT services must
ensure that these limitations are applied
consistent with the intent of MHPAEA.
H. Availability of Information
(§ 438.915, § 440.395(c), § 457.496(e))
Under the MHPAEA final regulations,
the criteria for medical necessity
determinations made under a group
health plan or health insurance coverage
for MH/SUD benefits must be made
available by the plan administrator or
the health insurance issuer offering such
coverage in accordance with regulations
to any current or potential participant,
beneficiary, or contracting provider
upon request. The MHPAEA final
regulations also state that the reason for
any denial under a group health plan or
health insurance coverage of
reimbursement or payment for services
for MH/SUD benefits in the case of any
participant or beneficiary must be made
available, upon request or as otherwise
required, by the plan administrator or
the health insurance issuer to the
participant or beneficiary in accordance
with the regulations. Through this
proposed rule, we are proposing to
apply the requirements imposed on the
health insurance issuer through the
MHPAEA final regulations regarding
availability of information in a similar
manner to MCOs and to PIHPs and
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PAHPs that provide coverage to MCO
enrollees. We propose to add
§ 438.915(a) to provide that MCOs,
PIHPs and PAHPs subject to MHPAEA
requirements must make their medical
necessity criteria for MH/SUD benefits
available to any enrollee, potential
enrollee or contracting provider upon
request. MCOs, PIHPs and PAHPs found
to be in compliance with § 438.236(c)—
which requires dissemination by MCOs,
PIHPs and PAHPs of practice guidelines
to all affected providers and, upon
request, to enrollees and potential
enrollees—will be deemed to meet this
proposed requirement. As proposed,
§ 438.915(b) would also require the
MCO, PIHP or PAHP to make available
the reason for any denial of
reimbursement or payment for services
for MH/SUD benefits to the enrollee. We
also note that § 438.210(c) requires each
contract with an MCO, PIHP, or PAHP
to provide for the MCO, PIHP, or PAHP
to notify the requesting provider and
give the enrollee written notice of any
decision by the MCO, PIHP, or PAHP to
deny a service authorization request or
to authorize a service in an amount,
duration, or scope that is less than
requested.
The MHPAEA final regulations, at 45
CFR 146.136(d)(2), state that non-federal
governmental group health plans (or
health insurance coverage offered in
connection with such plans) providing
the reason for claim denial in a form
and manner consistent with the
requirements of 29 CFR 2560.503–1 for
group health plans will be found in
compliance with the reason for denial
disclosure requirements.6 The
provisions under 29 CFR 2560.503–1
which discuss requirements related to
notices for group health plans subject to
ERISA, do not apply to Medicaid, and
we are not proposing to make them
applicable as a condition for deemed
compliance because similar
requirements are already applicable.
MCOs, PIHPs, PAHPs and states are
required to give a ‘‘reason’’ for any
adverse benefit determinations under
requirements for notices in,
respectively, § 438.404 and § 431.210.
The information provided in this
disclosure of the reason for the adverse
benefit determination must be made in
compliance with these and all other
provisions of applicable federal or state
law, as noted in proposed § 438.915(c).
6 The requirements of 29 CFR 2560.503–1 are
applicable to ERISA plans, as well as all nongrandfathered group health plans and health
insurance issuers in the group and individual
markets, through the claims and appeals regulations
adopted under the Affordable Care Act. See 78 FR
68247 for a full discussion.
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For similar reasons, we are not
proposing to make the claim denial
requirements of 29 CFR 2560.503–1 a
condition of deemed compliance for
CHIP programs. CHIP enrollees have an
opportunity for an external review of
denials, reduction or suspension of
health services under § 457.1130.
Although the statute that applies
MHPAEA to ABPs does not include
specific provisions regarding the
availability of plan information, we
propose to use our authority under
section 1902(a)(4) of the Act to extend
this provision to all ABPs, as well as
those ABPs with services delivered
through MCOs, PIHPs and all PAHP. At
§ 440.395(c)(1), we propose that all
states delivering ABP services through a
non-MCO must make available to
beneficiaries and contracting providers
on request the criteria for medical
necessity determinations for MH/SUD
benefits. Similarly, § 440.395(c)(2)
would require the state to make
available to the enrollee the reason for
any denial of reimbursement or
payment for services for MH/SUD
benefits.
Current rules related to notices of
adverse benefit determinations are
consistent with the intent of 29 CFR
2560.503–1. This proposed rule
proposes to apply provisions regarding
the availability of plan information for
ABP services. We request comment on
any additional provisions concerning
the availability of plan information or
notice of adverse determinations that
may be necessary to facilitate
compliance with MHPAEA for MCOs,
PIHPs, PAHPs, ABPs and CHIP.
I. Application to EHBs and Other ABP
Benefits (§ 440.395 and § 440.347)
Section 1937(b)(6) of the Act, as
added by section 2001(c) of the
Affordable Care Act, and implemented
through regulations at § 440.345(c)
directs that ABPs that provide both
medical/surgical benefits and MH or
SUD benefits must comply with certain
parity requirements. Further, ABPs must
provide the 10 EHBs, including MH/
SUD services. As states determine their
ABP service package, states must use all
of the EHB services from the basebenchmark plan selected by the state to
define EHBs, consistent with the
applicable requirements in 45 CFR part
156.
Section 1937 of the Act offers
flexibility for states to provide medical
assistance by designing different benefit
packages, including other services
beyond the EHBs for different groups of
eligible individuals, as long as each
benefit package contains all of the EHBs
and meets certain other requirements,
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including parity provisions under
section 2726 of the PHS Act.
J. Application of Parity Requirements to
the Medicaid State Plan
The provisions of section 2726 of the
PHS Act that are incorporated through
section 1932 of the Act do not apply
directly to the benefit design for
Medicaid non-ABP state plan services.
Under this proposed rule, the
requirements would apply to the
benefits offered by the MCO (or, as
discussed above, if benefits are carved
out, to all benefits provided to MCO
enrollees regardless of service delivery
system) but do not apply to all Medicaid
state plan benefit designs. As stated
earlier in this proposed rule, states that
have individuals enrolled in MCOs and
have MH/SUD services offered through
FFS will have the option of amending
their non-ABP state plan to be
consistent with these proposed
regulations or offering MH/SUD services
through a managed care delivery system
(MCOs, PIHPs, and/or PAHPs) to be
compliant with these proposed rules.
K. Scope and Applicability of the
Proposed Rule (§ 438.920(a) and (b),
§ 440.395(d), and § 457.496(f)(1))
Sections 438.920, 440.395(d), and
457.496(f) propose to address the
applicability and scope of this proposed
rule. Specifically under our proposal:
• Section 438.920(a) would provide
that the requirements of the subpart
apply to delivery of Medicaid services
when an MCO is used to deliver some
or all of the Medicaid services; section
438.920(b) (also discussed below)
addresses state responsibilities when
the MCO delivers only some of the
Medicaid services.
• Section 440.395 would apply to
ABPs that are not delivered through
managed care.
• Section 457.496 would apply to
CHIP state plans, including when
benefits are furnished under a contract
with MCEs.
The MHPAEA final regulations state
that if a group health plan or health
insurance coverage provides MH/SUD
benefits in any classification of benefits,
MH/SUD benefits must be provided in
every classification in which medical/
surgical benefits are provided. Under
our proposed amendments to part 438,
for these parity standards to apply, a
beneficiary must be enrolled in an MCO
under a Medicaid contract. Whether the
MCO provides medical/surgical or MH/
SUD benefits under that contract is
irrelevant.
While many Medicaid MCOs are
contracted to offer benefits in each of
the classifications of benefits described
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in this proposed rule, there are other
state-initiated ‘‘carve out’’ arrangements
(for example, PIHPs, PAHPs or FFS) in
which the MCOs are only contracted to
provide benefits in one MH/SUD
classification, while PIHPs, PAHPs,
FFS, or a combination of all 3 provide
coverage of benefits in other
classifications. For example, MCOs in
these carve out arrangements are likely
to have contracts that include MH/SUD
benefits in the prescription drug and
emergency care classifications of
benefits, but some or all of the MH/SUD
outpatient or inpatient benefits may be
offered instead through a PIHP, PAHP or
FFS delivery system.
In instances where the MH/SUD
services are delivered through multiple
managed care delivery vehicles, we are
proposing in § 438.920 that parity
provisions apply across the managed
care delivery systems in the Medicaid
program and CHIP. MHPAEA
requirements apply to the entire
package of services MCO enrollees
receive, whether from the MCO, PIHP,
PAHP, or FFS. If states carve out some
MH/SUD services from the MCO
contract and furnish those services by
PIHPs, PAHPs, or FFS, we are proposing
to apply the foregoing MHPAEA
requirement to the entire package of
services MCO enrollees receive.
Requiring the standards for parity to be
applied to the overall package of
benefits received by MCO enrollees will
allow MCOs to comply with MHPAEA
requirements without requiring
inclusion of additional MH/SUD
benefits in the MCO benefit package, as
long as these MH/SUD benefits are
provided elsewhere within the delivery
system. In states where MH/SUD
benefits are provided across multiple
delivery systems (including FFS), we
propose in § 438.920(b) that states
would be required to review the full
scope of benefits provided to MCO
enrollees to ensure compliance with the
proposed parity requirements. As part of
complying with this regulation, we
would expect states to work with their
MCOs (or PIHPs and PAHPs) to
determine the best method of achieving
compliance with these proposed parity
requirements for benefits provided to
the MCO enrollees. For MH/SUD
benefits offered through FFS, states
would not necessarily be required to
amend their non-ABP state plan to meet
parity requirements, but could use their
existing state plan or waiver services to
achieve parity when individuals are
receiving some MH/SUD benefits from a
MCO (including PIHPs or PAHPs) and
also some benefits through FFS.
However, if a state did not have MH/
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SUD benefits in every classification in
which medical/surgical benefits are
provided across all authorities, the state
would have to choose either to offer
these services through a MCO, PIHP or
PAHP or amend its state plan (or a
waiver of its state plan) to include these
benefits to achieve compliance with
proposed § 438.920(a) and (b). Applying
various parity provisions across the
different delivery system would allow
states the most flexibility in designing
delivery systems while ensuring that
parity in medical/surgical and MH/SUD
services is provided to MCO enrollees.
Given that there are many different
delivery system configurations that
carve out MH/SUD services, this would
allow compliance with parity
requirements while reducing incentives
for states to completely carve in all MH/
SUD benefits to a MCO or carve out or
terminate coverage of MH/SUD services.
In states where the MCO has
responsibility for offering all medical/
surgical and MH/SUD benefits, the MCO
would be responsible for undertaking
the parity analysis and informing the
state what additional changes will be
needed to the MCO contract to be
compliant with parity requirements. In
states where some or all MH/SUD
benefits are provided through MCOs,
PIHPs, PAHPs, or FFS, the state would
have the responsibility for undertaking
the parity analysis across these delivery
systems and determining if the existing
benefits and any financial or treatment
limitations are consistent with
MHPAEA. The state, based on this
analysis, would have to make the
necessary changes to ensure compliance
with parity requirements for its
Medicaid MCO enrollees. We also
propose at § 438.920(b)(1) that the state
provide documentation of its
compliance with this analysis to the
general public within 18 months of the
effective date of this rule.
If states offer benefits through an ABP
or CHIP state plan with various delivery
systems (managed care and nonmanaged care), the state would need to
apply the provisions of the proposed
rule across the delivery systems utilized
for its ABP and CHIP state plan.
For ABPs and CHIP state plans, we
would also require states to apply the
provisions of this proposed rule across
all delivery systems to ensure that
beneficiaries have access to MH/SUD
benefits in every classification in which
medical/surgical benefits are provided.
These provisions would apply when
states offer services through an ABP or
CHIP state plan using only a nonmanaged care arrangement (FFS). If
states offer services through an ABP or
CHIP state plan with various delivery
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systems (managed care and nonmanaged care), the state would need to
apply the provisions of the proposed
rule across the delivery systems utilized
for their ABP and CHIP state plan.
Provided below is an example of how
this proposed rule would be applied
across the delivery system in Medicaid.
Example 1. Facts. A Medicaid MCO
enrollee can access Medicaid benefits in
the following way at any given time
during their MCO enrollment:
• The MCO comprehensive benefits
include inpatient medical/surgical
benefits; outpatient medical/surgical
benefits; emergency for medical/
surgical, MH, and SUD benefits; and
prescription drugs for medical/surgical
and MH/SUD benefits.
• The PIHP carve out benefits include
inpatient MH benefit and the outpatient
MH benefit.
• The PAHP carve out benefits
include outpatient SUD benefits.
• The FFS system provides access to
inpatient SUD benefits.
For purposes of this example, we
assume there are no financial
requirements or treatment limitations
imposed on any of the benefits in any
of the delivery systems noted above.
Example 1. Conclusion. In this
example, the MCO, PIHP or PAHP
would not need to add any additional
services to its benefit package because
the MCO enrollee has access to MH/
SUD services through PIHPs, PAHPs
and FFS and the state is responsible for
undertaking the parity analysis across
delivery systems and making sure the
coverage complies with parity
requirements under our proposed
§ 438.920(a) and (b). The example
would apply in the same way to a CHIP
enrollee.
L. Scope of Services (§ 438.920(c),
§ 457.496(f)(2))
We propose provisions relating to the
scope of the parity requirements for
Medicaid MCOs and CHIP state plans
that are similar to the provisions set
forth in the MHPAEA final regulations
(45 CFR 146.136(e)(3)). Specifically, the
proposed regulations would not require
a MCO, PIHP, or PAHP to provide any
MH/SUD benefits for conditions or
disorders beyond the conditions or
disorders that are covered as required by
their contract with the state. For MCOs,
PIHPs or PAHPs that provide benefits
for one or more specific MH conditions
or SUDs under their contracts, the
proposed regulations would not require
the MCO, PIHP or PAHP to provide
benefits for additional MH conditions or
SUDs. The proposed regulations would
not affect the terms and conditions
relating to the amount, duration, or
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scope of MH/SUD benefits under the
MCO, PIHP or PAHP contract except as
specifically provided in § 438.905 and
§ 438.910 of the part.
M. ABP State Plan Requirements
(§ 440.395(d))
We are proposing to add a section in
part 440, subpart C that requires states
using ABPs to provide sufficient
information in ABP state plan
amendment requests to assure
compliance with MHPAEA. We will
review ABP state plan amendments to
ensure their compliance with applicable
federal statutes and regulations,
including MHPAEA, and EHB antidiscrimination provisions.
N. Increased Cost Exemption
As discussed above in this proposed
rule, we are not proposing an increased
cost exemption for MCOs, PIHPs or
PAHPs. As indicated previously, we are
proposing to change payment provisions
in part 438 to allow states to include the
cost of providing additional services or
removing or aligning treatment
limitations in their actuarially sound
rate methodology where such costs are
necessary to comply with the MHPAEA
parity provisions. These proposed
changes to the managed care rate setting
process give states and MCOs the ability
to fully comply with these mental
health parity requirements by giving
them flexibility to provide services
compliant with this proposed regulation
or remove or align service limits. We
believe that the Medicaid program
rather than the plan should bear the
costs of these changes. We propose to
provide states sufficient time to comply
with this regulation: States would have
up to 18 months after the date of the
publication of the final rule to comply
with the provisions of this regulation.
This will allow states to take the actions
to make the policy and budgetary
changes needed for compliance.
We are not proposing to permit states
delivering services through an ABP or
CHIP state plan to apply for a cost
exemption due to the mandatory
delivery of EHB and the requirement
that ABPs be compliant with MHPAEA.
O. Enforcement, Managed Care Rate
Setting (§ 438.6(e)) and Contract Review
and Approval (§ 438.6(n))
Medicaid and CHIP programs are
administered by states in partnership
with the federal government. States
have the responsibility of administering
the state plan in compliance with
federal law, so states will be required to
provide an assurance of compliance
with parity requirements when
submitting ABP or CHIP state plans. In
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addition, we propose to require the state
Medicaid agency to include contract
provisions requiring compliance with
parity requirements in all applicable
MCO, PIHP, and PAHP contracts. As
noted earlier in this proposed rule, we
believe that the intent of the parity
requirements implemented through
section 1932(b)(8) of the Act is to
provide access to services meeting
parity requirements to any enrollee of a
MCO in a state that provides some MH/
SUD benefits through its state plan,
regardless of the scope of benefits
covered through the MCO itself.
Therefore, states would have the
responsibility of ensuring that
appropriate contract language is
included in all MCO contracts and any
applicable PIHP or PAHP contracts
under proposed § 438.6(n). We expect
that states will include in the MCO,
PIHP and PAHP contracts a
methodology for the MCO, PIHP or
PAHP that will establish and
demonstrate compliance with parity
requirements (including, in some
instances, developing a crosswalk with
other entities that are part of the service
delivery system for enrollees). This
methodology would have to ensure that
all MCOs, PIHPs, or PAHPs included in
the delivery system work together to
ensure any MCO enrollee in a state is
provided access to a set of benefits that
meets the requirements of this rule
regardless of the MH/SUD benefits
provided by the MCO.
In accordance with section 1903(m) of
the Act, all MCO contracts must comply
with applicable requirements in section
1932 of the Act, which includes section
1932(b)(8) of the Act referencing
MHPAEA provisions in the PHS Act. As
we have discussed previously, if the
state provides some MH/SUD benefits
within its state plan, all MCO contracts
must include provisions requiring
compliance with parity requirements
because all MCO enrollees must be
provided access to MHPAEA compliant
services even if the MCO itself does not
provide the MH/SUD services.
Therefore, if it is not shown through the
MCO contract itself that an enrollee has
access to MH/SUD services in each
classification in which medical and
surgical services are provided that are
fully compliant with these parity
requirements, the state will be asked to
provide supplemental materials to the
MCO contract or an amendment to the
contract to demonstrate that the
standards proposed here are met.
Further, we may defer federal
financial participation (FFP) on
expenditures for the MCO contract to
the extent that the state has not
documented that the contract would
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comply with the requirements of section
1903(m) of the Act, including the
requirement that the MCO contract and
the MCO itself comply with applicable
provisions of section 1932 of the Act.
We understand that with the flexibility
afforded to states to provide MH/SUD
services across the delivery system there
may be services outside of the MCO
contract that may be needed to
demonstrate compliance. If this is the
case, the state would be required to
show how the MCO enrollees are
provided all the services needed to
comply with the requirements in this
proposed rule, and if the state cannot
provide evidence of this compliance
outside of the MCO contract, CMS
would have the ability to defer FFP on
the MCO contract amount until
evidence of compliance is provided.
Again, a state would have the option to
make changes to the MCO, PIHP or
PAHP contracts or make changes to its
Medicaid state plan to provide evidence
of compliance.
the Medicaid agency (or its designee) to
evaluate each beneficiary’s need for
admission into inpatient services in a
mental hospital. There is not a similar
requirement for the Medicaid agency to
review medical/surgical admissions to
other hospitals. States have indicated
that this regulation presents challenges
to achieving parity for inpatient services
rendered in a mental hospital. In
addition, these states have interpreted
the term ‘‘mental hospitals’’ to include
distinct part units of a general hospital,
as well as freestanding institutions of
mental diseases for children under the
age of 21 and adults 65 years and older.
This proposed rule would eliminate
current language from existing
regulations that require Medicaid
agencies to evaluate the need for these
admissions. A state could continue
these evaluations, but would need to
ensure that the standards and processes
were consistent with the provisions in
this regulation regarding
nonquantitative treatment limits.
P. Applicability and Compliance
(§ 438.930, § 440.395(d), § 457.496(f))
This proposed rule would be effective
based on the date of the publication of
the final rule. However, MCOs, PIHPs,
PAHPs and states would have 18
months to comply with the provisions
of this final regulation. Specifically:
• Managed care considerations:
Although the requirements of MHPAEA
have applied to Medicaid MCOs
through section 1932(b)(8) of the Act
since MHPAEA was passed in 2008,
Medicaid MCOs, PIHPs or PAHPs
would have to comply with the specific
provisions in the proposed rule in
contract years starting 18 months after
the publication of the final rule. New
managed care contracts, or amendments,
would be required to be compliant in
most cases.
• ABPs: Although the requirements of
MHPAEA have applied since January 1,
2014, states would have 18 months after
the publication of the final rule to have
the ABPs compliant with provisions in
this proposed rule.
• CHIP: The requirements of
MHPAEA have applied for CHIP since
October 1, 2009, however, states would
have 18 months after the publication
date of the final rule for CHIP plans to
be compliant with provisions in this
proposed rule.
IV. Collection of Information
Requirements
Under the Paperwork Reduction Act
of 1995 (PRA), we are required to
provide 60-day notice in the Federal
Register and solicit public comment
before a collection of information
requirement is submitted to the Office of
Management and Budget (OMB) for
review and approval. To fairly evaluate
whether an information collection
should be approved by OMB, section
3506(c)(2)(A) of the PRA requires that
we solicit comment on the following
issues:
• The need for the information
collection and its usefulness in carrying
out the proper functions of our agency.
• The accuracy of our estimate of the
information collection burden.
• The quality, utility, and clarity of
the information to be collected.
• Recommendations to minimize the
information collection burden on the
affected public, including automated
collection techniques.
We are soliciting public comment on
each of the section 3506(c)(2)(A)–
required issues for the following
information collection requirements.
Q. Utilization Management
Current Medicaid regulations
prescribe requirements for the control of
utilization management of inpatient
services in mental hospitals (§ 456.171).
These regulations specifically require
medical and other professionals within
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Sfmt 4702
A. Wage Estimates
To derive average costs, we used data
from the U.S. Bureau of Labor Statistics’
May 2013 National Occupational
Employment and Wage Estimates for all
salary estimates (www.bls.gov/oes/
current/oes_nat.htm). In this regard,
Table 2 presents the mean hourly wage,
the cost of fringe benefits (calculated at
100 percent of salary), and the adjusted
hourly wage.
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TABLE 2—PROPOSED HOURLY WAGE ESTIMATES
Occupation
code
Occupation title
Business Operations Specialists .............................................................
Medical Secretaries .................................................................................
We propose to adjust all our employee
hourly wage estimates by a factor of 100
percent. This is necessarily a rough
adjustment, both because fringe benefits
and overhead costs vary significantly
from employer to employer, and
because methods of estimating these
costs vary widely from study to study.
Nonetheless, there is no practical
alternative and we believe that doubling
the hourly wage to estimate total cost is
a reasonably accurate estimation
method.
B. Proposed Information Collection
Requirements (ICRs)
1. ICRs Regarding the Availability of
Information and the Criteria for Medical
Necessity Determinations (§§ 438.915(a),
440.395(c)(1), and 457.496(e)(1))
Proposed §§ 438.915(a), 440.395(c)(1),
and 457.496(e)(1) would require that the
medical necessity determination criteria
used by regulated entities for MH/SUD
benefits be made available to potential
participants, beneficiaries, or
contracting providers upon request.
In the November 13, 2013, MHPAEA
final rule, the regulatory impact analysis
(78 FR 68253 through 68266) quantified
the costs to disclose medical necessity
criteria. For consistency and
comparability, we are using the same
method for determining this rule’s
disclosure costs, with adjustments to
Mean hourly
wage
(per hr)
13–1000
43–6013
account for Medicaid MCOs, ABP and
CHIP and the population covered.
Labor Costs for Medical Necessity
Disclosures. We are unable to estimate
with certainty the number of requests
for medical necessity criteria
disclosures that will be received by
regulated entities. However, the
MHPAEA final rule’s impact analysis
did set forth assumptions that we
believe are relevant for calculating costs
for the Medicaid and CHIP program. In
that impact analysis, it was assumed
that each plan would receive three
medical necessity criteria disclosure
requests for every 1,000 beneficiaries.
This assumption equated to 0.003
requests per enrollee. This assumption
was applied to the number of enrollees
enrolled in Medicaid (33.1 million),
ABP (8.7 million) and CHIP (5.7
million) to project the number of
expected requests: 99,328 for MCOs;
26,100 for ABPs; and 16,975 for CHIP.
To estimate the time it will take a
medical staff to respond to each request,
we used the same assumption as the
MHPAEA final rule. Specifically, we
assumed that it took a staff member (in
this case, a Medical Secretary) 5
minutes to respond to the request. In
this proposed rule, this results in a total
annual burden of 11,867 hours for
Medicaid and CHIP programs.
The adjusted hourly rate for Medical
Secretaries responding to these requests
is estimated to be $31.86/hour.
Fringe benefit
(at 100%)
(per hr)
$33.19
15.93
$33.19
15.93
Adjusted
hourly wage
(per hr)
$66.38
31.86
Multiplying the total annual burden of
11,867 hours by the hourly wage, yields
an associated equivalent cost of about
$378,083 for all requests to Medicaid
and CHIP programs.
Mailing and Supply Costs. The
MHPAEA final rule’s impact analysis
estimated that 38 percent of the requests
would be delivered electronically with
de minimis cost. The remaining requests
would require materials, printing, and
postage amounting to approximately 66
cents per request. We believe that the
same mailing and supply costs per
request will apply to the disclosure
requirements of this proposed rule.
Table 3 displays the added burden
estimates, nationally and per program,
for Medicaid MCOs and CHIP to comply
with the proposed medical necessity
determination criteria’s disclosure
procedures. The number of enrollees for
MCOs/HIOs is based on the CMS
national breakout as of July 2012 while
the number for ABPs is based on the
estimated enrollment growth due to
Medicaid expansion (‘‘National Health
Expenditure Projections 2012–2022,’’
CMS). CHIP enrollment is based on
Medicaid and Children’s Health
Insurance Program (CHIP) Payment and
Access Commission’s 2014 estimates.
The proposed requirements and burden
will be submitted to OMB for approval
under control number 0938–New (CMS–
10556).
TABLE 3—NATIONAL AND PER PROGRAM BURDEN FOR THE PROPOSED MEDICAL NECESSITY DETERMINATION CRITERIA’S
DISCLOSURE REQUIREMENTS
Number of
expected requests
(.003 requests per
enrollee)
Time
(@5 min/
response
(hr)
Mailing and
supply cost
($) @$.66/mailing
MCO/HIO .................
ABP ..........................
CHIP .........................
33,109,462
8,700,000
5,658,460
99,328
26,100
16,975
8,277
2,175
1,415
263,705
69,296
45,082
61,584
16,182
10,525
40,645
10,680
6,947
304,350
79,976
52,029
Total ..................
ebenthall on DSK5SPTVN1PROD with PROPOSALS2
Plan type
47,467,922
142,403
11,867
378,083
88,291
58,272
436,355
2. ICRs Regarding the Availability of
Information and Reason for Any Denial
(§§ 438.915(b), 440.395(c)(2), and
457.496(e)(2))
MHPAEA requires that the reason for
any denial—under a group health plan
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21:23 Apr 09, 2015
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Labor cost
($) @$31.86/hr
Mailed
responses
(62% of
expected
enrollees)
Number of
enrollees
or health insurance coverage—of
reimbursement or payment for MH/SUD
benefits must be made available (upon
request or as otherwise required) by the
plan administrator (or the health
insurance issuer) to the beneficiary in
PO 00000
Frm 00018
Fmt 4701
Sfmt 4702
Total cost
($)
accordance with MHPAEA regulations
(45 CFR 146.136(d)(2)).
For the proposed provisions, this
proposed rule would not impose any
new or revised third-party disclosure
requirements, and therefore, does not
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Federal Register / Vol. 80, No. 69 / Friday, April 10, 2015 / Proposed Rules
require additional OMB review under
the authority of the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501
et seq.). The proposed text only clarifies
the expectations for disclosing
information concerning the denial of
reimbursement or payment for MH/SUD
benefits. We believe that the proposed
requirements are already met by
complying with existing disclosure
requirements in part 438, and therefore,
do not create any requirements or
burden beyond what is currently
approved by OMB under control
number 0938–1080 (CMS–10307). We
also believe that the proposed
requirements are already met for CHIP
by complying with existing notification
and disclosure requirements in
§§ 457.110 and 457.1130, and therefore,
do not create any requirements or
burden beyond what is currently
approved by OMB under control
number 0938–1148 (CMS–10398 #34)
(formerly, CMS–R–211, control number
0938–0707). Furthermore, the proposed
provisions do not create any new or
revised third-party disclosure
requirements for ABPs beyond what is
currently approved by OMB under
control number 0938–1188 (CMS–
10434).
3. ICRs Regarding Parity in Mental
Health and Substance Use Disorder
Benefits Under § 440.395 (Alternative
Benefit Plan) and § 457.496 (CHIP State
Plan)
The ABP State Plan Application is
employed by states to identify benefits
offered to Medicaid beneficiaries
receiving services under section 1937 of
the Act. The application requires that
states identify the MH/SUD services that
will be offered under the plan. The plan
also collects information on any
limitations (quantitative and
nonquantitative treatment limitations)
and financial requirements across all
benefit categories (including all
medical/surgical services). For states
needing to come into compliance with
MHPAEA, the state is required to
submit an ABP SPA amendment.
The parity requirements proposed in
§ 440.395 would not impose any new or
revised reporting, recordkeeping, or
third-party disclosure requirements, and
therefore, do not require additional
OMB review under the authority of the
Paperwork Reduction Act of 1995 (44
U.S.C. 3501 et seq.). The proposed
provisions only clarify parity
requirements and the meaning of terms
for ABPs and do not create any
information collection requirements or
burden beyond what is currently
approved by OMB under control
number 0938–1188 (CMS–10434).
The single streamlined application is
employed by states to determine
Medicaid or CHIP eligibility. It is not
used to determine benefits of any kind.
However, states are required to review
their respective CHIP state plans to
determine if they are in compliance
with MHPAEA. For states needing to
come into compliance, the state must
submit a CHIP SPA amendment.
The parity requirements proposed in
§ 457.496 would not impose any new or
revised reporting, recordkeeping, or
third-party disclosure requirements, and
therefore, do not require additional
OMB review under the authority of the
Paperwork Reduction Act of 1995 (44
U.S.C. 3501 et seq.). The information
collection requirements and burden are
approved by OMB under control
number 0938–1148 (CMS–10398 #34)
(formerly CMS–R–211, control number
0938–0707).
4. ICRs Regarding State Plan
Amendments
While this proposed rule discusses a
number of optional and mandatory SPA
amendments, this proposed rule would
not impose any new or revised SPAspecific reporting, recordkeeping, or
third-party disclosure requirements and
therefore, does not require additional
OMB review under the authority of the
Paperwork Reduction Act of 1995 (44
U.S.C. 3501 et seq.). The currently
approved ABP SPA application was
designed to capture the MHPAEA final
rule classifications and identify if there
are specific treatment limitations or
financial requirements. The information
collection requirements and burden are
approved by OMB under control
number 0938–1188 (CMS–10434).
5. ICRs Regarding State Health Official
(SHO) Letters SHO #09–014 (November
4, 2009) and SHO #13–001 (January 16,
2013)
The January 2013 SHO letter
addressed the application of the
MHPAEA requirements in Medicaid and
expanded upon the CMS’ CHIP
guidance provided in the November
2009 letter regarding section 502 of
CHIPRA. The letters are discussed in
section II.A. of this proposed rule as
background. This proposed rule does
not propose any new or revised
reporting, recordkeeping, or third-party
disclosure requirements pertaining to
either of the letters. Consequently, the
PRA does not apply.
6. ICRs Regarding Contract
Requirements (§ 438.6(n))
In § 438.6(n), states would be required
to include contract provisions in all
applicable MCO, PIHP, and PAHP
contracts to comply with part 438,
subpart K. We estimate a one-time state
burden of 30 minutes for a Business
Operations Specialist at $66.38/hour to
amend each contract with the applicable
requirements. In aggregate, we estimate
301 hours (602 contracts × 0.5 hours)
and $16,049 (301 hours × $53.32/hr).
The proposed requirements and burden
will be submitted to OMB for approval
under control number 0938–New (CMS–
10556).
C. Summary of Proposed Burden
Estimates
TABLE 4—PROPOSED ANNUAL RECORDKEEPING AND REPORTING REQUIREMENTS
Burden per
response
(min)
Total annual
burden
(hours)
Hourly labor
cost of
reporting
($/hr)
Total labor
cost of
reporting
($)
Total capital/
maintenance
costs
($)
142,403
5
11,867
31.86
378,082
40,645
436,355
36
602
30
301
66.38
19,980
0
19,980
638
143,005
35
12,168
......................
398,062
40,645
456,335
OMB Control
No.
(CMS ID No.)
438.915(a), 440.395(c)(1),
and 457.496(e)(1).
ebenthall on DSK5SPTVN1PROD with PROPOSALS2
Regulation Section(s)
under Title 42 of the CFR
602
438.6(n) .............................
0938–New
(CMS–
10556).
......................
Total ...........................
......................
Respondents
D. Submission of PRA-Related
Comments
We have submitted a copy of this
proposed rule to OMB for its review of
VerDate Sep<11>2014
21:23 Apr 09, 2015
Jkt 235001
Total
responses
the rule’s information collection
requirements. These requirements are
not effective until they have been
approved by OMB.
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Frm 00019
Fmt 4701
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Total cost
($)
To obtain copies of the supporting
statement and any related forms for the
proposed paperwork collections
referenced above, access CMS’ Web site
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at https://www.cms.hhs.gov/
PaperworkReductionActof1995; email
your request, including your address,
phone number, OMB control number,
and CMS document identifier, to
Paperwork@cms.hhs.gov; or call the
Reports Clearance Office at 410–786–
1326.
We invite public comments on these
potential information collection
requirements. If you comment on these
information collection and
recordkeeping requirements, please
submit your comments electronically as
specified in the ADDRESSES section of
this proposed rule. Please include
‘‘CMS–2333–P,’’ the ICR’s OMB control
number, and the CMS document ID
number in your comment.
PRA-specific comments must be
received by June 9, 2015.
V. Response to Comments
Because of the large number of public
comments we normally receive on
Federal Register documents, we are not
able to acknowledge or respond to them
individually. We will consider all
comments we receive by the date and
time specified in the DATES section of
this preamble, and, when we proceed
with a subsequent document, we will
respond to the comments in the
preamble to that document.
VI. Regulatory Impact Analysis
ebenthall on DSK5SPTVN1PROD with PROPOSALS2
A. Statement of Need
This proposed rule addresses the
applicability of the requirements under
the MHPAEA to Medicaid non-managed
care benchmark and benchmarkequivalent plans (referred to in this
proposed rule as Medicaid ABPs) as
described in section 1937 of the Act,
CHIP under title XXI of the Act, and
Medicaid MCOs as described in section
1932 of the Act.
In 2013, we released a SHO letter that
provided guidance to states regarding
the implementation of requirements
under MHPAEA to Medicaid benchmark
and benchmark-equivalent plans
(referred to in this letter as ABPs), CHIP,
and Medicaid MCOs.
Final regulations implementing
MHPAEA were published by HHS, the
Department of Labor, and the
Department of Treasury in the
November 13, 2013 Federal Register.
The MHPAEA final regulations do not
apply to Medicaid MCOs, ABPs, or
CHIP state plans.
We believe that in absence of a
regulation specific to the application of
the parity requirements under MHPAEA
to Medicaid and CHIP, states would not
be compelled to implement the
necessary changes to these programs,
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21:23 Apr 09, 2015
Jkt 235001
resulting in an inequity between
beneficiaries who have MH/SUD
conditions in the commercial market
(including the state and federal
marketplace) and Medicaid and CHIP.
Even for states that are attempting to
comply with parity requirements under
MHPAEA, the absence of regulation
could lead to inconsistent state-specific
policies based on a state’s interpretation
of how policies set forth in the
MHPAEA final regulations might apply
in the Medicaid and CHIP contexts.
This proposed rule provides the
specificity and clarity needed to
effectively implement the policies set
forth by MHPAEA and prevent the use
of prohibited limits on coverage,
including nonquantitative treatment
limitations that disproportionately limit
coverage of treatment for MH/SUD
conditions. The Department’s
assessment of the expected economic
effects of this proposed rule is discussed
in detail below.
B. Overall Impact
We have examined the impacts of this
rule as required by Executive Order
12866 on Regulatory Planning and
Review (September 30, 1993), Executive
Order 13563 on Improving Regulation
and Regulatory Review (January 18,
2011), the Regulatory Flexibility Act
(RFA) (September 19, 1980, Pub. L. 96–
354), section 1102(b) of the Act, section
202 of the Unfunded Mandates Reform
Act of 1995 (March 22, 1995; Pub. L.
104–4), Executive Order 13132 on
Federalism (August 4, 1999) and the
Congressional Review Act (5 U.S.C.
804(2).
Executive Orders 12866 and 13563
direct agencies to assess all costs and
benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributive impacts, and
equity). Section 3(f) of Executive Order
12866 defines a ‘‘significant regulatory
action’’ as an action that is likely to
result in a rule: (1) (Having an annual
effect on the economy of $100 million
or more in any 1 year, or adversely and
materially affecting a sector of the
economy, productivity, competition,
jobs, the environment, public health or
safety, or state, local or tribal
governments or communities (also
referred to as ‘‘economically
significant’’); (2) creating a serious
inconsistency or otherwise interfering
with an action taken or planned by
another agency; (3) materially altering
the budgetary impacts of entitlement
grants, user fees, or loan programs or the
PO 00000
Frm 00020
Fmt 4701
Sfmt 4702
rights and obligations of recipients
thereof; or (4) raising novel legal or
policy issues arising out of legal
mandates, the President’s priorities, or
the principles set forth in the Executive
Order.
A regulatory impact analysis (RIA)
must be prepared for major rules with
economically significant effects ($100
million or more in any 1 year). We
estimate that this rulemaking is
‘‘economically significant’’ as measured
by the $100 million threshold, and
hence, also a major rule under the
Congressional Review Act. Accordingly,
we have prepared a RIA, which to the
best of our ability presents the costs and
benefits of the rulemaking.
Because the application of parity
requirements to ABPs; MCOs and PIHPs
and PAHPs providing services to MCO
enrollees; and the CHIP is likely to have
an effect on the economy of $100
million or more in any given year, this
proposed rule is economically
significant within the meaning of
section 3(f)(1) of the Executive Order As
elaborated below, we believe the
benefits of the rule justify the costs.
C. Anticipated Effects
This proposed rule would benefit
approximately 21.6 million Medicaid
beneficiaries and 850,000 CHIP
beneficiaries in 2015, based on service
utilization estimates from 2012
Medicaid and CHIP enrollment. We
expect that a significant benefit
associated with the application of the
parity requirements under MHPAEA
and these proposed regulations will be
derived from applying parity
requirements to the quantitative
treatment limits such as annual or
lifetime day or visit limits. Applying
parity requirements to visit or stay
limits will help ensure that vulnerable
populations—those accessing
substantial amounts of MH/SUD
services—have better access to
appropriate care. Among adults aged 18
through 64 with Medicaid coverage,
approximately 9.6 percent have a
serious mental illness, 30.5 percent have
any mental illness, and 11.9 percent
have a substance use disorder.7 Among
CHIP beneficiaries, approximately 8
percent of children experience serious
behavioral or emotional difficulties.8
7 Calculations were based on the Substance Abuse
and Mental Health Services Administration
(SAMHSA) National Survey of Drug Use and
Health.
8 Pastor PN, Reuben CA, Duran CR. Identifying
Emotional And Behavioral Problems in Children
Aged 4–17 Years: United States, 2001–2007.
National Health Statistics Report No. 48.
Hyattsville, MD: National Center for Health
Statistics; 2012.
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Evidence-based treatment for severe
and persistent mental illness, and for
substance use disorders, often requires
prolonged (possibly lifetime) treatment
that consists of pharmacotherapy,
supportive counseling, and often
rehabilitative services. Individuals with
severe MH/SUD conditions often
quickly exhaust their benefits under
Medicaid managed care. In addition,
CHIP programs may restrict coverage,
such as covering only 40 hours of
psychotherapy or 5 days of
detoxification per year. These coverage
restrictions often result in people
forgoing outpatient treatment and a
higher likelihood of non-adherence to
treatment regimes, which produce poor
health and welfare outcomes and create
the potential for increased
hospitalization costs.9 10 For those with
substance use disorders, treatment
retention is of key importance when
assessing outcomes, where those who
stayed in treatment longer had more
success in decreasing their substance
use.11 12 In 2011, approximately 8
percent of adults with Medicaid
coverage reported at least one
occurrence in the past 12 months of
feeling the need for mental health or
substance use treatment or counseling
but not receiving it.13 Between 2007 and
2009, approximately 72 percent of
children in Medicaid with a potential
mental health need did not receive
mental health services.14 The most
frequently cited reasons for not seeking
MH/SUD treatment are cost and/or a
lack of health insurance coverage, low
perceived need, stigma, or structural
barriers (for example, no transportation,
did not know where to go).15 16
ebenthall on DSK5SPTVN1PROD with PROPOSALS2
9 Medication-Assisted
Treatment for Opioid
Addiction in Opioid Treatment Programs. Rockville
(MD): Substance Abuse and Mental Health Services
Administration (US); 2005. Treatment Improvement
Protocol (TIP) Series, No. 43.
10 Trivedi AN, Swaminathan S, Mor V. Insurance
parity and the use of outpatient mental health care
following a psychiatric hospitalization. JAMA. 2008
Dec 24;300(24):2879–85.
11 Simpson D D, Joe G W, Rowan-Szal G. Drug
abuse treatment retention and process effects on
follow-up outcomes. Drug and Alcohol
Dependence. 1997b;47(3):227–235.
12 Hartel D M, Schoenbaum E E. Methadone
treatment protects against HIV infection: Two
decades of experience in the Bronx, New York City.
Public Health Reports. 1998;113(Suppl. 1):107–115.
