Department of Health & Human Services (HHS) / Centers for Medicare & Medicaid Services (CMS) Department of Labor (DOL) Department of the Treasury

• 45 C.F.R. § 146.136(f) & (g) — the MHPAEA small-employer exemption and “grandfathered plan” increased-cost exemption for group health plans. • 29 C.F.R. § 2590.712(f) & (g) — the parallel DOL exemptions for ERISA-covered and grandfathered self-insured plans. • 42 C.F.R. § 441.152 — Medicaid’s “Institutions for Mental Diseases” payment exclusion for adults aged 21–64.

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Notice of Proposed Rulemaking

Mental Health Parity and Medicaid IMD Exclusion Loopholes (“Parity & IMD Exclusions”)

Current federal rules exempt small-group and “grandfathered” plans from mental-health parity (45 C.F.R. § 146.136(f) & (g); 29 C.F.R. § 2590.712(f) & (g)) and bar Medicaid coverage of most adult inpatient psychiatric care (42 C.F.R. § 441.152). Rescinding these provisions would close parity loopholes—requiring all group and self-insured plans to provide mental-health benefits on par with medical/surgical coverage—and restore Medicaid reimbursement for adult inpatient mental-health services, expanding access and reducing reliance on costly crisis care.

Department of Health & Human Services 200 Independence Avenue, SW Washington, DC 20201 Department of Labor 200 Constitution Avenue, NW Washington, DC 20210 Department of the Treasury 1500 Pennsylvania Avenue, NW Washington, DC 20220

) 492-4305 (410) 786-1524 (410) 786-8437

The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) mandates parity between mental-health/substance-use and medical benefits, but HHS and DOL implemented narrow exemptions for small employers (45 C.F.R. § 146.136(f); 29 C.F.R. § 2590.712(f)) and “grandfathered” plans (45 C.F.R. § 146.136(g); 29 C.F.R. § 2590.712(g)). Separately, the Medicaid “IMD exclusion” (Social Security Act § 1905(a)(B); implemented at 42 C.F.R. § 441.152) prohibits federal payment for adult inpatient stays in institutions for mental diseases, limiting access to essential psychiatric care.

Deleting the MHPAEA exemptions will compel every employer-sponsored and self-insured plan—regardless of size or grandfathered status—to offer mental-health and substance-use benefits equal in scope and cost-sharing to medical/surgical services. Removing the IMD exclusion will enable states to bill Medicaid for adult inpatient psychiatric services in licensed mental-health facilities, alleviating bed shortages, reducing downstream criminal-justice and homelessness costs, and substituting planned treatment for expensive emergency interventions.

— 45 C.F.R. § 146.136(f) & (g): Paragraphs (f) and (g) deleted; no small-employer or grandfathered-plan carve-outs—parity applies universally. — 29 C.F.R. § 2590.712(f) & (g): Paragraphs (f) and (g) deleted; all ERISA self-insured plans lose the grandfathered exemption—parity applies to all. — 42 C.F.R. § 441.152: Section removed; Medicaid may reimburse adult inpatient care in institutions for mental diseases without age-based exclusion. All other parity and Medicaid payment provisions remain in force without exception.

Robert F. Kennedy Jr. – Secretary of Health and Human Services

Secretary of Health and Human Services