Adult Behavioral Health Benefits in Medicaid and the Marketplace
Medicaid Behavioral Health Services
Behavioral health benefits are not a specifically enumerated service required to be provided by states to adult1 Medicaid beneficiaries under the state plan benefit package.2 Nevertheless, states can and do cover behavioral health services under various mandatory and optional Medicaid state plan benefit categories, such as inpatient, outpatient, physician, other licensed practitioner, federally qualified health center, pharmacy, clinic, case management, and health home services.3 (Due to a long-standing payment exclusion in federal law, Medicaid reimbursement is unavailable for inpatient services provided in “institutions for mental disease” (IMD) for adults ages 22-64.4) Medicaid’s rehabilitation services option is a major source of behavioral health coverage, with all states offering some amount of behavioral health services through this state plan category as of 2013.5 In FY 2011, 78% of beneficiaries receiving Medicaid rehabilitation services had a mental health diagnosis, and 76% of spending for Medicaid rehabilitation services was devoted to those with a mental health diagnosis.6
Adults newly eligible for Medicaid under the ACA’s expansion must receive an alternative benefit plan (ABP), which, at state option, may or may not include all of the services covered by the traditional Medicaid state plan benefit package.7 ABP coverage is based on a commercial health insurance plan or otherwise approved by the Health and Human Services Secretary. Unlike Medicaid state plan benefit packages, ABPs must cover all of the ACA’s essential health benefits, including behavioral health services.8 Beneficiaries who are “medically frail,” including newly eligible adults, are exempt from mandatory ABP enrollment and instead must have access to the full Medicaid state plan benefit package, to the extent that it differs from the new adult ABP; however, medically frail beneficiaries may choose to enroll in the ABP.9 The federal definition of “medically frail” includes “individuals with disabling mental disorders (including. . . adults with serious mental illness) [and] individuals with chronic substance use disorders.”10 Many states are offering their traditional Medicaid state plan benefit package to newly eligible adults to avoid having to determine which new adults qualify as medically frail.11
States provide behavioral health services either through a fee-for-service (FFS) or managed care delivery system. If beneficiaries are required to enroll in capitated managed care, they generally must have a choice of at least two managed care organizations (MCOs). States also may carve-out behavioral health services (beyond simple physician services) to a specialty behavioral health managed care entity. For example, in our analysis, Arizona, Colorado, and Michigan use pre-paid inpatient health plans (PIHPs) to deliver specialty behavioral health services on a capitated basis (see Appendix B for additional detail).
The ACA requires that Medicaid ABPs provide behavioral health services in parity with physical health services, consistent with the Mental Health Parity and Addiction Equity Act.12 Specifically, quantitative treatment limitations, cost-sharing obligations, medical necessity criteria, and out-of-network coverage standards for behavioral health benefits must be no more restrictive than those for medical/surgical benefits when both types of services are covered by a health plan. Current federal mental health parity requirements apply to Medicaid MCOs and to Medicaid ABPs but not to other Medicaid services delivered on a FFS basis. Previously, CMS had encouraged, but not required, states to apply mental health parity to PIHPs and PAHPs.13 In proposed regulations issued in April 2015, CMS would require parity for state Medicaid programs’ MCO enrollees, across all delivery systems that provide services to MCO enrollees, including PIHPs, PAHPs, and FFS. CMS also proposed regulations to implement parity for ABP enrollees, regardless of delivery system.14 CMS continues to encourage, but not require, parity in FFS benefits that are not delivered to MCO or ABP enrollees. Consequently, there may be different utilization limits or other restrictions on services that affect parity depending on the type of delivery system through which services are provided.
Marketplace Behavioral Health Services
The ACA provided for the creation of Marketplaces to facilitate the purchase of QHPs by individuals and small businesses. The Marketplace in each state may be operated by the state or the federal government or in partnership between the state and federal government. Marketplaces allow consumers to compare and shop for health plans and are the mechanism through which premium tax credits (for people with income from 100-400% of the federal poverty level (FPL), $11,770-$47,080 per year for an individual in 2015) and cost-sharing reductions (for people with income from 100-250% FPL, $11,770-29,425 per year for an individual in 2015) (for silver-level plans) are administered. (People with income between 100-138% FPL ($11,770-$16,243 per year for an individual in 2015) who qualify for Medicaid are ineligible for Marketplace subsidies.)
Behavioral health services are one of the ACA’s 10 categories of essential health benefits and thus must be included in QHP benefit packages.15 (EHB requirements also apply to health plans sold in the individual and small group markets outside the Marketplace.) Federal regulations require the selection of a benchmark plan to define EHBs in each state and to which a QHP’s covered benefits must be substantially equivalent.16 States had the option to select a benchmark plan from among the largest small-group plan by enrollment, one of the three largest health plans offered to state employees, one of the three largest federal employee health plans, or the health maintenance organization with the largest commercial non-Medicaid enrollment in the state.17 If states did not make a selection, the benchmark plan defaulted to the largest small group plan. States have broad leeway to further define the scope of services required to be covered by QHPs. In addition, federal mental health parity requirements (described above) apply to all QHPs.18