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Strong final rule for parity means big strides for residential, out-of-state treatment

November 14, 2013

The final rule implementing the Mental Health Parity and Addiction Equity Act (MHPAEA) issued on November 8 retains the strong provisions of the interim final rule (IFR) and adds some new ones, creating for the first time the possibility of a safe haven from the insurance practices that began in the late 1980s. These practices intruded on the relationship between provider and patient, restricting treatment for people with mental illnesses and all but decimating treatment for substance use disorders (SUDs).

The provisions retained in the final implementation rule include:

  • Non-quantitative treatment limitations (NQTLs), such as concurrent review, can be no more stringent for behavioral health care than they are for medical-surgical care in a plan. There had been concerns that these provisions, which first appeared in the IFR and caused consternation among insurance companies, would be dropped. They were not.
  • Scope of service: A full continuum of care, including residential treatment, is included.

The new provisions:

  • Strengthen the scope of service provision, clearly comparing treatment in a residential – non-inpatient – program to care in a nursing home or rehabilitation facility.
  • Eliminate an exception that was in the IFR that allowed insurance companies to categorically deny a treatment based on “clinically appropriate standard of care.”
  • Enable patients to pursue out-of-network treatment in another state if they are allowed to do so for medical-surgical care. For example, if a health plan lets patients from Virginia go to the Mayo Clinic for medical care, it has to let them go to Hazelden for substance abuse treatment.

The final regulation appears to have only one significant downside: its provisions do not apply to Medicaid managed care.

‘Huge step forward’

“I think this is a huge step forward, something that we have asked for for a long time,” Mark Covall, president and CEO of the National Association of Psychiatric Health Systems (NAPHS), told Behavioral Healthcare. “This changes the paradigm and says that people will get the right care at the right time at the right level.”

“Our field owes a debt of gratitude to all of the federal regulators from the Department of Health and Human Services, the Department of Labor, and Treasury, along with the Substance Abuse and Mental Health Services Administration and the Office of National Drug Control Policy,” said Carol McDaid, co-chair of the Parity Implementation Coalition (PIC). All of the agencies involved “fought to get a parity final rule out even while working tirelessly to get the President’s signature legislative accomplishment, the Affordable Care Act, implemented,” she told Behavioral Healthcare. “It would have been easier to just put the rule off. Even when there were differences on other issues they took reasoned and rational positions on parity when, and only when, we had evidence documenting problems - and it is much appreciated.”

“The regulations are very good news for all who work hard in the addiction treatment field and for everyone afflicted with substance abuse,” said Jerry Rhodes, chief operating officer of CRC Health Group. “The final regulations, which now provide that ‘parity applies to intermediate levels of care received in residential treatment or intensive outpatient settings,’ are far better than the interim regulations,” he said, joining McDaid in thanking HHS for listening to the field.

Rule excludes Medicaid managed care

Patients and providers alike benefit from the strong final rule, with one exception: the final rule does not apply to Medicaid managed care. In a highly unusual regulatory scenario, the law itself applies, but not the implementing regulations. This was hinted at in a January, 2013 letter from the Center for Medicare and Medicaid Services (CMS) to state Medicaid directors.

“CMS expects that states will apply the MHPAEA statutory requirements to these authorities and MCOs,” Mark Weber, a spokesman for the Department of Health and Human Services, told BH on November 13. “States can use current Medicaid flexibilities to amend their Medicaid state plans or demonstrations/waiver projects to address financial limitations, quantitative treatment limitations, non-quantitative treatment limitations, and disclosure requirements in ways that promote parity,” he said, adding that “CMS will offer technical assistance to states regarding strategies to implement MHPAEA.”

The preamble to the final rule basically says the same thing – that the law applies to Medicaid managed care – but the final rule doesn’t. While most states have had managed care for Medicaid medical-surgical benefits for many years, many states are now switching their behavioral health benefits from fee-for-service to a privatized managed care company for the first time ever.

“We are disappointed that the final rule did not apply to Medicaid managed care,” said Covall. “But obviously we will be working in talking with CMS about further clarifications.” For inpatient psychiatric hospital members of the NAPHS, 20 to 25 percent of their reimbursement comes from Medicaid, said Covall. For residential treatment for children and adolescent for mental illness, that figure is 50 to 60 percent. Most SUD providers who are members do not participate in Medicaid because of the IMD exclusion, he said.