13 Substance Abuse and Mental Health Services
Administration (SAMHSA). Behavioral Health
United States 2012. HHS Publication No. (SMA)13–
4797. Rockville, MD: SAMHSA; 2013.
14 GAO. Children’s Mental Health: Concerns
Remain about Appropriate Services for Children in
Medicaid and Foster Care. December 2012. https://
www.gao.gov/assets/660/650716.pdf. Accessed June
27, 2014.
15 Affordability Most Frequent Reason for Not
Receiving Mental Health Services. Rockville (MD):
Substance Abuse and Mental Health Services
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21:23 Apr 09, 2015
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Removing quantitative limits on
treatment may be particularly beneficial
for individuals with severe mental
illness and substance use disorders who
may need to receive more services than
the average individual.17 18 Improved
coverage may also reduce the financial
burden on individuals and families,
particularly those families of children
mental health service needs.19 Finally,
improving coverage of MH/SUD
treatment may also improve
employment, productivity, and earnings
among those with these conditions.20
Wang, et al, found that implementing a
care program for those identified with
depression yielded not only enhanced
clinical outcomes relative to depression,
but also produced positive outcomes
relative to decreased sick leave and
increased productivity.21 Similarly, the
State of Washington implemented a
substance abuse treatment program for
those receiving Aid to Families with
Dependent Children (AFDC), and found
that access to treatment increased both
earnings for those with jobs, and
increased rates of employment.22
Application of parity requirements
may also result in changes to payers’
utilization management approaches,
specifically when requiring
preauthorization of mental health
services. It was found that even when
approval for continued access to mental
health services was in essence
guaranteed, patients sought out less
treatment, perhaps believing they
Administration (US); 2013. The NSDUH Report
Data Spotlight.
16 Results from the 2012 National Survey on Drug
Use and Health: Summary of National Findings and
Detailed Tables. Rockville (MD): Substance Abuse
and Mental Health Services Administration (US);
2013.
17 Zuvekas SH, Banthin JS, Selden TM. How
would mental health parity affect the marginal price
of care? Health Serv Res. 2001 Feb;35(6):1207–27.
Review.
18 McConnell KJ. The effect of parity on
expenditures for individuals with severe mental
illness. Health Serv Res. 2013 Oct;48(5):1634–52.
doi: 10.1111/1475–6773.12058. Epub 2013 Apr 5.
19 Barry CL, Busch SH. Do state parity laws
reduce the financial burden on families of children
with mental health care needs? Health Serv Res.
2007 Jun;42(3 Pt 1):1061–84.
20 Dunigan R, Acevedo A, Campbell K, Garnick
DW, Horgan CM, Huber A, Lee MT, Panas L, Ritter
GA. Engagement in outpatient substance abuse
treatment and employment outcomes. J Behav
Health Serv Res. 2014 Jan;41(1):20–36. doi:
10.1007/s11414-013-9334–2
21 Wang P, Simon GE, Avorn J, Azocar F, Ludman
EJ, McCulloch J, Petukhova MZ, Kessler RC.
Telephone screening, outreach and care
management for depressed workers and impact on
clinical and work productivity outcomes. JAMA
2007;298(12):1401–11.
22 Wickizer TM, Campbell K, Krupski A, Stark K.
Employment outcomes among AFDC recipients
treated for substance abuse in Washington State.
Milbank Q. 2000;78(4):585–608, iv. PubMed PMID:
11191450.
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19437
‘‘should not’’ access further needed
treatment.23 Hodgkin, et al, found that
removal of utilization management
approaches (including preauthorization
for the first set of mental health visits)
increased use of mental health
services.24 Cuffel, et al, note that there
are various reasons for why an approach
like preauthorization can impact
provider behavior relative to mental
health service. Providers may believe
that the preauthorization process is too
laborious and not worth their time; they
may fear that those reviewing the
request will penalize them for
submitting a preauthorization request;
they may assume that the set limits on
services preclude additional requests for
services; providers may believe that the
initial limits are in place as an implied
recommendation towards shorter
treatment cycles; and some may believe
requests for preauthorization simply
will not be approved at all.25 Liu, et al,
found a significant correlation between
preauthorization processes and the
probability of ending mental health
treatment prematurely.26
Application of parity requirements
under MHPAEA may also have benefits
in terms of reduced medical costs.
Mental health and physical health are
interrelated, and individuals with poor
mental health are likely to have physical
health problems as well.27 28 29 Increased
access to and utilization of MH/SUD
benefits may result in a reduction of
medical and surgical costs for
individuals with mental health
conditions and substance use disorders
(so called ‘‘medical cost offsets’’). For
example, after receiving treatment,
individuals with substance use
23 Liu, X., R. Sturm, and B. J. Cuffel. 2000. ‘‘The
Impact of Prior Authorization on Outpatient
Utilization in Managed Behavioral Health Plans.’’
Medical Care Research Review 57: 182–95.
24 Hodgkin D, Merrick EL, Horgan CM, Garnick
DW, McLaughlin TJ. ‘‘Does Type of Gatekeeping
Model Affect Access to Outpatient Specialty Mental
Health Services?.’’ Health Services Research 42. 1
(2007): 104–123.
25 Cuffel, B., McCulloch, J., Wade, R., Tam, L.,
Brown-Mitchell, R., & Goldman, W. (2000). Patients’
and providers’ perceptions of outpatient treatment
termination in a managed behavioral health
organization. Psychiatric Services, 51(4), 469–473.
26 Liu, X., Sturm, R., Cuffel, B. (2000) The impact
of prior authorization on outpatient utilization in
managed behavioral health plans. Med Care Res
Rev. Jun;57(2):182–95.
27 Druss BG, Walker ER. Mental disorders and
medical comorbidity. Synth Proj Res Synth Rep.
2011 Feb;(21):1–26. Review.
28 National Institute on Drug Abuse. (December
2012). Medical Consequences of Drug Abuse.
Retrieved from https://www.drugabuse.gov/relatedtopics/medical-consequences-drug-abuse.
29 Bouchery, E. E., Harwood, H. J., Sacks, J. J.,
Simon, C. J., & Brewer, R. D. (2011). Economic costs
of excessive alcohol consumption in the US, 2006.
American Journal of Preventive Medicine, 41(5),
516–524.
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disorders may experience fewer
hospitalizations and emergency room
visits stemming from unintended
injuries such as accidents and drug
overdose. The evidence that treatment
results in medical care offsets is stronger
for substance abuse treatment than for
mental health treatment. For example,
an evaluation on the expansion of
substance abuse treatment in
Washington State’s Medicaid program
found per member per month savings of
$160 to $385 depending on the welfare
cohort.30 Another study done on welfare
clients in Washington State found that
those accessing substance use disorder
treatment had $2500 less in medical
costs than those who did not access
treatment. This estimated savings
equaled the cost of SUD treatment for
individuals accessing SUD treatment.31
While a similar reduction in medical
costs may be expected from mental
health treatment, most empirical studies
have not found a significant medical
cost offset from mental health
treatment.32 33
1. Costs
ebenthall on DSK5SPTVN1PROD with PROPOSALS2
a. Cost Associated With Increased
Utilization of MH/SUD Benefits
A primary objective of Congress in
enacting MHPAEA was to eliminate
barriers that impeded access to and
utilization of MH/SUD benefits. Cost
increases and increases in capitated
rates may occur as a result of increased
access and utilization from the
application of parity requirements and
these proposed regulations, but the
evidence suggests that any increases
will not be large. The impact of parity
requirements will depend on the extent
to which MCOs, ABPs, and CHIP plans
lack benefits in some classifications or
manage these benefits inconsistent with
such parity requirements.
In the April 30, 2010 final rule on
State Flexibility for Medicaid Benefit
Packages (75 FR 23068), the
assumptions utilized in modeling the
estimated economic impact of the
associated provisions took into account
30 Wickizer, T. M., Mancuso, D., & Huber, A.
(2012). Evaluation of an innovative Medicaid health
policy initiative to expand substance abuse
treatment in Washington State. Medical Care
Research and Review, 69(5), 540–559.
31 Wickizer, T. M., Krupski, A., Stark, K. D.,
Mancuso, D., & Campbell, K. (2006). The effect of
substance abuse treatment on Medicaid
expenditures among general assistance welfare
clients in Washington State. Milbank
Quarterly,84(3), 555–576.
32 Simon GE, Katzelnick DJ. Depression, use of
medical services and cost-offset effects. J
Psychosom Res. 1997 Apr;42(4):333–44. Review.
33 Sturm R. Economic grand rounds: The myth of
medical cost offset. PsychiatryServ. 2001
Jun;52(6):738–40.
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the costs of the benefit package for the
new adult group served through ABPs.
Coverage of these benefits was already
accounted for in the April 30, 2010 final
rule, and therefore, does not need to be
repeated here. Because we approved
ABPs only after ensuring compliance
with MHPAEA, we project that this
proposed regulation will result in no
additional costs to ABPs.
(1) Effect of Removing Non-Compliant
Quantitative Treatment Limitations
A review of Medicaid managed care
benefits in all 50 states and the District
of Columbia revealed that a subset of
states (18 states) had Medicaid managed
care plans that imposed quantitative
treatment limits on outpatient visits,
inpatient stays, and intermediate
services (for example, intensive
outpatient treatment). As indicated in
the preamble, some of these quantitative
treatment limits are a result of what is
currently in a state’s Medicaid plan.
A review of CHIP plans indicated that
most are already compliant with
MHPAEA. CHIP plans that include
Medicaid EPSDT are already required to
cover mental health and substance
abuse services as needed and they are
deemed compliant with MHPAEA
parity requirements for financial
requirements and treatment limitations.
It is not permissible to apply annual or
lifetime limits to the EPSDT benefit.
CHIP stand-alone programs are also
already compliant with MHPAEA
because of changes to treatment
limitations for both mental health or
substance use disorder benefits and
medical and surgical benefits required
under the Affordable Care Act.34 Among
CHIP plans that are Medicaid expansion
plans, we found only one to have an
explicit quantitative limit.35
We conducted an analysis to
determine how the use of services might
increase if quantitative limits on
Medicaid MCO and CHIP programs
were eliminated. Where quantitative
limits exist that are non-compliant with
parity requirements, states also have the
option to align these limits for MH/SUD
and medical/surgical benefits consistent
with the provisions of this proposed
rule. However, to estimate the highest
possible cost impact that could be
expected, we simulated the effect of
34 Sarata AK. Mental health parity and the Patient
Protection and Affordable Care Act of 2010.
Washington, DC: Congressional Research Service;
2011.
35 McConnell KJ, Gast SH, Ridgely MS, Wallace
N, Jacuzzi N, Rieckmann T, McFarland BH,
McCarty D. Behavioral health insurance parity:
Does Oregon’s experience presage the national
experience with the Mental Health Parity and
Addiction Equity Act? Am J Psychiatry 2012
Jan;169(1):31–8.
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removing visit and day limits in states
with limits for treatment users by
anticipating that utilization would
increase for beneficiaries who were near
or exceeded current limits to equal
utilization patterns observed in states
without limits for Medicaid managed
care beneficiaries. This simulation
indicated the maximum impact of
removing quantitative day and visit
limits on MH/SUD services by Medicaid
MCOs to be $103 million nationwide
(including federal and state costs) in
undiscounted dollars in 2015. Using a
similar approach, we estimated the
maximum impact of removing
quantitative limits on CHIP
expenditures to be $39.1 million in
undiscounted dollars in 2015.
However, these estimates are the
largest possible cost impacts and the
actual impact is likely to be lower. One
reason is that some states with
quantitative limits may have
mechanisms in place for beneficiaries to
obtain hospital days or outpatient visits
beyond the state’s limit if such care is
determined to be medically necessary.
In practice, we anticipate a potentially
lower impact than estimated currently,
given that quantitative limits may
already be routinely exceeded. We
found that in most of the 18 states with
visit limits, a number of recipients (for
example, 5 to 20 percent) used services
beyond the treatment limit, suggesting
that exceptions to the quantitative limits
may occur in these states. This does not
appear to be the case in all states,
because in a few states with visit limits
ranging from approximately 24 to 40
visits, only 1 or 2 percent of recipients
exceeded the limit.
There are no studies to date on how
the application of federal parity
requirements affects Medicaid spending.
However information from states that
have passed state-specific parity
legislation (which includes application
to Medicaid) provides additional
support for the projected impact of these
proposed regulations on service
utilization and spending. For instance,
an evaluation of the Oregon parity law
found no significant increases in
aggregate behavioral health spending or
in the percent of individuals using
behavioral health services associated
with its implementation.36 The
evaluators surmised that the flexibility
in quantitative limits prior to the parity
law may be one reason that the
36 McConnell KJ, Gast SH, Ridgely MS, Wallace
N, Jacuzzi N, Rieckmann T, McFarland BH,
McCarty D. Behavioral health insurance parity:
Does Oregon’s experience presage the national
experience with the Mental Health Parity and
Addiction Equity Act? Am J Psychiatry 2012
Jan;169(1):31–8.
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implementation of parity did not lead to
large increases in spending.
Specifically, they found that prior to the
implementation of the state parity law,
approximately 5 percent of beneficiaries
with any behavioral health visits
exceeded the specified limits of that
plan.
Vermont’s parity law is also very
similar to MHPAEA. A study of
Vermont’s parity law found that the
share of spending on mental and
substance use disorders increased only
slightly, from 2.30 percent to 2.47
percent of total spending for one health
plan.37
Finally, a recent evaluation of the
effect of MHPAEA on the commercial
market revealed a modest increase in
spending on substance use disorder
treatment per enrollee ($9.99, 95 percent
CI: 2.54, 18.21), but no significant
change in the percent of individuals
using substance use disorder services.38
(2) Effect of Classification of Services
Requirements
This proposed rule requires that if the
state provides for MH/SUD services
under the state plan, MH/SUD services
must be provided to MCO enrollees in
every classification in which medical/
surgical benefits are provided. After
reviewing the MH/SUD services
provided under Medicaid managed care
plans, we identified only two states
providing for MH/SUD services under
the state plan in which MH/SUD
services were excluded from a
classification in which medical/surgical
benefits are provided. In both states, the
excluded services were substance abuse
inpatient services. For the purposes of
this analysis, we assumed that
substance abuse inpatient services
would need to be included to the extent
that they were provided in a distinct
part or unit of a general hospital or
facility with 16 or fewer beds. Using
data on current use of Medicaid
substance use disorder inpatient
services and the cost of those services
from Medicaid claims data, we
estimated that the additional coverage
for these services would have led to an
increase of $11.7 million nationwide in
undiscounted dollars in 2012.
Table 5 displays the total costs of
removing non-compliant QTLs by
service and meeting classification of
services requirements in 2012.
TABLE 5—DETAILS OF ESTIMATED COSTS OF MEETING QTL AND CLASSIFICATION OF SERVICES REQUIREMENTS IN 2012
Inpatient
Outpatient
Intermediate
Administrative
Total
Mental Health—Medicaid ($million/year)
$19.8 ................................................................................................
$62.3
$0
$0.3
$82.4
0.4
0.04
31.2
0
0
11.7
0
0
0
............................
125.3
Mental Health—CHIP ($million/year)
0 .......................................................................................................
30.8
Substance Use Disorder—Medicaid ($million/year)
11.7 ..................................................................................................
0
Substance Use Disorder—CHIP ($million/year)
0 .......................................................................................................
0
Total Costs of Removing Quantitative Limits in 2012 ($million/year)
............................
............................
Note: Administrative costs are listed once for Medicaid and CHIP because the expense is all-inclusive for each program; costs are not broken
down by service.
ebenthall on DSK5SPTVN1PROD with PROPOSALS2
Costs for complying with parity rules
for each service category were estimated
based on a simulation of additional
utilization states may incur as a result
of removing quantitative treatment
limits. For the analysis of intermediate
services, we examined limits on partial
hospitalization and intensive outpatient
care.
These figures are calculated based on
2012 Medicaid and CHIP expenditures,
which equate to approximately $125.3
million in additional costs as a result of
parity compliance. To determine the
percent impact to Medicaid
expenditures in 2012, we divided
$125.3 million (the additional costs of
increased utilization) by $408.8 billion
(total Medicaid expenditures). Based on
this calculation, Medicaid expenditures
would increase by 0.03 percent each
year. As total Medicaid expenditures
increase over time, the cost impact of
mental health parity is expected to rise
proportionally. Therefore, given that
Medicaid expenditures overall are
projected to equal approximately $513.4
billion in 2015,39 the predicted impact
of mental health parity is expected to
equal $157.4 million in 2015, and to rise
in proportion to the growth in overall
Medicaid spending in future years.
Costs for 2015–2019 are displayed in
Table 6.
37 Rosenbach M, Lake T, Young C, et al. Effects
of the Vermont Mental Health and Substance Abuse
Parity Law. DHHS Pub. No. SMA 03–3822,
Rockville, MD: Substance Abuse and Mental Health
Services Administration; 2003.
38 Busch SH, Epstein AJ, Harhay MO, Fiellin DA,
Un H, Leader D Jr, Barry CL. The effects of federal
parity on substance use disorder treatment. Am J
Manag Care. 2014 Jan;20(1):76–82.
39 President’s Budget for Fiscal Year 2015,
available at https://www.whitehouse.gov/omb/
budget/.
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TABLE 6—ESTIMATED COSTS OF CMS–2333 FY 2015–2019
[In millions]
FY 2015
FY 2016
FY 2017
FY 2018
FY 2019
Federal .................................................................................
State .....................................................................................
94.6
62.8
102.0
66.8
108.4
71.2
114.0
75.0
120.3
79.4
Total ..............................................................................
157.4
168.8
179.6
188.9
199.8
(3) Effect of Medical Cost Offsets
As described above, the cost of
improving access to MH/SUD treatment
may be offset by a decline in the
expenditures on treatments for medical
conditions resulting from substance use
disorders. There is strong evidence from
Medicaid programs to assume a cost
offset resulting from improved access to
substance use disorder benefits. In
contrast, the evidence for cost offset
resulting from improved access to
mental health benefits is weaker. We
anticipate that, on balance, costs
stemming from increased utilization of
substance use disorder services
resulting from application of parity
requirements will be largely offset by
the savings from reduced medical costs,
yielding very little increase in overall
costs from increased utilization of
substance use disorder services.
However, given the difficulty of
quantifying the precise cost impact of
this reduced use of medical services that
is expected to result from enhanced
access to substance use disorder
services, we have not included any cost
offset in our estimates.
ebenthall on DSK5SPTVN1PROD with PROPOSALS2
b. Effect of Aligning NQTLs
Under the MHPAEA final rules,
medical management can be applied to
MH/SUD benefits if the processes,
strategies, evidentiary standards, or
other factors used in applying medical
management are comparable to, and are
applied no more stringently than, the
processes, strategies, evidentiary
standards, or other factors used in
applying medical management to
medical and surgical benefits. It is
difficult to determine whether, at
baseline, Medicaid MCOs, ABPs and
CHIP programs are applying medical
management more stringently to MH/
SUD benefits than to medical and
surgical benefits. A state-by-state search
of available Medicaid documents
indicated that most states that use
inpatient utilization management
techniques for MH/SUD services, such
as prior approval or continuing
utilization review for inpatient stays,
have similar restrictions for medical and
surgical conditions. Surveys of
commercial plans have also found that
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inpatient managed care restrictions,
such as pre-admission prior approval,
are common for medical and surgical
admissions.40 41 There may be important
distinctions in the processes, strategies,
evidentiary standards, or other factors
between MH/SUD services and medical
and surgical services, but current data
do not indicate that this is the case in
a way that would lead to a clear cost
impact.
Moreover, if some Medicaid plans
have stricter management controls for
MH/SUD services than for medical
services, there is scant evidence at this
time as to how utilization management
will evolve with the application of
parity requirements and whether stricter
controls would result in higher costs.42
For example, stricter controls may lead
to underutilization of sub-acute levels of
care for MH/SUD conditions, leading to
the worsening of both MH/SUD
conditions and medical or surgical
conditions that ultimately require more
costly acute levels of care. Studies of the
effect of utilization review and prior
approval on MH/SUD inpatient services
have revealed mixed results, with some
studies showing that these managed
care techniques result in lower costs,
quantities of treatment, or both, and
other studies finding only weak or no
effects, or effects that are short
term.43 44 45 46 As noted above, the
40 Baker CA, Diaz IS. Managed care plans and
managed care features: Data from the EBS to the
NCS. Compensation and Working Conditions
Spring 2011:30–6.
41 Claxton, G., DiJulio, B., Whitmore, H.,
Pickreign, J., McHugh, M., Finder, B., & Osei-Anto,
A. (2009). Job-based health insurance: Costs climb
at a moderate pace. Health Aff 2009; 28(6):w1002–
12.
42 Hodgkin D. The impact of private utilization
management and psychiatric care: A review of the
literature. Journal of Mental Health Administration
1992; 19(2):143–57.
43 Dickey B, Azeni H. Impact of managed care on
mental health services. Health Aff 1992 Fall;
11(3):197–204.
44 Frank RG, Brookmeyer R. Managed mental
health care and patterns of inpatient utilization for
treatment of affective disorders. Soc Psychiatry
Psychiatric Epidemiol 1995 Aug; 30(5):220–3.
45 Wickizer TM, Lessler D, Travis KM..
Controlling inpatient psychiatric utilization through
managed care. Am J Psychiatry 1996; 153:339–45.
46 Wickizer TM, Lessler D. Do treatment
restrictions imposed by utilization management
increase the likelihood of readmission for
psychiatric patients? Med Care 1998; 36(6):844–50.
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studies of Oregon and Vermont, whose
parity laws include similar restrictions
on medical management, have not
shown increases in costs resulting from
application of these laws. There is
uncertainty regarding the level of
increased costs that will result from
application of the parity requirement for
NQTLs, but there is evidence that any
increases may be small. We invite
comments related to any additional
evidence on the impact of aligning
NQTLs for Medicaid services.
2. Transfers Resulting From Increased
Access Under Medicaid
Transfer payments are monetary
payments from one group to another
that do not affect total resources
available to society. There is a potential
that application of parity requirements
under MHPAEA will result in transfers
among different government entities.
MH/SUD services receive greater
funding from public sources, such as
Medicaid, federal government block
grants, state government general funds,
and local government funding, than do
medical and surgical services.47 Over
time, MH/SUD spending has been
shifting away from state and local
funding, toward federal financing,
especially Medicaid.48 The potential
increase in the availability of MH/SUD
services under Medicaid and CHIP as a
result of the MHPAEA parity
requirements may result in a reduction
in use of, and spending on, services
financed by other public sources such as
state and local governments and federal
block grants.49 Limited sound evidence
exists about the size of this effect on
states.
47 Levit KR, Mark TL, Coffey RM, Frankel S,
Santora P, Vandivort-Warren R, Malone K. Federal
spending on behavioral health accelerated during
recession as individuals lost employer insurance.
Health Aff 2013 May; 32(5):952–62.
48 Levit KR, Mark TL, Coffey RM, Frankel S,
Santora P, Vandivort-Warren R, Malone K. Federal
spending on behavioral health accelerated during
recession as individuals lost employer insurance.
Health Aff 2013 May; 32(5):952–62.
49 Frank RG, Goldman HH, Hogan M. Medicaid
and mental health: Be careful what you ask for.
Health Aff 2003 Jan–Feb; 22(1):101–13.
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D. Alternatives Considered
We considered several other
approaches for providing guidance to
states regarding the application of the
MHPAEA to Medicaid MCOs, ABPs,
and CHIP. As stated in the preamble of
this proposed rule, under our current
policies, there is no affirmative
obligation to ensure that MCO enrollees
receive state plan benefits in a way that
fully complies with MHPAEA. This is
because section 1932(b)(8) of the Act
does not apply to the design of the
traditional Medicaid state plan, and
state plans thus may be designed in a
way that does not comply with
MHPAEA requirements. Under current
guidance, we have said that if an MCO
is simply properly applying state plan
benefits, there is no violation of section
1932(b)(8) of the Act even if that benefit
design does not conform to MHPAEA,
because the MCO did not adopt that
benefit design and thus was not at fault
in its non-compliance. As explained
above, we do not believe that this policy
effectuates Congressional intent in
enacting section 1932(b)(8) of the Act.
Further, we believe that implementation
of the statute requires that MCO
enrollees receive benefits in a manner
that complies with MHPAEA.
We considered requiring that all state
plan MH/SUD services be included
under MCO contracts as the way to
ensure that MCO enrollees receive the
full protections of MHPAEA. However,
we believe the approach we are
proposing would allow states the most
flexibility when applying mental health
parity requirements to their Medicaid
services across delivery systems. Given
that there are many different delivery
system configurations that carve out
MH/SUD services, the proposed
approach would allow states to comport
with parity requirements for MCO
enrollees without completely carving
out MH/SUD services from their MCO
or dropping MH/SUD coverage
altogether.
Also, under current statutes,
regulations and policies, states would
not be required under Federal law to
apply MHPAEA provisions to PIHPs
and PAHPs (many of which provide
MH/SUD services) since these
arrangements were not specifically
addressed in section 1932(b)(8) of the
Act, and MHPAEA does not directly
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apply to such contracts. Consideration
of these unique state MH/SUD delivery
systems is an important distinction in
Medicaid when compared to the
commercial market. Further, because
the statutory provisions making mental
health parity requirements applicable to
MCOs do not explicitly address these
situations, additional interpretation is
needed.
In addition to the delivery system
issues, states would not be required to
remove or align limits on services that
were in the state plan for individuals
enrolled in an MCO. As stated
previously in this proposed regulation,
these limits would be carried through in
the development of rates, and cost of
services outside of the state plan or a
waiver of the state plan cannot be
included. Without the proposed change
in this rule, individuals enrolled in an
MCO could still be subject to treatment
limitations that are not compliant with
parity requirements, which we believe
is inconsistent with the intent of
Congress in requiring in section
1932(b)(8) of the Act that MCOs deliver
services in a manner consistent with
MHPAEA requirements and the policies
regarding application of MHPAEA to
ABPs and CHIP that operate in a FFS
arrangement. In addition, without these
changes to the managed care rate setting
process, it will be difficult for MCOs to
comply with statutory requirements
regarding financial requirements and
treatment limitations.
Finally, there are mental health parity
provisions that are not applicable to the
FFS delivery systems for Medicaid ABP
benefits. These include: Annual and
lifetime dollar limits, availability of
plan information, and access to out-ofnetwork providers.
In addition, we considered the ability
to provide guidance and enforce the
provisions of MHPAEA’s application to
Medicaid and CHIP through subregulatory guidance. Over the past 5
years, we have used two SHO letters to
provide guidance to states regarding
MHPAEA and Medicaid and CHIP.
While states and other stakeholders
found this guidance useful, there were
many questions or concerns regarding
the lack of specificity regarding
application of MHPAEA parity
requirements to Medicaid and CHIP.
There were several issues that states
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19441
raised regarding this sub-regulatory
guidance. One issue was the actuarial
soundness requirements, which
mandate that MCO payments be based
on services as covered under state plans.
Another was additional clarification of
NQTLs and states’ concerns regarding
existing federal and state policies that
required utilization management
strategies that were inconsistent with
the intent of MHPAEA. States also
raised additional questions regarding
application of MHPAEA parity
requirements to other delivery systems
including PIHPs, PAHPs, and FFS. We
do not believe that additional
subregulatory guidance would provide
the necessary authority for MCOs and
states to implement or enforce MHPAEA
parity requirements for Medicaid
beneficiaries enrolled in an MCO.
We request public comment on our
rationale for having regulations that are
specific to Medicaid and CHIP.
E. Accounting Statement and Table
As required by OMB Circular A–4
(available at https://
www.whitehouse.gov/omb/circulars_
a004_a-4/), in Table 7 we have prepared
an accounting statement showing the
classification of the impacts associated
with implementation of this proposed
rule.
The projected impact on costs in 2015
was calculated by multiplying the
percent anticipated increase in cost due
to the application of parity requirements
by expected Medicaid expenditures in
2015. Based on our analysis, the parity
rule will lead to an increase of
approximately 0.03 percent in total
Medicaid spending each year over 10
years. In 2015, Medicaid expenditures
overall are projected to equal
approximately $513.4 billion.50 Thus,
the undiscounted cost of the rule is
estimated to be $157.4 million in 2015,
and to rise proportionate to the growth
in overall Medicaid spending in future
years. These costs are split between the
federal and state governments based on
the population covered and the
statutory matching rate.
50 Centers for Medicare & Medicaid Services.
National Health Expenditure Projections 2012–
2022. Forecast Summary. https://www.cms.gov/
Research-Statistics-Data-and-Systems/StatisticsTrends-and-Reports/NationalHealthExpendData/
Downloads/Proj2012.pdf. Accessed June 25, 2014.
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TABLE 7—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED BENEFIT, COSTS, AND TRANSFERS
Units
Category
Estimates
Discount rate
%
Year dollar
Period covered
Transfers from Federal Government to Providers
Annualized Monetized ($million/year) ........................................................
107.0
107.5
2015
2015
7
3
2015–2019
2015–2019
2015
2015
7
3
2015–2019
2015–2019
Transfers from State Government to Providers
Annualized Monetized ($million/year) ........................................................
70.5
70.8
Note. The displayed numbers are rounded to the nearest thousand and therefore may not add up to the totals.
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F. Regulatory Flexibility Act (RFA)
The RFA requires agencies to analyze
options for regulatory relief for small
entities, if a rule has a significant impact
on a substantial number of small
entities. The great majority of hospitals
and most other health care providers
and suppliers are small entities, either
by being nonprofit organizations or by
meeting the SBA definition of a small
business (having revenues of less than
$7.5 million to $38.5 million in any 1
year). States are not included in the
definition of a small entity. This
proposed rule does not change the rates
at which providers would be
reimbursed for any additional
treatments and services that may be
required, and MCOs, PIHPs, and PAHPs
will be paid on an actuarially sound
basis for any additional coverage that
they will be required to provide. As
indicated previously in this proposed
rule, the increased costs will be borne
by states and the federal government,
which are not considered small entities.
Therefore, the Secretary has determined
that this proposed rule will not have a
significant economic impact on a
substantial number of small entities as
that term is used in the RFA.
In addition, section 1102(b) of the Act
requires us to prepare a regulatory
impact analysis if a rule may have a
significant impact on the operations of
a substantial number of small rural
hospitals. This analysis must conform to
the provisions of section 603 of the
RFA. For purposes of section 1102(b) of
the Act, we define a small rural hospital
as a hospital that is located outside of
a metropolitan statistical area and has
fewer than 100 beds. The Secretary has
determined that this proposed rule will
not have a significant impact on the
operations of a substantial number of
small rural hospitals.
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G. Unfunded Mandates Reform Act
(UMRA)
Section 202 of the Unfunded
Mandates Reform Act of 1995 (UMRA)
also requires that agencies assess
anticipated costs and benefits before
issuing any rule whose mandates
require spending in any 1 year of $100
million in 1995 dollars, updated
annually for inflation. In 2015, that is
approximately $144 million. UMRA
does not address the total cost of a rule.
Rather, it focuses on certain categories
of cost, mainly those ‘‘Federal mandate’’
costs resulting from (A) imposing
enforceable duties on state, local, or
tribal governments, or on the private
sector, or (B) increasing the stringency
of conditions in, or decreasing the
funding of, state, local, or tribal
governments under entitlement
programs. The average state share of
total Medicaid spending in 2015 is
projected to be 39.9 percent. The total
cost impact of this rule is estimated to
be $157.4 million in 2015. Therefore,
the total cost to states is projected to be
approximately $62.8 million. Therefore,
this proposed rule is not subject to
UMRA.
MCOs, ABPs, and CHIP, the Secretary
expects that many states already offer
benefits under their state plan and MCO
contracts that meet or exceed the
Federal mental health parity standards
that would be implemented in this rule.
Throughout the process of developing
these regulations, to the extent feasible
within the relevant provisions of the
Act, PHS Act and MHPAEA, the
Secretary has attempted to balance the
latitude for states to structure their state
plan services and MCO contracts
according to the needs and preferences
of the state, and the Congress’ intent to
provide uniform minimum protections
to Medicaid and CHIP beneficiaries in
every state. By doing so, it is the
Secretary’s view that this proposed rule
complies with the requirements of
Executive Order 13132.
H. Federalism
Executive Order 13132 establishes
certain requirements that an agency
must meet when it issues a proposed
rule (and subsequent final rule) that
imposes substantial direct requirement
costs on state and local governments,
preempts state law, or otherwise has
federalism implications.
In the Secretary’s view, this proposed
rule has Federalism implications,
because it has direct effects on the
states, the relationship between the
federal government and states, or on the
distribution of power and
responsibilities among various levels of
government. However, in the Secretary’s
view, the Federalism implications of
this proposed rule are substantially
mitigated because, with regards to
Grant programs-health, Medicaid,
Reporting and recordkeeping
requirements.
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I. Conclusion
In accordance with the provisions of
Executive Order 12866, this regulation
was reviewed by the Office of
Management and Budget.
List of Subjects
42 CFR Part 438
42 CFR Part 440
Grant programs-health, Medicaid
reporting.
42 CFR Part 456
Administrative practice and
procedure, Drugs, Grant programshealth, Health facilities, Medicaid,
Reporting and recordkeeping
requirements.
42 CFR Part 457
Administrative practice and
procedure, Grant programs-health,
Health insurance, Reporting and
recordkeeping requirements.
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For the reasons set forth in the
preamble, the Centers for Medicare &
Medicaid Services proposes to amend
42 CFR chapter IV as set forth below:
Subpart K—Parity in Mental Health and
Substance Use Disorder Benefits
§ 438.900
PART 438—MANAGED CARE
1. The authority citation for part 438
continues to read as follows:
■
Authority: Sec. 1102 of the Social Security
Act (42 U.S.C. 1302).
2. Section 438.6 is amended by
revising paragraph (e) and adding
paragraph (n) to read as follows:
■
§ 438.6
Contract requirements.
*
*
*
*
(e) Additional services that may be
covered by a MCO, PIHP, or PAHP. A
MCO, PIHP, or PAHP may cover, for
enrollees, services that are in addition to
those covered under the state plan as
follows:
(1) Any services necessary for
compliance by the MCO, PIHP, or PAHP
with the requirements of subpart K of
this part and only to the extent such
services are necessary for the MCO,
PIHP, or PAHP to comply with
§ 438.910; and
(2) Any services that the MCO, PIHP,
or PAHP voluntarily agrees to provide.
(3) Only the costs associated with
services in paragraph (e)(1) of this
section may be included when
determining the payment rates under
paragraph (c) of this section.
*
*
*
*
*
(n) Parity in mental health and
substance use disorder benefits. (1) All
MCO contracts, and any PIHP and
PAHP contracts providing services to
MCO enrollees, must ensure that
enrollees receive services that are
compliant with the requirements of
subpart K of this part insofar as those
requirements are applicable.
(2) Any state providing any services to
MCO enrollees using a delivery system
other than the MCO delivery system
must provide documentation of how the
requirements of subpart K of this part
are met with the submission of the MCO
contract for review and approval under
paragraph (a) of this section.
■ 3. Subpart K is added to part 438 to
read as follows:
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*
Subpart K—Parity in Mental Health and
Substance Use Disorder Benefits
Sec.
438.900 Meaning of terms.
438.905 Parity requirements for aggregate
lifetime and annual dollar limits.
438.910 Parity requirements for financial
requirements and treatment limitations.
438.915 Availability of information.
438.920 Applicability.
438.930 Compliance dates.
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Meaning of terms.
For purposes of this subpart, except
where the context clearly indicates
otherwise, the following terms have the
meanings indicated:
Aggregate lifetime dollar limit means
a dollar limitation on the total amount
of specified benefits that may be paid
under a MCO, PIHP, or PAHP.
Annual dollar limit means a dollar
limitation on the total amount of
specified benefits that may be paid in a
12-month period under a MCO, PIHP, or
PAHP.
Cumulative financial requirements
are financial requirements that
determine whether or to what extent
benefits are provided based on
accumulated amounts and include
deductibles and out-of-pocket
maximums. (However, cumulative
financial requirements do not include
aggregate lifetime or annual dollar limits
because these two terms are excluded
from the meaning of financial
requirements.)
Early and Periodic Screening,
Diagnostic and Treatment (EPSDT)
benefits are benefits defined in section
1905(r) of the Act.
Financial requirements include
deductibles, copayments, coinsurance,
or out-of-pocket maximums. Financial
requirements do not include aggregate
lifetime or annual dollar limits.
Medical/surgical benefits means
benefits for items or services for medical
conditions or surgical procedures, as
defined by the state and in accordance
with applicable federal and state law,
but do not include mental health or
substance use disorder benefits. Any
condition defined by the state as being
or as not being a medical/surgical
condition must be defined to be
consistent with generally recognized
independent standards of current
medical practice (for example, the most
current version of the International
Classification of Diseases (ICD) or state
guidelines). Medical/surgical benefits
do not include long-term care services.
Mental health benefits means benefits
for items or services for mental health
conditions, as defined by the state and
in accordance with applicable federal
and state law. Any condition defined by
the state as being or as not being a
mental health condition must be
defined to be consistent with generally
recognized independent standards of
current medical practice (for example,
the most current version of the
Diagnostic and Statistical Manual of
Mental Disorders (DSM), the most
current version of the ICD, or state
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19443
guidelines). Mental health benefits do
not include long-term care services.
Substance use disorder benefits
means benefits for items or services for
substance use disorders, as defined by
the state and in accordance with
applicable federal and state law. Any
disorder defined by the state as being or
as not being a substance use disorder
must be defined to be consistent with
generally recognized independent
standards of current medical practice
(for example, the most current version
of the DSM, the most current version of
the ICD, or state guidelines). Substance
use disorder benefits do not include
long-term care services.
Treatment limitations include limits
on benefits based on the frequency of
treatment, number of visits, days of
coverage, days in a waiting period, or
other similar limits on the scope or
duration of treatment. Treatment
limitations include both quantitative
treatment limitations, which are
expressed numerically (such as 50
outpatient visits per year), and
nonquantitative treatment limitations,
which otherwise limit the scope or
duration of benefits for treatment under
a plan or coverage. (See § 438.910(d)(2)
for an illustrative list of nonquantitative
treatment limitations.) A permanent
exclusion of all benefits for a particular
condition or disorder, however, is not a
treatment limitation for purposes of this
definition.
§ 438.905 Parity requirements for
aggregate lifetime and annual dollar limits.
(a) General—(1) General parity
requirement. Each MCO, PIHP, and
PAHP providing services to MCO
enrollees must comply with paragraphs
(b), (c), or (e) of this section for all
enrollees of a MCO in states that cover
both medical/surgical benefits and
mental health or substance use disorder
benefits under the state plan. This
section details the application of the
parity requirements for aggregate
lifetime and annual dollar limits.
(b) MCOs, PIHPs, or PAHPs with no
limit or limits on less than one-third of
all medical/surgical benefits. If a MCO,
PIHP, or PAHP does not include an
aggregate lifetime or annual dollar limit
on any medical/surgical benefits or
includes an aggregate lifetime or annual
dollar limit that applies to less than onethird of all medical/surgical benefits
provided to enrollees through a contract
with the state, it may not impose an
aggregate lifetime or annual dollar limit,
respectively, on mental health or
substance use disorder benefits.
(c) MCOs, PIHPs, or PAHPs with a
limit on at least two-thirds of all
medical/surgical benefits. If a MCO,
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PIHP, or PAHP includes an aggregate
lifetime or annual dollar limit on at least
two-thirds of all medical/surgical
benefits provided to enrollees through a
contract with the state, it must either—
(1) Apply the aggregate lifetime or
annual dollar limit both to the medical/
surgical benefits to which the limit
would otherwise apply and to mental
health or substance use disorder
benefits in a manner that does not
distinguish between the medical/
surgical benefits and mental health or
substance use disorder benefits; or
(2) Not include an aggregate lifetime
or annual dollar limit on mental health
or substance use disorder benefits that
is more restrictive than the aggregate
lifetime or annual dollar limit,
respectively, on medical/surgical
benefits.
(d) Determining one-third and twothirds of all medical/surgical benefits.
For purposes of this section, the
determination of whether the portion of
medical/surgical benefits subject to an
aggregate lifetime or annual dollar limit
represents one-third or two-thirds of all
medical/surgical benefits is based on the
total dollar amount of all combinations
of MCO, PIHP, and PAHP payments for
medical/surgical benefits expected to be
paid under the MCO, PIHP, or PAHP for
a contract year (or for the portion of a
contract year after a change in benefits
that affects the applicability of the
aggregate lifetime or annual dollar
limits). Any reasonable method may be
used to determine whether the dollar
amount expected to be paid under the
MCOs, PIHPs, and PAHPs will
constitute one-third or two-thirds of the
dollar amount of all payments for
medical/surgical benefits.
(e) MCO, PIHP, or PAHP not described
in this section—(1) In general. A MCO,
PIHP, or PAHP that is not described in
paragraph (b) or (c) of this section for
aggregate lifetime or annual dollar limits
on medical/surgical benefits, must
either—
(i) Impose no aggregate lifetime or
annual dollar limit, on mental health or
substance use disorder benefits; or
(ii) Impose an aggregate lifetime or
annual dollar limit on mental health or
substance use disorder benefits that is
no more restrictive than an average limit
calculated for medical/surgical benefits
in the following manner. The average
limit is calculated by taking into
account the weighted average of the
aggregate lifetime or annual dollar
limits, as appropriate, that are
applicable to the categories of medical/
surgical benefits. Limits based on
delivery mechanisms, such as inpatient/
outpatient treatment or normal
treatment of common, low-cost
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conditions (such as treatment of normal
births), do not constitute categories for
purposes of this paragraph (e)(1)(ii). In
addition, for purposes of determining
weighted averages, any benefits that are
not within a category that is subject to
a separately-designated dollar limit
under the contract are taken into
account as a single separate category by
using an estimate of the upper limit on
the dollar amount that a MCO, PIHP, or
PAHP may reasonably be expected to
incur for such benefits, taking into
account any other applicable
restrictions.
