Strategies for improving parity in Oklahoma’s Medicaid managed care plans

Federal and Oklahoma law is clear: insurance companies cannot unfairly limit the mental health benefits of employer-sponsored health care plans.

This parity between mental and physical health was first established in federal law with the Mental Health Parity Act of 1996. Since then, Congress and federal agencies have adopted new and enhanced parity protections, including the landmark Mental Health Parity and Addiction Act of 2008.

Parity is also codified in Oklahoma statute. Senate Bill 1718, which Gov. Kevin Stitt signed into law in 2020, requires parity on commercial health plans and ensures enforcement of state and federal parity laws. Further legislation has applied parity to telemedicine, modeled Oklahoma’s parity reporting requirements with those of federal regulators, and enacted provisions to ensure the availability of mental health providers for people with commercial health insurance plans.

In addition to commercial insurance, parity applies to Medicaid managed care plans. More than half of Oklahoma’s Medicaid enrollees are on such a plan, making parity for these Oklahomans a crucial component of improving the state’s mental health and substance use outcomes.

During its 2025 session, the Oklahoma Legislature will consider a bill that strengthens oversight, transparency, and accountability for parity in Oklahoma’s relatively new Medicaid managed care program. House Bill 2049, authored by Rep. Preston Stinson (R-Edmond) and Sen. Todd Gollihare (R-Tulsa), mirrors parity reporting requirements for Medicaid managed care organizations with those already familiar to commercial insurers. Importantly, this proposed legislation aligns with federal law and practices in other states that offer strong parity protections for consumers.

In this report, we examine policy options for ensuring parity compliance on SoonerSelect, Oklahoma’s Medicaid managed care program. We explain the latest federal rules and requirements for parity that apply to both Medicaid and private insurance plans. Finally, we provide recommendations for further safeguarding parity by learning from other states that have implemented a Medicaid managed care program.

Key takeaways

• Health plan compliance and the oversight of parity have not met the full intent of the law or the standards set in federal rules, leading to lengthy and unclear appeal processes, treatment denials, and delays in accessing care.
• While Oklahoma has made progress in parity reporting, the state can take meaningful steps to improve provider participation in insurance networks and address disparities in reimbursement rates.
• Oklahoma’s proposed House Bill 2049 is a positive step toward achieving parity by codifying both insurers’ and the state’s responsibilities for improving access to mental health and substance use services.

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Federal parity requirements for Medicaid managed care

In a managed care system, a state’s Medicaid authority contracts with third parties to coordinate insurance benefits and services for health plan enrollees. As the federal agency overseeing Medicaid managed care plans, the Centers for Medicare and Medicaid Services (CMS) notes “improvement in health plan performance, health care quality, and outcomes” as "key objectives of Medicaid managed care.”

Last year, CMS, along with the labor and treasury departments, issued new federal rules to improve the oversight of parity requirements for commercial insurance and Medicaid managed care plans. These uniform rules require more detailed parity analysis and reports for Medicaid and employer-sponsored health plans. This approach will make reporting easier for insurers that operate both Medicaid and private plans.

CMS’ guidance on these new rules includes reporting templates that require an analysis

of the health plans’ performance in meeting parity requirements. This analysis encompasses both quantitative treatment limitations, such as limits on the number of outpatient sessions, as well as the non-quantitative treatment limitations. The latter are more complex to detect, as they do not rely on metrics like the number of therapy sessions or hospital days.

For example, the inappropriate use of non-quantitative treatment limitations can include:

• ‍High service denial rates, using criteria on medical necessity, to emphasize cost controls that result in service denials over providing necessary mental health treatment.‍
• Inadequate information on consumers’ rights to appeal coverage denials and a lengthy appeal process that delay treatment and lead to worsening mental health conditions, as well as over-utilization of crisis services, emergency rooms, and inpatient care.‍
• Under-reimbursement of mental health providers compared to medical/surgical providers. Evidence-based intensive and specialty community-based treatment is not paid for as a direct benefit or as an alternative service to even more intensive and expensive services, which is allowable under Medicaid managed care.

