DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, Maryland   21244-1850 
 
Center for Medicaid and State Operations 
                      SHO 09-014 
                      CHIPRA #9 
 
November 4, 2009 
 
 
Dear State Health Official: 
 
The purpose of this letter is to provide general guidance on implementation of section 502 of the 
Childrens Health Insurance Program Reauthorization Act of 2009 (CHIPRA), Public Law 111-3, 
which imposes mental health and substance use disorder parity requirements on all Childrens Health 
Insurance Program (CHIP) State plans under title XXI of the Social Security Act (the Act).  This letter 
also provides preliminary guidance to the extent that mental health and substance use disorder parity 
requirements apply to State Medicaid programs under title XIX of the Act.  
 
Statutory Basis for CHIPRA Parity Requirement 
 
Section 502 of CHIPRA amended section 2103(c) of the Act to incorporate, by reference, 
provisions added to section 2705 of the Public Health Service (PHS) Act by the Paul Wellstone 
and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), Public Law 
110-343.  Prior to MHPAEA, the PHS Act required parity in annual or lifetime dollar limits 
between mental health and medical/surgical benefits (as a result of the Mental Health Parity Act 
of 1996).  MHPAEA expanded the application of the existing mental health parity requirements 
in section 2705 to substance use disorder benefits, and added new requirements such as: 
 
  Financial requirements (e.g., co-payments) that are applied to mental health or substance 
use disorder benefits must be no more restrictive than the predominant financial 
requirements that are applied to substantially all medical/surgical benefits.  
  Treatment limitations (e.g., numbers of visits or days of coverage) that are applied to 
mental health or substance use disorder benefits must be no more restrictive than the 
predominant treatment limitations that are applied to substantially all medical/surgical 
benefits.  
  No separate financial requirements or treatment limitations can apply only to mental 
health or substance use disorder benefits. 
  When out-of-network coverage is available for medical/surgical benefits, it also must be 
available for mental health or substance use disorder benefits. 
 
The MHPAEA was enacted on October 3, 2008, and will be effective for group health plans for 
plan years beginning after October 3, 2009.  The Departments of Health and Human Services 
(HHS), Labor and the Treasury will jointly publish regulations on the application of MHPAEA 
to group health plans.    Page 2 - State Health Official 
 
 
Application to Medicaid 
 
The MHPAEA requirements apply to Medicaid only insofar as a States Medicaid agency 
contracts with one or more managed care organizations (MCOs) or Prepaid Inpatient Health 
Plans (PIHPs), to provide medical/surgical benefits as well as mental health or substance use 
disorder benefits.  In this case, those MCOs or PIHPs must meet the parity requirements of 
MHPAEA, as incorporated by reference in title XIX of the Act, for contract years beginning 
after October 3, 2009.  MHPAEA parity requirements do not apply to the Medicaid State plan if 
a State does not use MCOs or PIHPs to provide these benefits.  
 
Application to CHIP  
 
The application of MPHAEA to CHIP is somewhat broader.  Section 2103(c)(6) of the Act 
applies the MPHAEA requirements to the entire State child health plan including, but not 
limited to, any MCOs that contract with the State CHIP program.  Specifically, section 502 of 
CHIPRA requires that State child health plans comply with the requirements of section 2705(a) 
of the PHS Act in the same manner as such requirements apply to a group health plan.  
Therefore, if a CHIP State plan provides both medical/surgical benefits and mental health or 
substance use disorder benefits, any treatment limitations, lifetime or annual dollar limits or out-
of-pocket costs for both types of benefits must comply with the provisions added to the PHS Act 
by MHPAEA.  Section 502 of CHIPRA also specifies that State CHIP plans are deemed to 
satisfy the mental health and substance use disorder parity requirements if they provide coverage 
of Early and Periodic, Screening, Diagnostic and Treatment (EPSDT) benefits (as defined under 
title XIX of the Act).  This requirement was effective as of April 1, 2009. 
 
Implementation of MHPAEA Requirements 
 
States will need to begin to assess their own compliance with the MHPAEA parity requirements 
prior to the issuance of MHPAEA regulations.  For States that use MCOs or PIHPs to provide 
Medicaid benefits, a review of current contract language with the plans should occur before the 
next contract year begins to ensure that MHPAEA parity requirements are in place. 
 
Similarly, each State will need to review its CHIP plan to determine if the CHIP State plan 
imposes more restrictive requirements on mental health or substance use disorder benefits than 
on medical/surgical benefits.  As noted above, any State that either operates its CHIP program as 
an expansion of its Medicaid program, or which provides coverage of EPSDT benefits as defined 
under title XIX of the Act in its separate or combination CHIP program, already will be in 
compliance with these mental health and substance use disorder parity requirements. 
 
Until the MHPAEA regulations are issued or other guidance is provided, States will not have 
detailed information regarding how specific provisions in MHPAEA will be interpreted.  
However, section 3(d)(2) of CHIPRA provides that Federal financial participation in both CHIP 
and Medicaid shall not be denied if States make a good faith effort to comply with the 
requirements prior to the issuance of any regulations or guidance implementing the provisions in 
question.  Examples of what might be considered a good faith effort could include States 
providing an assurance in their CHIP State plan that there is no significant difference in cost  Page 3 - State Health Official 
 
 
sharing, lifetime or annual dollar limits, or treatment limits (e.g. the number of inpatient days) 
between mental health/substance use disorder benefits and medical/surgical benefits.  
 
In addition, section 3(b) of CHIPRA addresses the situation in which States need to pass 
legislation in order to bring their CHIP plans into compliance.   In that case, a State will not be 
found to be in violation of the statutory requirements before its next legislative session, as long 
as it notifies the Secretary of HHS, and she concurs that legislation is needed. If your State 
requires such legislation, please submit a letter to the Center for Medicaid and State Operations 
to that effect as soon as possible.  The letter should include the provision in question, the reason 
that State legislation is required for compliance, and the date the State will begin implementing 
the provision.  For States with annual legislative sessions, this date must be no later than the first 
day of the first calendar quarter beginning after the close of the first regular session of the State 
legislature that begins after February 4, 2009 (the date CHIPRA was enacted).  For States that 
have a 2-year legislative session, each year of the session is considered a separate regular session 
for this purpose.   
 
Additional policy guidance will be provided on this issue after the MHPAEA regulation is 
published.  However, in the meantime, we encourage all States to begin a dialogue with their 
Centers for Medicare & Medicaid Services regional office concerning their timeline for complying 
with these parity requirements. 
 
If you have any questions on the information provided in this letter, please send an email to 
CMSOCHIPRAQuestions@cms.hhs.gov or contact Ms. Maria Reed, Deputy Director, Family 
and Childrens Health Programs Group, at 410-786-5647. 
 
            Sincerely,  
 
                /s/ 
 
            Cindy Mann 
            Director 
  Page 4 - State Health Official 
 
 
cc: 
CMS Regional Administrators 
 
CMS Associate Regional Administrators 
Division of Medicaid and Childrens Health 
 
Ann C. Kohler          
NASMD Executive Director 
American Public Human Services Association 
 
Joy Wilson 
Director, Health Committee 
National Conference of State Legislatures 
 
Matt Salo 
Director of Health Legislation 
National Governors Association 
 
Debra Miller 
Director for Health Policy 
Council of State Governments 
 
Christine Evans, M.P.H. 
Director, Government Relations 
Association of State and Territorial Health Officials 
 
Alan R. Weil, J.D., M.P.P. 
Executive Director 
National Academy for State Health Policy