(2) Weighting. For purposes of this
paragraph (e), the weighting applicable
to any category of medical/surgical
benefits is determined in the manner set
forth in paragraph (d) of this section for
determining one-third or two-thirds of
all medical/surgical benefits.
§ 438.910 Parity requirements for financial
requirements and treatment limitations.
(a) Clarification of terms—(1)
Classification of benefits. When
reference is made in this section to a
classification of benefits, the term
‘‘classification’’ means a classification
as described in paragraph (b)(2) of this
section.
(2) Type of financial requirement or
treatment limitation. When reference is
made in this section to a type of
financial requirement or treatment
limitation, the reference to type means
its nature. Different types of financial
requirements include deductibles,
copayments, coinsurance, and out-ofpocket maximums. Different types of
quantitative treatment limitations
include annual, episode, and lifetime
day and visit limits. See paragraph
(d)(2) of this section for an illustrative
list of nonquantitative treatment
limitations.
(3) Level of a type of financial
requirement or treatment limitation.
When reference is made in this section
to a level of a type of financial
requirement or treatment limitation,
level refers to the magnitude of the type
of financial requirement or treatment
limitation.
(b) General parity requirement—(1)
General rule and scope. Each MCO,
PIHP and PAHP providing services to
MCO enrollees in a state that covers
both medical/surgical benefits and
mental health or substance use disorder
benefits under the state plan, must not
apply any financial requirement or
treatment limitation to mental health or
substance use disorder benefits in any
classification that is more restrictive
than the predominant financial
requirement or treatment limitation of
that type applied to substantially all
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Sfmt 4702
medical/surgical benefits in the same
classification furnished to enrollees
(whether or not the benefits are
furnished by the same MCO, PIHP, or
PAHP). Whether a financial requirement
or treatment limitation is a predominant
financial requirement or treatment
limitation that applies to substantially
all medical/surgical benefits in a
classification is determined separately
for each type of financial requirement or
treatment limitation. The application of
the rules of this paragraph (b) to
financial requirements and quantitative
treatment limitations is addressed in
paragraph (c) of this section; the
application of the rules of this
paragraph (b) to nonquantitative
treatment limitations is addressed in
paragraph (d) of this section.
(2) Classifications of benefits used for
applying rules. If an MCO enrollee is
provided mental health or substance use
disorder benefits in any classification of
benefits described in this paragraph
(b)(2), mental health or substance use
disorder benefits must be provided to
the enrollee in every classification in
which medical/surgical benefits are
provided. In determining the
classification in which a particular
benefit belongs, a MCO, PIHP, or PAHP
must apply the same standards to
medical/surgical benefits and to mental
health or substance use disorder
benefits. To the extent that a MCO,
PIHP, or PAHP provides benefits in a
classification and imposes any separate
financial requirement or treatment
limitation (or separate level of a
financial requirement or treatment
limitation) for benefits in the
classification, the rules of this section
apply separately for that classification
for all financial requirements or
treatment limitations. The following
classifications of benefits are the only
classifications used in applying the
rules of this section:
(i) Inpatient. Benefits furnished on an
inpatient basis.
(ii) Outpatient. Benefits furnished on
an outpatient basis. See special rules for
office visits in paragraph (c)(2) of this
section.
(iii) Emergency care. Benefits for
emergency care.
(iv) Prescription drugs. Benefits for
prescription drugs. See special rules for
multi-tiered prescription drug benefits
in paragraph (c)(2) of this section.
(c) Financial requirements and
quantitative treatment limitations—(1)
Determining ‘‘substantially all’’ and
‘‘predominant’’—(i) Substantially all.
For purposes of this section, a type of
financial requirement or quantitative
treatment limitation is considered to
apply to substantially all medical/
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surgical benefits in a classification of
benefits if it applies to at least twothirds of all medical/surgical benefits in
that classification. If a type of financial
requirement or quantitative treatment
limitation does not apply to at least twothirds of all medical/surgical benefits in
a classification, then that type cannot be
applied to mental health or substance
use disorder benefits in that
classification.
(ii) Predominant. (A) If a type of
financial requirement or quantitative
treatment limitation applies to at least
two-thirds of all medical/surgical
benefits in a classification as
determined under paragraph (c)(1)(i) of
this section, the level of the financial
requirement or quantitative treatment
limitation that is considered the
predominant level of that type in a
classification of benefits is the level that
applies to more than one-half of
medical/surgical benefits in that
classification subject to the financial
requirement or quantitative treatment
limitation.
(B) If, for a type of financial
requirement or quantitative treatment
limitation that applies to at least twothirds of all medical/surgical benefits in
a classification, there is no single level
that applies to more than one-half of
medical/surgical benefits in the
classification subject to the financial
requirement or quantitative treatment
limitation, the MCO, PIHP, or PAHP
may combine levels until the
combination of levels applies to more
than one-half of medical/surgical
benefits subject to the financial
requirement or quantitative treatment
limitation in the classification. The least
restrictive level within the combination
is considered the predominant level of
that type in the classification. (For this
purpose, a MCO, PIHP, or PAHP may
combine the most restrictive levels first,
with each less restrictive level added to
the combination until the combination
applies to more than one-half of the
benefits subject to the financial
requirement or treatment limitation.)
(iii) Portion based on MCO, PIHP or
PAHP payments. For purposes of this
section, the determination of the portion
of medical/surgical benefits in a
classification of benefits subject to a
financial requirement or quantitative
treatment limitation (or subject to any
level of a financial requirement or
quantitative treatment limitation) is
based on the total dollar amount of all
combinations of MCO, PIHP, and PAHP
payments for medical/surgical benefits
in the classification expected to be paid
under the MCOs, PIHPs, and PAHPs for
a contract year (or for the portion of a
contract year after a change in benefits
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that affects the applicability of the
financial requirement or quantitative
treatment limitation).
(iv) Clarifications for certain
threshold requirements. For any
deductible, the dollar amount of MCO,
PIHP, or PAHP payments includes all
payments for claims that would be
subject to the deductible if it had not
been satisfied. For any out-of-pocket
maximum, the dollar amount of MCO,
PIHP, or PAHP payments includes all
payments associated with out-of-pocket
payments that are taken into account
towards the out-of-pocket maximum as
well as all payments associated with
out-of-pocket payments that would have
been made towards the out-of-pocket
maximum if it had not been satisfied.
Similar rules apply for any other
thresholds at which the rate of MCO,
PIHP, or PAHP payment changes.
(v) Determining the dollar amount of
MCO, PIHP, or PAHP payments. Subject
to paragraph (c)(1)(iv) of this section,
any reasonable method may be used to
determine the dollar amount expected
to be paid under a MCO, PIHP, or PAHP
for medical/surgical benefits subject to a
financial requirement or quantitative
treatment limitation (or subject to any
level of a financial requirement or
quantitative treatment limitation).
(2) Special rules—(i) Multi-tiered
prescription drug benefits. If a MCO,
PIHP, or PAHP applies different levels
of financial requirements to different
tiers of prescription drug benefits based
on reasonable factors determined in
accordance with the rules in paragraph
(d)(1) of this section (relating to
requirements for nonquantitative
treatment limitations) and without
regard to whether a drug is generally
prescribed for medical/surgical benefits
or for mental health or substance use
disorder benefits, the MCO, PIHP, or
PAHP satisfies the parity requirements
of this section for prescription drug
benefits. Reasonable factors include
cost, efficacy, generic versus brand
name, and mail order versus pharmacy
pick-up/delivery.
(ii) Sub-classifications permitted for
office visits, separate from other
outpatient services. For purposes of
applying the financial requirement and
treatment limitation rules of this
section, a MCO, PIHP, or PAHP may
divide its benefits furnished on an
outpatient basis into the two subclassifications described in this
paragraph (c)(2)(ii). After the subclassifications are established, the MCO,
PIHP or PAHP may not impose any
financial requirement or quantitative
treatment limitation on mental health or
substance use disorder benefits in any
sub-classification that is more restrictive
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19445
than the predominant financial
requirement or quantitative treatment
limitation that applies to substantially
all medical/surgical benefits in the subclassification using the methodology set
forth in paragraph (c)(1) of this section.
Sub-classifications other than these
special rules, such as separate subclassifications for generalists and
specialists, are not permitted. The two
sub-classifications permitted under this
paragraph (c)(2)(ii) are:
(A) Office visits (such as physician
visits); and
(B) All other outpatient items and
services (such as outpatient surgery,
facility charges for day treatment
centers, laboratory charges, or other
medical items).
(3) No separate cumulative financial
requirements. A MCO, PIHP, or PAHP
may not apply any cumulative financial
requirement for mental health or
substance use disorder benefits in a
classification that accumulates
separately from any established for
medical/surgical benefits in the same
classification.
(4) Compliance with other costsharing rules. Each MCO, PIHP. and
PAHP must meet the cost-sharing
requirements in § 438.108 when
applying Medicaid cost-sharing.
(d) Nonquantitative treatment
limitations—(1) General rule. A MCO,
PIHP, or PAHP may not impose a
nonquantitative treatment limitation for
mental health or substance use disorder
benefits in any classification unless,
under the policies and procedures of the
MCO, PIHP, or PAHP as written and in
operation, any processes, strategies,
evidentiary standards, or other factors
used in applying the nonquantitative
treatment limitation to mental health or
substance use disorder benefits in the
classification are comparable to, and are
applied no more stringently than, the
processes, strategies, evidentiary
standards, or other factors used in
applying the limitation for medical/
surgical benefits in the classification.
(2) Illustrative list of nonquantitative
treatment limitations. Nonquantitative
treatment limitations include—
(i) Medical management standards
limiting or excluding benefits based on
medical necessity or medical
appropriateness, or based on whether
the treatment is experimental or
investigative;
(ii) Formulary design for prescription
drugs;
(iii) For MCOs, PIHPs, or PAHPs with
multiple network tiers (such as
preferred providers and participating
providers), network tier design;
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(iv) Standards for provider admission
to participate in a network, including
reimbursement rates;
(v) MCO, PIHP, or PAHP methods for
determining usual, customary, and
reasonable charges;
(vi) Refusal to pay for higher-cost
therapies until it can be shown that a
lower-cost therapy is not effective (also
known as fail-first policies or step
therapy protocols);
(vii) Exclusions based on failure to
complete a course of treatment;
(viii) Restrictions based on geographic
location, facility type, provider
specialty, and other criteria that limit
the scope or duration of benefits for
services provided under the MCO, PIHP,
or PAHP; and
(ix) Standards for providing access to
out-of-network providers
(3) Application to out-of-network
providers. Any MCO, PIHP or PAHP
providing access to out-of-network
providers for medical/surgical benefits
within a classification, must use the
same processes, strategies, evidentiary
standards, or other factors in
determining access to out-of-network
providers for MH/SUD benefits. If a
MCO, PIHP or PAHP is found to be in
compliance with § 438.206(b)(4), it will
be deemed in compliance with the
standards in this paragraph (d)(3).
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§ 438.915
Availability of information.
(a) Criteria for medical necessity
determinations. The criteria for medical
necessity determinations, made by a
MCO or by a PIHP or PAHP providing
services to an MCO enrollee, for mental
health or substance use disorder
benefits must be made available by the
MCO, PIHP, or PAHP administrator to
any enrollee, potential enrollee, or
contracting provider upon request.
MCOs, PIHPs, and PAHPs operating in
compliance with § 438.236(c) will be
deemed compliant with the
requirements in this paragraph (a).
(b) Reason for any denial. The reason
for any denial by a MCO, PIHP, or PAHP
of reimbursement or payment for
services for mental health or substance
use disorder benefits in the case of any
enrollee must be made available by the
MCO, PIHP, or PAHP administrator to
the enrollee.
(c) Provisions of other law.
Compliance with the disclosure
requirements in paragraphs (a) and (b)
of this section is not determinative of
compliance with any other provision of
applicable federal or state law.
§ 438.920
Applicability.
(a) MCOs, PIHPs, and PAHPs. The
requirements of this subpart apply to
each MCO, PIHP, and PAHP offering
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services to enrollees of a MCO, in states
covering medical/surgical and MH/SUD
services under the state plan. These
requirements regarding coverage for
services that must be provided to
enrollees of an MCO apply regardless of
the delivery system of the medical/
surgical or MH/SUD services under the
State plan.
(b) State responsibilities. (1) In any
instance where the full scope of
medical/surgical and MH/SUD services
are not provided through the MCO, the
State must review the MH/SUD benefits
provided in the MCO, PIHP, PAHP, or
FFS state plan service to ensure the full
scope of services available to all
enrollees of the MCO complies with the
requirements in this subpart. The state
must provide documentation of
compliance with requirements in this
subpart to the general public within 18
months of the effective date of the final
rule.
(2) In any instance where the full
scope of medical/surgical and MH/SUD
services are not provided through the
MCO, the State must ensure that the
enrollees of the MCO receive services in
compliance with this subpart.
(c) Scope. This subpart does not—
(1) Require a MCO, PIHP, or PAHP to
provide any mental health benefits or
substance use disorder benefits beyond
what is specified in its contract, and the
provision of benefits by a MCO, PIHP,
or PAHP for one or more mental health
conditions or substance use disorders
does not require the MCO, PIHP or
PAHP to provide benefits for any other
mental health condition or substance
use disorder;
(2) Require a MCO, PIHP, or PAHP
that provides coverage for mental health
or substance use disorder benefits only
to the extent required under
1905(a)(4)(D) of the Act to provide
additional mental health or substance
use disorder benefits in any
classification in accordance with this
section; or
(3) Affect the terms and conditions
relating to the amount, duration, or
scope of mental health or substance use
disorder benefits under the Medicaid
MCO, PIHP, or PAHP contract except as
specifically provided in §§ 438.905 and
438.910.
§ 438.930
Compliance dates.
In general, contracts with MCOs,
PIHPs, and PAHPs offering Medicaid
state plan services to enrollees, and
those entities, must comply with the
requirements of this subpart no later
than the beginning of the contract year
starting 18 months after the [DATE OF
PUBLICATION OF THE FINAL RULE].
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PART 440—SERVICES: GENERAL
PROVISIONS
4. The authority citation for part 440
continues to read as follows:
■
Authority: Sec. 1102 of the Social Security
Act (42 U.S.C. 1302).
5. Section 440.395 is added to read as
follows:
■
§ 440.395 Parity in mental health and
substance use disorder benefits.
(a) Meaning of terms. For purposes of
this section, except where the context
clearly indicates otherwise, the
following terms have the meanings
indicated:
Aggregate lifetime dollar limit means
a dollar limitation on the total amount
of specified benefits that may be paid
under an Alternative Benefit Plan
(ABP).
Annual dollar limit means a dollar
limitation on the total amount of
specified benefits that may be paid in a
12-month period under an ABP.
Alternative Benefit Plans (ABPs) mean
benefit packages in one or more of the
benchmark coverage packages described
in §§ 440.330(a) through (c) and
440.335. Benefits may be delivered
through managed care and non-managed
care delivery systems. Consistent with
the requirements of § 440.385, states
must comply with the managed care
provisions at section 1932 of the Act
and part 438 of this chapter, if
benchmark and benchmark-equivalent
benefits are provided through a
managed care entity.
Cumulative financial requirements
are financial requirements that
determine whether or to what extent
benefits are provided based on
accumulated amounts and include
deductibles and out-of-pocket
maximums. (However, cumulative
financial requirements do not include
aggregate lifetime or annual dollar limits
because these two terms are excluded
from the meaning of financial
requirements.)
EPSDT means benefits defined in
section 1905(r) of the Act.
Financial requirements include
deductibles, copayments, coinsurance,
or out-of-pocket maximums. Financial
requirements do not include aggregate
lifetime or annual dollar limits.
Medical/surgical benefits means
benefits for items or services for medical
conditions or surgical procedures, as
defined by the state under the terms of
the ABP and in accordance with
applicable federal and state law, but
does not include mental health or
substance use disorder benefits. Any
condition defined by the state as being
or as not being a medical/surgical
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condition must be defined to be
consistent with generally recognized
independent standards of current
medical practice (for example, the most
current version of the International
Classification of Diseases (ICD) or state
guidelines). Medical/surgical benefits
do not include long-term services.
Mental health benefits means benefits
for items or services for mental health
conditions, as defined by the state under
the terms of the ABP and in accordance
with applicable federal and state law.
Any condition defined by the state as
being or as not being a mental health
condition must be defined to be
consistent with generally recognized
independent standards of current
medical practice (for example, the most
current version of the Diagnostic and
Statistical Manual of Mental Disorders
(DSM), the most current version of the
ICD, or state guidelines. Mental health
benefits do not include long-term care
services.
Substance use disorder benefits
means benefits for items or services for
substance use disorders, as defined by
the state under the terms of the ABP and
in accordance with applicable federal
and state law. Any disorder defined by
the state as being or as not being a
substance use disorder must be defined
to be consistent with generally
recognized independent standards of
current medical practice (for example,
the most current version of the DSM, the
most current version of the ICD, or state
guidelines). Substance use disorder
benefits do not include long-term care
services.
Treatment limitations include limits
on benefits based on the frequency of
treatment, number of visits, days of
coverage, days in a waiting period, or
other similar limits on the scope or
duration of treatment. Treatment
limitations include both quantitative
treatment limitations, which are
expressed numerically (such as 50
outpatient visits per year), and
nonquantitative treatment limitations,
which otherwise limit the scope or
duration of benefits for treatment under
an ABP. (See paragraph (b)(4)(ii) of this
section for an illustrative list of
nonquantitative treatment limitations.)
A permanent exclusion of all benefits
for a particular condition or disorder,
however, is not a treatment limitation
for purposes of this definition.
(b) Parity requirements for financial
requirements and treatment
limitations—(1) Clarification of terms—
(i) Classification of benefits. When
reference is made in this paragraph (b)
to a classification of benefits, the term
‘‘classification’’ means a classification
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as described in paragraph (b)(2)(ii) of
this section.
(ii) Type of financial requirement or
treatment limitation. When reference is
made in this paragraph (b) to a type of
financial requirement or treatment
limitation, the reference to type means
its nature. Different types of financial
requirements include deductibles,
copayments, coinsurance, and out-ofpocket maximums. Different types of
quantitative treatment limitations
include annual, episode, and lifetime
day and visit limits. See paragraph
(b)(4)(ii) of this section for an
illustrative list of nonquantitative
treatment limitations.
(iii) Level of a type of financial
requirement or treatment limitation.
When reference is made in this
paragraph (b) to a level of a type of
financial requirement or treatment
limitation, level refers to the magnitude
of the type of financial requirement or
treatment limitation.
(2) General parity requirement—(i)
General rule. A state may not apply
within an ABP any financial
requirement or treatment limitation to
mental health or substance use disorder
benefits in any classification that is
more restrictive than the predominant
financial requirement or treatment
limitation of that type applied to
substantially all medical/surgical
benefits in the same classification.
Whether a financial requirement or
treatment limitation is a predominant
financial requirement or treatment
limitation that applies to substantially
all medical/surgical benefits in a
classification is determined separately
for each type of financial requirement or
treatment limitation. The application of
the rules of this paragraph (b)(2) to
financial requirements and quantitative
treatment limitations is addressed in
paragraph (b)(3) of this section; the
application of the rules of this
paragraph (b)(2) to nonquantitative
treatment limitations is addressed in
paragraph (b)(4) of this section.
(ii) Classifications of benefits used for
applying rules. ABPs must include
mental health or substance use disorder
benefits in every classification of
benefits described in this paragraph
(b)(2)(ii) in which medical/surgical
benefits are provided. In determining
the classification in which a particular
benefit belongs, the state must apply the
same standards to medical/surgical
benefits and to mental health or
substance use disorder benefits. To the
extent that a state provides ABP benefits
in a classification and imposes any
separate financial requirement or
treatment limitation (or separate level of
a financial requirement or treatment
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19447
limitation) for benefits in the
classification, the rules of this paragraph
(b) apply separately for that
classification for all financial
requirements or treatment limitations.
The following classifications of benefits
are the only classifications used in
applying the rules of this paragraph (b):
(A) Inpatient. Benefits furnished on
an inpatient basis.
(B) Outpatient. Benefits furnished on
an outpatient basis. See special rules for
office visits in paragraph (b)(3)(ii)(B)(1)
of this section.
(C) Emergency care. Benefits for
emergency care.
(D) Prescription drugs. Benefits for
prescription drugs. See special rules for
multi-tiered prescription drug benefits
in paragraph (b)(3)(ii) of this section.
(3) Financial requirements and
quantitative treatment limitations—(i)
Determining ‘‘substantially all’’ and
‘‘predominant’’—(A) Substantially all.
For purposes of this paragraph (b), a
type of financial requirement or
quantitative treatment limitation is
considered to apply to substantially all
medical/surgical benefits in a
classification of benefits if it applies to
at least two-thirds of all medical/
surgical benefits in that classification. If
a type of financial requirement or
quantitative treatment limitation does
not apply to at least two-thirds of all
medical/surgical benefits in a
classification, then that type cannot be
applied to mental health or substance
use disorder benefits in that
classification.
(B) Predominant—(1) If a type of
financial requirement or quantitative
treatment limitation applies to at least
two-thirds of all medical/surgical
benefits in a classification as
determined under paragraph (b)(3)(i)(A)
of this section, the level of the financial
requirement or quantitative treatment
limitation that is considered the
predominant level of that type in a
classification of benefits is the level that
applies to more than one-half of
medical/surgical benefits in that
classification subject to the financial
requirement or quantitative treatment
limitation.
(2) If, for a type of financial
requirement or quantitative treatment
limitation that applies to at least twothirds of all medical/surgical benefits in
a classification, there is no single level
that applies to more than one-half of
medical/surgical benefits in the
classification subject to the financial
requirement or quantitative treatment
limitation, the state may combine levels
until the combination of levels applies
to more than one-half of medical/
surgical benefits subject to the financial
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requirement or quantitative treatment
limitation in the classification. The least
restrictive level within the combination
is considered the predominant level of
that type in the classification. (For this
purpose, a state may combine the most
restrictive levels first, with each less
restrictive level added to the
combination until the combination
applies to more than one-half of the
benefits subject to the financial
requirement or treatment limitation.)
(C) Portion based on ABP payments.
For purposes of this paragraph (b), the
determination of the portion of medical/
surgical benefits in a classification of
benefits subject to a financial
requirement or quantitative treatment
limitation (or subject to any level of a
financial requirement or quantitative
treatment limitation) is based on the
dollar amount of all ABP payments for
medical/surgical benefits in the
classification expected to be paid under
the ABP for the plan year (or for the
portion of the plan year after a change
in ABP benefits that affects the
applicability of the financial
requirement or quantitative treatment
limitation).
(D) Clarifications for certain threshold
requirements. For any deductible, the
dollar amount of ABP payments
includes all payments for claims that
would be subject to the deductible if it
had not been satisfied. For any out-ofpocket maximum, the dollar amount of
ABP payments includes all payments
associated with out-of-pocket payments
that are taken into account towards the
out-of-pocket maximum as well as all
payments associated with out-of-pocket
payments that would have been made
towards the out-of-pocket maximum if it
had not been satisfied. Similar rules
apply for any other thresholds at which
the rate of payment changes.
(E) Determining the dollar amount of
ABP payments. Subject to paragraph
(b)(3)(i)(D) of this section, any
reasonable method may be used to
determine the dollar amount expected
to be paid for medical/surgical benefits
subject to a financial requirement or
quantitative treatment limitation (or
subject to any level of a financial
requirement or quantitative treatment
limitation).
(ii) Special rules—(A) Multi-tiered
prescription drug benefits. If a state or
plan administrator applies different
levels of financial requirements to
different tiers of prescription drug
benefits based on reasonable factors
determined in accordance with the rules
in paragraph (b)(4)(i) of this section
(relating to requirements for
nonquantitative treatment limitations)
and without regard to whether a drug is
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generally prescribed for medical/
surgical benefits or for mental health or
substance use disorder benefits, the ABP
satisfies the parity requirements of this
paragraph (b) for prescription drug
benefits. Reasonable factors include
cost, efficacy, generic versus brand
name, and mail order versus pharmacy
pick-up/delivery.
(B) Sub-classifications permitted for
office visits, separate from other
outpatient services. For purposes of
applying the financial requirement and
treatment limitation rules of this
paragraph (b), a state may divide its
benefits furnished on an outpatient
basis into the two sub-classifications
described in this paragraph (b)(3)(ii)(B).
After the sub-classifications are
established, the state may not impose
any financial requirement or
quantitative treatment limitation on
mental health or substance use disorder
benefits in any sub-classification that is
more restrictive than the predominant
financial requirement or quantitative
treatment limitation that applies to
substantially all medical/surgical
benefits in the sub-classification using
the methodology set forth in paragraph
(b)(3)(i) of this section. Subclassifications other than these special
rules, such as separate subclassifications for generalists and
specialists, are not permitted. The two
sub-classifications permitted under this
paragraph (b)(3)(ii)(B) are:
(1) Office visits (such as physician
visits); and
(2) All other outpatient items and
services (such as outpatient surgery,
laboratory services, or other medical
items).
(iii) No separate cumulative financial
requirements. A state may not apply any
cumulative financial requirement for
mental health or substance use disorder
benefits in a classification that
accumulates separately from any
established for medical/surgical benefits
in the same classification.
(iv) Compliance with other costsharing rules. States must meet the
requirements of §§ 447.50 through
447.57 of this chapter when applying
Medicaid cost-sharing.
(4) Nonquantitative treatment
limitations—(i) General rule. A state
may not impose a nonquantitative
treatment limitation for mental health or
substance use disorder benefits in any
classification unless, under the terms of
the ABP as written and in operation,
any processes, strategies, evidentiary
standards, or other factors used in
applying the nonquantitative treatment
limitation to mental health or substance
use disorder benefits in the
classification are comparable to, and are
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applied no more stringently than, the
processes, strategies, evidentiary
standards, or other factors used in
applying the limitation for medical/
surgical benefits in the classification.
(ii) Illustrative list of nonquantitative
treatment limitations. Nonquantitative
treatment limitations include—
(A) Medical management standards
limiting or excluding benefits based on
medical necessity or medical
appropriateness, or based on whether
the treatment is experimental or
investigative;
(B) Formulary design for prescription
drugs;
(C) Standards for provider admission
to participate in a network, including
reimbursement rates;
(D) Methods for determining usual,
customary, and reasonable charges;
(E) Refusal to pay for higher-cost
therapies until it can be shown that a
lower-cost therapy is not effective (also
known as fail-first policies or step
therapy protocols);
(F) Exclusions based on failure to
complete a course of treatment; and
(G) Restrictions based on geographic
location, facility type, provider
specialty, and other criteria that limit
the scope or duration of benefits or
services provided under the ABP.
(c) Availability of information—(1)
Criteria for medical necessity
determinations. The criteria for medical
necessity determinations made by the
state for beneficiaries served through the
ABP for mental health or substance use
disorder benefits must be made
available by the state to any beneficiary
or Medicaid provider upon request.
(2) Reason for any denial. The reason
for any denial made by the state in the
case of a beneficiary served through an
ABP of reimbursement or payment for
services for mental health or substance
use disorder benefits must be made
available by the state to the beneficiary.
(3) Provisions of other law.
Compliance with the disclosure
requirements in paragraphs (c)(1) and
(2) of this section is not determinative
of compliance with any other provision
of applicable federal or state law.
(d) Applicability—(1) Alternative
Benefit Plans (ABPs). The requirements
of this section apply to states providing
benefits through ABPs. For those states
providing ABPs through an MCO, PIHP,
or PAHP the rules of 42 CFR part 438,
subpart K also apply, and approved
contracts will be viewed as evidence of
compliance with the requirements of
this section.
(2) Scope. This section does not—
(i) Require a state to provide any
specific mental health benefits or
substance use disorder benefits;
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however, in providing coverage through
an ABP, the state must include the ten
essential health benefits as required in
§ 440.347, which include mental health
and substance use disorder benefits or
(ii) Affect the terms and conditions
relating to the amount, duration, or
scope of mental health or substance use
disorder benefits under the ABP except
as specifically provided in paragraph (b)
of this section.
(3) State plan requirement. If a state
plan provides for an ABP, the state must
provide sufficient information in ABP
state plan amendment requests to assure
compliance with the requirements of
this subpart.
(4) Compliance dates—(i) In general.
ABP coverage offered by states must
comply with the requirements of this
section no later than 18 months after the
publication of the final rule.
(ii) [Reserved]
PART 456—UTILIZATION CONTROL
6. The authority citation for part 456
continues to read as follows:
■
Authority: Sec. 1102 of the Social Security
Act (42 U.S.C. 1302), unless otherwise noted.
§ 456.171
[Removed and Reserved]
7. Section 456.171 is removed and
reserved.
■
PART 457—ALLOTMENTS AND
GRANTS TO STATES
8. The authority citation for part 457
continues to read as follows:
■
Authority: Section 1102 of the Social
Security Act (42 U.S.C. 1302).
9. Section 457.496 is added to subpart
D to read as follows:
■
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§ 457.496 Parity in mental health and
substance use disorder benefits.
(a) Meaning of terms. For purposes of
this section, except where the context
clearly indicates otherwise, the
following terms have the meanings
indicated:
Aggregate lifetime dollar limit means
a dollar limitation on the total amount
of specified benefits that may be paid
under a CHIP state plan or a Managed
Care Entity (MCE) (as defined at
§ 457.10) that contracts with the CHIP
state plan. CHIP state plans must meet
the requirements of § 457.480.
Annual dollar limit means a dollar
limitation on the total amount of
specified benefits that may be paid in a
12-month period under a CHIP state
plan or a MCE that contracts with a
CHIP state plan. CHIP state plans must
meet the requirements at § 457.480.
CHIP State Plan has the meaning
assigned at § 457.50.
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Cumulative financial requirements
are financial requirements that
determine whether or to what extent
benefits are provided based on
accumulated amounts and include
deductibles and out-of-pocket
maximums. (However, cumulative
financial requirements do not include
aggregate lifetime or annual dollar limits
because these two terms are excluded
from the meaning of financial
requirements.)
Early and Periodic Screening,
Diagnostic and Treatment (EPSDT)
benefits has the meaning defined in
section 1905(r) of the Act.
Financial requirements include
deductibles, copayments, coinsurance,
or out-of-pocket maximums. Financial
requirements do not include aggregate
lifetime or annual dollar limits.
Medical/surgical benefits means
benefits for items or services for medical
conditions or surgical procedures, as
defined under the terms of the CHIP
state plan in accordance with applicable
federal and state law, but does not
include mental health or substance use
disorder benefits. Any condition
defined by the CHIP state plan as being
or not being a medical/surgical
condition must be defined to be
consistent with generally recognized
independent standards of current
medical practice (for example, the most
current version of the International
Classification of Diseases (ICD) or
generally applicable state guidelines).
Medical/surgical benefits do not include
long-term care services.
Mental health benefits means benefits
for items or services that treat or
otherwise address mental health
conditions, as defined under the terms
of the CHIP state plan in accordance
with applicable federal and state law,
and consistent with generally
recognized independent standards of
current medical practice. Standards of
current medical practice can be based
on the most current version of the DSM,
the most current version of the ICD, or
generally applicable state guidelines.
The term does not include long term
care services.
Substance use disorder benefits
means benefits for items or services for
substance use disorders, as defined
under the terms of the CHIP state plan
in accordance with applicable federal
and state law, and consistent with
generally recognized independent
standards of current medical practice.
Standards of current medical practice
can be based on the most current
version of the DSM, the most current
version of the ICD, or generally
applicable state guidelines. The term
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does not include long term care
services.
Treatment limitations include limits
on benefits based on the frequency of
treatment, number of visits, days of
coverage, days in a waiting period, or
other similar limits on the scope or
duration of treatment. Treatment
limitations include both quantitative
treatment limitations, which are
expressed numerically (such as 50
outpatient visits per year), and
nonquantitative treatment limitations,
which otherwise limit the scope or
duration of benefits for treatment under
the CHIP state plan. (See paragraph
(d)(4)(ii) of this section for an
illustrative list of nonquantitative
treatment limitations.) A permanent
exclusion of all benefits for a particular
condition or disorder, however, is not a
treatment limitation for purposes of this
definition.
(b) State CHIP plan providing EPSDT
benefits. A state CHIP plan that provides
benefits through expansion of Medicaid
programs and provides EPSDT benefits
is deemed to be in compliance with the
parity requirements for financial
requirements and treatment limitations.
Annual or lifetime limits are not
permissible in EPSDT benefits.
(c) Parity requirements for aggregate
lifetime and annual dollar limits. This
paragraph (c) details the application of
the parity requirements for aggregate
lifetime and annual dollar limits. A
CHIP state plan that provides both
medical/surgical benefits and mental
health or substance use disorder
benefits must comply with paragraph
(c)(1), (2), or (4) of this section.
(1) Plan with no limit or limits on less
than one-third of all medical/surgical
benefits. If a CHIP state plan does not
include an aggregate lifetime or annual
dollar limit on any medical/surgical
benefits or includes an aggregate
lifetime or annual dollar limit that
applies to less than one-third of all
medical/surgical benefits, it may not
impose an aggregate lifetime or annual
dollar limit, respectively, on mental
health or substance use disorder
benefits.
(2) CHIP state plans with a limit on
at least two-thirds of all medical/
surgical benefits. If a CHIP state plan
includes an aggregate lifetime or annual
dollar limit on at least two-thirds of all
medical/surgical benefits, it must
either—
(i) Apply the aggregate lifetime or
annual dollar limit both to the medical/
surgical benefits to which the limit
would otherwise apply and to mental
health or substance use disorder
benefits in a manner that does not
distinguish between the medical/
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surgical benefits and mental health or
substance use disorder benefits; or
(ii) Not include an aggregate lifetime
or annual dollar limit on mental health
or substance use disorder benefits that
is more restrictive than the aggregate
lifetime or annual dollar limit,
respectively, on medical/surgical
benefits. (For cumulative limits other
than aggregate lifetime or annual dollar
limits, see paragraph (d)(3)(iii) of this
section prohibiting separately
accumulating cumulative financial
requirements.)
(3) Determining one-third and twothirds of all medical/surgical benefits.
For purposes of this paragraph (c), the
determination of whether the portion of
medical/surgical benefits subject to an
aggregate lifetime or annual dollar limit
represents one-third or two-thirds of all
medical/surgical benefits is based on the
dollar amount of all plan payments for
medical/surgical benefits expected to be
paid under the CHIP state plan for the
state plan year (or for the portion of the
plan year after a change in plan benefits
that affects the applicability of the
aggregate lifetime or annual dollar
limits). Any reasonable method may be
used to determine whether the dollar
amount expected to be paid under the
CHIP state plan will constitute one-third
or two-thirds of the dollar amount of all
plan payments for medical/surgical
benefits.
(4) Plan not described in this
section—(i) In general. A CHIP state
plan that is not described in paragraph
(c)(1) or (2) of this section for aggregate
lifetime or annual dollar limits on
medical/surgical benefits, must either—
(A) Impose no aggregate lifetime or
annual dollar limit, as appropriate, on
mental health or substance use disorder
benefits; or
(B) Impose an aggregate lifetime or
annual dollar limit on mental health or
substance use disorder benefits that is
no more restrictive than an average limit
calculated for medical/surgical benefits
in the following manner. The average
limit is calculated by taking into
account the weighted average of the
aggregate lifetime or annual dollar
limits, as appropriate, that are
applicable to the categories of medical/
surgical benefits. Limits based on
delivery systems, such as inpatient/
outpatient treatment or normal
treatment of common, low-cost
conditions (such as treatment of normal
births), do not constitute categories for
purposes of this paragraph (c)(4)(i)(B).
In addition, for purposes of determining
weighted averages, any benefits that are
not within a category that is subject to
a separately-designated dollar limit
under the plan are taken into account as
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a single separate category by using an
estimate of the upper limit on the dollar
amount that a plan may reasonably be
expected to incur for such benefits,
taking into account any other applicable
restrictions under the plan.
(ii) Weighting. For purposes of this
paragraph (c)(4), the weighting
applicable to any category of medical/
surgical benefits is determined in the
manner set forth in paragraph (c)(3) of
this section for determining one-third or
two-thirds of all medical/surgical
benefits.
(d) Parity requirements for financial
requirements and treatment
limitations—(1) Clarification of terms—
(i) Classification of benefits. When
reference is made in this paragraph (d)
to a classification of benefits, the term
‘‘classification’’ means a classification
as described in paragraph (d)(2)(ii) of
this section.
(ii) Type of financial requirement or
treatment limitation. When reference is
made in this paragraph (d) to a type of
financial requirement or treatment
limitation, the reference to type means
its nature. Different types of financial
requirements include deductibles,
copayments, coinsurance, and out-ofpocket maximums. Different types of
quantitative treatment limitations
include annual, episode, and lifetime
day and visit limits. See paragraph
(d)(4)(ii) of this section for an
illustrative list of nonquantitative
treatment limitations.
(iii) Level of a type of financial
requirement or treatment limitation.
When reference is made in this
paragraph (d) to a level of a type of
financial requirement or treatment
limitation, level refers to the magnitude
of the type of financial requirement or
treatment limitation.
(2) General parity requirement—(i)
General rule. A CHIP state plan or a
MCE that contracts with CHIP through
its state plan that provides both
medical/surgical benefits and mental
health or substance use disorder
benefits, including when such benefits
are delivered through an MCE, may not
apply any financial requirement or
treatment limitation to mental health or
substance use disorder benefits in any
classification that is more restrictive
than the predominant financial
requirement or treatment limitation of
that type applied to substantially all
medical/surgical benefits in the same
classification. Whether a financial
requirement or treatment limitation is a
predominant financial requirement or
treatment limitation that applies to
substantially all medical/surgical
benefits in a classification is determined
separately for each type of financial
PO 00000
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Fmt 4701
Sfmt 4702
requirement or treatment limitation. The
application of the rules of this
paragraph (d)(2) to financial
requirements and quantitative treatment
limitations is addressed in paragraph
(d)(3) of this section; the application of
the rules of this paragraph (d)(2) to
nonquantitative treatment limitations is
addressed in paragraph (d)(4) of this
section.
(ii) Classifications of benefits used for
applying rules. If a CHIP state plan
provides mental health or substance use
disorder benefits in any classification of
benefits described in this paragraph
(d)(2)(ii), mental health or substance use
disorder benefits must be provided in
every classification in which medical/
surgical benefits are provided. In
determining the classification in which
a particular benefit belongs, the same
standards must apply to medical/
surgical benefits and to mental health or
substance use disorder benefits. To the
extent that a CHIP state plan provides
benefits in a classification and imposes
any separate financial requirement or
treatment limitation (or separate level of
a financial requirement or treatment
limitation) for benefits in the
classification, the rules of this paragraph
(d) apply separately for that
classification for all financial
requirements or treatment limitations.
The following classifications of benefits
are the only classifications used in
applying the rules of this paragraph (d):
(A) Inpatient. Benefits furnished on
an inpatient basis.
(B) Outpatient. Benefits furnished on
an outpatient basis. See special rules for
office visits in paragraph (d)(3)(iii) of
this section.
(C) Emergency care. Benefits for
emergency care.
(D) Prescription drugs. Benefits for
prescription drugs. See special rules for
multi-tiered prescription drug benefits
in paragraph (d)(3)(iii) of this section.
(3) Financial requirements and
quantitative treatment limitations—(i)
Determining ‘‘substantially all’’ and
‘‘predominant’’—(A) Substantially all.
For purposes of this paragraph (d), a
type of financial requirement or
quantitative treatment limitation is
considered to apply to substantially all
medical/surgical benefits in a
classification of benefits if it applies to
at least two-thirds of all medical/
surgical benefits in that classification. If
a type of financial requirement or
quantitative treatment limitation does
not apply to at least two-thirds of all
medical/surgical benefits in a
classification, then that type cannot be
applied to mental health or substance
use disorder benefits in that
classification.
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(B) Predominant. (1) If a type of
financial requirement or quantitative
treatment limitation applies to at least
two-thirds of all medical/surgical
benefits in a classification as
determined under paragraph (d)(3)(i)(A)
of this section, the level of the financial
requirement or quantitative treatment
limitation that is considered the
predominant level of that type in a
classification of benefits is the level that
applies to more than one-half of
medical/surgical benefits in that
classification subject to the financial
requirement or quantitative treatment
limitation.
(2) If, for a type of financial
requirement or quantitative treatment
limitation that applies to at least twothirds of all medical/surgical benefits in
a classification, there is no single level
that applies to more than one-half of
medical/surgical benefits in the
classification subject to the financial
requirement or quantitative treatment
limitation, the CHIP state plan (or health
insurance issuer) may combine levels
until the combination of levels applies
to more than one-half of medical/
surgical benefits subject to the financial
requirement or quantitative treatment
limitation in the classification. The least
restrictive level within the combination
is considered the predominant level of
that type in the classification. (For this
purpose, a CHIP state plan may combine
the most restrictive levels first, with
each less restrictive level added to the
combination until the combination
applies to more than one-half of the
benefits subject to the financial
requirement or treatment limitation.)
(C) Portion based on plan payments.
For purposes of this paragraph (d), the
determination of the portion of medical/
surgical benefits in a classification of
benefits subject to a financial
requirement or quantitative treatment
limitation (or subject to any level of a
financial requirement or quantitative
treatment limitation) is based on the
dollar amount of all CHIP state plan
payments and combinations of MCE
payments for medical/surgical benefits
in the classification expected to be paid
under the plan or MCE or combination
that contracts with the CHIP state plan
for the plan year (or for the portion of
the plan year after a change in plan
benefits that affects the applicability of
the financial requirement or quantitative
treatment limitation).