To prevent the inappropriate use of quantitative and non-quantitative treatment limitations, managed care plans must adhere to established standards of care for mental health and substance use disorder services. These standards assure that all treatment-related decisions are evidence-based and follow professionally developed treatment criteria, just as physical health treatments would. Furthermore, these treatment limits must not unreasonably limit access to care.

Insights from national studies

Recent studies highlight glaring challenges in the management and oversight of parity on managed care programs, finding that:

• Medicaid managed care organizations (MCOs) failed to conduct required parity analyses, and all states did not make compliance documentation available to the public by the required timeframe.
• Quantitative treatment limits for mental health and substance use services were more restrictive than those for medical/surgical services in the same service classifications (e.g., outpatient, inpatient).
• MCOs applied non-quantitative treatment limits on mental health benefits that were not comparable to physical health benefits, or the medical necessity criteria for mental health services were more stringent than those for medical/surgical benefits in the same service classifications.‍
• MCOs' service request denials were higher for behavioral health care compared to medical/surgical care. However, this study did not provide detailed information on the actual behavioral health denial rates. The combined behavioral and physical health denial rates ranged from 3% to as high as 41% of service requests, with the overall rate at 12.5%. The high variability of managed care programs across the country suggests uneven performance among MCOs. Additionally, the report suggests the need for better tracking of behavioral health and physical health denial rates, as well as appeals resolutions. While service denials do not necessarily mean parity has been compromised, tracking this data would help determine whether prior authorization requirements for behavioral health are more restrictive than those for physical health. ‍
• Providers frequently handle the appeals process for denied service authorizations on behalf of Medicaid enrollees‍. The process is time-consuming due to multiple levels of appeals and limited access to the MCOs’ physician advisors, who can determine the medical necessity of a service at the time of denial or when an appeal occurs. The process results in delays in services for individuals, often worsening their mental health conditions, and creates extensive non-reimbursable administrative work for providers.
• Private insurance plan members and Medicaid enrollees struggle to understand their appeal rights when plans deny services. A Kaiser Family Foundation of U.S. adults who had coverage through employers, Medicare, Medicaid, and the Affordable Care Act (ACA) Marketplace found that majorities across all insurance types reported not knowing about, or believing they did not have, appeal rights when insurance plans denied services. People on Medicare understood their appeal rights more than other types of insurance.
• ‍Providers are reluctant to enroll in managed care networks because of poor reimbursements to behavioral health clinicians and time-consuming administrative processes, such as denied authorizations and submission of multiple claims to obtain payment. As a result, many people in need of behavioral health services rely on out-of-network providers, which is generally costlier than in-network providers. This reliance on out-of-network providers tends to be higher for substance use treatment, further increasing costs for members. 
• ‍Medicaid provider reimbursement in some states was lower than Medicare rates, which serve as the baseline rates for provider reimbursement. For example, Medicaid reimbursed psychiatrists at 81% of the Medicare rate for the same service. States like Oklahoma and Missouri have increased provider rates to align Medicaid with Medicare rates.

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Managed care and parity in Oklahoma

In April 2024, Oklahoma launched SoonerSelect, a managed care program for eligible Medicaid populations. The Oklahoma Health Care Authority (OHCA) contracts with three managed care organizations — Aetna, Humana Healthy Horizon, and Centene Oklahoma Complete Health — to coordinate the medical benefits for children, parents and caretaker relatives, pregnant women, and non-disabled adults ages 19 to 64. Collectively, these SoonerSelect-eligible populations account for 56% of all Medicaid enrollees in Oklahoma — about 583,000 of the roughly 1,034,000 Oklahomans on Medicaid.

