Alerts

Biden Administration’s Final Parity Rule a Win for Patients & Providers

The Biden administration today released its long-awaited parity final rule, which establishes more stringent protocols, amends existing provisions, and adds new ones to implement the Mental Health Parity and Addiction Equity Act (MHPAEA) that President George W. Bush signed into law 16 years ago next month.

After a preliminary review, the NABH team sees the final rule as a positive move in the right direction in its efforts to ensure that individuals in group health plans or group or individual health insurance coverage have equal coverage for behavioral and physical health services.

“It appears that NABH scored massive victories in persuading the agencies to remove the proposed NQTL exceptions to ‘fraud, waste, and abuse,’ elaborating on ‘meaningful benefits,’ and tying deviations from generally accepted standards of care to NQTL strategies,” said Meiram Bendat, J.D., Ph.D., founder and president of Psych Appeal and counsel to NABH.

NABH staff will continue to review the 536-page rule in the days and weeks ahead. NABH will send members its initial analysis tomorrow, Tuesday, Sept. 10 and also include an update in this week’s edition of CEO Update on Friday, Sept. 13.

The final rule’s major provisions include:

• Makes clear that MHPAEA protects plan participants, beneficiaries, and enrollees from facing greater restrictions on access to MH/SUD benefits as compared to M/S benefits.
• Reinforces that health plans and issuers cannot use non-quantitative treatment limits (NQTL) that are more restrictive than the predominant NQTLs applied to substantially all physical health benefits in the same classification.
  • Examples of NQTLs include prior authorization requirements and other medical management techniques, standards related to network composition, and methodologies to determine out-of-network reimbursement rates.
• Requires health plans to address material differences in access to behavioral and physical health benefits that result from application of NQTLs, based on relevant data collected by the plans.
• Requires health plans to conduct comparative analyses to measure the impact of NQTLs, including network composition, out-of-network reimbursement rates, and medical management and prior authorization NQTLs.
• Concerning the design of NQTLs, prohibits discriminatory information, evidence, sources, or standards that systematically disfavor access to behavioral healthcare benefits as compared with physical health benefits.
• Implements the “sunset provision” for self-funded, non-federal governmental plan elections to opt out of complying with MHPAEA; in other words, phase out this option.

To comply with the Consolidated Appropriations Act of 2021, the rule also establishes new health plan requirements and timeframes for reporting their own analyses of their compliance with NQTLs. And the rule specifies how health plans meet their obligations under MHPAEA and related enforcement measures.

Additional guidance and compliance assistance from the federal agencies is pending. For more details, please see the administration’s fact sheet and news release.

CMS Finalizes 2.5% IPF Payment Increase and Payment System Reforms

Payment Update

The Centers for Medicare & Medicaid Services’ (CMS) FY 2025 final rule on the inpatient psychiatric facility prospective payment system (IPF PPS) implements a net increase of 2.5 percentage points. The overall update of $65 million, compared to FY 2024 payment levels, represents a slight decrease from the proposed 2.6 percentage point increase.

This update includes a market basket increase of 3.3 percentage points that is offset by a 0.5 percentage point for productivity. In addition, to maintain the mandated outlier pool of 2.0% of total payments, CMS finalized an outlier payment reduction of 0.3 percentage point to stay within this target, which reduces the number of cases that will qualify for an outlier payment. Also finalized are several adjustments to ensure that the PPS design and other changes discussed below are implemented in a budget-neutral manner. Due to these adjustments, the base per diem will be reduced from $895.63 $895.63 to $876.53.

All-Inclusive Reporting
NABH is extremely disappointed that CMS finalized a significant narrowing of its all-inclusive reporting policy, which will take effect for upcoming cost reporting periods. Current policy allows IPFs to use an alternative methodology for reporting ancillary charges on cost reports. The final rule restricts this reporting option for ancillary charges only to Indian Health Service (IHS) hospitals, tribally owned and government-owned psychiatric, and acute care hospitals. CMS overlooked NABH’s strong caution that for many “all-inclusive IPFs,” significant administrative, timing and cost considerations will make impossible a timely transition to this change.

Under the finalized timing framework, CMS contractors will begin assessing compliance with the change through a look-back process that begins following the completion of a providers upcoming cost reporting period that begins on or after Oct. 1, 2024. Specifically, all IPFs will be required to have a charge structure that allows the reporting of ancillary costs and charges on their cost reports for all ancillary services and correlating charges, such as labs and drugs.

With this change, IPFs that are currently in the all-inclusive category now will have their cost reports included in the annual IPF PPS update calculated by CMS. In prior years, because CMS calculates the annual update using the sum of routine and ancillary costs, it has been removing from the calculation the all-inclusive IPFs, as their cost reports lack data on ancillary services. The final rule notes that in 2018, because of this exclusion, 82,491 (out of 364,080 total stays) were removed from the update calculation. CMS acknowledges that this exclusion has been producing skewed updates that do not represent the costs of the entire IPF field, with approximately 55 percent of stays from freestanding all-inclusive facilities removed in 2018, and 0.3 percent of stays from all-inclusive psychiatric units.

