Efforts to Simplify Medicaid and Mental Health Create A Complicated Mix
By Rebecca Adams, CQ HealthBeat Associate Editor February 6, 2013
The Medicaid expansion under the health care overhaul and the mental health parity law share a common goal: to broaden and simplify coverage. But the combination of the two statutes results in a structure that is anything but universal or easy to understand.
The resulting scheme would be hard for the average American to follow.
The 2008 mental health parity law (PL 110-343), which the Obama administration is finalizing in regulations expected to be released this spring, is intended to eliminate “the practice of unequal health treatment,” according to a federal fact sheet. It prevents health insurance plans from charging patients more or imposing more treatment limits for mental health services than plans do for medical or surgical benefits.
The Medicaid expansion under the health care law (PL 111-148, PL 111-152) is intended to offer coverage to a wider group of people than in the past. If a state expands its health program for the poor, residents will qualify based on their income, without having to also meet other qualifications that have been required in the past for certain categories, such as parents, children or people who need long-term care.
The differences in the way Medicaid covers mental health benefits is likely to make it difficult to apply the parity law in the simple way the measure intended. And that will affect many people who need access to the mental health system.
Medicaid is currently the largest payer for mental health coverage in the nation, and the potential expansion of the program will add to that, since people with serious mental illnesses tend to be low-income.
If a Medicaid beneficiary is enrolled in a Medicaid managed-care plan, the insurer does not have to cover mental health benefits. But if the plan chooses do cover such services, the parity law says that the plan can’t place more limits on its mental health care coverage than it does on medical benefits.
If a recipient is in traditional fee-for-service Medicaid, the rules are different. The state program doesn’t have to offer mental health coverage at all, and beneficiaries don’t get parity protections.
“One of the things that’s confusing about parity is it only applies to insurers, so Medicaid and Medicare are not covered, but Medicaid managed-care plans are,” said Rachel Garfield, associate director at the Kaiser Commission on Medicaid and the Uninsured.
In practice, most states have chosen to offer some mental health benefits, said Matt Salo, executive director of the National Association of State Medicaid Directors. And many states use managed care for physical health needs and a fee-for-service type of program for mental health.
Parity requirements will begin to kick in as states move to managed behavioral health or managed care that integrates both medical and mental health benefits.
But the requirements will be different for people who become eligible for Medicaid in 2014 under a state expansion. States do have to provide mental health benefits for those new beneficiaries. However, only those who are in a managed care plan get full parity protections. Those who join the program and get fee-for-service Medicaid will get some protections. But the program is not required to comply with the mental health parity law’s ban on annual and lifetime spending caps or out-of-network limits. States also can choose to offer coverage for the newly eligible population that is not as generous as the traditional Medicaid program if they wish.
The rules become even more complicated as states experiment with accountable care organizations, Salo said.
“It remains unclear, however, how it would fit into blended models [ACOs] where there are capitated arrangements but no actual health plan,” he said in an email.
The best way to create a more uniform mental health benefit system would be for Congress to update the law, which it isn’t expected to do. Mental health advocates would like a simpler system, but they acknowledge that the political reality is that it won’t happen anytime soon.
“From a policy perspective, it’d be useful to remedy that,” said Chuck Ingoglia, vice president of public policy for the National Council for Behavioral Health. “There have been some efforts over the years to substantially change the mental health and addiction benefits offered in Medicaid. But we’ve not had a serious conversation in a number of years.”