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The Aged, Blind, and Disabled Medicaid population is not included in SoonerSelect. This population includes adults 65+; individuals with disabilities, such as blindness or other physical and mental disabilities; and those with long-term care needs, such as a nursing facility or intermediate care facilities for individuals with intellectual disabilities.

The Oklahoma Department of Mental Health and Substance Abuse Services, through a delegated agreement with OHCA, is responsible for serving the disabled population with mental health conditions. However, individuals with serious mental health conditions who are not determined to be disabled fall into the general Medicaid population and enroll in SoonerSelect.‍

Parity in SoonerSelect

The Oklahoma Health Care Authority intends to implement the new 2024 federal parity rules and templates, according to interviews with agency staff. For the first year of SoonerSelect, OHCA tailored reports to include specific non-quantitative treatment limitations, such as prior authorizations for intensive behavioral health services. This approach resulted in a positive finding: MCOs authorized 95% of behavioral health requests and denied 5%. This shows a significant improvement compared to national studies, where denial rates exceeded 25%.

Additionally, the SoonerSelect Mental Health Parity and Addiction Equity Act Compliance Report indicates that all SoonerSelect MCOs meet the federal parity requirements for both quantitative and non-quantitative treatment limitations for mental health, substance use, and medical/surgical services. However, officials indicate they will continue monitoring compliance as processes change and the agency obtains more data.

Because SoonerSelect is a new program, and thus enrollees and providers may not be familiar with the appeal process, OHCA will need to track the number of appeals moving forward. Otherwise, OHCA could see an unintentional underutilization of the appeals process among SoonerSelect enrollees. Tracking the number of appeals is crucial to monitoring MCOs’ effectiveness in handling and resolving appeals, identifying any barriers, and ensuring enrollees are aware of the appeals process.

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Strategies from other states

National experts on Medicaid managed care point to the success of New Mexico and New Jersey in achieving mental health parity by developing exemplary policies and legislation. ‍

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Model legislation

New Mexico’s Senate Bill 273, passed in 2023, provides a comprehensive model for parity legislation. While the law will need to be adapted to address the new 2024 federal rules, it directly addresses several challenges in managed care operations that often derail parity and hinder access to services by requiring that insurers:

• Must adhere to recognized standards of care when providing mental health and substance use disorder services.
• Cannot apply quantitative or non-quantitative limitations on mental health and substance use disorder services that are more limiting than those use for physical health and surgical services.
• Must preserve an adequate provider network for behavioral health services similar to medical and surgical services. The Office of the Superintendent of Insurance oversees compliance through administrative measures, adequate provider reimbursement, review of claims, and network adequacy.
• Must follow up-to-date, professionally developed treatment criteria and standards of care when performing utilization reviews of mental health and substance use services.
• Must not exclude coverage for services required by federal or state law for the Aged, Blind, and Disabled population; prescribed by an administrative agency or court; available through public assistance programs (e.g., Medicaid); or when there is a co-occurring diagnosis.
• Must facilitate communication between service providers and the insured's primary care provider to ensure care coordination.

Elimination of insurance co-pays, coinsurance, and deductibles

New Mexico became the first state to eliminate cost-sharing practices for behavioral health by passing the No Behavioral Health Cost-Sharing law in 2021. The law removes in-network treatment copayments, coinsurance, and deductibles for mental health and substance use services in private insurance plans but excludes self-funded insurance plans. As a result, the law improved the affordability of behavioral health treatment at a time when insurers otherwise imposed high levels of cost-sharing.

New Jersey also eliminated co-pays, coinsurance, and deductibles for behavioral health services for adult Medicaid enrollees, including adults with incomes up to 138% of the federal poverty level under the 2010 Affordable Care Act’s expansion of Medicaid eligibility. A New Jersey administrator reported this measure provided financial relief to enrollees seeking treatment and reduced the administrative burden on providers from collecting these payments; in some instances, this burden costs more than the reimbursement itself.