(D) Clarifications for certain threshold
requirements. For any deductible, the
dollar amount of a CHIP state plan
payments includes all plan payments
for claims that would be subject to the
deductible if it had not been satisfied.
In accordance with the cumulative cost-
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sharing maximum in § 457.560, or any
other out-of-pocket maximum in the
CHIP state plan, the dollar amount of
plan payments includes all CHIP state
plan payments associated with out-ofpocket payments that are taken into
account towards the out-of-pocket
maximum as well as all plan payments
associated with out-of-pocket payments
that would have been made towards the
out-of-pocket maximum if it had not
been satisfied. Similar rules apply for
any other thresholds at which the rate
of health plan payment changes.
(E) Determining the dollar amount of
CHIP state plan payments. Subject to
paragraph (d)(3)(i)(D) of this section,
any reasonable method may be used to
determine the dollar amount expected
to be paid under a CHIP state plan for
medical/surgical benefits subject to a
financial requirement or quantitative
treatment limitation (or subject to any
level of a financial requirement or
quantitative treatment limitation).
(ii) Special rules—(A) Multi-tiered
prescription drug benefits. If a CHIP
state plan applies different levels of
financial requirements to different tiers
of prescription drug benefits based on
reasonable factors determined in
accordance with the rules in paragraph
(d)(4)(i) of this section (relating to
requirements for nonquantitative
treatment limitations) and without
regard to whether a drug is generally
prescribed for medical/surgical benefits
or for mental health or substance use
disorder benefits, the health plan
satisfies the parity requirements of this
paragraph (d) for prescription drug
benefits. Reasonable factors include
cost, efficacy, generic versus brand
name, and mail order versus pharmacy
pick-up/delivery.
(B) Sub-classifications permitted for
office visits, separate from other
outpatient services. For purposes of
applying the financial requirement and
treatment limitation rules of this
paragraph (d), a CHIP state plan may
divide its benefits furnished on an
outpatient basis into the two subclassifications described in this
paragraph (d)(3)(ii)(B). After the subclassifications are established, the CHIP
state plan may not impose any financial
requirement or quantitative treatment
limitation on mental health or substance
use disorder benefits in any subclassification that is more restrictive
than the predominant financial
requirement or quantitative treatment
limitation that applies to substantially
all medical/surgical benefits in the subclassification using the methodology set
forth in paragraph (d)(3)(i) of this
section. Sub-classifications other than
these special rules, such as separate sub-
PO 00000
Frm 00035
Fmt 4701
Sfmt 4702
19451
classifications for generalists and
specialists, are not permitted. The two
sub-classifications permitted under this
paragraph (d)(3)(ii)(B) are:
(1) Office visits (such as physician
visits); and
(2) All other outpatient items and
services (such as outpatient surgery,
facility charges for day treatment
centers, laboratory charges, or other
medical items).
(iii) No separate cumulative financial
requirements. A CHIP state plan may
not apply any cumulative financial
requirement for mental health or
substance use disorder benefits in a
classification that accumulates
separately from any established for
medical/surgical benefits in the same
classification.
(4) Nonquantitative treatment
limitations—(i) General rule. A CHIP
state plan may not impose a
nonquantitative treatment limitation for
mental health or substance use disorder
benefits in any classification unless,
under the terms of the CHIP state plan
as written and in operation, any
processes, strategies, evidentiary
standards, or other factors used in
applying the nonquantitative treatment
limitation to mental health or substance
use disorder benefits in the
classification are comparable to, and are
applied no more stringently than, the
processes, strategies, evidentiary
standards, or other factors used in
applying the limitation for medical/
surgical benefits in the classification.
(ii) Illustrative list of nonquantitative
treatment limitations. Nonquantitative
treatment limitations include—
(A) Medical management standards
limiting or excluding benefits based on
medical necessity or medical
appropriateness, or based on whether
the treatment is experimental or
investigative;
(B) Formulary design for prescription
drugs;
(C) For plans with multiple network
tiers (such as preferred providers and
participating providers), network tier
design;
(D) Standards for provider admission
to participate in a network, including
reimbursement rates;
(E) Plan methods for determining
usual, customary, and reasonable
charges;
(F) Refusal to pay for higher-cost
therapies until it can be shown that a
lower-cost therapy is not effective (also
known as fail-first policies or step
therapy protocols);
(G) Exclusions based on failure to
complete a course of treatment; and
(H) Restrictions based on geographic
location, facility type, provider
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specialty, and other criteria that limit
the scope or duration of benefits for
services provided under the plan or
coverage.
(I) Standards for providing access to
out-of-network providers
(5) Application to out-of-network
providers. Any CHIP state plan
providing access to out-of-network
providers for medical/surgical benefits
within a classification must use the
same processes, strategies, evidentiary
standards, or other factors in
determining access to out-of-network
providers for mental health and
substance use disorder benefits. If the
CHIP state plan is found to be in
compliance with § 438.206(b)(4) of this
chapter, they will be deemed in
compliance with the standards in this
paragraph (d)(5).
(e) Availability of plan information—
(1) Criteria for medical necessity
determinations. The criteria for medical
necessity determinations made under a
CHIP state plan including when benefits
are furnished through a MCE contractor
for mental health or substance use
disorder benefits must be made
available by the plan administrator (or
the state offering the coverage) to any
current enrollee or potential enrollee or
contracting provider upon request.
Health plans operating in compliance
with § 438.236(c) of this chapter will be
determined compliant with the
requirements in this paragraph (e).
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21:23 Apr 09, 2015
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(2) Reason for any denial. The reason
for any denial under a health plan of
reimbursement or payment for services
for mental health or substance use
disorder benefits in the case of any
enrollee must be made available by the
plan administrator or the state to the
enrollee.
(3) Provisions of other law.
Compliance with the disclosure
requirements in paragraphs (e)(1) and
(2) of this section is not determinative
of compliance with any other provision
of applicable federal or state law.
(f) Applicability—(1) CHIP state
plans. The requirements of this section
apply to CHIP state plans offering
medical/surgical benefits and mental
health or substance use disorder
benefits to their enrollees including
when benefits are furnished under a
contract with MCEs. If, under an
arrangement or arrangements to provide
CHIP state plan benefits any enrollee
can simultaneously receive coverage for
medical/surgical benefits and coverage
for mental health or substance use
disorder benefits, then the requirements
of this section apply separately for each
combination of medical/surgical
benefits and of mental health or
substance use disorder benefits that any
enrollee can simultaneously receive
from the state Medicaid agency.
(2) Scope. This section does not—
(i) Require a CHIP state plan or a MCE
that contracts with a CHIP state plan to
PO 00000
Frm 00036
Fmt 4701
Sfmt 9990
provide any mental health benefits or
substance use disorder benefits, and the
provision of benefits by a CHIP state
plan or a MCE that contracts with a
CHIP state plan for one or more mental
health conditions or substance use
disorders does not require the plan or
health insurance coverage under this
section to provide benefits for any other
mental health condition or substance
use disorder;
(ii) Affect the terms and conditions
relating to the amount, duration, or
scope of mental health or substance use
disorder benefits under the CHIP state
plan or a MCE that contracts with a
CHIP state plan except as specifically
provided in paragraphs (c) and (d) of
this section.
(g) Compliance dates—(i) In general.
CHIP state plans (including those that
contract with a MCE) must comply with
the requirements of this section no later
than [DATE 18 MONTHS AFTER THE
PUBLICATION OF THE FINAL RULE].
(ii) [Reserved]
Dated: March 18, 2015.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare
& Medicaid Services.
Dated: April 1, 2015.
Sylvia M. Burwell,
Secretary, Department of Health and Human
Services.
[FR Doc. 2015–08135 Filed 4–6–15; 4:15 pm]
BILLING CODE 4120–01–P
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]]>Agencies
[Federal Register Volume 80, Number 69 (Friday, April 10, 2015)]
[Proposed Rules]
[Pages 19417-19452]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-08135]
[[Page 19417]]
Vol. 80
Friday,
No. 69
April 10, 2015
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 438, 440, 456, et al.
Medicaid and Children's Health Insurance Programs; Mental Health
Parity and Addiction Equity Act of 2008; the Application of Mental
Health Parity Requirements to Coverage Offered by Medicaid Managed Care
Organizations, the Children's Health Insurance Program (CHIP), and
Alternative Benefit Plans; Proposed Rule
Federal Register / Vol. 80 , No. 69 / Friday, April 10, 2015 /
Proposed Rules
[[Page 19418]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 438, 440, 456, and 457
[CMS-2333-P]
RIN 0938-AS24
Medicaid and Children's Health Insurance Programs; Mental Health
Parity and Addiction Equity Act of 2008; the Application of Mental
Health Parity Requirements to Coverage Offered by Medicaid Managed Care
Organizations, the Children's Health Insurance Program (CHIP), and
Alternative Benefit Plans
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This proposed rule would address application of certain
requirements set forth in the Public Health Service Act, as amended by
the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction
Equity Act of 2008, to coverage offered by Medicaid managed care
organizations, Medicaid Alternative Benefit Plans, and Children's
Health Insurance Programs.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on June 9, 2015.
ADDRESSES: In commenting, please refer to file code CMS-2333-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to https://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-2333-P, P.O. Box 8016,
Baltimore, MD 21244-8016.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-2333-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. Alternatively, you may deliver (by hand or
courier) your written comments ONLY to the following addresses prior to
the close of the comment period:
a. For delivery in Washington, DC--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Room 445-G, Hubert
H. Humphrey Building, 200 Independence Avenue SW., Washington, DC
20201.
(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)
b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, 7500 Security
Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
call telephone number (410) 786-7195 in advance to schedule your
arrival with one of our staff members.
Comments erroneously mailed to the addresses indicated as
appropriate for hand or courier delivery may be delayed and received
after the comment period.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: John O'Brien or Jean Close at (410)
786-5529 (Alternative Benefit Plan), Debra Dombrowski at (312) 353-1403
(Managed Care) or Amy Lutzky (410) 786-0721.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: https://www.regulations.gov. Follow the search instructions on that Web site to
view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.
Acronyms, Abbreviations, and Short Forms
Because of the many terms to which we refer by acronym,
abbreviation, or short form in this proposed rule, we are listing the
acronyms, abbreviation, and short forms used and their corresponding
terms in alphabetical order below.
2008 Extenders Act Tax Extenders and Alternative Minimum Tax Relief
Act of 2008 (Division C)
The Act Social Security Act
The Affordable Care Act Patient Protection and Affordable Care Act
(Pub. L. 111-148, enacted on March 23, 2010), as amended by the
Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-
152)
The Departments Departments of the Treasury, Labor, and Health and
Human Services
ABP Alternative Benefit Plan
BBA Balanced Budget Act of 1997
CHIP Children's Health Insurance Program
CHIPRA Children's Health Insurance Program Reauthorization Act of
2009
CMS Centers for Medicare and Medicaid Services
The Code Internal Revenue Code of 1986
DOL Department of Labor
DSM Diagnostic and Statistical Manual of Mental Disorders (current
edition)
EHB Essential Health Benefit
EPSDT Early and Periodic Screening, Diagnostic and Treatment
ERISA Employee Retirement Income Security Act of 1974
FFS Fee for Service
HHS Department of Health and Human Services
ICD International Classification of Diseases
MCE Managed Care Entity
MCO Managed Care Organization
MH Mental Health
MH/SUD Mental Health or Substance Use Disorder
MHPA Mental Health Parity Act of 1996
MHPAEA Paul Wellstone and Pete Domenici Mental Health Parity and
Addiction Equity Act of 2008
NQTL Nonquantitative Treatment Limitation
PAHP Prepaid Ambulatory Health Plan
PHS Act Public Health Service Act
PIHP Prepaid Inpatient Health Plan
SHO State Health Official
SUD Substance Use Disorder
Treasury Department of the Treasury
Table of Contents
I. Executive Summary
II. Background
A. Introduction
B. Legislative Overview
III. Provisions of the Proposed Rule
A. Meaning of Terms
B. Parity Requirements for Aggregate, Lifetime and Annual Limits
[[Page 19419]]
C. Parity Requirements for Financial Requirements and Treatment
Limitations
D. Cumulative Financial Requirements
E. Compliance With Other Cost-sharing Rules
F. Nonquantitative Treatment Limitations (NQTLs)
G. Application to CHIP and EPSDT Deemed Compliance
H. Availability of Information
I. Application to EHBs and other ABP Benefits
J. Application of Parity Requirements to the Medicaid State Plan
K. Scope and Applicability of the Proposed Rule
L. Scope of Services
M. ABP State Plan Requirements
N. Increased Cost Exemption
O. Enforcement, Managed Care Rate Setting and Contract Review
and Approval
P. Applicability and Compliance
Q. Utilization Management
IV. Collection of Information Requirements
V. Response to Comments
VI. Regulatory Impact Statement
I. Executive Summary
This proposed rule addresses the application of certain provisions
added to the Public Health Service Act (PHS Act) (mental health parity
requirements) by the provisions of the Paul Wellstone and Pete Domenici
Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) (Pub. L.
110-343, enacted on October 3, 2008) to: (1) Medicaid managed care
organizations (MCOs) as described in section 1903(m) of the Social
Security Act (the Act); (2) Medicaid benchmark and benchmark-equivalent
plans (referred to in this proposed rule as Medicaid Alternative
Benefit Plans) as described in section 1937 of the Act; and (3)
Children's Health Insurance Program (CHIP) under title XXI of the Act.
Under section 1932(b)(8) of the Act, Medicaid MCOs are required to
comply with the requirements of subpart 2 of part A of title XXVII of
the PHS Act, to the same extent that those requirements apply to a
health insurance issuer that offers group health insurance. Subpart 2
includes mental health parity requirements added by MHPAEA at section
2726 of the PHS Act (as renumbered; formerly section 2705 of the PHS
Act). Under section 1937(b)(6) of the Act, Medicaid Alternative Benefit
Plans (ABPs) that are not offered by an MCO and that provide both
medical and surgical benefits and mental health or substance use
disorder benefits are required to ensure that financial requirements
and treatment limitations for such benefits comply with the mental
health parity requirements of the PHS Act (referencing section 2705(a)
of the PHS Act, which is now renumbered 2726(a) of the PHS Act), in the
same manner as such requirements apply to a group health plan. The
section 1937 provision applies only to ABPs that are not offered by
MCOs; ABPs offered by MCOs are already required to comply with these
requirements under section 1932(b)(8) of the Act. Section 2103(c)(6) of
the Act requires that state CHIP plans that provide both medical and
surgical benefits and mental health or substance use disorder benefits
shall ensure that financial requirements and treatment limitations for
such benefits comply with mental health parity requirements of the PHS
Act (referencing section 2705(a) of the PHS Act, now renumbered as
section 2726(a) of the PHS Act) to the same extent as such requirements
apply to a group health plan. In addition, section 2103(f)(2) of the
Act requires that CHIP benchmark or benchmark equivalent plans comply
with all of the requirements of subpart 2 of part A of the title XXVII
of the PHS Act, which includes the mental health parity requirements of
the PHS Act, insofar as such requirements apply to health insurance
issuers that offer group health insurance coverage.
This proposed rule would incorporate these requirements into our
regulations.
II. Background
A. Introduction
On September 26, 1996, the Congress enacted the Mental Health
Parity Act of 1996 (Pub. L. 104-204) (MHPA), which required parity in
aggregate lifetime and annual dollar limits for mental health benefits
and medical/surgical benefits. Those mental health parity provisions
were codified in section 712 of ERISA, section 2726 of the PHS Act
(renumbered under section 1001 of the Affordable Care Act), and section
9812 of the Code, and applied to employment-related group health plans
and health insurance coverage offered in connection with a group health
plan. The Balanced Budget Act of 1997 (Pub. L. 105-33, enacted on
August 5, 1997) (BBA) added sections 1932(b)(8) and 2103(f)(2) of the
Act to generally apply certain aspects of MHPA, including the
provisions of section 2726 of the PHS Act, to Medicaid MCOs and CHIP
benefits.
MHPAEA was enacted as sections 511 and 512 of the Tax Extenders and
Alternative Minimum Tax Relief Act of 2008 (Division C of Pub. L. 110-
343) (the 2008 Extenders Act). MHPAEA amends the Employee Retirement
Income Security Act of 1974 (ERISA), the PHS Act, and the Internal
Revenue Code of 1986 (the Code). The changes made by MHPAEA consist of
new standards, including parity for substance use disorder benefits, as
well as amendments to the existing mental health parity provisions
enacted in MHPA.
In 2009, section 502 of the Children's Health Insurance Program
Reauthorization Act of 2009 (Pub. L. 111-3) (CHIPRA) amended section
2103(c) of the Act by adding paragraph (6), which requires that CHIP
plans that provide both medical and surgical benefits and mental health
or substance use disorder benefits comply with the provisions of
section 2705(a) of the PHS Act, as amended by MHPAEA, in the same
manner as a group health plan.
The Patient Protection and Affordable Care Act (Pub. L. 111-148)
was enacted on March 23, 2010 and the Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111-152) was enacted on March 30,
2010 (collectively referred to as the ``Affordable Care Act''). Section
1001 of the Affordable Care Act reorganized and renumbered certain
provisions of the PHS Act, including renumbering section 2705 of the
PHS Act as section 2726 of the PHS Act. The Affordable Care Act did not
make conforming changes to cross-references to the renumbered
provisions, and contained new cross-references to the former section
numbers. But there was no indication that Congress intended to alter
the meaning of the existing cross-references. As a result, we read the
cross-references to continue to refer to the same section originally
referenced, as renumbered. We believe it is clear that the new cross-
references were also intended to refer to the renumbered provisions.
The Affordable Care Act expanded the application of section 2705(a)
of the PHS Act, as amended by MHPAEA, and renumbered as section 2726(a)
of the PHS Act, to benefits in Medicaid ABPs delivered outside of a
MCO. ABPs delivered through a MCO would already have to comply with
these requirements under section 1932(b)(8) of the Act.
Also, effective on March 23, 2010, section 2001(c) of the
Affordable Care Act modified the benefit provisions of section 1937 of
the Act. Specifically, section 2001(c) of the Affordable Care Act added
mental health benefits and prescription drug coverage to the list of
benefits that must be included in benchmark-equivalent coverage;
required the inclusion of essential health benefits (EHBs) beginning in
2014; and directed that plans described in section 1937 of the Act (now
known as ABPs) that include medical/surgical benefits and mental health
or substance use disorder benefits ensure that the financial
requirements and treatment limitations applicable to such mental
[[Page 19420]]
health or substance use disorder (MH/SUD) benefits comply with the
mental health parity provisions of the PHS Act.
In 2013, we released a State Health Official (SHO) letter that
provided guidance to states regarding the implementation of
requirements under MHPAEA to Medicaid benchmark and benchmark-
equivalent plans (referred to in the letter as ABPs) as described in
section 1937 of the Act, CHIP under title XXI of the Act, and MCOs as
described in section 1903(m) of the Act.\1\ We previously issued a SHO
letter on November 4, 2009, concerning the application of section 502
of CHIPRA.\2\
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\1\ https://www.medicaid.gov/federal-policy-guidance/downloads/sho-13-001.pdf.
\2\ https://downloads.cms.gov/cmsgov/archived-downloads/SMDL/downloads/SHO110409.pdf.
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The Departments of Health and Human Services (HHS), Labor, and the
Treasury (collectively the Departments) published interim final
regulations implementing MHPAEA on February 2, 2010 (75 FR 5410), and
final regulations applicable to group health plans and health insurance
issuers on November 13, 2013 (78 FR 68240) (MHPAEA final
regulations).\3\ The MHPAEA final regulations do not apply to Medicaid
MCOs, ABPs, or CHIP state plans. In this proposed rule, we are
proposing regulations to address how the MHPAEA requirements in section
2726 of the PHS Act, as implemented in the MHPAEA final regulations,
will apply to MCOs, ABPs and CHIP.
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\3\ The MHPAEA final regulations generally apply to group health
plans and health insurance issuers on the first day of the first
plan year beginning on or after July 1, 2014. The preamble to the
MHPAEA final regulations stated that each plan or issuer subject to
the interim final regulations, issued on February 2, 2010 (75 FR
5410), must continue to comply with the applicable provisions of the
interim final regulations until the corresponding provisions of
these final regulations become applicable to that plan or issuer (78
FR 68252 and 253). Note: For ease of reference, the citations to
provisions of the MHPAEA final rules throughout this document will
only refer to the provisions adopted by HHS in 45 CFR part 146.
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III. Provisions of the Proposed Rule
This proposed rule generally mirrors the policies set forth in the
MHPAEA final regulations to implement the statutory provisions that
require MCOs, ABPs and CHIP to comply with certain requirements of
section 2726 of the PHS Act (mental health parity requirements).
State Medicaid programs vary in their coverage of MH/SUD services.
For example, most MH/SUD services are optional services under the
traditional Medicaid benefits package, so states can choose to cover
some services and not others, or can choose to cover these services but
impose treatment limitations (for example, day or visit limits).
Additionally, states have the flexibility to provide services through a
managed care delivery mechanism using entities other than MCOs, such as
prepaid inpatient health plans (PIHPs) or prepaid ambulatory health
plans (PAHPs). PIHPs and PAHPs are defined in Sec. 438.2 as entities
that provide medical services on the basis of prepaid capitation
payments but provide a more limited benefit package than a
comprehensive MCO defined in section 1903(m) of the Act and are subject
to the requirements for managed care entities as specified in 42 CFR
part 438. These entities are not described in section 1932 of the Act,
which refers only to the application of mental health parity
requirements to Medicaid MCOs. In many instances, states will provide
the medical/surgical services through an MCO, but will not include in
the MCO benefit package some or all of their MH/SUD state plan
services. Instead, these services will be delivered through a PIHP or a
PAHP or a non-managed care delivery system, typically fee-for-service
(FFS). In many states, MCOs provide some MH/SUD services (for example,
emergency department services regardless of presenting condition, or
MH/SUD medications), and PIHPs, PAHPs, or FFS provide a more robust set
of services for those individuals with serious mental health conditions
or substance use disorders. These unique state MH/SUD delivery systems
are an important distinction between Medicaid coverage and coverage
available through the commercial market. Because the statutory
provisions making mental health parity requirements applicable to MCOs
do not explicitly address the situation in which medical/surgical
benefits and MH/SUD benefits included in coverage are furnished through
separate but interrelated and interdependent service delivery systems,
additional guidance is needed.
As a general matter, this proposed rule would require that each MCO
enrollee in a state must be provided access to a set of benefits that
meets the requirements of this rule regardless of whether the MH/SUD
services are provided by the MCO or through another service delivery
system. We propose to apply MHPAEA in this way as we interpret section
1932(b)(8) of the Act to require that, if a state uses private health
plans, or MCOs, to provide any of its state plan benefits under an MCO
contract, enrollees in those MCOs (whether under a voluntary or
mandatory managed care program) must receive the protections of MHPAEA
parity requirements for MH/SUD services. We are concerned that the
exclusion of MH/SUD services from MCO contracts could result in the
elimination of the application of section 1932(b)(8) of the Act. To
ensure that the goal of parity is met, we are proposing to require, by
relying on our authority in section 1902(a)(4) of the Act to specify
methods ``necessary for the proper and efficient operation of the state
plan,'' that if MH/SUD state plan services are provided to MCO
enrollees through a PIHP, PAHP, or under Medicaid FFS (because such
services are carved out of the MCO contract scope), MCO enrollees will
still receive the MHPAEA parity protections for MH/SUD state plan
services. Specifically, states that do not provide all services through
the MCO will be required to provide evidence of compliance with this
rule when they submit MCO contracts to the CMS Regional Office for
review and approval. Contracts with PIHPs and PAHPs would also be
required to provide that the PIHPs and PAHPs take steps necessary to
ensure such compliance with this proposed rule. For states that offer
MH/SUD services to MCO enrollees through FFS (other than when the
services are part of an ABP, as discussed below), states would
similarly be obligated to ensure that MH/SUD services provided on a FFS
basis, when combined with services furnished by the MCO, comply with
MHPAEA. In such an instance, the state would have the option of either
(1) making changes to the non-ABP state plan to provide MH/SUD services
through the FFS system in a manner that is on parity with the MCO-
provided medical/surgical services consistent with this proposed rule
or (2) including relevant MH/SUD services in the MCO contract (or PIHP
or PAHP contract as applicable), in which case the managed care entity
would have to comply with this proposed rule. Failure to adopt these
additional requirements using our authority under section 1902(a)(4) of
the Act, as well as section 1932(b)(8) of the Act would result in de
facto nullification of the MHPAEA protections that are provided in
section 1932(b)(8) of the Act if states carved out MH/SUD benefits from
the MCO contract.
We considered alternatives such as requiring, based as well on our
authority at section 1902(a)(4) of the Act, that all state plan MH/SUD
services be included under MCO contracts as the way to ensure that MCO
enrollees receive the full protections of MHPAEA as we believe the
Congress intended in section 1932(b)(8) of the Act, again relying on
our authority under section 1902(a)(4) of the Act. But, we believe that
the
[[Page 19421]]
approach we are proposing would allow states the most flexibility when
applying mental health parity requirements to their Medicaid services
across delivery systems. Given that there are many different delivery
system configurations that carve out MH/SUD services, this would allow
states to comport with parity requirements for MCO enrollees without
completely carving out MH/SUD services from their MCO or dropping MH/
SUD coverage altogether. We solicit comments on whether to require that
all state plan MH/SUD services be included under MCO contracts.
We recognize that this proposed regulation would require an
analysis by the state to determine if the overall delivery system
complies with the provisions of this proposed rule when all services
are not included in the benefit package of a single MCO. In states
where the MCO has sole responsibility for offering MH/SUD services, the
MCO would be responsible for undertaking the parity analysis and
informing the state what changes will be needed to the MCO contract to
comply with the provisions of this proposed rule. As proposed in Sec.
438.920, states would be required to make available to the public their
methods of complying with these proposed rules within 18 months after
the rule is finalized.
In states where some or all MH/SUD services are provided through
some combination of MCOs, PIHPs, PAHPs or FFS, the state would have the
responsibility for undertaking the parity analysis across these
delivery systems and determining if the benefits and any financial
requirements or treatment limitations are consistent with proposed
Sec. 438.920(b). The state, based on this analysis, would take the
necessary steps to ensure mental health parity compliance for its
Medicaid MCO enrollees. As previously discussed, we believe that the
provisions of section 1902(a)(4) of the Act authorize CMS to adopt
rules that require the state to perform the parity analysis when MH/SUD
services are offered across delivery systems because we believe that
this administrative responsibility is necessary and essential for full
implementation of section 1932(b)(8) of the Act. In addition, we are
proposing at Sec. 438.920(b) that the state make available
documentation of compliance with these proposed regulations to the
general public within 18 months of the effective date of this rule and
post it on the state Medicaid Web site.
For beneficiaries who are not enrolled in a MCO (FFS only), and
thus not covered by section 1932(b)(8) of the Act, our proposed rule
would not affect coverage (other than when the services are part of an
alternative benefit plan, as discussed below). However, we encourage
states to provide state plan benefits in a way that comports with the
mental health parity requirements of section 2726 of the PHS Act.
We note that payment to MCOs must be actuarially sound under
section 1903(m) of the Act; regulations implementing that requirement
are currently codified at Sec. 438.6 and are applicable to other
managed care entities based on separate statutory authority. In
particular, Sec. 438.6(e) provides that actuarially sound rates may
only be based on the cost to provide services covered under the state
plan. As part of our proposal to implement the mental health parity
requirements, we propose to revise Sec. 438.6(e) to specify
development of actuarially sound rates for MCOs, PIHPs and PAHPs that
provide MH/SUD services may take into account the cost of providing
services beyond those specified in the state plan which are necessary
for the MCO, PIHP or PAHP to comply with the mental health parity
requirements. Proposed Sec. 438.6(e) \4\ would require that states
base the capitation rates set for MCOs, PIHPs, and PAHPs, where MH/SUD
benefits are provided under contract with these entities, on their
provision of a benefit package that is compliant with these proposed
parity requirements even if services go beyond what is in the state
plan; the additional non-state plan services that are used to develop
the capitation rates would have to be necessary to comply with the
requirements of new subpart K of part 438. This would ensure that
states maintain an actuarially sound rate-setting structure that
provides for payment of capitation rates to managed care plans rate
that reflect the full scope of benefits the managed care plans are
obligated to provide. To the extent this new subpart K would obligate
an MCO, PIHP or PAHP to provide services that are not otherwise
included in the state plan, costs associated with services that would
not be included but for the parity requirements should be part of the
actuarially sound capitation rates. We believe that proposed Sec.
438.6(e) is sufficiently specific to only permit states to include
those services needed for compliance with these proposed rules. Section
438.6(e) allows a state's rate-setting structure to account for
services covered by an MCO, PIHP, or PAHP in excess of services and/or
treatment limits that are listed in the state plan only to the extent
that such services are necessary for the MCO, PIHP or PAHP to comply
with Sec. 438.910 of this rule. However, we are concerned about the
potential for inappropriately broad readings of the regulation text and
consequent use of this proposed section to include non-State plan
services in rate setting for to the MCO, PIHP or PAHP benefit package
that are not strictly necessary for compliance with these proposed
parity requirements. We request comments on this risk and how we might
mitigate it, such as a need for more prescriptive language or specific
oversight activities to ensure that managed care plans and states
develop rates that include only state plan services and the additional
services necessary for compliance with subpart K. For states that offer
MH/SUD services to MCO enrollees through FFS (other than when the
services are part of an alternative benefit plan, as discussed below),
states would similarly be obligated to ensure that MH/SUD services
provided on a FFS basis, when combined with services furnished by an
MCO, comply with the proposed parity provisions in part 438, subpart K.
To ensure this full implementation of section 1932(b)(8) of the Act, we
rely on our authority under section 1902(a)(4) of the Act to require
methods of administration necessary for the proper and efficient
administration of the state plan. If a state provides MH/SUD benefits
to MCO enrollees through FFS, the state would have the option of either
(1) making changes to the non-ABP state plan to provide MH/SUD services
through the FFS system in a manner that is on parity with the MCO-
provided medical/surgical services consistent with this rule, or (2)
including relevant MH/SUD services in a MCO contract (or PIHP or PAHP
contract when relevant), in which case the managed care entity would
have to comply with this rule.
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\4\ Our proposal is for this provision to be codified as part of
the regulations controlling rate setting for MCOs, PIHPs and PAHPs
and the paragraph designation may vary.
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To ensure the appropriate application of mental health parity
requirements to Medicaid services, we propose to amend current
regulations to apply mental health parity requirements under section
2726 of the PHS Act to services provided to enrollees of Medicaid MCOs
regardless of delivery system or limitations in the state plan.
Specifically, we propose amending part 438 by adding a new subpart K to
extend these mental health parity requirements to MCOs, and to PIHPs
and PAHPs as applicable, to ensure that all enrollees of the MCO are
provided access to a MHPAEA-compliant set of services when the state
plan includes
[[Page 19422]]
some MH/SUD services. Second, we are proposing to add a new provision
in Sec. 438.6 to require that all MCO contracts, and any PIHP and PAHP
contracts providing services to MCO enrollees, ensure that enrollees
receive services that are in compliance with the requirements of new
subpart K insofar as those requirements are applicable. We would not
apply mental health parity requirements to state plan services provided
to beneficiaries covered only through a FFS delivery system, even if
care for other beneficiaries is delivered through a managed care
delivery system. However, as indicated in our 2013 SHO letter, we
strongly encourage states to consider changes to the state plan benefit
package to comport with the mental health parity requirements of
section 2726 of the PHS Act. Several states have already implemented
the necessary changes in their state plan (for example, adding SUD
outpatient services and removing or aligning treatment limitations) to
make their MH/SUD benefits consistent for all Medicaid beneficiaries.
For clarity, we are not applying mental health parity requirements
under section 2726 of the PHS Act to Medicare Parts A, B, or D services
covered by Medicaid MCOs, such as those covered by integrated plans for
people who are dually eligible for Medicare and Medicaid; Medicare
benefits are controlled by the Medicare statute and regulations, which
are not within the scope of this proposed rule.
The proposed rules pertaining to ABPs and CHIP cross-reference the
proposed rules governing MCOs, PIHPs or PAHPs when states are using
these organizations as their delivery system for ABP or CHIP benefits.
Regardless of whether services are delivered in managed care or non-
managed care arrangements, all Medicaid ABPs (including benchmark
equivalent and Secretary-approved benchmark plans) and CHIP plans are
required to meet the financial requirements and treatment limitations
component of the mental health parity provisions set forth at section
2726(a) of the PHS Act.
Section 2726 of the PHS Act contains an increased cost exemption
that is available for group health plans and health insurance issuers
that make changes to comply with the law and incur an increased cost of
at least 2 percent in the first year that mental health parity
requirements apply to the plan or coverage, or an increased cost of at
least 1 percent in any subsequent plan or policy year. Plans or issuer-
offered coverage that comply with the parity requirements for one -full
plan year and that satisfy the conditions for the increased cost
exemption are exempt from the parity requirements for the following
plan or policy year, and the exemption lasts for one plan or policy
year.
This proposed rule does not include an increased cost exemption for
MCOs, PIHPs, or PAHPs, and we do not believe that these Medicaid
managed care entities will incur any net increase in costs because we
are also proposing here that the actuarially sound payment methodology
will take costs of compliance with parity requirements into account. As
noted, we are proposing to allow states to include the cost of
providing services beyond what is specified in the state plan which may
include adding services or removing or aligning treatment limitations
in managed care benefits into the actuarially sound rate methodology so
long as those services beyond what is specified in the state plan are
necessary to comply with mental health parity requirements. These
changes to the managed care rate setting process would authorize
states, in instances where they choose not to change their state plan,
to include the cost of services beyond what is specified in the state
plan into the capitation rate development to the extent the services
are required to be provided by the MCO, PIHP or PAHP and outlined under
contract to comply with this proposed rule. Therefore, the Medicaid
program rather than the plan will bear the costs of these changes. This
is different from the circumstances of the commercial market and
removes the rationale for an increased cost exemption for Medicaid
MCOs, PIHPs and PAHPs. In addition, we understand that few if any
issuers and group health plans have sought an increased cost exemption
in the commercial market. Therefore, in this proposed rule, we are not
extending the cost exemption provision to the Medicaid and CHIP
programs.
We recognize that state budgeting and contracting processes may
necessitate additional time for compliance with these new contracting
and rate setting parameters. We propose to afford states up to 18
months after the date of the publication of the final rule to comply
with the finalized provisions of this proposed rule. This proposal
would allow states to come into compliance with these regulations and
take the actions to make the necessary budget requests to add new
services or additional service units. Some states have a biannual
budget cycle and may need this length of time to develop and obtain
approval of these budget requests. In addition, states would need to
make the necessary contract changes to their MCOs, PIHPs, or PAHPs once
the budget has been approved. Some states may choose to request
approval from CMS to make changes to their non-ABP state plan for
services delivered through FFS. We believe that 18 months should
provide states with sufficient time to implement the necessary policy,
contract and budget changes to comply with the final regulations and
are proposing a delayed compliance deadline accordingly. We invite
comments on this proposal regarding the delay of required compliance
and the treatment of a cost-based exemption.
The statutory requirements applying mental health parity
requirements to CHIP are structured differently than the statutory
direction to apply those requirements to Medicaid MCOs. For CHIP
programs, sections 2103(c)(6) and 2103(f)(2) of the Act generally
provide that MH/SUD parity requirements apply to all delivery systems,
including FFS and managed care. Except where the CHIP state plan
provides full coverage of EPSDT and the MHPAEA requirements are deemed
as met, the MHPAEA parity requirements apply to the CHIP state plan in
the same manner as the law applies to health insurance issuers and
group health plans. Our proposal reflects this in the proposed
regulations for part 457.
For CHIP enrollees in an MCO, we propose to apply all mental health
parity provisions of section 2726 of the PHS Act. In addition to the
language at sections 2103(c)(6) and section 2103(f)(2) of the Act
previously discussed, section 2103(f)(3) of the Act makes applicable to
CHIP MCOs certain requirements under section 1932 of the Act, including
section 1932(b)(8) of the Act which requires that MCOs comply with
MHPAEA parity requirements. Furthermore, we propose to require parity
in connection with coverage provided by PIHPs and PAHPs to CHIP MCO
enrollees.
For ABP benefits offered only through FFS delivery systems,
financial requirements and treatment limitations under section 2726(a)
of the PHS Act are the only mental health parity provisions that apply
(based on section 1937(b)(6) of the Act). Section 2726(a)(3)(B) of the
PHS Act excludes from the definition of the term ``financial
requirement'' aggregate lifetime or annual dollar limits on benefits,
and thus these are not included in the ``financial requirements and
treatment limitations'' parity requirements applicable to Medicaid ABPs
furnished through FFS service delivery systems. (Annual and lifetime
limits are addressed separately under MHPAEA from financial
requirements, at sections 2726(a)(1) and (2) of the PHS
[[Page 19423]]
Act.). In addition, the following mental health parity provisions are
not applicable to FFS delivery systems for Medicaid ABP benefits
because they are not ``financial or treatment limitations:'' those
regarding access to out-of-network providers and the increased cost
exemption. For ABP benefits provided through an MCO, PIHP or PAHP, our
proposal is to require compliance with the part 438 provisions
addressing MHPAEA parity requirements for Medicaid managed care.
A. Meaning of Terms (Sec. 438.900, Sec. 440.395, Sec. 457.496)
The definitions of terms in this proposed rule include most terms
included in the MHPAEA final regulation at 45 CFR 146.136(a). This
proposed rule proposes to modify or add several terms to reflect the
terminology used in the Medicaid program and CHIP statutes, regulations
or policies. Some terms that are not relevant to the Medicaid program
or CHIP are not included in this proposed rule. For each term described
in this proposed rule, when appropriate, we have identified where we
have modified, added or deleted language that deviates from those
definitions in the MHPAEA final regulations. The proposed terms are as
follows:
For the definition of ``Aggregate lifetime dollar limit,'' we are
proposing to replace the words ``group health plan (or health insurance
coverage offered in connection with such a plan) for any coverage
unit'' with ``MCO, PIHP or PAHP'' or ``ABP'' to reflect the common
terms for health plans in the Medicaid program. For CHIP, we are
proposing to replace these words with ``CHIP state plan or a Managed
Care Entity (MCE).''
In Sec. 440.395, we are proposing to add the term ``Alternative
Benefit Plans''.
For the definition of ``Annual dollar limit,'' we are proposing to
replace the words ``group health plan (or health insurance coverage
offered in connection with such a plan) for any coverage unit'' with
``MCO, PIHP or PAHP'' to reflect the common terms for health plans in
the Medicaid program and ``a CHIP state plan or a MCE'' for CHIP.
We are proposing to add the definition of ``Early and Periodic
Screening, Diagnostic and Treatment (EPSDT) benefits''. Under section
1905(r) of the Act, EPSDT is a required benefit under the Medicaid
program for categorically needy individuals under age 21. The EPSDT
benefit is optional for the medically needy population and if elected
for that population, the EPSDT benefit must be made available to all
Medicaid eligible individuals under age 21. Under the EPSDT benefit,
states must provide for screening, vision, hearing and dental services
at intervals which meet reasonable standards of medical and dental
practice established after consultation with recognized medical and
dental organizations involved in child health care. States must also
provide for medically necessary screening, vision, hearing and dental
services regardless of whether such services coincide with established
periodicity schedules for these services. Additionally, the Act
requires that other necessary health care, diagnostic services,
treatment, and other measures described in section 1905(a) of the Act
to correct or ameliorate defects and physical and mental illnesses, and
conditions identified by the screening services, must be provided to
EPSDT beneficiaries whether or not such services are otherwise covered
under the Medicaid state plan.
In the proposed ABP parity rules, we are also proposing to add the
definition of ``essential health benefits (EHB).'' Since 2014, all non-
grandfathered health insurance coverage in the individual and small
group markets, Medicaid benchmark and benchmark-equivalent plans (now
also known as ABPs), and Basic Health Programs (if applicable) must
cover EHBs, which include items and services in 10 statutory benefit
categories, that are substantially equal in scope to a typical employer
health plan. Consistent with the requirements set forth in 45 CFR part
156, EHBs are comprised of (1) Ambulatory patient services; (2)
Emergency services; (3) Hospitalization; (4) Maternity and newborn
care; (5) Mental health and substance use disorder services, including
behavioral health treatment; (6) Prescription drugs; (7) Rehabilitative
and habilitative services and devices; (8) Laboratory services; (9)
Preventive and wellness services and chronic disease management; and
(10) Pediatric services, including oral and vision care.
We are proposing a different definition for the term ``medical/
surgical benefits,'' to reflect that the state defines these benefits
in the Medicaid and CHIP contexts. Under existing Medicaid law, the
state has the responsibility of identifying what is a covered benefit
for MCOs, PIHPs, PAHPs, ABPs, and CHIP; MCOs, PIHPs or PAHPs are
responsible for providing the covered benefits identified by the state.
This is different from the MHPAEA final regulations, where medical/
surgical benefits are defined under the terms of the group health plan
or health insurance coverage and in accordance with applicable federal
or state law. We are also proposing that the definition of ``medical/
surgical services'' clearly exclude long term care services in the
Medicaid and CHIP context. We believe this clarification is consistent
with the intent of the MHPAEA final regulations, as the kinds of long
term care services included in benefit packages for Medicaid and CHIP
beneficiaries are not commonly provided in the commercial market as
part of health benefits coverage. We are seeking comments on our
proposal to exclude long term care services from the definition of
medical/surgical services. This proposed rule further provides that
states define which benefits are medical/surgical consistent with
generally recognized independent standards of current medical practice
(for example, the most current version of the International
Classification of Diseases (ICD) or state guidelines).