Pamela Greenberg, president and CEO of the Association for Behavioral Health and Wellness (ABHW), wasn’t surprised about the language regarding Medicaid managed care. “When the IFR came out, that didn’t apply to Medicaid managed care either,” she told BH. “We always knew that the law applied, but the IFR didn’t.  CMS has issued guidance about the application of MHPAEA to Medicaid managed care and additional guidance addressing other parts of the rule is expected.”

“I don’t think we’ve seen the last of this,” said McDaid about the determination that the final rule does not apply to Medicaid managed care. “They said there would be additional guidance on Medicaid,” said McDaid. The PIC, co-chaired by McDaid and Sam Muszynski of the American Psychiatric Association, has requested that this guidance be issued within six months.

‘Intermediate’ services included

There has been great concern about how “intermediate services” – residential, partial hospitalization, and intensive outpatient – fit into the six classifications of treatment set forth in the IFR. Finding analogues for these in the medical-surgical system didn’t seem easy, and the treatment field went through some dark moments wondering whether patients would have to pay out-of pocket for their nighttime stays, or go to hotels. The final rule clearly puts these intermediate services on a par with nursing homes. From the final rule:

“For example, if a plan or issuer classifies care in skilled nursing facilities or rehabilitation hospitals as inpatient benefits, then the plan or issuer must likewise treat any covered care in residential treatment facilities for mental health or substance use disorders as an inpatient benefit. In addition, if a plan or issuer treats home health care as an outpatient benefit, then any covered intensive outpatient mental health or substance use disorder services and partial hospitalization must be considered outpatient benefits as well.”

This language makes it clear that if a patient’s medical plan pays for treatment in a skilled nursing facility or rehabilitation facility (for example, following a stroke), the coverage would have to be applied and paid in the same way for residential services for mental illness or SUDs.

Because the PIC is still seeing health plans that have exclusions for residential treatment, McDaid said the final rule’s language – which disallows this exclusion if the plan covers intermediate levels for medical/surgical – is a “vast improvement.”

There are still details to be worked out in terms of how the scope of service regulations will be “operationalized,” said Covall. “The rule doesn’t define what criteria the plans will have to use to determine comparability for these levels of care,” he said. For example, the final rule says someone having a stroke and going to a rehab facility is comparable to someone needing residential treatment for mental illness or addiction, he noted. But nobody expects insurance companies to simply accept this without scrutiny. “There’s comparability in that kind of service, but the question is, what kind of residential treatment is going to be covered, and to what degree is it going to be covered.”

Insurance companies, indeed, are concerned about the intermediate services provision.  ABHW’s Greenberg is also asking for clarification on the residential question. “This is a new provision in the rule and we may need some information from the regulators about how they intended for this provision to be implemented by plans,” she said.

Out of state, out of network benefits

The final rule also says that if patients are allowed to go out-of-state for medical or surgical treatment, they should also be allowed to go out-of-state for behavioral health treatment.

The provisions regarding location of services are yet another area of the final rule that insurance companies want to understand better. The final rule is the first time it has come up. In many cases, addiction treatment providers are located out of state – for example, many patients travel to programs in Minnesota, Florida, or California, for example.

Preemption of state laws

ABHW also remains concerned about some states’ understanding of the preemption provisions in the law and the final rule. “We see some states setting maximums, mostly in terms of number of hours or dollar caps, on autism treatment,” she said. “That puts us in a bind – it’s a conflict with the parity law,” she said.

Clearly, if a state Medicaid department will only pay the insurance company for a capped amount, but the insurance company must under parity pay for more, that’s not a sustainable business model.

No more secret ‘standards of care’

A major win for patients and providers is the elimination of the “clinically appropriate standard of care” exception from the final rule. This was a change from the IFR, which contained an exception to the NQTL requirements allowing insurance companies to vary from parity between behavioral and medical/surgical benefits “to the extent that recognized clinically appropriate standards of care may permit a difference.”

“We were disappointed” about the removal of the exception, said Greenberg. “We knew they would at least put some parameters around it but we didn’t expect the clause to be eliminated,” she said. On the flip side, the removal was somewhat ambiguous, because it appeared to reverse itself in another section of the final rule. “We could use more clarification about what was meant there,” she said.

But the clinical appropriateness exception could have made it possible for insurance companies to get around the entire rule. By eliminating it, insurance companies can’t unilaterally declare that there’s a certain clinically recognized standard of care, and to deny care accordingly, said McDaid. “We had been working on this, encountering denials that simply declared there was a clinically recognized standard, but not saying what it is,” she said.

The final rule takes effect with plan years starting in July of 2014, which will mean that for most people, the new rule will be applied in plans effective January 2015.

The text of the final rule was published in the Federal Register November 13

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