In a landmark move signaling a stronger stance on mental health equity, the state of New York has fined five Medicaid managed care organizations (MCOs) a combined total of $2.6 million for improperly denying behavioral health claims or failing to reimburse at required rates. This wave of Medicaid Behavioral Health Parity Enforcement could mark the beginning of a nationwide trend, where states hold insurers accountable for violating mental health parity laws.
The enforcement action followed an extensive examination conducted by New York’s Office of Mental Health. The review zeroed in on services most commonly denied, including assertive community treatment (ACT), personalized recovery-oriented services (PROS), comprehensive psychiatric emergency programs (CPEP), partial hospitalization, and adult behavioral health home- and community-based services. These denials not only violate parity laws but also leave vulnerable populations without essential care.
“The companies that continue to flout these regulations are imposing a formidable barrier that ultimately discourages New Yorkers from getting the mental health care they need,” said Ann Sullivan, Commissioner of the New York Office of Mental Health. “New York State is holding Medicaid insurers accountable and those insurers failing to comply with the law will face significant penalties.”
Who Was Fined and Why
The following MCOs were penalized:
- Affinity Health Plan Inc. (acquired by Molina Healthcare) — $349,500 fine for failing to oversee management functions and underpaying providers.
- Amida Care Inc. — $232,000 for improperly denying behavioral health claims and missing prompt pay deadlines.
- EmblemHealth — $422,000 for ongoing inappropriate claims denials and payment shortfalls.
- MetroPlus HealthPlan Inc. — $584,000 for failing to reimburse at required rates.
- MVP HealthPlan, Inc. (partnered with Cigna) — the largest fine at $1 million for repeated payment and reimbursement failures.
These enforcement actions make it clear: state agencies are now willing to levy substantial financial penalties to uphold mental health parity within Medicaid systems. And experts say New York’s example could become a national template.
A Roadmap for States: Accountability and Enforcement
According to Bragg Hemme, a shareholder at the national law firm Polsinelli and co-chair of its behavioral health group, this move is “unique but likely not isolated.” Hemme emphasized that Medicaid Behavioral Health Parity Enforcement may soon gain traction in other states that rely heavily on managed care to administer behavioral health services.
“It provides a roadmap for others to follow along,” Hemme told Behavioral Health Business. “Particularly in states with a large managed care presence, we anticipate increased interest in holding plans accountable.”
Hemme further explained that MCOs delegating behavioral health claims to third-party vendors often experience higher rates of inappropriate denials. The structure of these systems — separating physical and behavioral health under different umbrellas — makes true parity harder to achieve unless metrics and oversight are rigorously implemented.
The Human Impact of Denials
The consequences of denied care go far beyond paperwork. According to KFF, nearly a quarter of patients who experience a denial see a decline in their health, compared to just 10 percent among those who do not. To make matters worse, most people don’t understand their appeal rights or even know where to seek help when a claim is denied.
This highlights the urgent need for Medicaid Behavioral Health Parity Enforcement as not just a compliance issue, but a public health imperative. Denied access to treatment—especially for individuals with severe or persistent mental illness—can result in crises, hospitalizations, homelessness, or worse.
A Call to Strengthen Oversight Nationwide
While federal laws like the Mental Health Parity and Addiction Equity Act (MHPAEA) provide a framework, much of the real enforcement lies with the states. Hemme emphasized that local enforcement, supported by stronger federal directives, is key to achieving real change.
“The federal administration’s focus on parity is important. Congress’s focus is important. But until there are more teeth behind these laws, we won’t see widespread behavior change from payers,” Hemme said.
Medicaid Behavioral Health Parity Enforcement must become a shared priority among states, especially as behavioral health demand continues to rise post-pandemic. Access to care should not depend on administrative loopholes or provider reimbursement failures.
Looking Ahead
If other states take cues from New York, we could see more investigations into how MCOs handle behavioral health claims, more fines for those violating parity laws, and, hopefully, systemic improvements in care delivery. This moment represents an inflection point—either the nation moves toward enforcing parity in a real and measurable way, or we continue letting insurance infrastructure determine who gets mental health care and who doesn’t.
New York has drawn a hard line. Now, it’s up to other states to step up. The goal is clear: ensure Medicaid Behavioral Health Parity Enforcement is not just a promise on paper, but a practice in policy.