We propose to define ``mental health benefits'' and ``substance use
disorder benefits'', under these regulations, as benefits for items and
services for mental health conditions and substance use disorders,
respectively, as defined by the state and in accordance with applicable
federal and state law. Thus, our proposal here for the terms ``mental
health benefits'' and ``substance use disorder benefits'' in this
Medicaid and CHIP context also varies from the MHPAEA final
regulations, similar to our proposed definition for medical/surgical
benefits, to reflect that the state (not the MCO, PIHP or PAHP) is
responsible for defining these benefits. This proposed rule also
proposes that when states define what benefits are MH/SUD benefits, the
definitions must be consistent with generally recognized independent
standards of current medical practice. Consistent with the MHPAEA final
regulations, this requirement is included to ensure that a benefit is
not misclassified to avoid complying with the parity requirements. The
word ``generally'' in the requirement ``to be consistent with generally
recognized independent standards of current medical practice'' is not
meant to imply that the standard must be a national standard, but
instead that a standard is largely accepted in the relevant medical
community. There are many different sources that would meet this
requirement. For example, a state may follow the most current version
of the Diagnostic and Statistical Manual of Mental Disorders (current
edition) (DSM), ICD, or a state guideline. All of these would be
considered acceptable resources to determine whether benefits for a
particular condition are classified
[[Page 19424]]
as medical/surgical or MH/SUD benefits for purposes of these rules.
This proposed rule duplicates the definition of the term
``treatment limitations'' in the MHPAEA final regulations, including
distinguishing between a quantitative and a nonquantitative treatment
limitation (NQTL). This proposed rule proposes that the parity
requirements in the statute apply to both quantitative treatment
limitations and NQTLs. A quantitative treatment limitation is a
restriction that is expressed numerically, such as a limit of 50
outpatient visits per year. A NQTL is a restriction that is not
expressed numerically, but otherwise limits the scope or duration of
benefits for treatment, such as requirements for prior authorization
for services. A non-exhaustive list of NQTLs is included in proposed
Sec. 438.910(d)(2), Sec. 440.395(b) and Sec. 457.496. This list, as
well as the application of these regulations to NQTLs, is further
discussed later in this proposed rule. However, these regulations
propose that a permanent exclusion of all benefits for a specific
condition or disorder is not a treatment limitation.
B. Parity Requirements for Aggregate Lifetime and Annual Dollar Limits
Proposed Sec. Sec. 438.905 and 457.496(c) address the parity
requirements for aggregate lifetime and annual dollar limits. The
application of these requirements is generally the same as under the
MHPAEA final regulations (45 CFR 146.136(b)). We note that for managed
care arrangements, we are using our authority in section 1902(a)(4) of
the Act to require PIHPs and PAHPs to comply with mental health parity
requirements for MCO enrollees.
C. Parity Requirements for Financial Requirements and Treatment
Limitations
Sections 438.910, 440.395(b), and 457.496(d) of this proposed rule
set forth parity requirements for financial requirements and treatment
limitations.
1. Clarification of Terms
In addition to proposing the meaning of terms in Sec. 438.900,
Sec. 440.395, and Sec. 457.496, this proposed rule clarifies certain
terms that have been given specific meanings for purposes of MHPAEA.
a. Classification of Benefits
For the purposes of this proposed rule, ``classification of
benefits'' means a classification as described in Sec. 438.910, Sec.
440.395(b), and Sec. 457.496(d). This proposed rule would modify the
classification of benefits set forth in the regulations that were
adopted by the Departments, as discussed in section III.C.2.a of this
proposed rule, and would provide that the parity requirements for
financial requirements and treatment limitations are applied on a
classification-by-classification basis.
b. Type
This proposed rule uses the term ``type'' to refer to financial
requirements and treatment limitations of the same nature. Different
types of financial requirements and treatment limitations include
copayments, coinsurance, annual visit limits, and episode visit limits.
States sometimes apply more than one financial requirement or treatment
limitation to benefits. Also, this proposed rule specifies that a
financial requirement or treatment limitation must be compared only to
financial requirements or treatment limitations of the same type within
a classification. For example, copayments are compared only to other
copayments, and annual visit limits are compared only to other annual
visit limits; copayments are not compared to coinsurance, and annual
visit limits are not compared to episode visit limits.
c. Level
In this proposed rule, a ``level'' of a type of financial
requirement or treatment limitation refers to the magnitude (such as,
the dollar, percentage, day, or visit amount) of the financial
requirement or treatment limitation. For example, a plan might impose a
20 unit annual limit on outpatient visits or a $3 copayment depending
on the medical/surgical or MH/SUD benefit.
2. General Parity Requirement for Financial Requirements and Treatment
Limitations
The general parity requirement proposed in Sec. 438.910(b), Sec.
440.395(b), and Sec. 457.496(d) of this proposed rule prohibits a MCO,
PIHP, or PAHP (when providing benefits to an MCO enrollee), or ABP
(when used in a non-managed care arrangement), or CHIP state plan from
applying any financial requirement or treatment limitation to MH/SUD
benefits in any classification that is more restrictive than the
predominant financial requirement or treatment limitation of that type
applied to substantially all medical/surgical benefits in the same
classification. For this purpose, the general parity requirement of
MHPAEA applies separately for each type of financial requirement or
treatment limitation (for example, unit limits are compared to unit
limits). This general parity requirement also applies to NQTLs, which
is discussed later in this proposed rule.
a. Classifications of Benefits
The MHPAEA final regulations at 45 CFR 146.136(c)(2)(ii) set forth
the following classifications of benefits: Inpatient in-network;
inpatient out-of-network; outpatient in-network; outpatient out-of-
network; emergency care; and prescription drugs. Under those MHPAEA
regulations, if a group health plan or health insurance coverage
provides MH/SUD benefits in any classification of benefits, MH/SUD
benefits must be provided in every classification in which medical/
surgical benefits are provided. The parity requirements are applied to
financial requirements and treatment limitations within each
classification separately.
The benefit structure of traditional Medicaid (non-ABP state plan
services), ABPs and CHIP may vary significantly from commercial health
insurance coverage. For example, nursing facility long-term care
services are a mandatory service in traditional Medicaid, but are not
commonly provided in the commercial market as part of health benefits
coverage. Additional long term care services and supports, such as
personal care, home and community based services, or long term psycho-
social rehabilitation programs, are also commonly included in benefit
packages for all or targeted populations of Medicaid and CHIP
beneficiaries, but these benefits are not typically provided in a
commercial environment. Additionally, the cost-sharing structure and
out-of-network coverage of Medicaid and CHIP services is often
different than benefits provided in the commercial market. Therefore,
issues arise over how similar or different the classifications should
be for the Medicaid and CHIP programs. Our proposal follows the general
structure of the classifications used in the MHPAEA final regulations
with a significant distinction. For this proposed rule, we eliminated
the in-network and out-of-network distinctions for the inpatient and
outpatient classifications and propose four classifications: Inpatient;
Outpatient; Emergency care; and Prescription drugs. We propose these
classifications for the following reasons:
Medicaid and CHIP are held to certain cost-sharing
requirements for either managed care or non-managed care delivery
systems. The dollar amount the beneficiary pays varies by income, and
whether services are received through a network model does
[[Page 19425]]
not impact the amount for which the beneficiary is responsible.
When CHIP or ABPs use a FFS delivery system or other non-
managed care arrangement, payment is made for services to beneficiaries
furnished by any qualified providers that have signed a Medicaid or
CHIP provider agreement. Absent a waiver of section 1902(a)(23)(A) of
the Act, beneficiaries have a choice from among qualified providers and
are not limited to a network.
In a Medicaid managed care environment, Sec.
438.206(b)(4) states that if a managed care plan's provider network is
unable to provide necessary services covered under the contract to a
particular enrollee, the MCO, PIHP or PAHP must adequately (and on a
timely basis) cover these services out-of-network for the enrollee for
as long as the MCO, PIHP or PAHP is unable to provide them in network.
This provision is not specific to medical/surgical services or MH/SUD
services. We understand there may be continued concerns that access to
out-of-network providers is provided by MCOs, PIHPs and PAHPs in
compliance with MHPAEA. To address this concern, we are proposing to
add access to out-of-network providers to the illustrative list of
NQTLs.
For purposes of applying parity requirements to Medicaid, the
classifications of benefits should relate to how states construct and
manage their Medicaid benefits. All Medicaid benefits provided, with
the exception of long term care services, should fall into one of the
classifications of benefits.
We are proposing that parity requirements for financial
requirements and treatment limitations are generally applied on a
classification-by-classification basis. The four classifications
proposed in this rule are the only classifications to be used for
purposes of applying the parity requirements of MHPAEA to Medicaid and
CHIP. Moreover, these classifications must be used for all financial
requirements and treatment limitations to the extent that a MCO, PIHP,
PAHP, ABP or CHIP provides benefits in a classification and imposes any
separate financial requirement or treatment limitation (or separate
level of a financial requirement or treatment limitation) for benefits
in the classification.
The MHPAEA final regulations discussed the application of parity
requirements to intermediate services (such as residential treatment,
partial hospitalization, and intensive outpatient treatment) provided
under the health plan. Specifically, the MHPAEA final regulations
required group health plans and issuers to assign covered intermediate
MH/SUD benefits to a benefit classification in the same manner they
assign comparable intermediate medical/surgical benefits to a
classification. The MHPAEA final regulations do not specifically define
intermediate services; nor do the Medicaid and CHIP programs define
intermediate services within state plan benefits. Therefore, we are not
proposing to specify an intermediate classification to be used in the
parity analysis for Medicaid or CHIP programs. As in the MHPAEA final
rule, we propose to allow the applicable regulated entity (the MCO,
PIHP or PAHP, or state in connection with the ABP and CHIP) to assign
intermediate level services to any of the classifications listed, but
assignment to those classifications must be done in a consistent manner
for medical/surgical services and MH/SUD services. We request comment
on this approach, as well as alternatives.
Similar to the MHPAEA final rule, this proposed rule would not
define what services are included in the inpatient, outpatient, or
emergency care classifications. These terms are subject to the design
of a state's managed care program and their meanings may differ
depending on the benefit packages. State health insurance laws may
define these terms and in the event that these are not defined we would
expect each regulated entity within a state to define these
classifications in a similar manner. Further, each regulated managed
care plan (MCOs, PIHPs and PAHPs) or the state in connection with ABP
or CHIP must apply these terms uniformly for both medical/surgical
benefits and MH/SUD benefits.
3. Applying the General Parity Requirement to Financial Requirements
and Quantitative Treatment Limitations
Sections 438.910(c), 440.395(b) and, 457.496(d) of this proposed
rule address the application of the general parity requirement of
MHPAEA to financial requirements and quantitative treatment limitations
in MCOs, PIHPs, PAHPs, ABP or CHIP state plans.
a. Determining the Portion of Medical/Surgical Benefits Subject to a
Financial Requirement or Quantitative Treatment Limitation
As noted above, the general parity requirement proposed in Sec.
438.910(b), Sec. 440.395(b), and Sec. 457.496(d) of this proposed
rule prohibits a MCO, PIHP, or PAHP, or ABP state plan (when used in a
non-managed care arrangement), or CHIP state plan or MCE contracting
with a CHIP state plan from applying any financial requirement or
treatment limitation to MH/SUD benefits in any classification that is
more restrictive than the ``predominant'' financial requirement or
treatment limitation of that type applied to ``substantially all''
medical/surgical benefits in the same classification. In these
paragraphs of the proposed regulations, we propose standards similar to
those in the MHPAEA final regulations for determining the portion of
medical/surgical benefits subject to a financial requirement or
quantitative treatment limitation for purposes of the parity analysis.
Under this proposed rule, the portion of medical/surgical benefits in a
classification subject to a financial requirement or quantitative
treatment limitation would be based on the dollar amount of all
payments for medical/surgical benefits in the classification expected
to be paid during a specific year. For MCOs, PIHPS and PAHPs, this
would be dollar amounts for payment during a contract year. For ABPs
and CHIP state plans, it would be for the year starting the effective
date of the approved ABP or CHIP state plan; effective dates for these
plans will vary based on the date the ABP or CHIP state plan was
approved by CMS. For purposes of this calculation, the MCOs, PIHPs and
PAHPs (when such organizations are responsible for MH/SUD benefit)
would collectively (with the assistance of the state) determine the
total amount projected to be expended (including FFS) to determine the
two-thirds threshold as discussed below. We are requesting comment on
the approach to determine the threshold when there are multiple managed
care delivery systems (for example, MCOs, PIHPs and PAHPs).
b. ``Substantially all''
Similar to the MHPAEA final regulations, the first step in applying
the general parity requirement of MHPAEA to a given financial
requirement or quantitative treatment limitation is to determine
whether a type of financial requirement or quantitative treatment
limitation applies to substantially all medical/surgical benefits in a
classification. This proposed rule would define ``substantially all''
as meaning at least two-thirds of the medical/surgical benefits in that
classification as measured by the total dollar amount of payments for
medical/surgical benefits in the classification expected to be paid
within a measurement year. In this proposed rule, we would apply
``substantially all'' consistent with the MHPAEA final regulations.
[[Page 19426]]
c. ``Predominant''
If a type of financial requirement or quantitative treatment
limitation applies to substantially all medical/surgical benefits in a
classification, the second step is to determine the predominant level
of that type of financial requirement or quantitative treatment
limitation that may be applied to MH/SUD benefits in the
classification. Under this proposed rule, the level of a type of
financial requirement or quantitative treatment limitation would be the
predominant level if it applies to more than one-half of medical/
surgical benefits subject to the financial requirement or quantitative
treatment limitation in that classification. If a single level of a
type of financial requirement or quantitative treatment limitation
applies to more than one-half of medical/surgical benefits subject to
the financial requirement or quantitative treatment limitation in a
classification (based on expected payments, as discussed earlier in
this proposed rule), the applicable regulated entity (under proposed
Sec. Sec. 438.910(b), 440.395(b), or 457.496(d)) may not apply that
particular financial requirement or quantitative treatment limitation
to MH/SUD benefits at a level that is higher (for example, more
expensive beneficiary cost-sharing) or more restrictive than the level
that has been determined to be predominant for medical/surgical
benefits. As proposed in Sec. 438.920(b), states that choose to use
PIHPs, PAHPs or the FFS delivery system to provide some of the MH/SUD
benefits to MCO enrollees would be required to complete an analysis to
determine if the benefits comply with these rules. For example, all
projected payments for services provided to the MCO enrollees
(regardless of whether the payments are made by the MCO, PIHP, PAHP or
FFS) would need to be considered in determining if the level of
financial requirement or treatment limitation is the predominant level.
If no single level applies to more than one-half of medical/surgical
benefits subject to the financial requirement or quantitative treatment
limitation in a classification, multiple levels of the same type of
financial requirement or quantitative treatment limitation can be
combined by the state, in cases where some MH/SUD services are provided
outside the MCO, or the MCO, in cases where all services are carved-in,
until the portion of medical/surgical benefits subject to the financial
requirement or quantitative treatment limitation exceeds one-half. For
any combination of levels that applies to more than one-half of
medical/surgical benefits subject to the financial requirement or
quantitative treatment limitation in a classification, the state or the
MCO may not apply that particular financial requirement or quantitative
treatment limitation to MH/SUD benefits at a level that is more
restrictive than the least restrictive level within the combination.
The state or the MCO may combine projected payments for benefits
subject to the most restrictive levels first, with each less
restrictive level added to the combination until the combination
applies to more than one-half of the benefits subject to the financial
requirement or treatment limitation. The following example illustrates
the application of quantitative treatment limitations to medical/
surgical and MH/SUD benefits.
Example. Facts. A state is providing a comprehensive service
package through an MCO. The MCO is currently providing coverage of
services with limits that are consistent with the approved state plan.
The MCO benefit package includes:
Inpatient Hospital services for medical/surgical--30 days
per year limit
Inpatient Hospital services for MH/SUD--30 days per year
limit
Primary Care Physician Services for medical/surgical--
unlimited
Specialist Physician Services for medical/surgical--50
visits per year
Outpatient MH services--20 visits per year limit
Physical Therapy--20 visits per year limit
Occupational Therapy--20 visits per year limit
Emergency Services--Unlimited for medical/surgical or MH/
SUD
The MCO projects its payments as follows for medical/surgical
benefits:
Table 1--Example of Quantitative Treatment Limit
----------------------------------------------------------------------------------------------------------------
Percent of
Percent of total classification
Benefit/classification--medical/surgical Projected payment costs subject to a
limit
----------------------------------------------------------------------------------------------------------------
Inpatient Hospital..................................... $400x 100 100
Inpatient total.................................... 400x 100 100
Physician Services..................................... 150x 27 0
Specialist Services.................................... 250x 46 46
Physical Therapy....................................... 75x 13.5 13.5
Occupational Therapy................................... 75x 13.5 13.5
Outpatient total................................... 550x 100 73
Emergency Services..................................... 100x 100 0
Emergency total.................................... 100x 100 0
----------------------------------------------------------------------------------------------------------------
Example. Conclusion. In this example, the MCO would be able to
maintain some level of day and visit limits on benefits in both the
inpatient and outpatient MH/SUD classifications because both
classifications meet the ``substantially all'' standard--in other
words, more than two-thirds of the medical/surgical benefits in each
classification are subject to those types of limits (100 percent of all
medical/surgical inpatient benefits are subject to a day limit, and 73
percent of all medical/surgical outpatient benefits are subject to a
visit limit).
With regards to the level of the quantitative treatment limitation
on inpatient MH/SUD services, the MCO may maintain its 30 day limit
because 100 percent of all inpatient medical/surgical benefits are also
subject to a 30 day limit, making it the predominant level.
However, with regards to the level of the quantitative treatment
limitation on outpatient MH/SUD services, the MCO may not maintain its
current limit of 20 visits per year. Of the total amount of outpatient
medical/surgical benefits subject to a visit limit ($400x), 62.5
percent ($250x) are subject to a 50 visit limit (specialist services),
and only 37.5 percent ($150x) are subject to a 20 visit limit (physical
therapy and occupational therapy). Because the 20 visit limitation is
not the predominant level (that is, it does not apply to at least 50
percent of the medical/surgical benefits in the classification subject
to
[[Page 19427]]
the visit limit), the MCO would need to either remove the visit limits
altogether on outpatient MH/SUD services or increase the visit
limitation to at least 50 visits per year to align with the least
restrictive level of visit limits on outpatient medical/surgical
benefits.
Lastly, because there are currently unlimited emergency visits
under the medical/surgical benefits, the MCO would need to maintain
unlimited visits for emergency services for MH/SUD, and would not be
able to impose any limits on MH/SUD unless limits were also imposed on
medical/surgical services and such limits were consistent with parity
requirements.
4. Special Rules for Multi-Tiered Prescription Drug Benefits and Other
Benefits (Sec. Sec. 438.910(c)(2), 440.395(b)(3)(ii),
457.496(d)(3)(ii))
In addition, the MHPAEA final regulations at 45 CFR
146.136(c)(3)(iii)(A) permit plans under certain circumstances to apply
different levels of financial requirements to different tiers of
prescription drugs and still satisfy the parity requirements. This
proposed rule would allow a MCO, PIHP, PAHP, ABP or CHIP state plan to
subdivide the prescription drug classification into tiers based on
reasonable factors as described in the proposed regulations and without
regard to whether a drug is generally prescribed for medical/surgical
benefits or for MH/SUD benefits.
The MHPAEA final regulations at 45 CFR 146.136(c)(3)(iii)(C) permit
a sub-classification for office visits, separate from other outpatient
items and services. Other sub-classifications not specifically
permitted, such as separate sub-classifications for generalists and
specialists, cannot be used for purposes of determining parity. We
propose to retain this approach to sub-classifications in the
application of these parity requirements established in parts 438, 440
and 457 (that is, to services provided to enrollees in Medicaid MCOs,
and to ABPs and CHIP). After the sub-classifications are established, a
MCO, PIHP, PAHP, ABP or CHIP state plan may not impose any financial
requirement or quantitative treatment limitation on MH/SUD benefits in
any sub-classification (for example, office visits or non-office
visits) that is more restrictive than the predominant financial
requirement or quantitative treatment limitation that applies to
substantially all medical/surgical benefits in the sub-classification,
using the parity analysis for financial requirements and quantitative
treatment limitations.
In the MHPAEA final regulations, the Departments recognized that
tiered networks have become an important tool for health plan efforts
to manage care and control costs. Therefore, for purposes of applying
the financial requirement and treatment limitation rules under MHPAEA,
the MHPAEA final regulations provide that if a plan (or health
insurance coverage) provides benefits through multiple tiers of in-
network providers (such as an in-network tier of preferred providers
with more generous cost-sharing to participants than a separate in-
network tier of participating providers in any classification), the
plan may divide its benefits furnished on an in-network basis into sub-
classifications that reflect those network tiers, if the tiering is
done without regard to whether a provider is a MH/SUD provider or a
medical/surgical provider. While network tiers may also be used in
Medicaid managed care, we do not believe that the use of network tiers
for the purposes of the parity analysis is needed. As discussed later
in section F. of this proposed rule, Medicaid cost-sharing rules apply
regardless of network status. Additionally, any quantitative treatment
limitation outlined in the contract must be applied to the service
broadly and therefore cannot have separate limitations based on network
tiers. We recognize there may be network tiers used to commonly refer
enrollees or for purposes of building the network and have varying
payment rates to providers, but the use of multiple network tiers for
NQTLs is discussed in section E. of this proposed rule.
D. Cumulative Financial Requirements (Sec. 438.910(c)(3), Sec.
440.395(b)(3)(iii), Sec. 457.496(d)(3)(iii))
While financial requirements such as copayments and coinsurance
generally apply separately to each covered expense, other financial
requirements (in particular, deductibles) accumulate across covered
expenses. In the case of deductibles, generally an amount of otherwise
covered expenses must be accumulated before the plan pays benefits.
Financial requirements that determine whether and to what extent
benefits are provided based on accumulated amounts are defined in these
proposed rules as cumulative financial requirements. The MHPAEA final
regulations provide that a group health plan or issuer may not apply
cumulative financial requirements or cumulative quantitative treatment
limitations to MH/SUD benefits in a classification that accumulate
separately from any such cumulative financial requirements or
cumulative quantitative treatment limitations established for medical/
surgical benefits in the same classification. As in the MHPAEA final
rule at 45 CFR 146.136(c)(2)(v), we propose that any separate
cumulative financial requirement (separate for mental health, substance
use or medical/surgical) will not be permitted for entities subject to
our proposed requirements (namely, MCOs, PIHPs and PAHPs in connection
with coverage provided to MCO enrollees, and in ABP and CHIP). However,
we propose to permit quantitative treatment limitations to accumulate
separately for medical/surgical and MH/SUD services as long as they
comply with the general parity requirement. We are proposing to allow
this separate accumulation of treatment limits in Medicaid and CHIP for
several reasons. First, benefits for MCO beneficiaries must be provided
in at least the same amount, duration and scope as set forth in the
state plan. Requiring plans to have cumulative limits across medical/
surgical benefits and MH/SUD benefits within a classification may
incentivize MCOs to retain the quantitative treatment limitation level
applied on the medical/surgical benefits in the state plan as the total
cumulative limit for both medical/surgical and MH/SUD benefits. This
would comply with the requirements of parity, but would not meet the
requirements of providing at least what is in the state plan. In
addition, we believe that requiring quantitative treatment limitations
within a classification of benefits to accumulate jointly toward a
unified limit level may be operationally challenging for states with
multiple delivery systems. Specifically, in Medicaid the state
determines which entities will provide the specific medical/surgical
and MH/SUD benefits covered under their respective contracts, including
if some services will be provided under FFS. These potentially complex
service delivery arrangements in Medicaid in turn determine whether the
MCO or the state have the responsibility for complying with parity
requirements. In commercial coverage, the parity obligations remain
with the same entity--the group health plan or issuer--that determines
which entities will provide each individual medical/surgical or MH/SUD
benefits. Due to the difficulty that the MCO will face in administering
unified treatment limits that accumulate across entities that the MCO
has no contractual relationship with, we propose to permit the MCO,
PIHP or PAHP to maintain separate treatment limitations, provided such
limit for MH/SUD benefits is no more
[[Page 19428]]
restrictive than the predominant limit applied to substantially all
medical/surgical benefits in a given classification.
E. Compliance With Other Cost-Sharing Rules (Sec. 438.910(c)(4))
States and the MCOs, PIHPs and PAHPs that contract with states are
bound by the existing Medicaid and CHIP cost-sharing rules (Sec.
438.108 and part 457, subpart E). As previously indicated, the Medicaid
program and CHIP are held to strict cost-sharing requirements for both
managed care and non-managed care delivery systems. We emphasize here
that all financial requirements included in a MHPAEA analysis must also
be in compliance with both existing cost-sharing rules and the
requirements of this proposed rule. Compliance with the parity
requirements does not mean that a state, or MCO, PIHP or PAHP can
violate existing cost-sharing requirements. Therefore, some cost-
sharing structures in a state's Medicaid program or CHIP may need to
change to be compliant with MHPAEA. To clarify this, we propose at
Sec. 438.910(c)(4) to reiterate that requirement with a cross-
reference to the cost-sharing rules applicable to MCOs, PIHPs and
PAHPs.
F. Nonquantitative Treatment Limitations (NQTLs) (Sec. 438.910(d),
Sec. 440.395(b)(4), and Sec. 457.496(d)(4))
MCOs, PIHPs, PAHPs, ABP and CHIP state plans may impose a variety
of limits affecting the scope or duration of benefits that are not
expressed numerically (nonquantitative treatment limitations or NTQLs).
Nonetheless, such nonquantitative provisions are also treatment
limitations affecting the scope or duration of benefits. Sections
438.910(d), 440.395(b)(4), and 457.496(d)(4) of this proposed rule
would prohibit the imposition of any NQTL to MH/SUD benefits unless
certain requirements are met. In addition, this proposed rule provides
an illustrative list of NQTLs, including medical management standards;
prescription drug formulary design; standards for provider admission to
participate in a network; and conditioning benefits on completion of a
course of treatment.
Under the MHPAEA final regulations at 45 CFR 146.136(c)(4), an NQTL
may not be imposed for MH/SUD benefits in any classification unless,
under the terms of the plan (or health insurance coverage) as written
and in operation, any factors used in applying the NQTL to MH/SUD
benefits in a classification are comparable to and applied no more
stringently than factors used in applying the limitation for medical
surgical/benefits in the classification. For these purposes, factors
mean the processes, strategies, evidentiary standards, or other
considerations used in determining limitations on coverage of services.
The phrase ``applied no more stringently'' requires that any processes,
strategies, evidentiary standards, or other factors that are comparable
on their face be applied in the same manner to medical/surgical
benefits and MH/SUD benefits.
We propose to duplicate this approach to NQTLs in the application
of parity requirements to Medicaid MCOs, PIHPs and PAHPs providing
services to MCO enrollees, ABPs, and CHIP state plans. For states that
are using a non-managed care delivery system for their ABPs and CHIP,
the state (through its ABP and CHIP state plan) may only impose an NQTL
on a MH/SUD benefit in any classification if it has written and
operable processes, strategies, evidentiary standards or other factors
used in applying--to MH/SUD benefits in that classification--the NQTL
that are comparable to or less restrictive and applied no more
stringently than any processes, strategies, evidentiary standards, or
other factors used in applying the limitation for medical/surgical
services in that classification.
In addition, we propose to add another example of an NQTL regarding
standards for accessing out-of-network providers. As discussed earlier
in this proposed rule, in the context of CHIP or ABPs that use a FFS
delivery system or other non-managed care arrangement, beneficiaries
may choose from any qualified provider that has signed a Medicaid or
CHIP provider agreement and are not limited to a network. In a Medicaid
managed care environment, if a provider network is unable to provide
necessary services covered under the contract to a particular enrollee,
the MCO, PIHP or PAHP must adequately (and on a timely basis) cover
these services out-of-network for the enrollee as long as the MCO, PIHP
or PAHP is unable to provide them in-network.\5\ To address continued
concerns about access to these services out-of-network when they cannot
be provided in-network, these proposed rules would add this example of
an NQTL, so that providing access to out-of-network providers for MH/
SUD benefits in any classification would have to use the same
processes, strategies, evidentiary standards, or other factors as are
used in providing access to out-of-network providers for medical/
surgical benefits within the same classification. If MCOs, PIHPs or
PAHPs, and ABPs provided through managed care, are found to be in
compliance with Sec. 438.206(b)(4), that would be evidence that they
are in compliance with proposed Sec. 438.910(d)(3), although the state
will want to review how the plan is doing this in practice. This
additional example of an NQTL is not relevant for states that are using
a non-managed care delivery system for ABPs and CHIP state plan, since
providers must be enrolled in Medicaid or CHIP and would not be
considered out-of-network.
---------------------------------------------------------------------------
\5\ See Sec. 438.206(b)(4).
---------------------------------------------------------------------------
We note that we propose to use in Sec. 438.910(d)(2)(iii), the
example of an NQTL pertaining to network design for MCOs, PIHPs and
PAHPs with multiple network tiers because although network tiers may
not be used to impose financial requirements or quantitative treatment
limitations in Medicaid and CHIP, we believe MCOs, PIHPs and PAHPs may
still use them in developing NQTLs. For example, the MCO, PIHP or PAHP
may use network tiers when recommending providers to enrollees, or how
they structure their provider directories. MCOs, PIHPs and PAHPs with
multiple network tiers should be constructing them and providing
beneficiary access to them in a way that is consistent with the parity
standard for NQTLs.
The examples below illustrate the operation of the requirements for
NQTLs.
Example 1. Facts. A MCO requires prior authorization that a
treatment is medically necessary for all inpatient medical/surgical
benefits and for all inpatient MH/SUD benefits. In practice, inpatient
benefits for medical/surgical conditions are routinely approved for 7
days, after which a treatment plan must be submitted by the patient's
attending provider and approved by the MCO. Conversely, for inpatient
MH/SUD benefits, routine approval is given only for 1 day, after which
a treatment plan must be submitted by the beneficiary's attending
provider and approved by the MCO.
Example 1. Conclusion. In this example, the MCO violates the NQTL
provision of this proposed rule (Sec. 438.910(d)) because it is
applying a stricter NQTL in practice to MH/SUD benefits than is applied
to medical/surgical benefits.
Example 2. Facts. A MCO applies concurrent review to inpatient care
where there are high levels of variation in length of stay (as measured
by a coefficient of variation exceeding 0.8). In practice, the
application of this standard affects 60 percent of MH/SUDs, but only 30
percent of medical/surgical conditions.
[[Page 19429]]
Example 2. Conclusion. In this example, the MCO complies with the
NQTL provisions of this proposed rule because the evidentiary standard
used by the MCO is applied no more stringently for MH/SUD benefits than
for medical/surgical benefits, even though it results in an overall
difference in the application of concurrent review for MH/SUDs than for
medical/surgical conditions.
Example 3. Facts. A MCO requires prior approval that a course of
treatment is medically necessary for outpatient medical/surgical and
MH/SUD benefits and uses comparable criteria in determining whether a
course of treatment is medically necessary. For MH/SUD treatments that
do not have prior approval, no benefits will be paid; for medical/
surgical treatments that do not have prior approval, providers will
only receive a 25 percent reduction in payments for these treatments
from the MCO.
Example 3. Conclusion. In this example, the MCO violates the NQTL
provision of this proposed rule. Although the same NQTL--medical
necessity--is applied both to MH/SUD benefits and to medical/surgical
benefits for outpatient services, it is not applied in a comparable
way. The penalty for failure to obtain prior approval for MH/SUD
benefits is not comparable to the penalty for failure to obtain prior
approval for medical/surgical benefits.
Example 4. Facts. A MCO generally covers medically appropriate
treatments. For both medical/surgical benefits and MH/SUD benefits,
evidentiary standards used in determining whether a treatment is
medically appropriate are based on recommendations made by panels of
experts with appropriate training and experience in the fields of
medicine involved. The evidentiary standards are applied in a manner
that is based on clinically appropriate standards of care for a
condition.
Example 4. Conclusion. In this example, the MCO complies with the
NQTL provision of the proposed rule because the processes for
developing the evidentiary standards used to determine medical
appropriateness and the application of these standards to MH/SUD
benefits are comparable to and are applied no more stringently than for
medical/surgical benefits. This is the result even if the application
of the evidentiary standards does not result in similar numbers of
visits, days of coverage, or other benefits utilized for MH/SUDs as it
does for any particular medical/surgical condition.
Example 5. Facts. Training and state licensing requirements often
vary among types of providers. A MCO applies a general standard that
any provider must meet the highest licensing requirement related to
supervised clinical experience under applicable state law in order to
participate in the MCO's provider network. Therefore, the MCO requires
master's-level mental health therapists to have post-degree, supervised
clinical experience but does not impose this requirement on master's-
level general medical providers because the scope of their licensure
under applicable state law already requires supervised clinical
experience. In addition, the MCO does not require post-degree,
supervised clinical experience for psychiatrists or Ph.D. level
psychologists since their licensing already requires supervised
training.
Example 5. Conclusion. In this example, the MCO complies with the
provision of this proposed rule pertaining to NQTLs. The requirement
that master's-level mental health therapists must have supervised
clinical experience to join the network is permissible, as long as the
MCO consistently applies the same standard to all providers, even
though it may have a disparate impact on certain mental health
providers.
Example 6. Facts. A state contracts with an external utilization
review entity to review inpatient admissions for all beneficiaries
participating in its ABP. All inpatient services in the ABP are
delivered on a FFS basis. The state's utilization review contractor
considers a wide array of factors in designing medical management
techniques for both MH/SUD and medical/surgical inpatient benefits,
such as cost of treatment; high cost growth; variability in cost and
quality; elasticity of demand; provider discretion in determining
diagnosis, or type or length of treatment; clinical efficacy of any
proposed treatment or service; licensing and accreditation of
providers; and claim types with a high percentage of fraud. Based on
application of these factors in a comparable fashion, prior
authorization is required for some (but not all) inpatient MH/SUD
benefits, as well as for some (but not all) medical/surgical benefits.
The evidence considered in developing its medical management techniques
includes consideration of a wide array of recognized medical literature
and professional standards and protocols (including comparative
effectiveness studies and clinical trials). This evidence and how it
was used to develop these medical management techniques is also well
documented by the state's utilization review organization.
Example 6. Conclusion. In this example, the state and its
utilization review contractor comply with the NQTL rules. Under the
terms of the ABP as written and in operation, the processes,
strategies, evidentiary standards, and other factors considered by the
contractor in implementing the prior authorization requirement for MH/
SUD inpatient benefits are comparable to, and applied no more
stringently than, those applied to medical/surgical benefits.
Example 7. Facts. A MCO provides coverage for medically appropriate
medical/surgical benefits, as well as MH/SUD benefits. The MCO excludes
coverage for inpatient SUD services when obtained outside of the state.
There is no similar exclusion for medical/surgical benefits within the
same classification.
Example 7. Conclusion. In this example, the MCO violates the NQTL
provisions of this proposed rule. The MCO is imposing a NQTL that
restricts benefits based on geographic location. Because there is no
comparable exclusion that applies to medical/surgical benefits, this
exclusion may not be applied to MH/SUD benefits.
Example 8. Facts. A state's CHIP program requires prior
authorization for all outpatient MH/SUD services after the ninth visit
and will only approve up to 5 additional visits per authorization. For
outpatient medical/surgical benefits, the state's CHIP program allows
an initial visit without prior authorization. After the initial visit,
benefits must be pre-approved based on the individual treatment plan
recommended by the attending provider based on that individual's
specific medical condition. There is no explicit, predetermined cap on
the amount of additional visits approved per authorization.
Example 8. Conclusion. In this example, the state's CHIP program
violates the NQTL provisions of the proposed rule. Although the same
NQTL--prior authorization to determine medical appropriateness--is
applied to both MH/SUD benefits and medical/surgical benefits for
outpatient services, it is not applied in a comparable way. While the
state CHIP plan is more generous in the number of visits initially
provided without pre-authorization for MH/SUD benefits, treating all
MH/SUDs in the same manner, while providing for individualized
treatment of medical conditions, is not a comparable application of
this NQTL.
Example 9. Facts. A state provides an ABP that is compliant with
EHB
[[Page 19430]]
requirements, including the provision of MH/SUD services. The state
aligns its ABP's outpatient benefits with those described in the state
plan and applies the same prior authorization requirements. For
outpatient MH/SUD services, prior authorization is required for each
individual treatment session. In contrast, for outpatient medical/
surgical services, a series of treatments is provided under a single
authorization.
Example 9. Conclusion. In this example, the state's ABP design does
not comply with the NQTL provisions of this proposed rule. Although the
same NQTL--prior authorization to determine medical appropriateness--is
applied to both MH/SUD benefits and medical/surgical benefits for
outpatient services, it is not applied in a comparable way.
Example 10. Facts. A state's ABP requires preauthorization for all
outpatient substance use disorder services. The state APB does not
require preauthorization for any medical/surgical services.
Example 10. Conclusion. The state ABP does not comply with the NQTL
requirements in this proposed rule. If a state plan requires
preauthorization for each outpatient SUD service it cannot remain in
compliance if there is no comparable limitation on medical/surgical
services.
Example 11. Facts. In cases where an MCO is unable to provide
necessary outpatient services to a particular enrollee, the MCO
requires that the enrollee must get prior approval in order to see any
outpatient out-of-network provider. The MCO approves the use of an out-
of-network provider for medical/surgical outpatient services if there
is not an in-network provider within 10 miles of the person's
residence. Approval of an out-of-network provider for outpatient MH/SUD
services is only authorized if there is not an in-network provider
within 30 miles of a person's residence.
Example 11. Conclusion. In this example, the MCO violates the NQTL
provisions of this proposed rule. The MCO is imposing a restriction
that limits access to out-of-network providers. Although the same
nonquantitative treatment limitation is applied to both the MH/SUD
benefits and to medical/surgical benefits for outpatient services, it
is not applied in a comparable way.
G. Application to CHIP and EPSDT Deemed Compliance (Sec. 457.496(b))
The CHIPRA applies MH/SUD parity requirements to the entire ``state
child health plan'' including, but not limited to, any MCOs that
contract with the state CHIP. Specifically, section 502 of the CHIPRA
requires that state child health plans ensure financial requirements
and treatment limitations applicable to MH/SUD benefits comply with the
requirements of section 2726(a) of the PHS Act (as renumbered) ``in the
same manner'' as such requirements apply to a group health plan.
Therefore, if a CHIP state plan provides both medical/surgical benefits
and MH/SUD benefits, any treatment limitations, lifetime or annual
dollar limits or financial requirements (such as out-of-pocket costs)
on MH/SUD benefits must comply with the provisions of section 2726 of
the PHS Act made applicable to CHIP by section 502 of the CHIPRA adding
section 2103(c)(6) to the Act and by section 2103(f)(2) of the Act.
Section 2103(c)(6)(B) of the Act also specifies that state CHIP plans
are deemed to satisfy the requirement under section 2103(c)(6)(A) of
the Act to ensure that financial requirements and treatment limitations
comply with the provisions of section 2726 of the PHS Act if they
provide coverage of EPSDT benefits (as defined under title XIX of the
Act). For individuals receiving EPSDT services through the CHIP state
plan, proposed Sec. 457.496(b) provides that the state will be deemed
to meet parity requirements for financial requirements and treatment
limitations. However, states that do apply NQTLs to EPSDT services must
ensure that these limitations are applied consistent with the intent of
MHPAEA.
H. Availability of Information (Sec. 438.915, Sec. 440.395(c), Sec.
457.496(e))
Under the MHPAEA final regulations, the criteria for medical
necessity determinations made under a group health plan or health
insurance coverage for MH/SUD benefits must be made available by the
plan administrator or the health insurance issuer offering such
coverage in accordance with regulations to any current or potential
participant, beneficiary, or contracting provider upon request. The
MHPAEA final regulations also state that the reason for any denial
under a group health plan or health insurance coverage of reimbursement
or payment for services for MH/SUD benefits in the case of any
participant or beneficiary must be made available, upon request or as
otherwise required, by the plan administrator or the health insurance
issuer to the participant or beneficiary in accordance with the
regulations. Through this proposed rule, we are proposing to apply the
requirements imposed on the health insurance issuer through the MHPAEA
final regulations regarding availability of information in a similar
manner to MCOs and to PIHPs and PAHPs that provide coverage to MCO
enrollees. We propose to add Sec. 438.915(a) to provide that MCOs,
PIHPs and PAHPs subject to MHPAEA requirements must make their medical
necessity criteria for MH/SUD benefits available to any enrollee,
potential enrollee or contracting provider upon request. MCOs, PIHPs
and PAHPs found to be in compliance with Sec. 438.236(c)--which
requires dissemination by MCOs, PIHPs and PAHPs of practice guidelines
to all affected providers and, upon request, to enrollees and potential
enrollees--will be deemed to meet this proposed requirement. As
proposed, Sec. 438.915(b) would also require the MCO, PIHP or PAHP to
make available the reason for any denial of reimbursement or payment
for services for MH/SUD benefits to the enrollee. We also note that
Sec. 438.210(c) requires each contract with an MCO, PIHP, or PAHP to
provide for the MCO, PIHP, or PAHP to notify the requesting provider
and give the enrollee written notice of any decision by the MCO, PIHP,
or PAHP to deny a service authorization request or to authorize a
service in an amount, duration, or scope that is less than requested.
