HHS IG Audit: 'CMS Did Not Ensure That Selected States Complied With Medicaid Managed Care Mental Health & Substance Use Disorder Parity Requirements'

WASHINGTON, March 31 -- The Health and Human Services Inspector General issued the following audit report (No. A-02-22-01016) on March 25, 2024, entitled "CMS Did Not Ensure That Selected States Complied With Medicaid Managed Care Mental Health and Substance Use Disorder Parity Requirements" filed under the Centers for Medicare and Medicaid Services.

Here are excerpts:

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Report in Brief

Why OIG Did This Audit

In 2021, nearly 58 million adults in the United States experienced some form of mental illness, and an estimated 46.3 million people aged 12 or older had a substance use disorder. Individuals seeking care for mental health and substance use disorder (MH/SUD) conditions often find that treatment operates in a separate, and often very disparate, system than treatment for medical/surgical care, even under the same health insurance coverage. Federal regulations implementing the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 were put in place to make it easier for people with MH/SUD conditions to access treatment and services by prohibiting coverage limitations that apply more restrictively to MH/SUD benefits than to medical/surgical benefits.

Our objective was to determine whether the Centers for Medicare & Medicaid Services (CMS) ensured that selected States complied with Medicaid managed care MH/SUD parity requirements.

How OIG Did This Audit

We selected eight States for review with Medicaid managed care contracts in effect on or after October 2, 2017 (the compliance date). We selected four States in which the State was required to conduct the parity analysis and four States in which managed care organizations (MCOs) were required to conduct the parity analysis. We reviewed CMS's approval of States' MCO contract provisions and its oversight of States' compliance with MH/SUD parity requirements.

What OIG Found

CMS did not ensure that selected States complied with Medicaid managed care MH/SUD parity requirements. For all eight States we reviewed, State contracts with Medicaid MCOs did not contain required parity provisions by the compliance date. Further, States and their MCOs did not conduct required parity analyses (five States), and States did not make documentation of compliance available to the public by the compliance date (eight States). In addition, all eight States may not have ensured that all services were delivered to MCO enrollees in compliance with MH/SUD parity requirements. Specifically, MCOs applied financial requirements (two States) and quantitative treatment limitations (six States) for MH/SUD services that were more restrictive than those for medical/surgical services in the same classifications and imposed nonquantitative treatment limitations (eight States) on MH/SUD benefits that were not comparable to, or were more stringent than, those for medical/surgical benefits in the same classifications.

What OIG Recommends and CMS Comments

We recommend that CMS improve its oversight of States' compliance with MH/SUD parity requirements and require States to improve their monitoring of MCOs' ongoing compliance with MH/SUD parity requirements.

In written comments on our draft report, CMS concurred with our recommendations and described actions that it plans to take to address them. Specifically, CMS stated that it will take steps to strengthen its followup procedures for monitoring States' compliance with MH/SUD parity requirements, including steps for: (1) verifying that States have performed required parity analyses, (2) following up with States that have identified noncompliance with MH/SUD parity requirements, and (3) maintaining documentation of its communications with States relating to compliance with parity requirements and actions taken to correct any identified deficiencies. In addition, CMS stated that it will issue guidance to States to ensure MCOs' ongoing compliance with parity requirements.

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TABLE OF CONTENTS

INTRODUCTION ... 1

Why We Did This Audit ... 1

Objective ... 1

Background ... 1

The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 ... 1

Mental Health and Substance Use Disorder Parity Requirements ... 2

How We Conducted This Audit ... 3

FINDINGS ... 4

Mental Health and Substance Use Disorder Parity Provisions Were Not Included in Managed Care Organization Contracts by the Compliance Date ... 5

Selected States and Managed Care Organizations Did Not Conduct Parity Analyses or

Make Parity Compliance Information Available to the Public by the Compliance Date ... 6

Selected States May Not Have Ensured That Services Were Delivered to Enrollees in Compliance With Parity Requirements ... 8

Managed Care Organizations Imposed Financial Requirements That Were More Restrictive for Mental Health and Substance Use Disorder Benefits Than Those for Medical/Surgical Benefits ... 9

Managed Care Organizations Imposed Quantitative Treatment Limitations That Were More Restrictive for Mental Health and Substance Use Disorder Benefits Than Those for Medical/Surgical Benefits ... 10

