New York’s Medicaid program failed to ensure that insurers administering the program were not denying prior authorization requests for mental health services at higher rates than for medical services, an audit report published Aug. 14 by the HHS Office of Inspector General found.
“Since certain MCOs still had not demonstrated compliance with parity requirements, access to [mental health and substance use disorder] services for their enrollees may have been limited compared to access for [medical and surgical] services,” the report said. “This may have increased the risk that Medicaid enrollees would encounter delays or barriers to needed MH/SUD treatment.”
Seven things to know:
1. The audit examined 2023 data for three of the 14 insurers in New York with contracts to provide access to mental health services, which cover around 42% of the state’s Medicaid enrollees. The OIG selected the insurers, which were not named, based on risk factors including identified prior auth noncompliance, number of enrollees served and the use of external vendors for claims adjudication and denials.
2. One insurer showed denial rates for outpatient out-of-network mental health services far exceeding those for medical services. In the second quarter of 2023, its mental health denial rate was 70% compared to 25% for medical services. The gap persisted in the third quarter at 70% vs. 29% and 73% vs. 30% in the fourth quarter. The OIG noted that a higher denial rate does not necessarily mean noncompliance with parity requirements but could be an indicator of it.
3. All three insurers’ annual claims summary reports for 2023 identified denial rates for certain mental health services that exceeded New York’s threshold of 20%. At one insurer, the annual denial rate for community psychiatric support and treatment services was 42%. At another, the annual denial rate for partial hospitalization services was 37%. The third plan’s continuing day treatment services had a denial rate of 20%.
4. None of the three payers maintained documentation to support their comparative analyses of mental health benefits and medical benefits in each benefit classification. The plans said they developed their analyses using real-time data that could not be replicated because of subsequent claim adjustments or timing differences. The state also did not request or obtain data from the insurers to support the comparisons and instead relied on attestations that the analyses were accurate and reliable.
5. Two of the three insurers remained noncompliant with prior auth parity requirements more than six years after the October 2017 compliance deadline. One was found to have provided only general statements of compliance rather than a sufficient comparative analysis. The other was deemed partially compliant, having corrected prior issues for inpatient services and prescription drugs but failing to demonstrate compliance for outpatient services.
6. The OIG recommended that the state improve its policies and procedures for monitoring insurer compliance, including collecting and reviewing supporting data from plans for their comparative analyses, providing clear and uniform guidance to plans and establishing a formal written policy that includes its denial rate threshold and the actions plans are to take when denial rates exceed it. The OIG also recommended the state continue to use available corrective action measures, such as imposing sanctions, to address situations where insurers do not consistently meet parity requirements.
7. New York said it has issued 151 total citations for parity violations and collected $1.7 million in sanctions as of July 2026. The state also said that despite its legal and regulatory compliance framework, insurers have continued prior auth parity violations.
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