The MHPAEA final regulations, at 45 CFR 146.136(d)(2), state that
non-federal governmental group health plans (or health insurance
coverage offered in connection with such plans) providing the reason
for claim denial in a form and manner consistent with the requirements
of 29 CFR 2560.503-1 for group health plans will be found in compliance
with the reason for denial disclosure requirements.\6\ The provisions
under 29 CFR 2560.503-1 which discuss requirements related to notices
for group health plans subject to ERISA, do not apply to Medicaid, and
we are not proposing to make them applicable as a condition for deemed
compliance because similar requirements are already applicable. MCOs,
PIHPs, PAHPs and states are required to give a ``reason'' for any
adverse benefit determinations under requirements for notices in,
respectively, Sec. 438.404 and Sec. 431.210. The information provided
in this disclosure of the reason for the adverse benefit determination
must be made in compliance with these and all other provisions of
applicable federal or state law, as noted in proposed Sec. 438.915(c).
---------------------------------------------------------------------------
\6\ The requirements of 29 CFR 2560.503-1 are applicable to
ERISA plans, as well as all non-grandfathered group health plans and
health insurance issuers in the group and individual markets,
through the claims and appeals regulations adopted under the
Affordable Care Act. See 78 FR 68247 for a full discussion.
---------------------------------------------------------------------------
[[Page 19431]]
For similar reasons, we are not proposing to make the claim denial
requirements of 29 CFR 2560.503-1 a condition of deemed compliance for
CHIP programs. CHIP enrollees have an opportunity for an external
review of denials, reduction or suspension of health services under
Sec. 457.1130.
Although the statute that applies MHPAEA to ABPs does not include
specific provisions regarding the availability of plan information, we
propose to use our authority under section 1902(a)(4) of the Act to
extend this provision to all ABPs, as well as those ABPs with services
delivered through MCOs, PIHPs and all PAHP. At Sec. 440.395(c)(1), we
propose that all states delivering ABP services through a non-MCO must
make available to beneficiaries and contracting providers on request
the criteria for medical necessity determinations for MH/SUD benefits.
Similarly, Sec. 440.395(c)(2) would require the state to make
available to the enrollee the reason for any denial of reimbursement or
payment for services for MH/SUD benefits.
Current rules related to notices of adverse benefit determinations
are consistent with the intent of 29 CFR 2560.503-1. This proposed rule
proposes to apply provisions regarding the availability of plan
information for ABP services. We request comment on any additional
provisions concerning the availability of plan information or notice of
adverse determinations that may be necessary to facilitate compliance
with MHPAEA for MCOs, PIHPs, PAHPs, ABPs and CHIP.
I. Application to EHBs and Other ABP Benefits (Sec. 440.395 and Sec.
440.347)
Section 1937(b)(6) of the Act, as added by section 2001(c) of the
Affordable Care Act, and implemented through regulations at Sec.
440.345(c) directs that ABPs that provide both medical/surgical
benefits and MH or SUD benefits must comply with certain parity
requirements. Further, ABPs must provide the 10 EHBs, including MH/SUD
services. As states determine their ABP service package, states must
use all of the EHB services from the base-benchmark plan selected by
the state to define EHBs, consistent with the applicable requirements
in 45 CFR part 156.
Section 1937 of the Act offers flexibility for states to provide
medical assistance by designing different benefit packages, including
other services beyond the EHBs for different groups of eligible
individuals, as long as each benefit package contains all of the EHBs
and meets certain other requirements, including parity provisions under
section 2726 of the PHS Act.
J. Application of Parity Requirements to the Medicaid State Plan
The provisions of section 2726 of the PHS Act that are incorporated
through section 1932 of the Act do not apply directly to the benefit
design for Medicaid non-ABP state plan services. Under this proposed
rule, the requirements would apply to the benefits offered by the MCO
(or, as discussed above, if benefits are carved out, to all benefits
provided to MCO enrollees regardless of service delivery system) but do
not apply to all Medicaid state plan benefit designs. As stated earlier
in this proposed rule, states that have individuals enrolled in MCOs
and have MH/SUD services offered through FFS will have the option of
amending their non-ABP state plan to be consistent with these proposed
regulations or offering MH/SUD services through a managed care delivery
system (MCOs, PIHPs, and/or PAHPs) to be compliant with these proposed
rules.
K. Scope and Applicability of the Proposed Rule (Sec. 438.920(a) and
(b), Sec. 440.395(d), and Sec. 457.496(f)(1))
Sections 438.920, 440.395(d), and 457.496(f) propose to address the
applicability and scope of this proposed rule. Specifically under our
proposal:
Section 438.920(a) would provide that the requirements of
the subpart apply to delivery of Medicaid services when an MCO is used
to deliver some or all of the Medicaid services; section 438.920(b)
(also discussed below) addresses state responsibilities when the MCO
delivers only some of the Medicaid services.
Section 440.395 would apply to ABPs that are not delivered
through managed care.
Section 457.496 would apply to CHIP state plans, including
when benefits are furnished under a contract with MCEs.
The MHPAEA final regulations state that if a group health plan or
health insurance coverage provides MH/SUD benefits in any
classification of benefits, MH/SUD benefits must be provided in every
classification in which medical/surgical benefits are provided. Under
our proposed amendments to part 438, for these parity standards to
apply, a beneficiary must be enrolled in an MCO under a Medicaid
contract. Whether the MCO provides medical/surgical or MH/SUD benefits
under that contract is irrelevant.
While many Medicaid MCOs are contracted to offer benefits in each
of the classifications of benefits described in this proposed rule,
there are other state-initiated ``carve out'' arrangements (for
example, PIHPs, PAHPs or FFS) in which the MCOs are only contracted to
provide benefits in one MH/SUD classification, while PIHPs, PAHPs, FFS,
or a combination of all 3 provide coverage of benefits in other
classifications. For example, MCOs in these carve out arrangements are
likely to have contracts that include MH/SUD benefits in the
prescription drug and emergency care classifications of benefits, but
some or all of the MH/SUD outpatient or inpatient benefits may be
offered instead through a PIHP, PAHP or FFS delivery system.
In instances where the MH/SUD services are delivered through
multiple managed care delivery vehicles, we are proposing in Sec.
438.920 that parity provisions apply across the managed care delivery
systems in the Medicaid program and CHIP. MHPAEA requirements apply to
the entire package of services MCO enrollees receive, whether from the
MCO, PIHP, PAHP, or FFS. If states carve out some MH/SUD services from
the MCO contract and furnish those services by PIHPs, PAHPs, or FFS, we
are proposing to apply the foregoing MHPAEA requirement to the entire
package of services MCO enrollees receive. Requiring the standards for
parity to be applied to the overall package of benefits received by MCO
enrollees will allow MCOs to comply with MHPAEA requirements without
requiring inclusion of additional MH/SUD benefits in the MCO benefit
package, as long as these MH/SUD benefits are provided elsewhere within
the delivery system. In states where MH/SUD benefits are provided
across multiple delivery systems (including FFS), we propose in Sec.
438.920(b) that states would be required to review the full scope of
benefits provided to MCO enrollees to ensure compliance with the
proposed parity requirements. As part of complying with this
regulation, we would expect states to work with their MCOs (or PIHPs
and PAHPs) to determine the best method of achieving compliance with
these proposed parity requirements for benefits provided to the MCO
enrollees. For MH/SUD benefits offered through FFS, states would not
necessarily be required to amend their non-ABP state plan to meet
parity requirements, but could use their existing state plan or waiver
services to achieve parity when individuals are receiving some MH/SUD
benefits from a MCO (including PIHPs or PAHPs) and also some benefits
through FFS. However, if a state did not have MH/
[[Page 19432]]
SUD benefits in every classification in which medical/surgical benefits
are provided across all authorities, the state would have to choose
either to offer these services through a MCO, PIHP or PAHP or amend its
state plan (or a waiver of its state plan) to include these benefits to
achieve compliance with proposed Sec. 438.920(a) and (b). Applying
various parity provisions across the different delivery system would
allow states the most flexibility in designing delivery systems while
ensuring that parity in medical/surgical and MH/SUD services is
provided to MCO enrollees. Given that there are many different delivery
system configurations that carve out MH/SUD services, this would allow
compliance with parity requirements while reducing incentives for
states to completely carve in all MH/SUD benefits to a MCO or carve out
or terminate coverage of MH/SUD services.
In states where the MCO has responsibility for offering all
medical/surgical and MH/SUD benefits, the MCO would be responsible for
undertaking the parity analysis and informing the state what additional
changes will be needed to the MCO contract to be compliant with parity
requirements. In states where some or all MH/SUD benefits are provided
through MCOs, PIHPs, PAHPs, or FFS, the state would have the
responsibility for undertaking the parity analysis across these
delivery systems and determining if the existing benefits and any
financial or treatment limitations are consistent with MHPAEA. The
state, based on this analysis, would have to make the necessary changes
to ensure compliance with parity requirements for its Medicaid MCO
enrollees. We also propose at Sec. 438.920(b)(1) that the state
provide documentation of its compliance with this analysis to the
general public within 18 months of the effective date of this rule.
If states offer benefits through an ABP or CHIP state plan with
various delivery systems (managed care and non-managed care), the state
would need to apply the provisions of the proposed rule across the
delivery systems utilized for its ABP and CHIP state plan.
For ABPs and CHIP state plans, we would also require states to
apply the provisions of this proposed rule across all delivery systems
to ensure that beneficiaries have access to MH/SUD benefits in every
classification in which medical/surgical benefits are provided. These
provisions would apply when states offer services through an ABP or
CHIP state plan using only a non-managed care arrangement (FFS). If
states offer services through an ABP or CHIP state plan with various
delivery systems (managed care and non-managed care), the state would
need to apply the provisions of the proposed rule across the delivery
systems utilized for their ABP and CHIP state plan. Provided below is
an example of how this proposed rule would be applied across the
delivery system in Medicaid.
Example 1. Facts. A Medicaid MCO enrollee can access Medicaid
benefits in the following way at any given time during their MCO
enrollment:
The MCO comprehensive benefits include inpatient medical/
surgical benefits; outpatient medical/surgical benefits; emergency for
medical/surgical, MH, and SUD benefits; and prescription drugs for
medical/surgical and MH/SUD benefits.
The PIHP carve out benefits include inpatient MH benefit
and the outpatient MH benefit.
The PAHP carve out benefits include outpatient SUD
benefits.
The FFS system provides access to inpatient SUD benefits.
For purposes of this example, we assume there are no financial
requirements or treatment limitations imposed on any of the benefits in
any of the delivery systems noted above.
Example 1. Conclusion. In this example, the MCO, PIHP or PAHP would
not need to add any additional services to its benefit package because
the MCO enrollee has access to MH/SUD services through PIHPs, PAHPs and
FFS and the state is responsible for undertaking the parity analysis
across delivery systems and making sure the coverage complies with
parity requirements under our proposed Sec. 438.920(a) and (b). The
example would apply in the same way to a CHIP enrollee.
L. Scope of Services (Sec. 438.920(c), Sec. 457.496(f)(2))
We propose provisions relating to the scope of the parity
requirements for Medicaid MCOs and CHIP state plans that are similar to
the provisions set forth in the MHPAEA final regulations (45 CFR
146.136(e)(3)). Specifically, the proposed regulations would not
require a MCO, PIHP, or PAHP to provide any MH/SUD benefits for
conditions or disorders beyond the conditions or disorders that are
covered as required by their contract with the state. For MCOs, PIHPs
or PAHPs that provide benefits for one or more specific MH conditions
or SUDs under their contracts, the proposed regulations would not
require the MCO, PIHP or PAHP to provide benefits for additional MH
conditions or SUDs. The proposed regulations would not affect the terms
and conditions relating to the amount, duration, or scope of MH/SUD
benefits under the MCO, PIHP or PAHP contract except as specifically
provided in Sec. 438.905 and Sec. 438.910 of the part.
M. ABP State Plan Requirements (Sec. 440.395(d))
We are proposing to add a section in part 440, subpart C that
requires states using ABPs to provide sufficient information in ABP
state plan amendment requests to assure compliance with MHPAEA. We will
review ABP state plan amendments to ensure their compliance with
applicable federal statutes and regulations, including MHPAEA, and EHB
anti-discrimination provisions.
N. Increased Cost Exemption
As discussed above in this proposed rule, we are not proposing an
increased cost exemption for MCOs, PIHPs or PAHPs. As indicated
previously, we are proposing to change payment provisions in part 438
to allow states to include the cost of providing additional services or
removing or aligning treatment limitations in their actuarially sound
rate methodology where such costs are necessary to comply with the
MHPAEA parity provisions. These proposed changes to the managed care
rate setting process give states and MCOs the ability to fully comply
with these mental health parity requirements by giving them flexibility
to provide services compliant with this proposed regulation or remove
or align service limits. We believe that the Medicaid program rather
than the plan should bear the costs of these changes. We propose to
provide states sufficient time to comply with this regulation: States
would have up to 18 months after the date of the publication of the
final rule to comply with the provisions of this regulation. This will
allow states to take the actions to make the policy and budgetary
changes needed for compliance.
We are not proposing to permit states delivering services through
an ABP or CHIP state plan to apply for a cost exemption due to the
mandatory delivery of EHB and the requirement that ABPs be compliant
with MHPAEA.
O. Enforcement, Managed Care Rate Setting (Sec. 438.6(e)) and Contract
Review and Approval (Sec. 438.6(n))
Medicaid and CHIP programs are administered by states in
partnership with the federal government. States have the responsibility
of administering the state plan in compliance with federal law, so
states will be required to provide an assurance of compliance with
parity requirements when submitting ABP or CHIP state plans. In
[[Page 19433]]
addition, we propose to require the state Medicaid agency to include
contract provisions requiring compliance with parity requirements in
all applicable MCO, PIHP, and PAHP contracts. As noted earlier in this
proposed rule, we believe that the intent of the parity requirements
implemented through section 1932(b)(8) of the Act is to provide access
to services meeting parity requirements to any enrollee of a MCO in a
state that provides some MH/SUD benefits through its state plan,
regardless of the scope of benefits covered through the MCO itself.
Therefore, states would have the responsibility of ensuring that
appropriate contract language is included in all MCO contracts and any
applicable PIHP or PAHP contracts under proposed Sec. 438.6(n). We
expect that states will include in the MCO, PIHP and PAHP contracts a
methodology for the MCO, PIHP or PAHP that will establish and
demonstrate compliance with parity requirements (including, in some
instances, developing a crosswalk with other entities that are part of
the service delivery system for enrollees). This methodology would have
to ensure that all MCOs, PIHPs, or PAHPs included in the delivery
system work together to ensure any MCO enrollee in a state is provided
access to a set of benefits that meets the requirements of this rule
regardless of the MH/SUD benefits provided by the MCO.
In accordance with section 1903(m) of the Act, all MCO contracts
must comply with applicable requirements in section 1932 of the Act,
which includes section 1932(b)(8) of the Act referencing MHPAEA
provisions in the PHS Act. As we have discussed previously, if the
state provides some MH/SUD benefits within its state plan, all MCO
contracts must include provisions requiring compliance with parity
requirements because all MCO enrollees must be provided access to
MHPAEA compliant services even if the MCO itself does not provide the
MH/SUD services. Therefore, if it is not shown through the MCO contract
itself that an enrollee has access to MH/SUD services in each
classification in which medical and surgical services are provided that
are fully compliant with these parity requirements, the state will be
asked to provide supplemental materials to the MCO contract or an
amendment to the contract to demonstrate that the standards proposed
here are met.
Further, we may defer federal financial participation (FFP) on
expenditures for the MCO contract to the extent that the state has not
documented that the contract would comply with the requirements of
section 1903(m) of the Act, including the requirement that the MCO
contract and the MCO itself comply with applicable provisions of
section 1932 of the Act. We understand that with the flexibility
afforded to states to provide MH/SUD services across the delivery
system there may be services outside of the MCO contract that may be
needed to demonstrate compliance. If this is the case, the state would
be required to show how the MCO enrollees are provided all the services
needed to comply with the requirements in this proposed rule, and if
the state cannot provide evidence of this compliance outside of the MCO
contract, CMS would have the ability to defer FFP on the MCO contract
amount until evidence of compliance is provided. Again, a state would
have the option to make changes to the MCO, PIHP or PAHP contracts or
make changes to its Medicaid state plan to provide evidence of
compliance.
P. Applicability and Compliance (Sec. 438.930, Sec. 440.395(d), Sec.
457.496(f))
This proposed rule would be effective based on the date of the
publication of the final rule. However, MCOs, PIHPs, PAHPs and states
would have 18 months to comply with the provisions of this final
regulation. Specifically:
Managed care considerations: Although the requirements of
MHPAEA have applied to Medicaid MCOs through section 1932(b)(8) of the
Act since MHPAEA was passed in 2008, Medicaid MCOs, PIHPs or PAHPs
would have to comply with the specific provisions in the proposed rule
in contract years starting 18 months after the publication of the final
rule. New managed care contracts, or amendments, would be required to
be compliant in most cases.
ABPs: Although the requirements of MHPAEA have applied
since January 1, 2014, states would have 18 months after the
publication of the final rule to have the ABPs compliant with
provisions in this proposed rule.
CHIP: The requirements of MHPAEA have applied for CHIP
since October 1, 2009, however, states would have 18 months after the
publication date of the final rule for CHIP plans to be compliant with
provisions in this proposed rule.
Q. Utilization Management
Current Medicaid regulations prescribe requirements for the control
of utilization management of inpatient services in mental hospitals
(Sec. 456.171). These regulations specifically require medical and
other professionals within the Medicaid agency (or its designee) to
evaluate each beneficiary's need for admission into inpatient services
in a mental hospital. There is not a similar requirement for the
Medicaid agency to review medical/surgical admissions to other
hospitals. States have indicated that this regulation presents
challenges to achieving parity for inpatient services rendered in a
mental hospital. In addition, these states have interpreted the term
``mental hospitals'' to include distinct part units of a general
hospital, as well as freestanding institutions of mental diseases for
children under the age of 21 and adults 65 years and older. This
proposed rule would eliminate current language from existing
regulations that require Medicaid agencies to evaluate the need for
these admissions. A state could continue these evaluations, but would
need to ensure that the standards and processes were consistent with
the provisions in this regulation regarding nonquantitative treatment
limits.
IV. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995 (PRA), we are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. To
fairly evaluate whether an information collection should be approved by
OMB, section 3506(c)(2)(A) of the PRA requires that we solicit comment
on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We are soliciting public comment on each of the section
3506(c)(2)(A)-required issues for the following information collection
requirements.
A. Wage Estimates
To derive average costs, we used data from the U.S. Bureau of Labor
Statistics' May 2013 National Occupational Employment and Wage
Estimates for all salary estimates (www.bls.gov/oes/current/oes_nat.htm). In this regard, Table 2 presents the mean hourly wage,
the cost of fringe benefits (calculated at 100 percent of salary), and
the adjusted hourly wage.
[[Page 19434]]
Table 2--Proposed Hourly Wage Estimates
----------------------------------------------------------------------------------------------------------------
Fringe benefit
Occupation title Occupation Mean hourly wage (at 100%) (per Adjusted hourly
code (per hr) hr) wage (per hr)
----------------------------------------------------------------------------------------------------------------
Business Operations Specialists.............. 13-1000 $33.19 $33.19 $66.38
Medical Secretaries.......................... 43-6013 15.93 15.93 31.86
----------------------------------------------------------------------------------------------------------------
We propose to adjust all our employee hourly wage estimates by a
factor of 100 percent. This is necessarily a rough adjustment, both
because fringe benefits and overhead costs vary significantly from
employer to employer, and because methods of estimating these costs
vary widely from study to study. Nonetheless, there is no practical
alternative and we believe that doubling the hourly wage to estimate
total cost is a reasonably accurate estimation method.
B. Proposed Information Collection Requirements (ICRs)
1. ICRs Regarding the Availability of Information and the Criteria for
Medical Necessity Determinations (Sec. Sec. 438.915(a), 440.395(c)(1),
and 457.496(e)(1))
Proposed Sec. Sec. 438.915(a), 440.395(c)(1), and 457.496(e)(1)
would require that the medical necessity determination criteria used by
regulated entities for MH/SUD benefits be made available to potential
participants, beneficiaries, or contracting providers upon request.
In the November 13, 2013, MHPAEA final rule, the regulatory impact
analysis (78 FR 68253 through 68266) quantified the costs to disclose
medical necessity criteria. For consistency and comparability, we are
using the same method for determining this rule's disclosure costs,
with adjustments to account for Medicaid MCOs, ABP and CHIP and the
population covered.
Labor Costs for Medical Necessity Disclosures. We are unable to
estimate with certainty the number of requests for medical necessity
criteria disclosures that will be received by regulated entities.
However, the MHPAEA final rule's impact analysis did set forth
assumptions that we believe are relevant for calculating costs for the
Medicaid and CHIP program. In that impact analysis, it was assumed that
each plan would receive three medical necessity criteria disclosure
requests for every 1,000 beneficiaries. This assumption equated to
0.003 requests per enrollee. This assumption was applied to the number
of enrollees enrolled in Medicaid (33.1 million), ABP (8.7 million) and
CHIP (5.7 million) to project the number of expected requests: 99,328
for MCOs; 26,100 for ABPs; and 16,975 for CHIP.
To estimate the time it will take a medical staff to respond to
each request, we used the same assumption as the MHPAEA final rule.
Specifically, we assumed that it took a staff member (in this case, a
Medical Secretary) 5 minutes to respond to the request. In this
proposed rule, this results in a total annual burden of 11,867 hours
for Medicaid and CHIP programs.
The adjusted hourly rate for Medical Secretaries responding to
these requests is estimated to be $31.86/hour. Multiplying the total
annual burden of 11,867 hours by the hourly wage, yields an associated
equivalent cost of about $378,083 for all requests to Medicaid and CHIP
programs.
Mailing and Supply Costs. The MHPAEA final rule's impact analysis
estimated that 38 percent of the requests would be delivered
electronically with de minimis cost. The remaining requests would
require materials, printing, and postage amounting to approximately 66
cents per request. We believe that the same mailing and supply costs
per request will apply to the disclosure requirements of this proposed
rule.
Table 3 displays the added burden estimates, nationally and per
program, for Medicaid MCOs and CHIP to comply with the proposed medical
necessity determination criteria's disclosure procedures. The number of
enrollees for MCOs/HIOs is based on the CMS national breakout as of
July 2012 while the number for ABPs is based on the estimated
enrollment growth due to Medicaid expansion (``National Health
Expenditure Projections 2012-2022,'' CMS). CHIP enrollment is based on
Medicaid and Children's Health Insurance Program (CHIP) Payment and
Access Commission's 2014 estimates. The proposed requirements and
burden will be submitted to OMB for approval under control number 0938-
New (CMS-10556).
Table 3--National and per Program Burden for the Proposed Medical Necessity Determination Criteria's Disclosure Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Mailed
Number of expected requests Time (@5 min/ Labor cost ($) responses (62% Mailing and Total cost
Plan type enrollees (.003 requests response @$31.86/hr of expected supply cost ($) ($)
per enrollee) (hr) enrollees) @$.66/mailing
--------------------------------------------------------------------------------------------------------------------------------------------------------
MCO/HIO.................................. 33,109,462 99,328 8,277 263,705 61,584 40,645 304,350
ABP...................................... 8,700,000 26,100 2,175 69,296 16,182 10,680 79,976
CHIP..................................... 5,658,460 16,975 1,415 45,082 10,525 6,947 52,029
--------------------------------------------------------------------------------------------------------------
Total................................ 47,467,922 142,403 11,867 378,083 88,291 58,272 436,355
--------------------------------------------------------------------------------------------------------------------------------------------------------
2. ICRs Regarding the Availability of Information and Reason for Any
Denial (Sec. Sec. 438.915(b), 440.395(c)(2), and 457.496(e)(2))
MHPAEA requires that the reason for any denial--under a group
health plan or health insurance coverage--of reimbursement or payment
for MH/SUD benefits must be made available (upon request or as
otherwise required) by the plan administrator (or the health insurance
issuer) to the beneficiary in accordance with MHPAEA regulations (45
CFR 146.136(d)(2)).
For the proposed provisions, this proposed rule would not impose
any new or revised third-party disclosure requirements, and therefore,
does not
[[Page 19435]]
require additional OMB review under the authority of the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501 et seq.). The proposed text only
clarifies the expectations for disclosing information concerning the
denial of reimbursement or payment for MH/SUD benefits. We believe that
the proposed requirements are already met by complying with existing
disclosure requirements in part 438, and therefore, do not create any
requirements or burden beyond what is currently approved by OMB under
control number 0938-1080 (CMS-10307). We also believe that the proposed
requirements are already met for CHIP by complying with existing
notification and disclosure requirements in Sec. Sec. 457.110 and
457.1130, and therefore, do not create any requirements or burden
beyond what is currently approved by OMB under control number 0938-1148
(CMS-10398 #34) (formerly, CMS-R-211, control number 0938-0707).
Furthermore, the proposed provisions do not create any new or revised
third-party disclosure requirements for ABPs beyond what is currently
approved by OMB under control number 0938-1188 (CMS-10434).
3. ICRs Regarding Parity in Mental Health and Substance Use Disorder
Benefits Under Sec. 440.395 (Alternative Benefit Plan) and Sec.
457.496 (CHIP State Plan)
The ABP State Plan Application is employed by states to identify
benefits offered to Medicaid beneficiaries receiving services under
section 1937 of the Act. The application requires that states identify
the MH/SUD services that will be offered under the plan. The plan also
collects information on any limitations (quantitative and
nonquantitative treatment limitations) and financial requirements
across all benefit categories (including all medical/surgical
services). For states needing to come into compliance with MHPAEA, the
state is required to submit an ABP SPA amendment.
The parity requirements proposed in Sec. 440.395 would not impose
any new or revised reporting, recordkeeping, or third-party disclosure
requirements, and therefore, do not require additional OMB review under
the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et
seq.). The proposed provisions only clarify parity requirements and the
meaning of terms for ABPs and do not create any information collection
requirements or burden beyond what is currently approved by OMB under
control number 0938-1188 (CMS-10434).
The single streamlined application is employed by states to
determine Medicaid or CHIP eligibility. It is not used to determine
benefits of any kind. However, states are required to review their
respective CHIP state plans to determine if they are in compliance with
MHPAEA. For states needing to come into compliance, the state must
submit a CHIP SPA amendment.
The parity requirements proposed in Sec. 457.496 would not impose
any new or revised reporting, recordkeeping, or third-party disclosure
requirements, and therefore, do not require additional OMB review under
the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et
seq.). The information collection requirements and burden are approved
by OMB under control number 0938-1148 (CMS-10398 #34) (formerly CMS-R-
211, control number 0938-0707).
4. ICRs Regarding State Plan Amendments
While this proposed rule discusses a number of optional and
mandatory SPA amendments, this proposed rule would not impose any new
or revised SPA-specific reporting, recordkeeping, or third-party
disclosure requirements and therefore, does not require additional OMB
review under the authority of the Paperwork Reduction Act of 1995 (44
U.S.C. 3501 et seq.). The currently approved ABP SPA application was
designed to capture the MHPAEA final rule classifications and identify
if there are specific treatment limitations or financial requirements.
The information collection requirements and burden are approved by OMB
under control number 0938-1188 (CMS-10434).
5. ICRs Regarding State Health Official (SHO) Letters SHO #09-014
(November 4, 2009) and SHO #13-001 (January 16, 2013)
The January 2013 SHO letter addressed the application of the MHPAEA
requirements in Medicaid and expanded upon the CMS' CHIP guidance
provided in the November 2009 letter regarding section 502 of CHIPRA.
The letters are discussed in section II.A. of this proposed rule as
background. This proposed rule does not propose any new or revised
reporting, recordkeeping, or third-party disclosure requirements
pertaining to either of the letters. Consequently, the PRA does not
apply.
6. ICRs Regarding Contract Requirements (Sec. 438.6(n))
In Sec. 438.6(n), states would be required to include contract
provisions in all applicable MCO, PIHP, and PAHP contracts to comply
with part 438, subpart K. We estimate a one-time state burden of 30
minutes for a Business Operations Specialist at $66.38/hour to amend
each contract with the applicable requirements. In aggregate, we
estimate 301 hours (602 contracts x 0.5 hours) and $16,049 (301 hours x
$53.32/hr). The proposed requirements and burden will be submitted to
OMB for approval under control number 0938-New (CMS-10556).
C. Summary of Proposed Burden Estimates
Table 4--Proposed Annual Recordkeeping and Reporting Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Hourly labor Total labor Total
Regulation Section(s) under OMB Control No. Total Burden per annual cost of cost of capital/ Total cost
Title 42 of the CFR (CMS ID No.) Respondents responses response burden reporting ($/ reporting maintenance ($)
(min) (hours) hr) ($) costs ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
438.915(a), 440.395(c)(1), 0938-New (CMS- 602 142,403 5 11,867 31.86 378,082 40,645 436,355
and 457.496(e)(1). 10556).
438.6(n).................... ............... 36 602 30 301 66.38 19,980 0 19,980
---------------------------------------------------------------------------------------------------------------------------
Total................... ............... 638 143,005 35 12,168 ............ 398,062 40,645 456,335
--------------------------------------------------------------------------------------------------------------------------------------------------------
D. Submission of PRA-Related Comments
We have submitted a copy of this proposed rule to OMB for its
review of the rule's information collection requirements. These
requirements are not effective until they have been approved by OMB.
To obtain copies of the supporting statement and any related forms
for the proposed paperwork collections referenced above, access CMS'
Web site
[[Page 19436]]
at https://www.cms.hhs.gov/PaperworkReductionActof1995; email your
request, including your address, phone number, OMB control number, and
CMS document identifier, to Paperwork@cms.hhs.gov; or call the Reports
Clearance Office at 410-786-1326.
We invite public comments on these potential information collection
requirements. If you comment on these information collection and
recordkeeping requirements, please submit your comments electronically
as specified in the ADDRESSES section of this proposed rule. Please
include ``CMS-2333-P,'' the ICR's OMB control number, and the CMS
document ID number in your comment.
PRA-specific comments must be received by June 9, 2015.
V. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.
VI. Regulatory Impact Analysis
A. Statement of Need
This proposed rule addresses the applicability of the requirements
under the MHPAEA to Medicaid non-managed care benchmark and benchmark-
equivalent plans (referred to in this proposed rule as Medicaid ABPs)
as described in section 1937 of the Act, CHIP under title XXI of the
Act, and Medicaid MCOs as described in section 1932 of the Act.
In 2013, we released a SHO letter that provided guidance to states
regarding the implementation of requirements under MHPAEA to Medicaid
benchmark and benchmark-equivalent plans (referred to in this letter as
ABPs), CHIP, and Medicaid MCOs.
Final regulations implementing MHPAEA were published by HHS, the
Department of Labor, and the Department of Treasury in the November 13,
2013 Federal Register. The MHPAEA final regulations do not apply to
Medicaid MCOs, ABPs, or CHIP state plans.
We believe that in absence of a regulation specific to the
application of the parity requirements under MHPAEA to Medicaid and
CHIP, states would not be compelled to implement the necessary changes
to these programs, resulting in an inequity between beneficiaries who
have MH/SUD conditions in the commercial market (including the state
and federal marketplace) and Medicaid and CHIP. Even for states that
are attempting to comply with parity requirements under MHPAEA, the
absence of regulation could lead to inconsistent state-specific
policies based on a state's interpretation of how policies set forth in
the MHPAEA final regulations might apply in the Medicaid and CHIP
contexts.
This proposed rule provides the specificity and clarity needed to
effectively implement the policies set forth by MHPAEA and prevent the
use of prohibited limits on coverage, including nonquantitative
treatment limitations that disproportionately limit coverage of
treatment for MH/SUD conditions. The Department's assessment of the
expected economic effects of this proposed rule is discussed in detail
below.
B. Overall Impact
We have examined the impacts of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), section 1102(b) of the Act, section 202 of the
Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4),
Executive Order 13132 on Federalism (August 4, 1999) and the
Congressional Review Act (5 U.S.C. 804(2).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Section
3(f) of Executive Order 12866 defines a ``significant regulatory
action'' as an action that is likely to result in a rule: (1) (Having
an annual effect on the economy of $100 million or more in any 1 year,
or adversely and materially affecting a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or state, local or tribal governments or communities (also
referred to as ``economically significant''); (2) creating a serious
inconsistency or otherwise interfering with an action taken or planned
by another agency; (3) materially altering the budgetary impacts of
entitlement grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) raising novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the Executive Order.
A regulatory impact analysis (RIA) must be prepared for major rules
with economically significant effects ($100 million or more in any 1
year). We estimate that this rulemaking is ``economically significant''
as measured by the $100 million threshold, and hence, also a major rule
under the Congressional Review Act. Accordingly, we have prepared a
RIA, which to the best of our ability presents the costs and benefits
of the rulemaking.
Because the application of parity requirements to ABPs; MCOs and
PIHPs and PAHPs providing services to MCO enrollees; and the CHIP is
likely to have an effect on the economy of $100 million or more in any
given year, this proposed rule is economically significant within the
meaning of section 3(f)(1) of the Executive Order As elaborated below,
we believe the benefits of the rule justify the costs.
C. Anticipated Effects
This proposed rule would benefit approximately 21.6 million
Medicaid beneficiaries and 850,000 CHIP beneficiaries in 2015, based on
service utilization estimates from 2012 Medicaid and CHIP enrollment.
We expect that a significant benefit associated with the application of
the parity requirements under MHPAEA and these proposed regulations
will be derived from applying parity requirements to the quantitative
treatment limits such as annual or lifetime day or visit limits.
Applying parity requirements to visit or stay limits will help ensure
that vulnerable populations--those accessing substantial amounts of MH/
SUD services--have better access to appropriate care. Among adults aged
18 through 64 with Medicaid coverage, approximately 9.6 percent have a
serious mental illness, 30.5 percent have any mental illness, and 11.9
percent have a substance use disorder.\7\ Among CHIP beneficiaries,
approximately 8 percent of children experience serious behavioral or
emotional difficulties.\8\
---------------------------------------------------------------------------
\7\ Calculations were based on the Substance Abuse and Mental
Health Services Administration (SAMHSA) National Survey of Drug Use
and Health.
\8\ Pastor PN, Reuben CA, Duran CR. Identifying Emotional And
Behavioral Problems in Children Aged 4-17 Years: United States,
2001-2007. National Health Statistics Report No. 48. Hyattsville,
MD: National Center for Health Statistics; 2012.
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[[Page 19437]]
Evidence-based treatment for severe and persistent mental illness,
and for substance use disorders, often requires prolonged (possibly
lifetime) treatment that consists of pharmacotherapy, supportive
counseling, and often rehabilitative services. Individuals with severe
MH/SUD conditions often quickly exhaust their benefits under Medicaid
managed care. In addition, CHIP programs may restrict coverage, such as
covering only 40 hours of psychotherapy or 5 days of detoxification per
year. These coverage restrictions often result in people forgoing
outpatient treatment and a higher likelihood of non-adherence to
treatment regimes, which produce poor health and welfare outcomes and
create the potential for increased hospitalization
costs.9 10 For those with substance use disorders, treatment
retention is of key importance when assessing outcomes, where those who
stayed in treatment longer had more success in decreasing their
substance use.11 12 In 2011, approximately 8 percent of
adults with Medicaid coverage reported at least one occurrence in the
past 12 months of feeling the need for mental health or substance use
treatment or counseling but not receiving it.\13\ Between 2007 and
2009, approximately 72 percent of children in Medicaid with a potential
mental health need did not receive mental health services.\14\ The most
frequently cited reasons for not seeking MH/SUD treatment are cost and/
or a lack of health insurance coverage, low perceived need, stigma, or
structural barriers (for example, no transportation, did not know where
to go).15 16 Removing quantitative limits on treatment may
be particularly beneficial for individuals with severe mental illness
and substance use disorders who may need to receive more services than
the average individual.17 18 Improved coverage may also
reduce the financial burden on individuals and families, particularly
those families of children mental health service needs.\19\ Finally,
improving coverage of MH/SUD treatment may also improve employment,
productivity, and earnings among those with these conditions.\20\ Wang,
et al, found that implementing a care program for those identified with
depression yielded not only enhanced clinical outcomes relative to
depression, but also produced positive outcomes relative to decreased
sick leave and increased productivity.\21\ Similarly, the State of
Washington implemented a substance abuse treatment program for those
receiving Aid to Families with Dependent Children (AFDC), and found
that access to treatment increased both earnings for those with jobs,
and increased rates of employment.\22\
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\9\ Medication-Assisted Treatment for Opioid Addiction in Opioid
Treatment Programs. Rockville (MD): Substance Abuse and Mental
Health Services Administration (US); 2005. Treatment Improvement
Protocol (TIP) Series, No. 43.
\10\ Trivedi AN, Swaminathan S, Mor V. Insurance parity and the
use of outpatient mental health care following a psychiatric
hospitalization. JAMA. 2008 Dec 24;300(24):2879-85.
\11\ Simpson D D, Joe G W, Rowan-Szal G. Drug abuse treatment
retention and process effects on follow-up outcomes. Drug and
Alcohol Dependence. 1997b;47(3):227-235.
\12\ Hartel D M, Schoenbaum E E. Methadone treatment protects
against HIV infection: Two decades of experience in the Bronx, New
York City. Public Health Reports. 1998;113(Suppl. 1):107-115.
\13\ Substance Abuse and Mental Health Services Administration
(SAMHSA). Behavioral Health United States 2012. HHS Publication No.
(SMA)13-4797. Rockville, MD: SAMHSA; 2013.
\14\ GAO. Children's Mental Health: Concerns Remain about
Appropriate Services for Children in Medicaid and Foster Care.
December 2012. https://www.gao.gov/assets/660/650716.pdf. Accessed
June 27, 2014.
\15\ Affordability Most Frequent Reason for Not Receiving Mental
Health Services. Rockville (MD): Substance Abuse and Mental Health
Services Administration (US); 2013. The NSDUH Report Data Spotlight.
\16\ Results from the 2012 National Survey on Drug Use and
Health: Summary of National Findings and Detailed Tables. Rockville
(MD): Substance Abuse and Mental Health Services Administration
(US); 2013.
\17\ Zuvekas SH, Banthin JS, Selden TM. How would mental health
parity affect the marginal price of care? Health Serv Res. 2001
Feb;35(6):1207-27. Review.
\18\ McConnell KJ. The effect of parity on expenditures for
individuals with severe mental illness. Health Serv Res. 2013
Oct;48(5):1634-52. doi: 10.1111/1475-6773.12058. Epub 2013 Apr 5.
\19\ Barry CL, Busch SH. Do state parity laws reduce the
financial burden on families of children with mental health care
needs? Health Serv Res. 2007 Jun;42(3 Pt 1):1061-84.
\20\ Dunigan R, Acevedo A, Campbell K, Garnick DW, Horgan CM,
Huber A, Lee MT, Panas L, Ritter GA. Engagement in outpatient
substance abuse treatment and employment outcomes. J Behav Health
Serv Res. 2014 Jan;41(1):20-36. doi: 10.1007/s11414-013-9334-2
\21\ Wang P, Simon GE, Avorn J, Azocar F, Ludman EJ, McCulloch
J, Petukhova MZ, Kessler RC. Telephone screening, outreach and care
management for depressed workers and impact on clinical and work
productivity outcomes. JAMA 2007;298(12):1401-11.
\22\ Wickizer TM, Campbell K, Krupski A, Stark K. Employment
outcomes among AFDC recipients treated for substance abuse in
Washington State. Milbank Q. 2000;78(4):585-608, iv. PubMed PMID:
11191450.
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Application of parity requirements may also result in changes to
payers' utilization management approaches, specifically when requiring
preauthorization of mental health services. It was found that even when
approval for continued access to mental health services was in essence
guaranteed, patients sought out less treatment, perhaps believing they
``should not'' access further needed treatment.\23\ Hodgkin, et al,
found that removal of utilization management approaches (including
preauthorization for the first set of mental health visits) increased
use of mental health services.\24\ Cuffel, et al, note that there are
various reasons for why an approach like preauthorization can impact
provider behavior relative to mental health service. Providers may
believe that the preauthorization process is too laborious and not
worth their time; they may fear that those reviewing the request will
penalize them for submitting a preauthorization request; they may
assume that the set limits on services preclude additional requests for
services; providers may believe that the initial limits are in place as
an implied recommendation towards shorter treatment cycles; and some
may believe requests for preauthorization simply will not be approved
at all.\25\ Liu, et al, found a significant correlation between
preauthorization processes and the probability of ending mental health
treatment prematurely.\26\
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\23\ Liu, X., R. Sturm, and B. J. Cuffel. 2000. ``The Impact of
Prior Authorization on Outpatient Utilization in Managed Behavioral
Health Plans.'' Medical Care Research Review 57: 182-95.
\24\ Hodgkin D, Merrick EL, Horgan CM, Garnick DW, McLaughlin
TJ. ``Does Type of Gatekeeping Model Affect Access to Outpatient
Specialty Mental Health Services?.'' Health Services Research 42. 1
(2007): 104-123.
\25\ Cuffel, B., McCulloch, J., Wade, R., Tam, L., Brown-
Mitchell, R., & Goldman, W. (2000). Patients' and providers'
perceptions of outpatient treatment termination in a managed
behavioral health organization. Psychiatric Services, 51(4), 469-
473.
\26\ Liu, X., Sturm, R., Cuffel, B. (2000) The impact of prior
authorization on outpatient utilization in managed behavioral health
plans. Med Care Res Rev. Jun;57(2):182-95.
