Mental Health Parity

On March 29, 2016, the Centers for Medicare & Medicaid Services (CMS) issued the Medicaid Mental Health Parity Final Rule (herein referenced as “Parity”) to strengthen access to mental health and substance use disorder services for Medicaid beneficiaries.

Two key objectives of Parity are to create consistency between the commercial and Medicaid markets and to ensure that restrictions or limits are comparable and not applied more stringently to mental health and substance use disorder services as compared to medical surgical services.

The Parity rule requires AHCCCS to post its compliance determination in meeting Parity requirements applicable to the benefits provided to Medicaid beneficiaries receiving services from a Managed Care Organization (MCO).

Parity Analysis

The Arizona Health Care Cost Containment System (AHCCCS) contracted with Mercer Government Human Services Consulting (Mercer) to provide technical assistance with assessing compliance with Parity. Mercer has drafted a comprehensive final report (link below) that includes the Parity analysis methodology and compliance recommendations.

As part of the analysis, AHCCCS and Mercer identified all the benefit packages to which Parity applies. Parity applies when any portion of the benefit to enrollees is provided through an MCO. The AHCCCS service delivery system currently includes partially and fully integrated MCOs.

AHCCCS along with Mercer was responsible for conducting the analysis of all partially integrated benefit packages. Although AHCCCS has fully integrated populations within many of our MCOs, the ALTCS Elderly and Physically Disabled (EPD) MCOs are the only Plans responsible for providing fully integrated benefits for their entire population. For this reason, AHCCCS worked with Mercer to conduct the analysis for all programs and Contractors, with the exception of ALTCS EPD Contractors. The ALTCS EPD Contractors were responsible for conducting their own parity analysis. Summary findings from that analysis are posted below.

The Mercer report and attachments/appendices include the following:

  • A description informing the public about mental health and substance use disorder (MH/SUD) Parity protections under state and federal law;
  • A description of the methodology used by AHCCCS to check for compliance;
  • The standard used by AHCCCS to define MH/SUD and medical/surgical (M/S) benefits and how those terms have been defined;
  • The standard used by AHCCCS to define MH/SUD and M/S benefits and how those terms have been defined;
  • Identified Aggregate Lifetime and Annual Dollar Limits (AL/ADL), Financial Requirements (FRs) and Quantitative Treatment Limitations (QTLs);
  • Identified Non-Quantitative Treatment Limitations (NQTLs); and
  • Actions planned or taken by AHCCCS to resolve compliance concerns.

ALTCS-DD Service Delivery Changes Effective October 1, 2019

Since the initial Parity analysis took place in 2017, a significant change occurred in AHCCCS’ delivery system for the Arizona Long Term Care Services for Developmentally Disabled (ALTCS-DD) members, effective October 1, 2019. This change precipitated the need to reassess Mental Health Parity compliance. AHCCCS contracted with Mercer in 2019 to conduct the analysis related to changes to the ALTCS-DD program.

To complete the Parity analysis, AHCCCS performed and documented the following activities based on October 1, 2019, service delivery changes based on the Mercer report:

  • Reviewed and confirmed benefit packages and service delivery systems included under the AHCCCS program that are subject to parity.
  • Reviewed and confirmed the definitions for MH, SUD, and M/S benefits consistent with a generally recognized independent standard of current medical practice.
  • Reviewed and confirmed assignments of each service to one of four classifications [inpatient (IP), outpatient (OP), emergency care (EC), prescription drugs (PDs)] applying the same reasonable standard to M/S and MH/SUD benefits.
  • Reviewed service delivery change impact to applicable FRs, QTLs, and aggregate lifetime and annual dollar limits (AL/ADLs) applied to each classification of identified benefit packages.
  • Evaluated each NQTL for compliance applied to MH/SUD and M/S benefits to determine Parity requirements for comparability and stringency.
AZ Parity Summary Report 2019

Information for AHCCCS Members and Providers

In addition to the above analysis, AHCCCS is required to ensure that enrollees, potential enrollees and providers have the right to request and obtain additional information regarding:

  1. the criteria for medical necessity determinations for mental health and substance use disorder benefits upon request to Managed Care Organization (MCO) enrollees, potential enrollees, and providers; and,
  2. the reason for any denial of reimbursement or payment for mental health and substance use disorder benefits to beneficiaries.

AHCCCS requires MCOs to have member handbooks that provide members with procedures for obtaining benefits, including any requirements for service authorizations. This information includes the criteria for medical necessity determinations for mental health or substance use disorder benefits whenever the service is subject to authorization by the MCO.

AHCCCS further requires MCOs to provide the reason for any denial of reimbursement or payment for mental health and substance use disorder benefits to beneficiaries in a written notice of adverse benefit determination whenever service requests requiring authorization have been denied, reduced, or terminated. The notice of adverse benefit determination must explain to the member:

“The reasons for the adverse benefit determination, including the right of the enrollee to be provided upon request and free of charge, reasonable access to and copies of all documents, records, and other information relevant to the enrollee’s adverse benefit determination. Such information includes medical necessity criteria, and any processes, strategies, or evidentiary standards used in setting coverage limits.” 42 CFR 438.404(b).

Additional Resources

AHCCCS members and providers can find more information about Parity at

To report a Parity compliance concern, you may contact AHCCCS Clinical Resolution Unit by phone at 602-364-4558 or submit your concern in writing by email to For written concerns, please be sure to let us know how to reach you so that we can gather needed information to assist in the review and resolution of your concerns.