In response to input that all-inclusive IPFs are providing full and clinically-appropriate services and that the absence of ancillary charges on cost reports is due to gained cost efficiencies, CMS states it “believe[s that] IPFs are providing these necessary services to patients.” Also that, “…maintaining an accurate charge structure would be part of a business’s accounting for reordering and restocking pharmaceuticals at a minimum, as well as more accurate payment for the purposes of outlier payments.”

Payment Increase for Electroconvulsive Therapy
For FY 2025, to achieve some alignment with outpatient rates, CMS finalized the proposed 71 percent increase for ECT payment per treatment from the current rate of $385.58 to $661.52.

IPF PPS Modifications

As mandated by Congress, CMS reviewed key IPF PPS elements with a focus on facility and patient-level adjustments, and in this rule finalizes multiple, relatively modest changes. While the agency is maintaining the rural and teaching facility adjustments, as is, the rule finalizes multiple budget-neutral changes to the structure of the PPS. As shown in Tables 4 and 5 in the rule, CMS finalized these changes:

• Added DRGs 917 (Poisoning and toxic effects of drugs w MCC) and 918 (Poisoning and toxic effects of drugs w/out MCC).
• Replaced DRGs 080 (Nontraumatic stupor & coma w MCC) and 081 (Nontraumatic stupor & coma w/o MCC) with DRGs 947 (Signs and Symptoms w MCC) and 948 (Signs and Symptoms w/out MCC.
• Removed 2 DRGs: DRG 887 (Other mental disorder diagnoses) and DRG 896 (Alcohol, Drug Abuse or Dependence w/out rehab therapy w MCC).
• Multiple changes to comorbidity payment add-ons were finalized as shown in Table 10.

IPF Quality Reporting Program
As proposed, the final rule implements one new measure: the 30-Day Risk-Standardized All-Cause Emergency Department Visit Following an Inpatient Psychiatric Facility Discharge. In response to concerns raised through public comments that its implementation may not be feasible, CMS did not finalize the proposed requirement for IPFs to submit patient-level quality data every quarter (versus the current annual basis).

CMS’ Fact Sheet on the rule provides additional information.

CMS Updates IOP and PHP Payment Rates for 2025

The Centers for Medicare & Medicaid Services (CMS) today issued its calendar year (CY) 2025 Medicare hospital outpatient prospective payment system (OPPS) proposed rule, which proposes a net increase of 2.3 percentage points, relative to current year rates. The net update reflects a market basket increase of 3.0 percentage points and the statutorily required 0.4 percentage point cut, along with several budget neutrality adjustments and a minor increase in outlier payments.

The proposed update would apply to services paid under the OPPS, intensive outpatient programs (IOP), partial hospitalization programs (PHP), community mental health centers (CMHCs), opioid use disorder (OUD) treatments in an IOP, and other settings.

In addition to other items, the proposed rule addresses the behavioral healthcare provisions summarized below and lists in Table 68 the eight proposed ambulatory payment classification (APC) per diems for IOPs and PHPs that are set according to the number of services provided per day.

IOPs:
For the IOP benefit established last year, the current dual-rate, per-diem structure would be maintained: one rate for days with three services and another rate for days with four or more services. In general, the structure of the IOP mirrors the design of the PHP, including provisions on coding, billing, and payment policies.

The rule defines IOPs as distinct and organized outpatient programs of psychiatric services provided for individuals who have an acute mental illness or substance use disorder, consisting of a specified group of behavioral health services paid on a per-diem basis for a minimum of nine hours of IOP services per week, or other payment system.

Opioid Treatment Program (OTP) Payment Add-On:
For the new OPPS coverage of OUD treatments that OTPs provide, CMS would maintain the payment add-on of three times the payment rate for APC 5861 (intensive outpatient of three services per day) for hospital-based IOPs.

FQHCs and RHCs:
The annual payment update for IOP services provided by federally qualified health centers and rural health clinics will be addressed in the pending physician fee schedule proposed rule for CY 2025.

PHPs:
For PHPs, services provided in hospital outpatient departments and CMHCs, CMS proposes to maintain the current payment structure, which sets reimbursements based on whether a patient receives three services versus four or more services per day. PHPs are intensive, structured outpatient programs that are alternatives to psychiatric hospitalization, consisting of a specified group of mental health services paid on a per-diem basis for a minimum of 20 hours of PHP services per week, based on per diem costs.

Access to Non-Opioid Treatments for Pain Relief:
As mandated by Congress, CMS is proposing temporary add-on payments for certain non-opioid treatments for pain relief. This complex provision would take effect from Jan. 1, 2025 through Dec. 31, 2027, and would require certain clinical evidence for medical devices and FDA-approved indications for pain management. The payment add-on would be capped at the estimated average of 18% of the full OPPS payment, calculated using the top five procedures by volume for each drug or device. Table 84 in the rule lists the proposed seven injections and other items that would qualify for a payment add-on under this provision.

CMS will accept comments on this rule through Sept 9. See the agency’s related fact sheet for more information.