Phasing in intensive services for individuals with behavioral health conditions

Unlike in Oklahoma, New Jersey’s commercial and nonprofit managed care plans serve the Aged, Blind, and Disabled Medicaid population. In New Jersey, intensive services for people with mental health conditions in this population were gradually phased into the Medicaid managed care program, which gave health plans time to become familiar with these new covered services and the providers that deliver them. Each year, the state included more intensive mental health services as a benefit of the Medicaid managed care program until phasing in a final set of residential services for substance use disorders in 2024.

In interviews, an official at New Jersey’s Medicaid agency reported that this phased approach proved effective in promoting parity. Specifically, the strategy helped private health plans become more familiar with intensive services covered by Medicaid — but rarely covered under commercial plans — as well as the criteria for establishing these services as medically necessary. Intensive services like Program of Assertive Community Treatment and First Episode Psychosis Program are typically only covered by Medicaid plans and reimbursed with state funds; remarkably, these have slowly come to be covered in New Jersey by some private insurers as well.

Reporting, monitoring, and transparency

New Jersey and New Mexico issued information on state-operated websites that demonstrate how to appropriately plan for and analyze managed care parity reports. However, they do not yet have the amount of detail required by the new federal rules.

New Jersey’s standard MCO contract language explicitly requires compliance with all federal parity laws and rules. In an interview, New Jersey officials also reported plans to implement the reporting and monitoring requirements of the new federal rules.

Similarly, New Mexico’s Health Services Department developed a parity monitoring and analysis plan, and state law explicitly requires compliance with mental health parity reporting and monitoring.

Oklahoma’s proposed House Bill 2049 reflects some of the reporting, monitoring, and transparency strategies seen in New Jersey and New Mexico. Oklahoma’s bill goes beyond the new federal requirements by focusing more on state-based oversight, enforcement procedures, and greater transparency. In particular, the bill:

• Requires regular reviews of non-quantitative treatment limitations, including changes to those limitations
• Calls for a structured and clear process for addressing noncompliance
• Stresses public accountability by making public parity reports and complaints
• Adds a layer of consumer protection by outlining a specific process for receiving and investigating parity complaints

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Recommendations for Oklahoma

Parity laws ensure the equal treatment of behavioral and physical health conditions, yet many challenges to enforcing parity persist in Oklahoma. In addition to passing House Bill 2049, the state can take several short- and long-term approaches to strengthening parity in SoonerSelect.

In the next six months, Oklahoma policymakers and regulators can:

• ‍Identify and address with MCOs any existing gaps in the availability of physician advisors and other mental health clinical advisors. This will help provide consultation on service denials at the time of denial, reducing the need for a lengthy appeal process when the physician or clinical advisor agrees with the need for services.‍
• Identify strategies to enhance SoonerSelect enrollees’ awareness of parity rights and ensure easy access to information about appeal rights for both members and providers within health plans.‍
• Incentivize health plans to closely align behavioral health clinicians’ reimbursement with physical health care providers to ensure more equitable access to mental health and substance use services.

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Long-term, Oklahoma should expand the availability of intensive behavioral health services and ensure they are covered under SoonerSelect. Individuals with serious mental health conditions need access to specialty providers that go beyond outpatient services by providing comprehensive, community-based care. Many of these services — such as Programs of Assertive Community Treatment (PACT) or First Episode Psychosis Programs (FEP) — are not usually covered by private insurers. In Oklahoma, managed care plans reimburse for PACT, but FEP is not currently covered. In 2023, CMS introduced a mechanism for reimbursing the costs of providing FEP on private and public insurance plans. Studies on FEP have shown a decrease in costs for inpatient hospitalization and emergency room visits and an improved quality of life.

Furthermore, Oklahoma could implement additional administrative measures that align with successful models from other states, such as eliminating cost-sharing for mental health and substance use services. And while the state has made progress in parity reporting, tracking appeals of denied claims by MCOs will be crucial to identifying potential issues and ensuring that SoonerSelect enrollees are well aware of the appeal process.

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