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Application of parity requirements under MHPAEA may also have
benefits in terms of reduced medical costs. Mental health and physical
health are interrelated, and individuals with poor mental health are
likely to have physical health problems as well.27 28 29
Increased access to and utilization of MH/SUD benefits may result in a
reduction of medical and surgical costs for individuals with mental
health conditions and substance use disorders (so called ``medical cost
offsets''). For example, after receiving treatment, individuals with
substance use
[[Page 19438]]
disorders may experience fewer hospitalizations and emergency room
visits stemming from unintended injuries such as accidents and drug
overdose. The evidence that treatment results in medical care offsets
is stronger for substance abuse treatment than for mental health
treatment. For example, an evaluation on the expansion of substance
abuse treatment in Washington State's Medicaid program found per member
per month savings of $160 to $385 depending on the welfare cohort.\30\
Another study done on welfare clients in Washington State found that
those accessing substance use disorder treatment had $2500 less in
medical costs than those who did not access treatment. This estimated
savings equaled the cost of SUD treatment for individuals accessing SUD
treatment.\31\ While a similar reduction in medical costs may be
expected from mental health treatment, most empirical studies have not
found a significant medical cost offset from mental health
treatment.32 33
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\27\ Druss BG, Walker ER. Mental disorders and medical
comorbidity. Synth Proj Res Synth Rep. 2011 Feb;(21):1-26. Review.
\28\ National Institute on Drug Abuse. (December 2012). Medical
Consequences of Drug Abuse. Retrieved from https://www.drugabuse.gov/related-topics/medical-consequences-drug-abuse.
\29\ Bouchery, E. E., Harwood, H. J., Sacks, J. J., Simon, C.
J., & Brewer, R. D. (2011). Economic costs of excessive alcohol
consumption in the US, 2006. American Journal of Preventive
Medicine, 41(5), 516-524.
\30\ Wickizer, T. M., Mancuso, D., & Huber, A. (2012).
Evaluation of an innovative Medicaid health policy initiative to
expand substance abuse treatment in Washington State. Medical Care
Research and Review, 69(5), 540-559.
\31\ Wickizer, T. M., Krupski, A., Stark, K. D., Mancuso, D., &
Campbell, K. (2006). The effect of substance abuse treatment on
Medicaid expenditures among general assistance welfare clients in
Washington State. Milbank Quarterly,84(3), 555-576.
\32\ Simon GE, Katzelnick DJ. Depression, use of medical
services and cost-offset effects. J Psychosom Res. 1997
Apr;42(4):333-44. Review.
\33\ Sturm R. Economic grand rounds: The myth of medical cost
offset. PsychiatryServ. 2001 Jun;52(6):738-40.
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1. Costs
a. Cost Associated With Increased Utilization of MH/SUD Benefits
A primary objective of Congress in enacting MHPAEA was to eliminate
barriers that impeded access to and utilization of MH/SUD benefits.
Cost increases and increases in capitated rates may occur as a result
of increased access and utilization from the application of parity
requirements and these proposed regulations, but the evidence suggests
that any increases will not be large. The impact of parity requirements
will depend on the extent to which MCOs, ABPs, and CHIP plans lack
benefits in some classifications or manage these benefits inconsistent
with such parity requirements.
In the April 30, 2010 final rule on State Flexibility for Medicaid
Benefit Packages (75 FR 23068), the assumptions utilized in modeling
the estimated economic impact of the associated provisions took into
account the costs of the benefit package for the new adult group served
through ABPs. Coverage of these benefits was already accounted for in
the April 30, 2010 final rule, and therefore, does not need to be
repeated here. Because we approved ABPs only after ensuring compliance
with MHPAEA, we project that this proposed regulation will result in no
additional costs to ABPs.
(1) Effect of Removing Non-Compliant Quantitative Treatment Limitations
A review of Medicaid managed care benefits in all 50 states and the
District of Columbia revealed that a subset of states (18 states) had
Medicaid managed care plans that imposed quantitative treatment limits
on outpatient visits, inpatient stays, and intermediate services (for
example, intensive outpatient treatment). As indicated in the preamble,
some of these quantitative treatment limits are a result of what is
currently in a state's Medicaid plan.
A review of CHIP plans indicated that most are already compliant
with MHPAEA. CHIP plans that include Medicaid EPSDT are already
required to cover mental health and substance abuse services as needed
and they are deemed compliant with MHPAEA parity requirements for
financial requirements and treatment limitations. It is not permissible
to apply annual or lifetime limits to the EPSDT benefit. CHIP stand-
alone programs are also already compliant with MHPAEA because of
changes to treatment limitations for both mental health or substance
use disorder benefits and medical and surgical benefits required under
the Affordable Care Act.\34\ Among CHIP plans that are Medicaid
expansion plans, we found only one to have an explicit quantitative
limit.\35\
---------------------------------------------------------------------------
\34\ Sarata AK. Mental health parity and the Patient Protection
and Affordable Care Act of 2010. Washington, DC: Congressional
Research Service; 2011.
\35\ McConnell KJ, Gast SH, Ridgely MS, Wallace N, Jacuzzi N,
Rieckmann T, McFarland BH, McCarty D. Behavioral health insurance
parity: Does Oregon's experience presage the national experience
with the Mental Health Parity and Addiction Equity Act? Am J
Psychiatry 2012 Jan;169(1):31-8.
---------------------------------------------------------------------------
We conducted an analysis to determine how the use of services might
increase if quantitative limits on Medicaid MCO and CHIP programs were
eliminated. Where quantitative limits exist that are non-compliant with
parity requirements, states also have the option to align these limits
for MH/SUD and medical/surgical benefits consistent with the provisions
of this proposed rule. However, to estimate the highest possible cost
impact that could be expected, we simulated the effect of removing
visit and day limits in states with limits for treatment users by
anticipating that utilization would increase for beneficiaries who were
near or exceeded current limits to equal utilization patterns observed
in states without limits for Medicaid managed care beneficiaries. This
simulation indicated the maximum impact of removing quantitative day
and visit limits on MH/SUD services by Medicaid MCOs to be $103 million
nationwide (including federal and state costs) in undiscounted dollars
in 2015. Using a similar approach, we estimated the maximum impact of
removing quantitative limits on CHIP expenditures to be $39.1 million
in undiscounted dollars in 2015.
However, these estimates are the largest possible cost impacts and
the actual impact is likely to be lower. One reason is that some states
with quantitative limits may have mechanisms in place for beneficiaries
to obtain hospital days or outpatient visits beyond the state's limit
if such care is determined to be medically necessary. In practice, we
anticipate a potentially lower impact than estimated currently, given
that quantitative limits may already be routinely exceeded. We found
that in most of the 18 states with visit limits, a number of recipients
(for example, 5 to 20 percent) used services beyond the treatment
limit, suggesting that exceptions to the quantitative limits may occur
in these states. This does not appear to be the case in all states,
because in a few states with visit limits ranging from approximately 24
to 40 visits, only 1 or 2 percent of recipients exceeded the limit.
There are no studies to date on how the application of federal
parity requirements affects Medicaid spending. However information from
states that have passed state-specific parity legislation (which
includes application to Medicaid) provides additional support for the
projected impact of these proposed regulations on service utilization
and spending. For instance, an evaluation of the Oregon parity law
found no significant increases in aggregate behavioral health spending
or in the percent of individuals using behavioral health services
associated with its implementation.\36\ The evaluators surmised that
the flexibility in quantitative limits prior to the parity law may be
one reason that the
[[Page 19439]]
implementation of parity did not lead to large increases in spending.
Specifically, they found that prior to the implementation of the state
parity law, approximately 5 percent of beneficiaries with any
behavioral health visits exceeded the specified limits of that plan.
---------------------------------------------------------------------------
\36\ McConnell KJ, Gast SH, Ridgely MS, Wallace N, Jacuzzi N,
Rieckmann T, McFarland BH, McCarty D. Behavioral health insurance
parity: Does Oregon's experience presage the national experience
with the Mental Health Parity and Addiction Equity Act? Am J
Psychiatry 2012 Jan;169(1):31-8.
---------------------------------------------------------------------------
Vermont's parity law is also very similar to MHPAEA. A study of
Vermont's parity law found that the share of spending on mental and
substance use disorders increased only slightly, from 2.30 percent to
2.47 percent of total spending for one health plan.\37\
---------------------------------------------------------------------------
\37\ Rosenbach M, Lake T, Young C, et al. Effects of the Vermont
Mental Health and Substance Abuse Parity Law. DHHS Pub. No. SMA 03-
3822, Rockville, MD: Substance Abuse and Mental Health Services
Administration; 2003.
---------------------------------------------------------------------------
Finally, a recent evaluation of the effect of MHPAEA on the
commercial market revealed a modest increase in spending on substance
use disorder treatment per enrollee ($9.99, 95 percent CI: 2.54,
18.21), but no significant change in the percent of individuals using
substance use disorder services.\38\
---------------------------------------------------------------------------
\38\ Busch SH, Epstein AJ, Harhay MO, Fiellin DA, Un H, Leader D
Jr, Barry CL. The effects of federal parity on substance use
disorder treatment. Am J Manag Care. 2014 Jan;20(1):76-82.
---------------------------------------------------------------------------
(2) Effect of Classification of Services Requirements
This proposed rule requires that if the state provides for MH/SUD
services under the state plan, MH/SUD services must be provided to MCO
enrollees in every classification in which medical/surgical benefits
are provided. After reviewing the MH/SUD services provided under
Medicaid managed care plans, we identified only two states providing
for MH/SUD services under the state plan in which MH/SUD services were
excluded from a classification in which medical/surgical benefits are
provided. In both states, the excluded services were substance abuse
inpatient services. For the purposes of this analysis, we assumed that
substance abuse inpatient services would need to be included to the
extent that they were provided in a distinct part or unit of a general
hospital or facility with 16 or fewer beds. Using data on current use
of Medicaid substance use disorder inpatient services and the cost of
those services from Medicaid claims data, we estimated that the
additional coverage for these services would have led to an increase of
$11.7 million nationwide in undiscounted dollars in 2012.
Table 5 displays the total costs of removing non-compliant QTLs by
service and meeting classification of services requirements in 2012.
Table 5--Details of Estimated Costs of Meeting QTL and Classification of Services Requirements in 2012
----------------------------------------------------------------------------------------------------------------
Inpatient Outpatient Intermediate Administrative Total
----------------------------------------------------------------------------------------------------------------
Mental Health--Medicaid ($million/year)
----------------------------------------------------------------------------------------------------------------
$19.8................................... $62.3 $0 $0.3 $82.4
----------------------------------------------------------------------------------------------------------------
Mental Health--CHIP ($million/year)
----------------------------------------------------------------------------------------------------------------
0....................................... 30.8 0.4 0.04 31.2
----------------------------------------------------------------------------------------------------------------
Substance Use Disorder--Medicaid ($million/year)
----------------------------------------------------------------------------------------------------------------
11.7.................................... 0 0 0 11.7
----------------------------------------------------------------------------------------------------------------
Substance Use Disorder--CHIP ($million/year)
----------------------------------------------------------------------------------------------------------------
0....................................... 0 0 0 0
----------------------------------------------------------------------------------------------------------------
Total Costs of Removing Quantitative Limits in 2012 ($million/year)
----------------------------------------------------------------------------------------------------------------
................ ................ ................ 125.3
----------------------------------------------------------------------------------------------------------------
Note: Administrative costs are listed once for Medicaid and CHIP because the expense is all-inclusive for each
program; costs are not broken down by service.
Costs for complying with parity rules for each service category
were estimated based on a simulation of additional utilization states
may incur as a result of removing quantitative treatment limits. For
the analysis of intermediate services, we examined limits on partial
hospitalization and intensive outpatient care.
These figures are calculated based on 2012 Medicaid and CHIP
expenditures, which equate to approximately $125.3 million in
additional costs as a result of parity compliance. To determine the
percent impact to Medicaid expenditures in 2012, we divided $125.3
million (the additional costs of increased utilization) by $408.8
billion (total Medicaid expenditures). Based on this calculation,
Medicaid expenditures would increase by 0.03 percent each year. As
total Medicaid expenditures increase over time, the cost impact of
mental health parity is expected to rise proportionally. Therefore,
given that Medicaid expenditures overall are projected to equal
approximately $513.4 billion in 2015,\39\ the predicted impact of
mental health parity is expected to equal $157.4 million in 2015, and
to rise in proportion to the growth in overall Medicaid spending in
future years. Costs for 2015-2019 are displayed in Table 6.
---------------------------------------------------------------------------
\39\ President's Budget for Fiscal Year 2015, available at
https://www.whitehouse.gov/omb/budget/.
[[Page 19440]]
Table 6--Estimated Costs of CMS-2333 FY 2015-2019
[In millions]
----------------------------------------------------------------------------------------------------------------
FY 2015 FY 2016 FY 2017 FY 2018 FY 2019
----------------------------------------------------------------------------------------------------------------
Federal......................... 94.6 102.0 108.4 114.0 120.3
State........................... 62.8 66.8 71.2 75.0 79.4
-------------------------------------------------------------------------------
Total....................... 157.4 168.8 179.6 188.9 199.8
----------------------------------------------------------------------------------------------------------------
(3) Effect of Medical Cost Offsets
As described above, the cost of improving access to MH/SUD
treatment may be offset by a decline in the expenditures on treatments
for medical conditions resulting from substance use disorders. There is
strong evidence from Medicaid programs to assume a cost offset
resulting from improved access to substance use disorder benefits. In
contrast, the evidence for cost offset resulting from improved access
to mental health benefits is weaker. We anticipate that, on balance,
costs stemming from increased utilization of substance use disorder
services resulting from application of parity requirements will be
largely offset by the savings from reduced medical costs, yielding very
little increase in overall costs from increased utilization of
substance use disorder services. However, given the difficulty of
quantifying the precise cost impact of this reduced use of medical
services that is expected to result from enhanced access to substance
use disorder services, we have not included any cost offset in our
estimates.
b. Effect of Aligning NQTLs
Under the MHPAEA final rules, medical management can be applied to
MH/SUD benefits if the processes, strategies, evidentiary standards, or
other factors used in applying medical management are comparable to,
and are applied no more stringently than, the processes, strategies,
evidentiary standards, or other factors used in applying medical
management to medical and surgical benefits. It is difficult to
determine whether, at baseline, Medicaid MCOs, ABPs and CHIP programs
are applying medical management more stringently to MH/SUD benefits
than to medical and surgical benefits. A state-by-state search of
available Medicaid documents indicated that most states that use
inpatient utilization management techniques for MH/SUD services, such
as prior approval or continuing utilization review for inpatient stays,
have similar restrictions for medical and surgical conditions. Surveys
of commercial plans have also found that inpatient managed care
restrictions, such as pre-admission prior approval, are common for
medical and surgical admissions.40 41 There may be important
distinctions in the processes, strategies, evidentiary standards, or
other factors between MH/SUD services and medical and surgical
services, but current data do not indicate that this is the case in a
way that would lead to a clear cost impact.
---------------------------------------------------------------------------
\40\ Baker CA, Diaz IS. Managed care plans and managed care
features: Data from the EBS to the NCS. Compensation and Working
Conditions Spring 2011:30-6.
\41\ Claxton, G., DiJulio, B., Whitmore, H., Pickreign, J.,
McHugh, M., Finder, B., & Osei-Anto, A. (2009). Job-based health
insurance: Costs climb at a moderate pace. Health Aff 2009;
28(6):w1002-12.
---------------------------------------------------------------------------
Moreover, if some Medicaid plans have stricter management controls
for MH/SUD services than for medical services, there is scant evidence
at this time as to how utilization management will evolve with the
application of parity requirements and whether stricter controls would
result in higher costs.\42\ For example, stricter controls may lead to
underutilization of sub-acute levels of care for MH/SUD conditions,
leading to the worsening of both MH/SUD conditions and medical or
surgical conditions that ultimately require more costly acute levels of
care. Studies of the effect of utilization review and prior approval on
MH/SUD inpatient services have revealed mixed results, with some
studies showing that these managed care techniques result in lower
costs, quantities of treatment, or both, and other studies finding only
weak or no effects, or effects that are short
term.43 44 45 46 As noted above, the studies of Oregon and
Vermont, whose parity laws include similar restrictions on medical
management, have not shown increases in costs resulting from
application of these laws. There is uncertainty regarding the level of
increased costs that will result from application of the parity
requirement for NQTLs, but there is evidence that any increases may be
small. We invite comments related to any additional evidence on the
impact of aligning NQTLs for Medicaid services.
---------------------------------------------------------------------------
\42\ Hodgkin D. The impact of private utilization management and
psychiatric care: A review of the literature. Journal of Mental
Health Administration 1992; 19(2):143-57.
\43\ Dickey B, Azeni H. Impact of managed care on mental health
services. Health Aff 1992 Fall; 11(3):197-204.
\44\ Frank RG, Brookmeyer R. Managed mental health care and
patterns of inpatient utilization for treatment of affective
disorders. Soc Psychiatry Psychiatric Epidemiol 1995 Aug; 30(5):220-
3.
\45\ Wickizer TM, Lessler D, Travis KM.. Controlling inpatient
psychiatric utilization through managed care. Am J Psychiatry 1996;
153:339-45.
\46\ Wickizer TM, Lessler D. Do treatment restrictions imposed
by utilization management increase the likelihood of readmission for
psychiatric patients? Med Care 1998; 36(6):844-50.
---------------------------------------------------------------------------
2. Transfers Resulting From Increased Access Under Medicaid
Transfer payments are monetary payments from one group to another
that do not affect total resources available to society. There is a
potential that application of parity requirements under MHPAEA will
result in transfers among different government entities. MH/SUD
services receive greater funding from public sources, such as Medicaid,
federal government block grants, state government general funds, and
local government funding, than do medical and surgical services.\47\
Over time, MH/SUD spending has been shifting away from state and local
funding, toward federal financing, especially Medicaid.\48\ The
potential increase in the availability of MH/SUD services under
Medicaid and CHIP as a result of the MHPAEA parity requirements may
result in a reduction in use of, and spending on, services financed by
other public sources such as state and local governments and federal
block grants.\49\ Limited sound evidence exists about the size of this
effect on states.
---------------------------------------------------------------------------
\47\ Levit KR, Mark TL, Coffey RM, Frankel S, Santora P,
Vandivort-Warren R, Malone K. Federal spending on behavioral health
accelerated during recession as individuals lost employer insurance.
Health Aff 2013 May; 32(5):952-62.
\48\ Levit KR, Mark TL, Coffey RM, Frankel S, Santora P,
Vandivort-Warren R, Malone K. Federal spending on behavioral health
accelerated during recession as individuals lost employer insurance.
Health Aff 2013 May; 32(5):952-62.
\49\ Frank RG, Goldman HH, Hogan M. Medicaid and mental health:
Be careful what you ask for. Health Aff 2003 Jan-Feb; 22(1):101-13.
---------------------------------------------------------------------------
[[Page 19441]]
D. Alternatives Considered
We considered several other approaches for providing guidance to
states regarding the application of the MHPAEA to Medicaid MCOs, ABPs,
and CHIP. As stated in the preamble of this proposed rule, under our
current policies, there is no affirmative obligation to ensure that MCO
enrollees receive state plan benefits in a way that fully complies with
MHPAEA. This is because section 1932(b)(8) of the Act does not apply to
the design of the traditional Medicaid state plan, and state plans thus
may be designed in a way that does not comply with MHPAEA requirements.
Under current guidance, we have said that if an MCO is simply properly
applying state plan benefits, there is no violation of section
1932(b)(8) of the Act even if that benefit design does not conform to
MHPAEA, because the MCO did not adopt that benefit design and thus was
not at fault in its non-compliance. As explained above, we do not
believe that this policy effectuates Congressional intent in enacting
section 1932(b)(8) of the Act. Further, we believe that implementation
of the statute requires that MCO enrollees receive benefits in a manner
that complies with MHPAEA.
We considered requiring that all state plan MH/SUD services be
included under MCO contracts as the way to ensure that MCO enrollees
receive the full protections of MHPAEA. However, we believe the
approach we are proposing would allow states the most flexibility when
applying mental health parity requirements to their Medicaid services
across delivery systems. Given that there are many different delivery
system configurations that carve out MH/SUD services, the proposed
approach would allow states to comport with parity requirements for MCO
enrollees without completely carving out MH/SUD services from their MCO
or dropping MH/SUD coverage altogether.
Also, under current statutes, regulations and policies, states
would not be required under Federal law to apply MHPAEA provisions to
PIHPs and PAHPs (many of which provide MH/SUD services) since these
arrangements were not specifically addressed in section 1932(b)(8) of
the Act, and MHPAEA does not directly apply to such contracts.
Consideration of these unique state MH/SUD delivery systems is an
important distinction in Medicaid when compared to the commercial
market. Further, because the statutory provisions making mental health
parity requirements applicable to MCOs do not explicitly address these
situations, additional interpretation is needed.
In addition to the delivery system issues, states would not be
required to remove or align limits on services that were in the state
plan for individuals enrolled in an MCO. As stated previously in this
proposed regulation, these limits would be carried through in the
development of rates, and cost of services outside of the state plan or
a waiver of the state plan cannot be included. Without the proposed
change in this rule, individuals enrolled in an MCO could still be
subject to treatment limitations that are not compliant with parity
requirements, which we believe is inconsistent with the intent of
Congress in requiring in section 1932(b)(8) of the Act that MCOs
deliver services in a manner consistent with MHPAEA requirements and
the policies regarding application of MHPAEA to ABPs and CHIP that
operate in a FFS arrangement. In addition, without these changes to the
managed care rate setting process, it will be difficult for MCOs to
comply with statutory requirements regarding financial requirements and
treatment limitations.
Finally, there are mental health parity provisions that are not
applicable to the FFS delivery systems for Medicaid ABP benefits. These
include: Annual and lifetime dollar limits, availability of plan
information, and access to out-of-network providers.
In addition, we considered the ability to provide guidance and
enforce the provisions of MHPAEA's application to Medicaid and CHIP
through sub-regulatory guidance. Over the past 5 years, we have used
two SHO letters to provide guidance to states regarding MHPAEA and
Medicaid and CHIP. While states and other stakeholders found this
guidance useful, there were many questions or concerns regarding the
lack of specificity regarding application of MHPAEA parity requirements
to Medicaid and CHIP. There were several issues that states raised
regarding this sub-regulatory guidance. One issue was the actuarial
soundness requirements, which mandate that MCO payments be based on
services as covered under state plans. Another was additional
clarification of NQTLs and states' concerns regarding existing federal
and state policies that required utilization management strategies that
were inconsistent with the intent of MHPAEA. States also raised
additional questions regarding application of MHPAEA parity
requirements to other delivery systems including PIHPs, PAHPs, and FFS.
We do not believe that additional subregulatory guidance would provide
the necessary authority for MCOs and states to implement or enforce
MHPAEA parity requirements for Medicaid beneficiaries enrolled in an
MCO.
We request public comment on our rationale for having regulations
that are specific to Medicaid and CHIP.
E. Accounting Statement and Table
As required by OMB Circular A-4 (available at https://www.whitehouse.gov/omb/circulars_a004_a-4/), in Table 7 we have
prepared an accounting statement showing the classification of the
impacts associated with implementation of this proposed rule.
The projected impact on costs in 2015 was calculated by multiplying
the percent anticipated increase in cost due to the application of
parity requirements by expected Medicaid expenditures in 2015. Based on
our analysis, the parity rule will lead to an increase of approximately
0.03 percent in total Medicaid spending each year over 10 years. In
2015, Medicaid expenditures overall are projected to equal
approximately $513.4 billion.\50\ Thus, the undiscounted cost of the
rule is estimated to be $157.4 million in 2015, and to rise
proportionate to the growth in overall Medicaid spending in future
years. These costs are split between the federal and state governments
based on the population covered and the statutory matching rate.
---------------------------------------------------------------------------
\50\ Centers for Medicare & Medicaid Services. National Health
Expenditure Projections 2012-2022. Forecast Summary. https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/Proj2012.pdf.
Accessed June 25, 2014.
[[Page 19442]]
Table 7--Accounting Statement: Classification of Estimated Benefit, Costs, and Transfers
----------------------------------------------------------------------------------------------------------------
Units
Category Estimates --------------------------------------------------
Year dollar Discount rate % Period covered
----------------------------------------------------------------------------------------------------------------
Transfers from Federal Government to Providers
----------------------------------------------------------------------------------------------------------------
Annualized Monetized ($million/year)......... 107.0 2015 7 2015-2019
107.5 2015 3 2015-2019
----------------------------------------------------------------------------------------------------------------
Transfers from State Government to Providers
----------------------------------------------------------------------------------------------------------------
Annualized Monetized ($million/year)......... 70.5 2015 7 2015-2019
70.8 2015 3 2015-2019
----------------------------------------------------------------------------------------------------------------
Note. The displayed numbers are rounded to the nearest thousand and therefore may not add up to the totals.
F. Regulatory Flexibility Act (RFA)
The RFA requires agencies to analyze options for regulatory relief
for small entities, if a rule has a significant impact on a substantial
number of small entities. The great majority of hospitals and most
other health care providers and suppliers are small entities, either by
being nonprofit organizations or by meeting the SBA definition of a
small business (having revenues of less than $7.5 million to $38.5
million in any 1 year). States are not included in the definition of a
small entity. This proposed rule does not change the rates at which
providers would be reimbursed for any additional treatments and
services that may be required, and MCOs, PIHPs, and PAHPs will be paid
on an actuarially sound basis for any additional coverage that they
will be required to provide. As indicated previously in this proposed
rule, the increased costs will be borne by states and the federal
government, which are not considered small entities. Therefore, the
Secretary has determined that this proposed rule will not have a
significant economic impact on a substantial number of small entities
as that term is used in the RFA.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 603 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a metropolitan
statistical area and has fewer than 100 beds. The Secretary has
determined that this proposed rule will not have a significant impact
on the operations of a substantial number of small rural hospitals.
G. Unfunded Mandates Reform Act (UMRA)
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2015, that
is approximately $144 million. UMRA does not address the total cost of
a rule. Rather, it focuses on certain categories of cost, mainly those
``Federal mandate'' costs resulting from (A) imposing enforceable
duties on state, local, or tribal governments, or on the private
sector, or (B) increasing the stringency of conditions in, or
decreasing the funding of, state, local, or tribal governments under
entitlement programs. The average state share of total Medicaid
spending in 2015 is projected to be 39.9 percent. The total cost impact
of this rule is estimated to be $157.4 million in 2015. Therefore, the
total cost to states is projected to be approximately $62.8 million.
Therefore, this proposed rule is not subject to UMRA.
H. Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it issues a proposed rule (and subsequent final
rule) that imposes substantial direct requirement costs on state and
local governments, preempts state law, or otherwise has federalism
implications.
In the Secretary's view, this proposed rule has Federalism
implications, because it has direct effects on the states, the
relationship between the federal government and states, or on the
distribution of power and responsibilities among various levels of
government. However, in the Secretary's view, the Federalism
implications of this proposed rule are substantially mitigated because,
with regards to MCOs, ABPs, and CHIP, the Secretary expects that many
states already offer benefits under their state plan and MCO contracts
that meet or exceed the Federal mental health parity standards that
would be implemented in this rule.
Throughout the process of developing these regulations, to the
extent feasible within the relevant provisions of the Act, PHS Act and
MHPAEA, the Secretary has attempted to balance the latitude for states
to structure their state plan services and MCO contracts according to
the needs and preferences of the state, and the Congress' intent to
provide uniform minimum protections to Medicaid and CHIP beneficiaries
in every state. By doing so, it is the Secretary's view that this
proposed rule complies with the requirements of Executive Order 13132.
I. Conclusion
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
List of Subjects
42 CFR Part 438
Grant programs-health, Medicaid, Reporting and recordkeeping
requirements.
42 CFR Part 440
Grant programs-health, Medicaid reporting.
42 CFR Part 456
Administrative practice and procedure, Drugs, Grant programs-
health, Health facilities, Medicaid, Reporting and recordkeeping
requirements.
42 CFR Part 457
Administrative practice and procedure, Grant programs-health,
Health insurance, Reporting and recordkeeping requirements.
[[Page 19443]]
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services proposes to amend 42 CFR chapter IV as set forth
below:
PART 438--MANAGED CARE
0
1. The authority citation for part 438 continues to read as follows:
Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302).
0
2. Section 438.6 is amended by revising paragraph (e) and adding
paragraph (n) to read as follows:
Sec. 438.6 Contract requirements.
* * * * *
(e) Additional services that may be covered by a MCO, PIHP, or
PAHP. A MCO, PIHP, or PAHP may cover, for enrollees, services that are
in addition to those covered under the state plan as follows:
(1) Any services necessary for compliance by the MCO, PIHP, or PAHP
with the requirements of subpart K of this part and only to the extent
such services are necessary for the MCO, PIHP, or PAHP to comply with
Sec. 438.910; and
(2) Any services that the MCO, PIHP, or PAHP voluntarily agrees to
provide.
(3) Only the costs associated with services in paragraph (e)(1) of
this section may be included when determining the payment rates under
paragraph (c) of this section.
* * * * *
(n) Parity in mental health and substance use disorder benefits.
(1) All MCO contracts, and any PIHP and PAHP contracts providing
services to MCO enrollees, must ensure that enrollees receive services
that are compliant with the requirements of subpart K of this part
insofar as those requirements are applicable.
(2) Any state providing any services to MCO enrollees using a
delivery system other than the MCO delivery system must provide
documentation of how the requirements of subpart K of this part are met
with the submission of the MCO contract for review and approval under
paragraph (a) of this section.
0
3. Subpart K is added to part 438 to read as follows:
Subpart K--Parity in Mental Health and Substance Use Disorder Benefits
Sec.
438.900 Meaning of terms.
438.905 Parity requirements for aggregate lifetime and annual dollar
limits.
438.910 Parity requirements for financial requirements and treatment
limitations.
438.915 Availability of information.
438.920 Applicability.
438.930 Compliance dates.
Subpart K--Parity in Mental Health and Substance Use Disorder
Benefits
Sec. 438.900 Meaning of terms.
For purposes of this subpart, except where the context clearly
indicates otherwise, the following terms have the meanings indicated:
Aggregate lifetime dollar limit means a dollar limitation on the
total amount of specified benefits that may be paid under a MCO, PIHP,
or PAHP.
Annual dollar limit means a dollar limitation on the total amount
of specified benefits that may be paid in a 12-month period under a
MCO, PIHP, or PAHP.
Cumulative financial requirements are financial requirements that
determine whether or to what extent benefits are provided based on
accumulated amounts and include deductibles and out-of-pocket maximums.
(However, cumulative financial requirements do not include aggregate
lifetime or annual dollar limits because these two terms are excluded
from the meaning of financial requirements.)
Early and Periodic Screening, Diagnostic and Treatment (EPSDT)
benefits are benefits defined in section 1905(r) of the Act.
Financial requirements include deductibles, copayments,
coinsurance, or out-of-pocket maximums. Financial requirements do not
include aggregate lifetime or annual dollar limits.
Medical/surgical benefits means benefits for items or services for
medical conditions or surgical procedures, as defined by the state and
in accordance with applicable federal and state law, but do not include
mental health or substance use disorder benefits. Any condition defined
by the state as being or as not being a medical/surgical condition must
be defined to be consistent with generally recognized independent
standards of current medical practice (for example, the most current
version of the International Classification of Diseases (ICD) or state
guidelines). Medical/surgical benefits do not include long-term care
services.
Mental health benefits means benefits for items or services for
mental health conditions, as defined by the state and in accordance
with applicable federal and state law. Any condition defined by the
state as being or as not being a mental health condition must be
defined to be consistent with generally recognized independent
standards of current medical practice (for example, the most current
version of the Diagnostic and Statistical Manual of Mental Disorders
(DSM), the most current version of the ICD, or state guidelines).
Mental health benefits do not include long-term care services.
Substance use disorder benefits means benefits for items or
services for substance use disorders, as defined by the state and in
accordance with applicable federal and state law. Any disorder defined
by the state as being or as not being a substance use disorder must be
defined to be consistent with generally recognized independent
standards of current medical practice (for example, the most current
version of the DSM, the most current version of the ICD, or state
guidelines). Substance use disorder benefits do not include long-term
care services.
Treatment limitations include limits on benefits based on the
frequency of treatment, number of visits, days of coverage, days in a
waiting period, or other similar limits on the scope or duration of
treatment. Treatment limitations include both quantitative treatment
limitations, which are expressed numerically (such as 50 outpatient
visits per year), and nonquantitative treatment limitations, which
otherwise limit the scope or duration of benefits for treatment under a
plan or coverage. (See Sec. 438.910(d)(2) for an illustrative list of
nonquantitative treatment limitations.) A permanent exclusion of all
benefits for a particular condition or disorder, however, is not a
treatment limitation for purposes of this definition.
Sec. 438.905 Parity requirements for aggregate lifetime and annual
dollar limits.
(a) General--(1) General parity requirement. Each MCO, PIHP, and
PAHP providing services to MCO enrollees must comply with paragraphs
(b), (c), or (e) of this section for all enrollees of a MCO in states
that cover both medical/surgical benefits and mental health or
substance use disorder benefits under the state plan. This section
details the application of the parity requirements for aggregate
lifetime and annual dollar limits.
(b) MCOs, PIHPs, or PAHPs with no limit or limits on less than one-
third of all medical/surgical benefits. If a MCO, PIHP, or PAHP does
not include an aggregate lifetime or annual dollar limit on any
medical/surgical benefits or includes an aggregate lifetime or annual
dollar limit that applies to less than one-third of all medical/
surgical benefits provided to enrollees through a contract with the
state, it may not impose an aggregate lifetime or annual dollar limit,
respectively, on mental health or substance use disorder benefits.
(c) MCOs, PIHPs, or PAHPs with a limit on at least two-thirds of
all medical/surgical benefits. If a MCO,
[[Page 19444]]
PIHP, or PAHP includes an aggregate lifetime or annual dollar limit on
at least two-thirds of all medical/surgical benefits provided to
enrollees through a contract with the state, it must either--
(1) Apply the aggregate lifetime or annual dollar limit both to the
medical/surgical benefits to which the limit would otherwise apply and
to mental health or substance use disorder benefits in a manner that
does not distinguish between the medical/surgical benefits and mental
health or substance use disorder benefits; or
(2) Not include an aggregate lifetime or annual dollar limit on
mental health or substance use disorder benefits that is more
restrictive than the aggregate lifetime or annual dollar limit,
respectively, on medical/surgical benefits.
(d) Determining one-third and two-thirds of all medical/surgical
benefits. For purposes of this section, the determination of whether
the portion of medical/surgical benefits subject to an aggregate
lifetime or annual dollar limit represents one-third or two-thirds of
all medical/surgical benefits is based on the total dollar amount of
all combinations of MCO, PIHP, and PAHP payments for medical/surgical
benefits expected to be paid under the MCO, PIHP, or PAHP for a
contract year (or for the portion of a contract year after a change in
benefits that affects the applicability of the aggregate lifetime or
annual dollar limits). Any reasonable method may be used to determine
whether the dollar amount expected to be paid under the MCOs, PIHPs,
and PAHPs will constitute one-third or two-thirds of the dollar amount
of all payments for medical/surgical benefits.
(e) MCO, PIHP, or PAHP not described in this section--(1) In
general. A MCO, PIHP, or PAHP that is not described in paragraph (b) or
(c) of this section for aggregate lifetime or annual dollar limits on
medical/surgical benefits, must either--
(i) Impose no aggregate lifetime or annual dollar limit, on mental
health or substance use disorder benefits; or
(ii) Impose an aggregate lifetime or annual dollar limit on mental
health or substance use disorder benefits that is no more restrictive
than an average limit calculated for medical/surgical benefits in the
following manner. The average limit is calculated by taking into
account the weighted average of the aggregate lifetime or annual dollar
limits, as appropriate, that are applicable to the categories of
medical/surgical benefits. Limits based on delivery mechanisms, such as
inpatient/outpatient treatment or normal treatment of common, low-cost
conditions (such as treatment of normal births), do not constitute
categories for purposes of this paragraph (e)(1)(ii). In addition, for
purposes of determining weighted averages, any benefits that are not
within a category that is subject to a separately-designated dollar
limit under the contract are taken into account as a single separate
category by using an estimate of the upper limit on the dollar amount
that a MCO, PIHP, or PAHP may reasonably be expected to incur for such
benefits, taking into account any other applicable restrictions.
(2) Weighting. For purposes of this paragraph (e), the weighting
applicable to any category of medical/surgical benefits is determined
in the manner set forth in paragraph (d) of this section for
determining one-third or two-thirds of all medical/surgical benefits.
Sec. 438.910 Parity requirements for financial requirements and
treatment limitations.
(a) Clarification of terms--(1) Classification of benefits. When
reference is made in this section to a classification of benefits, the
term ``classification'' means a classification as described in
paragraph (b)(2) of this section.
(2) Type of financial requirement or treatment limitation. When
reference is made in this section to a type of financial requirement or
treatment limitation, the reference to type means its nature. Different
types of financial requirements include deductibles, copayments,
coinsurance, and out-of-pocket maximums. Different types of
quantitative treatment limitations include annual, episode, and
lifetime day and visit limits. See paragraph (d)(2) of this section for
an illustrative list of nonquantitative treatment limitations.
(3) Level of a type of financial requirement or treatment
limitation. When reference is made in this section to a level of a type
of financial requirement or treatment limitation, level refers to the
magnitude of the type of financial requirement or treatment limitation.
(b) General parity requirement--(1) General rule and scope. Each
MCO, PIHP and PAHP providing services to MCO enrollees in a state that
covers both medical/surgical benefits and mental health or substance
use disorder benefits under the state plan, must not apply any
financial requirement or treatment limitation to mental health or
substance use disorder benefits in any classification that is more
restrictive than the predominant financial requirement or treatment
limitation of that type applied to substantially all medical/surgical
benefits in the same classification furnished to enrollees (whether or
not the benefits are furnished by the same MCO, PIHP, or PAHP). Whether
a financial requirement or treatment limitation is a predominant
financial requirement or treatment limitation that applies to
substantially all medical/surgical benefits in a classification is
determined separately for each type of financial requirement or
treatment limitation. The application of the rules of this paragraph
(b) to financial requirements and quantitative treatment limitations is
addressed in paragraph (c) of this section; the application of the
rules of this paragraph (b) to nonquantitative treatment limitations is
addressed in paragraph (d) of this section.
(2) Classifications of benefits used for applying rules. If an MCO
enrollee is provided mental health or substance use disorder benefits
in any classification of benefits described in this paragraph (b)(2),
mental health or substance use disorder benefits must be provided to
the enrollee in every classification in which medical/surgical benefits
are provided. In determining the classification in which a particular
benefit belongs, a MCO, PIHP, or PAHP must apply the same standards to
medical/surgical benefits and to mental health or substance use
disorder benefits. To the extent that a MCO, PIHP, or PAHP provides
benefits in a classification and imposes any separate financial
requirement or treatment limitation (or separate level of a financial
requirement or treatment limitation) for benefits in the
classification, the rules of this section apply separately for that
classification for all financial requirements or treatment limitations.
The following classifications of benefits are the only classifications
used in applying the rules of this section:
(i) Inpatient. Benefits furnished on an inpatient basis.
(ii) Outpatient. Benefits furnished on an outpatient basis. See
special rules for office visits in paragraph (c)(2) of this section.
(iii) Emergency care. Benefits for emergency care.
(iv) Prescription drugs. Benefits for prescription drugs. See
special rules for multi-tiered prescription drug benefits in paragraph
(c)(2) of this section.
(c) Financial requirements and quantitative treatment limitations--
(1) Determining ``substantially all'' and ``predominant''--(i)
Substantially all. For purposes of this section, a type of financial
requirement or quantitative treatment limitation is considered to apply
to substantially all medical/
[[Page 19445]]
surgical benefits in a classification of benefits if it applies to at
least two-thirds of all medical/surgical benefits in that
classification. If a type of financial requirement or quantitative
treatment limitation does not apply to at least two-thirds of all
medical/surgical benefits in a classification, then that type cannot be
applied to mental health or substance use disorder benefits in that
classification.
(ii) Predominant. (A) If a type of financial requirement or
quantitative treatment limitation applies to at least two-thirds of all
medical/surgical benefits in a classification as determined under
paragraph (c)(1)(i) of this section, the level of the financial
requirement or quantitative treatment limitation that is considered the
predominant level of that type in a classification of benefits is the
level that applies to more than one-half of medical/surgical benefits
in that classification subject to the financial requirement or
quantitative treatment limitation.
(B) If, for a type of financial requirement or quantitative
treatment limitation that applies to at least two-thirds of all
medical/surgical benefits in a classification, there is no single level
that applies to more than one-half of medical/surgical benefits in the
classification subject to the financial requirement or quantitative
treatment limitation, the MCO, PIHP, or PAHP may combine levels until
the combination of levels applies to more than one-half of medical/
surgical benefits subject to the financial requirement or quantitative
treatment limitation in the classification. The least restrictive level
within the combination is considered the predominant level of that type
in the classification. (For this purpose, a MCO, PIHP, or PAHP may
combine the most restrictive levels first, with each less restrictive
level added to the combination until the combination applies to more
than one-half of the benefits subject to the financial requirement or
treatment limitation.)
(iii) Portion based on MCO, PIHP or PAHP payments. For purposes of
this section, the determination of the portion of medical/surgical
benefits in a classification of benefits subject to a financial
requirement or quantitative treatment limitation (or subject to any
level of a financial requirement or quantitative treatment limitation)
is based on the total dollar amount of all combinations of MCO, PIHP,
and PAHP payments for medical/surgical benefits in the classification
expected to be paid under the MCOs, PIHPs, and PAHPs for a contract
year (or for the portion of a contract year after a change in benefits
that affects the applicability of the financial requirement or
quantitative treatment limitation).