Managed Care Organizations Imposed Nonquantitative Treatment Limitations on Mental Health and Substance Use Disorder Benefits That Were Not Comparable to, or Were More Stringent Than, Those for Medical/Surgical Benefits ... 10

Causes of Selected States' and Managed Care Organizations' Noncompliance With Parity Requirements ... 11

RECOMMENDATIONS ... 12

CMS COMMENTS AND OFFICE OF INSPECTOR GENERAL RESPONSE ... 13

APPENDICES

A: Audit Scope and Methodology ... 15

B: Related Office of Inspector General Reports ... 17

C: CMS Comments ... 18

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INTRODUCTION

WHY WE DID THIS AUDIT

In 2021, nearly 58 million adults in the United States experienced some form of mental illness,/1 and an estimated 46.3 million people aged 12 or older had a substance use disorder./2

Individuals seeking care for mental health and substance use disorder (MH/SUD) conditions often find that treatment operates in a separate, and often very disparate, system than treatment for medical/surgical care, even under the same health insurance coverage. Federal regulations implementing the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) were put in place to make it easier for people with MH/SUD conditions to access treatment and services by prohibiting coverage limitations that apply more restrictively to MH/SUD benefits than to medical/surgical benefits (i.e., parity in how the two types of benefits are covered by health insurers, including Medicaid managed care).

We conducted this audit as part of the Office of Inspector General's (OIG's) oversight work related to enrollees' access to health care services that deliver value, quality, and improved outcomes in Medicare and Medicaid.3 Further, there is significant congressional interest in OIG's work that addresses enrollees' access to MH/SUD services, including the topic of parity.

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OBJECTIVE

The objective of this audit was to determine whether the Centers for Medicare & Medicaid Services (CMS) ensured that selected States complied with Medicaid managed care MH/SUD parity requirements.

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BACKGROUND

The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 MHPAEA was intended to promote equal access to treatment for people with MH/SUD conditions by prohibiting coverage limitations that apply more restrictively to MH/SUD benefits than for medical/surgical benefits. Such limitations may include higher copayments, separate deductibles, and stricter preauthorization or medical necessity reviews, as compared to other covered medical treatments.

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FINDINGS

CMS did not ensure that selected States complied with Medicaid managed care MH/SUD parity requirements, as detailed in the figure on the following page. For all eight States we reviewed, State contracts with Medicaid MCOs did not contain required parity provisions by the compliance date. Further, States and their MCOs did not conduct required parity analyses (five States), and States did not make documentation of compliance available to the public by the compliance date (eight States). In addition, all eight States may not have ensured that all services were delivered to MCO enrollees in compliance with MH/SUD parity requirements. Specifically, MCOs applied financial requirements (two States) and QTLs (six States) for MH/SUD services that were more restrictive than those for medical/surgical services in the same classifications and imposed NQTLs (eight States) on MH/SUD benefits that were more stringent than those for medical/surgical benefits in the same classifications.

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RECOMMENDATIONS

We recommend that the Centers for Medicare & Medicaid Services:

* improve its oversight of States' compliance with MH/SUD parity requirements, including:

- strengthening its followup procedures, including regular communication with States, to verify that States perform parity analyses across their MH/SUD delivery systems;

- requiring States in which MCOs are responsible for the parity analysis to submit information MCOs provided regarding compliance with parity requirements to CMS for its review as part of the contract approval process and, if necessary, seeking additional regulatory authority to do so;

- following up with any States that have identified any noncompliance with parity requirements to verify that the States have taken actions to address the noncompliance; and

- maintaining documentation of its communications with States related to compliance with MH/SUD parity requirements and actions taken to correct any identified deficiencies; and

* require States to improve their monitoring of MCOs' ongoing compliance with MH/SUD parity requirements by:

- modifying State policies and procedures for reviewing MCOs' compliance with contract provisions to include written procedures for reviewing compliance with MH/SUD parity requirements,

- requiring MCOs to update parity analyses when benefits change or deficiencies are corrected,

- requiring newly added MCOs to conduct parity analyses, and

- conducting followup in a timely manner with MCOs that have identified noncompliance with parity requirements to verify that the MCOs take corrective actions to address the noncompliance.

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The report is posted at: https://oig.hhs.gov/documents/audit/9831/A-02-22-01016.pdf