April 11, 2024  – In a comprehensive investigation, the Office of Inspector General (OIG) released a report highlighting substantial lapses in adherence to Medicaid managed care mental health parity requirements across eight states. This critical review, focusing on Arizona, Illinois, Kansas, Mississippi, New Jersey, New York, South Carolina, and Texas, found that state contract with Medicaid managed care organizations (MCOs) failed to meet a number of requirements, including compliance with pivotal mental health parity mandates.

The requirements come from a 2016 final rule aimed at integrating the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA) into Medicaid MCOs. The primary goal of MHPAEA is to secure equitable access to mental health and substance use disorder treatments, safeguarding against more restrictive financial or treatment limitations.

Key findings from the OIG’s report reveal that all eight evaluated states failed to incorporate required parity provisions in their Medicaid MCO contracts by the mandated compliance date of October 2, 2017. In addition, five states did not conduct timely parity analyses. None made compliance documentation publicly accessible by the deadline.

While some corrective actions were taken post-compliance date, persistent issues were noted in certain states. The OIG’s review was missing an examination of public access to underlying MCO contracts, despite CMS regulations mandating states to publish their MCO risk contracts online. An independent review found that only a fraction of the states in question fully complied with this requirement.

The report concludes with the observation that neither CMS nor the involved states provided sufficient oversight to ensure adherence to mental health parity requirements. In response, the OIG has outlined eight recommendations aimed at improving CMS’s oversight mechanisms. These included mandating states responsible for parity analysis to submit compliance data to CMS for review and urging MCOs to routinely update parity analyses.

There are also additional calls for CMS to ensure states are transparent about their MCO risk contracts and parity compliance documentation. This would allow for public scrutiny of how taxpayer-supported contracts address mental health parity. CMS has acknowledged the OIG’s recommendations, pledging to issue guidance to states as part of its efforts to tighten compliance with mental health parity and addiction equity in Medicaid and the Children’s Health Insurance Program (CHIP).