(iv) Clarifications for certain threshold requirements. For any
deductible, the dollar amount of MCO, PIHP, or PAHP payments includes
all payments for claims that would be subject to the deductible if it
had not been satisfied. For any out-of-pocket maximum, the dollar
amount of MCO, PIHP, or PAHP payments includes all payments associated
with out-of-pocket payments that are taken into account towards the
out-of-pocket maximum as well as all payments associated with out-of-
pocket payments that would have been made towards the out-of-pocket
maximum if it had not been satisfied. Similar rules apply for any other
thresholds at which the rate of MCO, PIHP, or PAHP payment changes.
(v) Determining the dollar amount of MCO, PIHP, or PAHP payments.
Subject to paragraph (c)(1)(iv) of this section, any reasonable method
may be used to determine the dollar amount expected to be paid under a
MCO, PIHP, or PAHP for medical/surgical benefits subject to a financial
requirement or quantitative treatment limitation (or subject to any
level of a financial requirement or quantitative treatment limitation).
(2) Special rules--(i) Multi-tiered prescription drug benefits. If
a MCO, PIHP, or PAHP applies different levels of financial requirements
to different tiers of prescription drug benefits based on reasonable
factors determined in accordance with the rules in paragraph (d)(1) of
this section (relating to requirements for nonquantitative treatment
limitations) and without regard to whether a drug is generally
prescribed for medical/surgical benefits or for mental health or
substance use disorder benefits, the MCO, PIHP, or PAHP satisfies the
parity requirements of this section for prescription drug benefits.
Reasonable factors include cost, efficacy, generic versus brand name,
and mail order versus pharmacy pick-up/delivery.
(ii) Sub-classifications permitted for office visits, separate from
other outpatient services. For purposes of applying the financial
requirement and treatment limitation rules of this section, a MCO,
PIHP, or PAHP may divide its benefits furnished on an outpatient basis
into the two sub-classifications described in this paragraph
(c)(2)(ii). After the sub-classifications are established, the MCO,
PIHP or PAHP may not impose any financial requirement or quantitative
treatment limitation on mental health or substance use disorder
benefits in any sub-classification that is more restrictive than the
predominant financial requirement or quantitative treatment limitation
that applies to substantially all medical/surgical benefits in the sub-
classification using the methodology set forth in paragraph (c)(1) of
this section. Sub-classifications other than these special rules, such
as separate sub-classifications for generalists and specialists, are
not permitted. The two sub-classifications permitted under this
paragraph (c)(2)(ii) are:
(A) Office visits (such as physician visits); and
(B) All other outpatient items and services (such as outpatient
surgery, facility charges for day treatment centers, laboratory
charges, or other medical items).
(3) No separate cumulative financial requirements. A MCO, PIHP, or
PAHP may not apply any cumulative financial requirement for mental
health or substance use disorder benefits in a classification that
accumulates separately from any established for medical/surgical
benefits in the same classification.
(4) Compliance with other cost-sharing rules. Each MCO, PIHP. and
PAHP must meet the cost-sharing requirements in Sec. 438.108 when
applying Medicaid cost-sharing.
(d) Nonquantitative treatment limitations--(1) General rule. A MCO,
PIHP, or PAHP may not impose a nonquantitative treatment limitation for
mental health or substance use disorder benefits in any classification
unless, under the policies and procedures of the MCO, PIHP, or PAHP as
written and in operation, any processes, strategies, evidentiary
standards, or other factors used in applying the nonquantitative
treatment limitation to mental health or substance use disorder
benefits in the classification are comparable to, and are applied no
more stringently than, the processes, strategies, evidentiary
standards, or other factors used in applying the limitation for
medical/surgical benefits in the classification.
(2) Illustrative list of nonquantitative treatment limitations.
Nonquantitative treatment limitations include--
(i) Medical management standards limiting or excluding benefits
based on medical necessity or medical appropriateness, or based on
whether the treatment is experimental or investigative;
(ii) Formulary design for prescription drugs;
(iii) For MCOs, PIHPs, or PAHPs with multiple network tiers (such
as preferred providers and participating providers), network tier
design;
[[Page 19446]]
(iv) Standards for provider admission to participate in a network,
including reimbursement rates;
(v) MCO, PIHP, or PAHP methods for determining usual, customary,
and reasonable charges;
(vi) Refusal to pay for higher-cost therapies until it can be shown
that a lower-cost therapy is not effective (also known as fail-first
policies or step therapy protocols);
(vii) Exclusions based on failure to complete a course of
treatment;
(viii) Restrictions based on geographic location, facility type,
provider specialty, and other criteria that limit the scope or duration
of benefits for services provided under the MCO, PIHP, or PAHP; and
(ix) Standards for providing access to out-of-network providers
(3) Application to out-of-network providers. Any MCO, PIHP or PAHP
providing access to out-of-network providers for medical/surgical
benefits within a classification, must use the same processes,
strategies, evidentiary standards, or other factors in determining
access to out-of-network providers for MH/SUD benefits. If a MCO, PIHP
or PAHP is found to be in compliance with Sec. 438.206(b)(4), it will
be deemed in compliance with the standards in this paragraph (d)(3).
Sec. 438.915 Availability of information.
(a) Criteria for medical necessity determinations. The criteria for
medical necessity determinations, made by a MCO or by a PIHP or PAHP
providing services to an MCO enrollee, for mental health or substance
use disorder benefits must be made available by the MCO, PIHP, or PAHP
administrator to any enrollee, potential enrollee, or contracting
provider upon request. MCOs, PIHPs, and PAHPs operating in compliance
with Sec. 438.236(c) will be deemed compliant with the requirements in
this paragraph (a).
(b) Reason for any denial. The reason for any denial by a MCO,
PIHP, or PAHP of reimbursement or payment for services for mental
health or substance use disorder benefits in the case of any enrollee
must be made available by the MCO, PIHP, or PAHP administrator to the
enrollee.
(c) Provisions of other law. Compliance with the disclosure
requirements in paragraphs (a) and (b) of this section is not
determinative of compliance with any other provision of applicable
federal or state law.
Sec. 438.920 Applicability.
(a) MCOs, PIHPs, and PAHPs. The requirements of this subpart apply
to each MCO, PIHP, and PAHP offering services to enrollees of a MCO, in
states covering medical/surgical and MH/SUD services under the state
plan. These requirements regarding coverage for services that must be
provided to enrollees of an MCO apply regardless of the delivery system
of the medical/surgical or MH/SUD services under the State plan.
(b) State responsibilities. (1) In any instance where the full
scope of medical/surgical and MH/SUD services are not provided through
the MCO, the State must review the MH/SUD benefits provided in the MCO,
PIHP, PAHP, or FFS state plan service to ensure the full scope of
services available to all enrollees of the MCO complies with the
requirements in this subpart. The state must provide documentation of
compliance with requirements in this subpart to the general public
within 18 months of the effective date of the final rule.
(2) In any instance where the full scope of medical/surgical and
MH/SUD services are not provided through the MCO, the State must ensure
that the enrollees of the MCO receive services in compliance with this
subpart.
(c) Scope. This subpart does not--
(1) Require a MCO, PIHP, or PAHP to provide any mental health
benefits or substance use disorder benefits beyond what is specified in
its contract, and the provision of benefits by a MCO, PIHP, or PAHP for
one or more mental health conditions or substance use disorders does
not require the MCO, PIHP or PAHP to provide benefits for any other
mental health condition or substance use disorder;
(2) Require a MCO, PIHP, or PAHP that provides coverage for mental
health or substance use disorder benefits only to the extent required
under 1905(a)(4)(D) of the Act to provide additional mental health or
substance use disorder benefits in any classification in accordance
with this section; or
(3) Affect the terms and conditions relating to the amount,
duration, or scope of mental health or substance use disorder benefits
under the Medicaid MCO, PIHP, or PAHP contract except as specifically
provided in Sec. Sec. 438.905 and 438.910.
Sec. 438.930 Compliance dates.
In general, contracts with MCOs, PIHPs, and PAHPs offering Medicaid
state plan services to enrollees, and those entities, must comply with
the requirements of this subpart no later than the beginning of the
contract year starting 18 months after the [DATE OF PUBLICATION OF THE
FINAL RULE].
PART 440--SERVICES: GENERAL PROVISIONS
0
4. The authority citation for part 440 continues to read as follows:
Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302).
0
5. Section 440.395 is added to read as follows:
Sec. 440.395 Parity in mental health and substance use disorder
benefits.
(a) Meaning of terms. For purposes of this section, except where
the context clearly indicates otherwise, the following terms have the
meanings indicated:
Aggregate lifetime dollar limit means a dollar limitation on the
total amount of specified benefits that may be paid under an
Alternative Benefit Plan (ABP).
Annual dollar limit means a dollar limitation on the total amount
of specified benefits that may be paid in a 12-month period under an
ABP.
Alternative Benefit Plans (ABPs) mean benefit packages in one or
more of the benchmark coverage packages described in Sec. Sec.
440.330(a) through (c) and 440.335. Benefits may be delivered through
managed care and non-managed care delivery systems. Consistent with the
requirements of Sec. 440.385, states must comply with the managed care
provisions at section 1932 of the Act and part 438 of this chapter, if
benchmark and benchmark-equivalent benefits are provided through a
managed care entity.
Cumulative financial requirements are financial requirements that
determine whether or to what extent benefits are provided based on
accumulated amounts and include deductibles and out-of-pocket maximums.
(However, cumulative financial requirements do not include aggregate
lifetime or annual dollar limits because these two terms are excluded
from the meaning of financial requirements.)
EPSDT means benefits defined in section 1905(r) of the Act.
Financial requirements include deductibles, copayments,
coinsurance, or out-of-pocket maximums. Financial requirements do not
include aggregate lifetime or annual dollar limits.
Medical/surgical benefits means benefits for items or services for
medical conditions or surgical procedures, as defined by the state
under the terms of the ABP and in accordance with applicable federal
and state law, but does not include mental health or substance use
disorder benefits. Any condition defined by the state as being or as
not being a medical/surgical
[[Page 19447]]
condition must be defined to be consistent with generally recognized
independent standards of current medical practice (for example, the
most current version of the International Classification of Diseases
(ICD) or state guidelines). Medical/surgical benefits do not include
long-term services.
Mental health benefits means benefits for items or services for
mental health conditions, as defined by the state under the terms of
the ABP and in accordance with applicable federal and state law. Any
condition defined by the state as being or as not being a mental health
condition must be defined to be consistent with generally recognized
independent standards of current medical practice (for example, the
most current version of the Diagnostic and Statistical Manual of Mental
Disorders (DSM), the most current version of the ICD, or state
guidelines. Mental health benefits do not include long-term care
services.
Substance use disorder benefits means benefits for items or
services for substance use disorders, as defined by the state under the
terms of the ABP and in accordance with applicable federal and state
law. Any disorder defined by the state as being or as not being a
substance use disorder must be defined to be consistent with generally
recognized independent standards of current medical practice (for
example, the most current version of the DSM, the most current version
of the ICD, or state guidelines). Substance use disorder benefits do
not include long-term care services.
Treatment limitations include limits on benefits based on the
frequency of treatment, number of visits, days of coverage, days in a
waiting period, or other similar limits on the scope or duration of
treatment. Treatment limitations include both quantitative treatment
limitations, which are expressed numerically (such as 50 outpatient
visits per year), and nonquantitative treatment limitations, which
otherwise limit the scope or duration of benefits for treatment under
an ABP. (See paragraph (b)(4)(ii) of this section for an illustrative
list of nonquantitative treatment limitations.) A permanent exclusion
of all benefits for a particular condition or disorder, however, is not
a treatment limitation for purposes of this definition.
(b) Parity requirements for financial requirements and treatment
limitations--(1) Clarification of terms--(i) Classification of
benefits. When reference is made in this paragraph (b) to a
classification of benefits, the term ``classification'' means a
classification as described in paragraph (b)(2)(ii) of this section.
(ii) Type of financial requirement or treatment limitation. When
reference is made in this paragraph (b) to a type of financial
requirement or treatment limitation, the reference to type means its
nature. Different types of financial requirements include deductibles,
copayments, coinsurance, and out-of-pocket maximums. Different types of
quantitative treatment limitations include annual, episode, and
lifetime day and visit limits. See paragraph (b)(4)(ii) of this section
for an illustrative list of nonquantitative treatment limitations.
(iii) Level of a type of financial requirement or treatment
limitation. When reference is made in this paragraph (b) to a level of
a type of financial requirement or treatment limitation, level refers
to the magnitude of the type of financial requirement or treatment
limitation.
(2) General parity requirement--(i) General rule. A state may not
apply within an ABP any financial requirement or treatment limitation
to mental health or substance use disorder benefits in any
classification that is more restrictive than the predominant financial
requirement or treatment limitation of that type applied to
substantially all medical/surgical benefits in the same classification.
Whether a financial requirement or treatment limitation is a
predominant financial requirement or treatment limitation that applies
to substantially all medical/surgical benefits in a classification is
determined separately for each type of financial requirement or
treatment limitation. The application of the rules of this paragraph
(b)(2) to financial requirements and quantitative treatment limitations
is addressed in paragraph (b)(3) of this section; the application of
the rules of this paragraph (b)(2) to nonquantitative treatment
limitations is addressed in paragraph (b)(4) of this section.
(ii) Classifications of benefits used for applying rules. ABPs must
include mental health or substance use disorder benefits in every
classification of benefits described in this paragraph (b)(2)(ii) in
which medical/surgical benefits are provided. In determining the
classification in which a particular benefit belongs, the state must
apply the same standards to medical/surgical benefits and to mental
health or substance use disorder benefits. To the extent that a state
provides ABP benefits in a classification and imposes any separate
financial requirement or treatment limitation (or separate level of a
financial requirement or treatment limitation) for benefits in the
classification, the rules of this paragraph (b) apply separately for
that classification for all financial requirements or treatment
limitations. The following classifications of benefits are the only
classifications used in applying the rules of this paragraph (b):
(A) Inpatient. Benefits furnished on an inpatient basis.
(B) Outpatient. Benefits furnished on an outpatient basis. See
special rules for office visits in paragraph (b)(3)(ii)(B)(1) of this
section.
(C) Emergency care. Benefits for emergency care.
(D) Prescription drugs. Benefits for prescription drugs. See
special rules for multi-tiered prescription drug benefits in paragraph
(b)(3)(ii) of this section.
(3) Financial requirements and quantitative treatment limitations--
(i) Determining ``substantially all'' and ``predominant''--(A)
Substantially all. For purposes of this paragraph (b), a type of
financial requirement or quantitative treatment limitation is
considered to apply to substantially all medical/surgical benefits in a
classification of benefits if it applies to at least two-thirds of all
medical/surgical benefits in that classification. If a type of
financial requirement or quantitative treatment limitation does not
apply to at least two-thirds of all medical/surgical benefits in a
classification, then that type cannot be applied to mental health or
substance use disorder benefits in that classification.
(B) Predominant--(1) If a type of financial requirement or
quantitative treatment limitation applies to at least two-thirds of all
medical/surgical benefits in a classification as determined under
paragraph (b)(3)(i)(A) of this section, the level of the financial
requirement or quantitative treatment limitation that is considered the
predominant level of that type in a classification of benefits is the
level that applies to more than one-half of medical/surgical benefits
in that classification subject to the financial requirement or
quantitative treatment limitation.
(2) If, for a type of financial requirement or quantitative
treatment limitation that applies to at least two-thirds of all
medical/surgical benefits in a classification, there is no single level
that applies to more than one-half of medical/surgical benefits in the
classification subject to the financial requirement or quantitative
treatment limitation, the state may combine levels until the
combination of levels applies to more than one-half of medical/surgical
benefits subject to the financial
[[Page 19448]]
requirement or quantitative treatment limitation in the classification.
The least restrictive level within the combination is considered the
predominant level of that type in the classification. (For this
purpose, a state may combine the most restrictive levels first, with
each less restrictive level added to the combination until the
combination applies to more than one-half of the benefits subject to
the financial requirement or treatment limitation.)
(C) Portion based on ABP payments. For purposes of this paragraph
(b), the determination of the portion of medical/surgical benefits in a
classification of benefits subject to a financial requirement or
quantitative treatment limitation (or subject to any level of a
financial requirement or quantitative treatment limitation) is based on
the dollar amount of all ABP payments for medical/surgical benefits in
the classification expected to be paid under the ABP for the plan year
(or for the portion of the plan year after a change in ABP benefits
that affects the applicability of the financial requirement or
quantitative treatment limitation).
(D) Clarifications for certain threshold requirements. For any
deductible, the dollar amount of ABP payments includes all payments for
claims that would be subject to the deductible if it had not been
satisfied. For any out-of-pocket maximum, the dollar amount of ABP
payments includes all payments associated with out-of-pocket payments
that are taken into account towards the out-of-pocket maximum as well
as all payments associated with out-of-pocket payments that would have
been made towards the out-of-pocket maximum if it had not been
satisfied. Similar rules apply for any other thresholds at which the
rate of payment changes.
(E) Determining the dollar amount of ABP payments. Subject to
paragraph (b)(3)(i)(D) of this section, any reasonable method may be
used to determine the dollar amount expected to be paid for medical/
surgical benefits subject to a financial requirement or quantitative
treatment limitation (or subject to any level of a financial
requirement or quantitative treatment limitation).
(ii) Special rules--(A) Multi-tiered prescription drug benefits. If
a state or plan administrator applies different levels of financial
requirements to different tiers of prescription drug benefits based on
reasonable factors determined in accordance with the rules in paragraph
(b)(4)(i) of this section (relating to requirements for nonquantitative
treatment limitations) and without regard to whether a drug is
generally prescribed for medical/surgical benefits or for mental health
or substance use disorder benefits, the ABP satisfies the parity
requirements of this paragraph (b) for prescription drug benefits.
Reasonable factors include cost, efficacy, generic versus brand name,
and mail order versus pharmacy pick-up/delivery.
(B) Sub-classifications permitted for office visits, separate from
other outpatient services. For purposes of applying the financial
requirement and treatment limitation rules of this paragraph (b), a
state may divide its benefits furnished on an outpatient basis into the
two sub-classifications described in this paragraph (b)(3)(ii)(B).
After the sub-classifications are established, the state may not impose
any financial requirement or quantitative treatment limitation on
mental health or substance use disorder benefits in any sub-
classification that is more restrictive than the predominant financial
requirement or quantitative treatment limitation that applies to
substantially all medical/surgical benefits in the sub-classification
using the methodology set forth in paragraph (b)(3)(i) of this section.
Sub-classifications other than these special rules, such as separate
sub-classifications for generalists and specialists, are not permitted.
The two sub-classifications permitted under this paragraph
(b)(3)(ii)(B) are:
(1) Office visits (such as physician visits); and
(2) All other outpatient items and services (such as outpatient
surgery, laboratory services, or other medical items).
(iii) No separate cumulative financial requirements. A state may
not apply any cumulative financial requirement for mental health or
substance use disorder benefits in a classification that accumulates
separately from any established for medical/surgical benefits in the
same classification.
(iv) Compliance with other cost-sharing rules. States must meet the
requirements of Sec. Sec. 447.50 through 447.57 of this chapter when
applying Medicaid cost-sharing.
(4) Nonquantitative treatment limitations--(i) General rule. A
state may not impose a nonquantitative treatment limitation for mental
health or substance use disorder benefits in any classification unless,
under the terms of the ABP as written and in operation, any processes,
strategies, evidentiary standards, or other factors used in applying
the nonquantitative treatment limitation to mental health or substance
use disorder benefits in the classification are comparable to, and are
applied no more stringently than, the processes, strategies,
evidentiary standards, or other factors used in applying the limitation
for medical/surgical benefits in the classification.
(ii) Illustrative list of nonquantitative treatment limitations.
Nonquantitative treatment limitations include--
(A) Medical management standards limiting or excluding benefits
based on medical necessity or medical appropriateness, or based on
whether the treatment is experimental or investigative;
(B) Formulary design for prescription drugs;
(C) Standards for provider admission to participate in a network,
including reimbursement rates;
(D) Methods for determining usual, customary, and reasonable
charges;
(E) Refusal to pay for higher-cost therapies until it can be shown
that a lower-cost therapy is not effective (also known as fail-first
policies or step therapy protocols);
(F) Exclusions based on failure to complete a course of treatment;
and
(G) Restrictions based on geographic location, facility type,
provider specialty, and other criteria that limit the scope or duration
of benefits or services provided under the ABP.
(c) Availability of information--(1) Criteria for medical necessity
determinations. The criteria for medical necessity determinations made
by the state for beneficiaries served through the ABP for mental health
or substance use disorder benefits must be made available by the state
to any beneficiary or Medicaid provider upon request.
(2) Reason for any denial. The reason for any denial made by the
state in the case of a beneficiary served through an ABP of
reimbursement or payment for services for mental health or substance
use disorder benefits must be made available by the state to the
beneficiary.
(3) Provisions of other law. Compliance with the disclosure
requirements in paragraphs (c)(1) and (2) of this section is not
determinative of compliance with any other provision of applicable
federal or state law.
(d) Applicability--(1) Alternative Benefit Plans (ABPs). The
requirements of this section apply to states providing benefits through
ABPs. For those states providing ABPs through an MCO, PIHP, or PAHP the
rules of 42 CFR part 438, subpart K also apply, and approved contracts
will be viewed as evidence of compliance with the requirements of this
section.
(2) Scope. This section does not--
(i) Require a state to provide any specific mental health benefits
or substance use disorder benefits;
[[Page 19449]]
however, in providing coverage through an ABP, the state must include
the ten essential health benefits as required in Sec. 440.347, which
include mental health and substance use disorder benefits or
(ii) Affect the terms and conditions relating to the amount,
duration, or scope of mental health or substance use disorder benefits
under the ABP except as specifically provided in paragraph (b) of this
section.
(3) State plan requirement. If a state plan provides for an ABP,
the state must provide sufficient information in ABP state plan
amendment requests to assure compliance with the requirements of this
subpart.
(4) Compliance dates--(i) In general. ABP coverage offered by
states must comply with the requirements of this section no later than
18 months after the publication of the final rule.
(ii) [Reserved]
PART 456--UTILIZATION CONTROL
0
6. The authority citation for part 456 continues to read as follows:
Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302), unless otherwise noted.
Sec. 456.171 [Removed and Reserved]
0
7. Section 456.171 is removed and reserved.
PART 457--ALLOTMENTS AND GRANTS TO STATES
0
8. The authority citation for part 457 continues to read as follows:
Authority: Section 1102 of the Social Security Act (42 U.S.C.
1302).
0
9. Section 457.496 is added to subpart D to read as follows:
Sec. 457.496 Parity in mental health and substance use disorder
benefits.
(a) Meaning of terms. For purposes of this section, except where
the context clearly indicates otherwise, the following terms have the
meanings indicated:
Aggregate lifetime dollar limit means a dollar limitation on the
total amount of specified benefits that may be paid under a CHIP state
plan or a Managed Care Entity (MCE) (as defined at Sec. 457.10) that
contracts with the CHIP state plan. CHIP state plans must meet the
requirements of Sec. 457.480.
Annual dollar limit means a dollar limitation on the total amount
of specified benefits that may be paid in a 12-month period under a
CHIP state plan or a MCE that contracts with a CHIP state plan. CHIP
state plans must meet the requirements at Sec. 457.480.
CHIP State Plan has the meaning assigned at Sec. 457.50.
Cumulative financial requirements are financial requirements that
determine whether or to what extent benefits are provided based on
accumulated amounts and include deductibles and out-of-pocket maximums.
(However, cumulative financial requirements do not include aggregate
lifetime or annual dollar limits because these two terms are excluded
from the meaning of financial requirements.)
Early and Periodic Screening, Diagnostic and Treatment (EPSDT)
benefits has the meaning defined in section 1905(r) of the Act.
Financial requirements include deductibles, copayments,
coinsurance, or out-of-pocket maximums. Financial requirements do not
include aggregate lifetime or annual dollar limits.
Medical/surgical benefits means benefits for items or services for
medical conditions or surgical procedures, as defined under the terms
of the CHIP state plan in accordance with applicable federal and state
law, but does not include mental health or substance use disorder
benefits. Any condition defined by the CHIP state plan as being or not
being a medical/surgical condition must be defined to be consistent
with generally recognized independent standards of current medical
practice (for example, the most current version of the International
Classification of Diseases (ICD) or generally applicable state
guidelines). Medical/surgical benefits do not include long-term care
services.
Mental health benefits means benefits for items or services that
treat or otherwise address mental health conditions, as defined under
the terms of the CHIP state plan in accordance with applicable federal
and state law, and consistent with generally recognized independent
standards of current medical practice. Standards of current medical
practice can be based on the most current version of the DSM, the most
current version of the ICD, or generally applicable state guidelines.
The term does not include long term care services.
Substance use disorder benefits means benefits for items or
services for substance use disorders, as defined under the terms of the
CHIP state plan in accordance with applicable federal and state law,
and consistent with generally recognized independent standards of
current medical practice. Standards of current medical practice can be
based on the most current version of the DSM, the most current version
of the ICD, or generally applicable state guidelines. The term does not
include long term care services.
Treatment limitations include limits on benefits based on the
frequency of treatment, number of visits, days of coverage, days in a
waiting period, or other similar limits on the scope or duration of
treatment. Treatment limitations include both quantitative treatment
limitations, which are expressed numerically (such as 50 outpatient
visits per year), and nonquantitative treatment limitations, which
otherwise limit the scope or duration of benefits for treatment under
the CHIP state plan. (See paragraph (d)(4)(ii) of this section for an
illustrative list of nonquantitative treatment limitations.) A
permanent exclusion of all benefits for a particular condition or
disorder, however, is not a treatment limitation for purposes of this
definition.
(b) State CHIP plan providing EPSDT benefits. A state CHIP plan
that provides benefits through expansion of Medicaid programs and
provides EPSDT benefits is deemed to be in compliance with the parity
requirements for financial requirements and treatment limitations.
Annual or lifetime limits are not permissible in EPSDT benefits.
(c) Parity requirements for aggregate lifetime and annual dollar
limits. This paragraph (c) details the application of the parity
requirements for aggregate lifetime and annual dollar limits. A CHIP
state plan that provides both medical/surgical benefits and mental
health or substance use disorder benefits must comply with paragraph
(c)(1), (2), or (4) of this section.
(1) Plan with no limit or limits on less than one-third of all
medical/surgical benefits. If a CHIP state plan does not include an
aggregate lifetime or annual dollar limit on any medical/surgical
benefits or includes an aggregate lifetime or annual dollar limit that
applies to less than one-third of all medical/surgical benefits, it may
not impose an aggregate lifetime or annual dollar limit, respectively,
on mental health or substance use disorder benefits.
(2) CHIP state plans with a limit on at least two-thirds of all
medical/surgical benefits. If a CHIP state plan includes an aggregate
lifetime or annual dollar limit on at least two-thirds of all medical/
surgical benefits, it must either--
(i) Apply the aggregate lifetime or annual dollar limit both to the
medical/surgical benefits to which the limit would otherwise apply and
to mental health or substance use disorder benefits in a manner that
does not distinguish between the medical/
[[Page 19450]]
surgical benefits and mental health or substance use disorder benefits;
or
(ii) Not include an aggregate lifetime or annual dollar limit on
mental health or substance use disorder benefits that is more
restrictive than the aggregate lifetime or annual dollar limit,
respectively, on medical/surgical benefits. (For cumulative limits
other than aggregate lifetime or annual dollar limits, see paragraph
(d)(3)(iii) of this section prohibiting separately accumulating
cumulative financial requirements.)
(3) Determining one-third and two-thirds of all medical/surgical
benefits. For purposes of this paragraph (c), the determination of
whether the portion of medical/surgical benefits subject to an
aggregate lifetime or annual dollar limit represents one-third or two-
thirds of all medical/surgical benefits is based on the dollar amount
of all plan payments for medical/surgical benefits expected to be paid
under the CHIP state plan for the state plan year (or for the portion
of the plan year after a change in plan benefits that affects the
applicability of the aggregate lifetime or annual dollar limits). Any
reasonable method may be used to determine whether the dollar amount
expected to be paid under the CHIP state plan will constitute one-third
or two-thirds of the dollar amount of all plan payments for medical/
surgical benefits.
(4) Plan not described in this section--(i) In general. A CHIP
state plan that is not described in paragraph (c)(1) or (2) of this
section for aggregate lifetime or annual dollar limits on medical/
surgical benefits, must either--
(A) Impose no aggregate lifetime or annual dollar limit, as
appropriate, on mental health or substance use disorder benefits; or
(B) Impose an aggregate lifetime or annual dollar limit on mental
health or substance use disorder benefits that is no more restrictive
than an average limit calculated for medical/surgical benefits in the
following manner. The average limit is calculated by taking into
account the weighted average of the aggregate lifetime or annual dollar
limits, as appropriate, that are applicable to the categories of
medical/surgical benefits. Limits based on delivery systems, such as
inpatient/outpatient treatment or normal treatment of common, low-cost
conditions (such as treatment of normal births), do not constitute
categories for purposes of this paragraph (c)(4)(i)(B). In addition,
for purposes of determining weighted averages, any benefits that are
not within a category that is subject to a separately-designated dollar
limit under the plan are taken into account as a single separate
category by using an estimate of the upper limit on the dollar amount
that a plan may reasonably be expected to incur for such benefits,
taking into account any other applicable restrictions under the plan.
(ii) Weighting. For purposes of this paragraph (c)(4), the
weighting applicable to any category of medical/surgical benefits is
determined in the manner set forth in paragraph (c)(3) of this section
for determining one-third or two-thirds of all medical/surgical
benefits.
(d) Parity requirements for financial requirements and treatment
limitations--(1) Clarification of terms--(i) Classification of
benefits. When reference is made in this paragraph (d) to a
classification of benefits, the term ``classification'' means a
classification as described in paragraph (d)(2)(ii) of this section.
(ii) Type of financial requirement or treatment limitation. When
reference is made in this paragraph (d) to a type of financial
requirement or treatment limitation, the reference to type means its
nature. Different types of financial requirements include deductibles,
copayments, coinsurance, and out-of-pocket maximums. Different types of
quantitative treatment limitations include annual, episode, and
lifetime day and visit limits. See paragraph (d)(4)(ii) of this section
for an illustrative list of nonquantitative treatment limitations.
(iii) Level of a type of financial requirement or treatment
limitation. When reference is made in this paragraph (d) to a level of
a type of financial requirement or treatment limitation, level refers
to the magnitude of the type of financial requirement or treatment
limitation.
(2) General parity requirement--(i) General rule. A CHIP state plan
or a MCE that contracts with CHIP through its state plan that provides
both medical/surgical benefits and mental health or substance use
disorder benefits, including when such benefits are delivered through
an MCE, may not apply any financial requirement or treatment limitation
to mental health or substance use disorder benefits in any
classification that is more restrictive than the predominant financial
requirement or treatment limitation of that type applied to
substantially all medical/surgical benefits in the same classification.
Whether a financial requirement or treatment limitation is a
predominant financial requirement or treatment limitation that applies
to substantially all medical/surgical benefits in a classification is
determined separately for each type of financial requirement or
treatment limitation. The application of the rules of this paragraph
(d)(2) to financial requirements and quantitative treatment limitations
is addressed in paragraph (d)(3) of this section; the application of
the rules of this paragraph (d)(2) to nonquantitative treatment
limitations is addressed in paragraph (d)(4) of this section.
(ii) Classifications of benefits used for applying rules. If a CHIP
state plan provides mental health or substance use disorder benefits in
any classification of benefits described in this paragraph (d)(2)(ii),
mental health or substance use disorder benefits must be provided in
every classification in which medical/surgical benefits are provided.
In determining the classification in which a particular benefit
belongs, the same standards must apply to medical/surgical benefits and
to mental health or substance use disorder benefits. To the extent that
a CHIP state plan provides benefits in a classification and imposes any
separate financial requirement or treatment limitation (or separate
level of a financial requirement or treatment limitation) for benefits
in the classification, the rules of this paragraph (d) apply separately
for that classification for all financial requirements or treatment
limitations. The following classifications of benefits are the only
classifications used in applying the rules of this paragraph (d):
(A) Inpatient. Benefits furnished on an inpatient basis.
(B) Outpatient. Benefits furnished on an outpatient basis. See
special rules for office visits in paragraph (d)(3)(iii) of this
section.
(C) Emergency care. Benefits for emergency care.
(D) Prescription drugs. Benefits for prescription drugs. See
special rules for multi-tiered prescription drug benefits in paragraph
(d)(3)(iii) of this section.
(3) Financial requirements and quantitative treatment limitations--
(i) Determining ``substantially all'' and ``predominant''--(A)
Substantially all. For purposes of this paragraph (d), a type of
financial requirement or quantitative treatment limitation is
considered to apply to substantially all medical/surgical benefits in a
classification of benefits if it applies to at least two-thirds of all
medical/surgical benefits in that classification. If a type of
financial requirement or quantitative treatment limitation does not
apply to at least two-thirds of all medical/surgical benefits in a
classification, then that type cannot be applied to mental health or
substance use disorder benefits in that classification.
[[Page 19451]]
(B) Predominant. (1) If a type of financial requirement or
quantitative treatment limitation applies to at least two-thirds of all
medical/surgical benefits in a classification as determined under
paragraph (d)(3)(i)(A) of this section, the level of the financial
requirement or quantitative treatment limitation that is considered the
predominant level of that type in a classification of benefits is the
level that applies to more than one-half of medical/surgical benefits
in that classification subject to the financial requirement or
quantitative treatment limitation.
(2) If, for a type of financial requirement or quantitative
treatment limitation that applies to at least two-thirds of all
medical/surgical benefits in a classification, there is no single level
that applies to more than one-half of medical/surgical benefits in the
classification subject to the financial requirement or quantitative
treatment limitation, the CHIP state plan (or health insurance issuer)
may combine levels until the combination of levels applies to more than
one-half of medical/surgical benefits subject to the financial
requirement or quantitative treatment limitation in the classification.
The least restrictive level within the combination is considered the
predominant level of that type in the classification. (For this
purpose, a CHIP state plan may combine the most restrictive levels
first, with each less restrictive level added to the combination until
the combination applies to more than one-half of the benefits subject
to the financial requirement or treatment limitation.)
(C) Portion based on plan payments. For purposes of this paragraph
(d), the determination of the portion of medical/surgical benefits in a
classification of benefits subject to a financial requirement or
quantitative treatment limitation (or subject to any level of a
financial requirement or quantitative treatment limitation) is based on
the dollar amount of all CHIP state plan payments and combinations of
MCE payments for medical/surgical benefits in the classification
expected to be paid under the plan or MCE or combination that contracts
with the CHIP state plan for the plan year (or for the portion of the
plan year after a change in plan benefits that affects the
applicability of the financial requirement or quantitative treatment
limitation).
(D) Clarifications for certain threshold requirements. For any
deductible, the dollar amount of a CHIP state plan payments includes
all plan payments for claims that would be subject to the deductible if
it had not been satisfied. In accordance with the cumulative cost-
sharing maximum in Sec. 457.560, or any other out-of-pocket maximum in
the CHIP state plan, the dollar amount of plan payments includes all
CHIP state plan payments associated with out-of-pocket payments that
are taken into account towards the out-of-pocket maximum as well as all
plan payments associated with out-of-pocket payments that would have
been made towards the out-of-pocket maximum if it had not been
satisfied. Similar rules apply for any other thresholds at which the
rate of health plan payment changes.
(E) Determining the dollar amount of CHIP state plan payments.
Subject to paragraph (d)(3)(i)(D) of this section, any reasonable
method may be used to determine the dollar amount expected to be paid
under a CHIP state plan for medical/surgical benefits subject to a
financial requirement or quantitative treatment limitation (or subject
to any level of a financial requirement or quantitative treatment
limitation).
(ii) Special rules--(A) Multi-tiered prescription drug benefits. If
a CHIP state plan applies different levels of financial requirements to
different tiers of prescription drug benefits based on reasonable
factors determined in accordance with the rules in paragraph (d)(4)(i)
of this section (relating to requirements for nonquantitative treatment
limitations) and without regard to whether a drug is generally
prescribed for medical/surgical benefits or for mental health or
substance use disorder benefits, the health plan satisfies the parity
requirements of this paragraph (d) for prescription drug benefits.
Reasonable factors include cost, efficacy, generic versus brand name,
and mail order versus pharmacy pick-up/delivery.
(B) Sub-classifications permitted for office visits, separate from
other outpatient services. For purposes of applying the financial
requirement and treatment limitation rules of this paragraph (d), a
CHIP state plan may divide its benefits furnished on an outpatient
basis into the two sub-classifications described in this paragraph
(d)(3)(ii)(B). After the sub-classifications are established, the CHIP
state plan may not impose any financial requirement or quantitative
treatment limitation on mental health or substance use disorder
benefits in any sub-classification that is more restrictive than the
predominant financial requirement or quantitative treatment limitation
that applies to substantially all medical/surgical benefits in the sub-
classification using the methodology set forth in paragraph (d)(3)(i)
of this section. Sub-classifications other than these special rules,
such as separate sub-classifications for generalists and specialists,
are not permitted. The two sub-classifications permitted under this
paragraph (d)(3)(ii)(B) are:
(1) Office visits (such as physician visits); and
(2) All other outpatient items and services (such as outpatient
surgery, facility charges for day treatment centers, laboratory
charges, or other medical items).
(iii) No separate cumulative financial requirements. A CHIP state
plan may not apply any cumulative financial requirement for mental
health or substance use disorder benefits in a classification that
accumulates separately from any established for medical/surgical
benefits in the same classification.
(4) Nonquantitative treatment limitations--(i) General rule. A CHIP
state plan may not impose a nonquantitative treatment limitation for
mental health or substance use disorder benefits in any classification
unless, under the terms of the CHIP state plan as written and in
operation, any processes, strategies, evidentiary standards, or other
factors used in applying the nonquantitative treatment limitation to
mental health or substance use disorder benefits in the classification
are comparable to, and are applied no more stringently than, the
processes, strategies, evidentiary standards, or other factors used in
applying the limitation for medical/surgical benefits in the
classification.
(ii) Illustrative list of nonquantitative treatment limitations.
Nonquantitative treatment limitations include--
(A) Medical management standards limiting or excluding benefits
based on medical necessity or medical appropriateness, or based on
whether the treatment is experimental or investigative;
(B) Formulary design for prescription drugs;
(C) For plans with multiple network tiers (such as preferred
providers and participating providers), network tier design;
(D) Standards for provider admission to participate in a network,
including reimbursement rates;
(E) Plan methods for determining usual, customary, and reasonable
charges;
(F) Refusal to pay for higher-cost therapies until it can be shown
that a lower-cost therapy is not effective (also known as fail-first
policies or step therapy protocols);
(G) Exclusions based on failure to complete a course of treatment;
and
(H) Restrictions based on geographic location, facility type,
provider
[[Page 19452]]
specialty, and other criteria that limit the scope or duration of
benefits for services provided under the plan or coverage.
(I) Standards for providing access to out-of-network providers
(5) Application to out-of-network providers. Any CHIP state plan
providing access to out-of-network providers for medical/surgical
benefits within a classification must use the same processes,
strategies, evidentiary standards, or other factors in determining
access to out-of-network providers for mental health and substance use
disorder benefits. If the CHIP state plan is found to be in compliance
with Sec. 438.206(b)(4) of this chapter, they will be deemed in
compliance with the standards in this paragraph (d)(5).
(e) Availability of plan information--(1) Criteria for medical
necessity determinations. The criteria for medical necessity
determinations made under a CHIP state plan including when benefits are
furnished through a MCE contractor for mental health or substance use
disorder benefits must be made available by the plan administrator (or
the state offering the coverage) to any current enrollee or potential
enrollee or contracting provider upon request. Health plans operating
in compliance with Sec. 438.236(c) of this chapter will be determined
compliant with the requirements in this paragraph (e).
(2) Reason for any denial. The reason for any denial under a health
plan of reimbursement or payment for services for mental health or
substance use disorder benefits in the case of any enrollee must be
made available by the plan administrator or the state to the enrollee.
(3) Provisions of other law. Compliance with the disclosure
requirements in paragraphs (e)(1) and (2) of this section is not
determinative of compliance with any other provision of applicable
federal or state law.
(f) Applicability--(1) CHIP state plans. The requirements of this
section apply to CHIP state plans offering medical/surgical benefits
and mental health or substance use disorder benefits to their enrollees
including when benefits are furnished under a contract with MCEs. If,
under an arrangement or arrangements to provide CHIP state plan
benefits any enrollee can simultaneously receive coverage for medical/
surgical benefits and coverage for mental health or substance use
disorder benefits, then the requirements of this section apply
separately for each combination of medical/surgical benefits and of
mental health or substance use disorder benefits that any enrollee can
simultaneously receive from the state Medicaid agency.
(2) Scope. This section does not--
(i) Require a CHIP state plan or a MCE that contracts with a CHIP
state plan to provide any mental health benefits or substance use
disorder benefits, and the provision of benefits by a CHIP state plan
or a MCE that contracts with a CHIP state plan for one or more mental
health conditions or substance use disorders does not require the plan
or health insurance coverage under this section to provide benefits for
any other mental health condition or substance use disorder;
(ii) Affect the terms and conditions relating to the amount,
duration, or scope of mental health or substance use disorder benefits
under the CHIP state plan or a MCE that contracts with a CHIP state
plan except as specifically provided in paragraphs (c) and (d) of this
section.
(g) Compliance dates--(i) In general. CHIP state plans (including
those that contract with a MCE) must comply with the requirements of
this section no later than [DATE 18 MONTHS AFTER THE PUBLICATION OF THE
FINAL RULE].
(ii) [Reserved]
Dated: March 18, 2015.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare & Medicaid Services.
Dated: April 1, 2015.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2015-08135 Filed 4-6-15; 4:15 pm]
BILLING CODE 4120-01-P
