A Lack of Parity In Parity? A National Recovery Month Spotlight

Coverage for substance use disorder varies but the view from 2024 looks so much brighter.

Created by SAMHSA in 1989, the goal of September’s National Recovery Month is “to promote and support new evidence-based treatment and recovery practices, the nation’s strong and proud recovery community, and the dedication of service providers and communities who make recovery in all its forms possible” (Substance Abuse and Mental Health Services Administration, a branch of HHS).

In recognition of National Recovery Month, HealthLeaders examines where substance use disorder (SUD) coverage has been, recent changes, and the additional factors that influence access, outcomes and long-term recovery.

A little history: Treatment, parity and coverage

SAMHSA defines recovery as “a process of change through which individuals improve their health and wellness, live self-directed lives, and strive to reach their full potential.” Since 2000, recovery-oriented systems of care (ROSC) have been a growing focus of substance use disorder (SUD) treatment.

Treatment

In terms of SUD treatment, ROSC represents a shift — from the long-standing acute-care model to one that views SUD like other chronic illnesses (e.g., diabetes, asthma; McLellan et al. 2000) with multiple focus points including: engagement and assessment; service integration, planning, options, and duration; and long-term maintenance with the help of a broader personal, professional, and community network (Slaying the Dragon: The History of U.S. Addiction Treatment And Recovery in America, William L. White).

Coverage

In Slaying the Dragon, White cites the role of payers in the development of ROSC, “who were tiring of paying for multiple treatments without measurable recovery outcomes.”

But it got worse before it got better. The Recovery Research Institute notes that “the advent of managed care in the 1990s . . . greatly reduced access to formal addiction treatment by tightening insurance reimbursement for care.” This began to change with the Mental Health Parity Act of 1996 (MHPA), which mandated that large group health plans could not limit mental health benefits differently than medical/surgical benefits (annual or lifetime dollar limits; CMS).

Parity

While the MHPA was a first step, it did not include SUD benefits. It wasn’t until 2008 that Congress added SUD to parity legislation (MHPAEA, or The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008). And it wasn’t until 2010 that the ACA required that health plans provide SUD/MH coverage if they wanted to participate in the Marketplace.

But what is the current state of SUD coverage across multiple payers — and how is it evolving?

Medicare SUD coverage is limited but expanding

Data from 2020 shows that approximately 3% of Medicare beneficiaries had a past-year SUD (1.7 of 61.5 million) — but that only 11% sought treatment due to insufficient coverage and high cost of care.

Current Coverage: Historically, Medicare has only covered hospital- or outpatient-based SUD treatment.

Developing: CMS has added some coverage for intensive outpatient (IOP, or treatment beyond traditional OP services), and new legislation would grant access to residential SUD care in non-hospital settings (Residential Recovery for Seniors Act, introduced just last month).

Medicare Advantage coverage varies

With MA growing as a percentage of overall Medicare enrollment (54% in 2024), it’s important to look at this subset related to SUD.

Current Coverage: The Kaiser Family Foundation notes that despite this growth, “not much is known about the scope of mental health and substance use disorder benefits covered by these plans” — including OOP limits, the use of prior authorization and resulting care delays/denials — as well as SUD provider network access. What was known as of 2022:

• Inpatient: MA must cover what Medicare does (Part A) but only 12% of plans offered extra SUD/MH benefits
• Outpatient: Again, MA matches Medicare (Part B) but plans required and varied in their cost-sharing.
• Out-of-network: 60% of plans offered no SUD/MH coverage.

Developing: The traditional Medicare IOP additions should cascade to MA plans as part of Part B coverage. Beyond this, SUD coverage is at the discretion of MA plans.

Medicaid MCOs are in the driver’s seat

Medicaid MCOs cover the majority of Medicaid enrollees, who have a higher prevalence of SUD (more than 20%) compared to 16% of commercial enrollees; KFF).

Current Coverage: Despite prevalence and major progress, including enhanced access/services, half of states do not require full SUD coverage via their contracted MCOs. A July 2024 Health Affairs study of 33 states and Washington, DC found that while most required that MCOs cover common SUD treatments without annual maximum out-of-pockets and cost sharing:

• Many states leave SUD coverage requirements entirely to MCO discretion
• Less than one-third of states kept MCOs from applying prior authorization to services
• This increased to less than two-thirds of states for medication PAs (drug testing, step therapy)

Developing: New York state is an exception — adding “teeth” to parity law by fining Medicaid MCOs for denials and unpaid specialty care. While these fines applied to MH claims, it’s not a far stretch to expect SUD-related fines and that other states may follow suit. In addition, At least three state Medicaid programs (AL, AR and CA) operate under 1115 waivers that specifically address SUD.

Commercial payer coverage: Workplace versus Marketplace

Collectively, SUD among commercial enrollees is 16% (KFF).

As mentioned, 2008 legislation applied SUD parity to large group health plans (e.g., employers with more than 50 employees) and to other insurers that offer SUD/MH benefits.

Workplace: While it is difficult to quantify employer SUD coverage, one thing is certain: It is costing companies and their health plans a lot, and they are struggling to ensure sufficient provider networks. A 2023 JAMA study found:

• 1.4% of employer plan members had an SUD diagnosis (2.3 of 162 million).
• Annual attributable medical expenditures were nearly $16,000 per enrollee
• Across the entire population, these costs were $35.3 billion.

Despite this prevalence and cost, a 2023 KFF annual Employer Health Benefits Survey showed that only 59% of employers offering coverage believe there are enough in-network SUD providers to provide timely access and care.

Marketplace: The ACA brought parity to Marketplace plans by defining SUD (and MH) as one of  10 essential benefits that payers must provide. While SUD is an essential benefit, states can nuance coverage via the benchmark plans they must submit to CMS. In addition, in its 2025 Marketplace rule, CMS has defined SUD cost-sharing ranges for the new standardized Marketplace plans:

• Inpatient hospital SUD: $350 to 50%
• Outpatient SUD office visit: $0-50

Progress, not perfection

There cannot be parity without coverage but there cannot be care without provider access or service use. The 50% coinsurance for inpatient treatment shows that even when legislation mandates coverage, costs may prohibit care:

• Medicare: The previously cited 2020 data showed that only 11% of the 1.7 million beneficiaries with an SUD sought treatment.
• Medicaid: ACA expansion increased SUD coverage but multiple studies have shown that access did not increase treatment rates.

Reasons varied. Medicare beneficiaries cited still-insufficient SUD coverage and high cost of care. The Medicaid studies cited lack of accessible treatment, particularly in rural areas. Of note, CMS did not extend provider network adequacy standards (time and distance) to SUD providers in its 2025 Marketplace plans rule.

SAMHSA cites access to affordable, high-quality SUD coverage and treatment as one of several policy recommendations to support recovery. Legislation and regulations have expanded coverage and parity.

Engagement, innovation, reimbursement, equity and integration will advance the SUD field even further. About alcohol use disorder specifically, the Recovery Research Institute writes: “In the past century there have been dramatic socio-cultural, scientific, and political shifts in how alcohol use disorder is perceived, understood, and treated . . . At the same time, stigma has reduced” as perceptions about SUD shift from the moral to the medical.

Many SUD challenges remain, but so do the opportunities. If we in recovery can sustain not only our sobriety but our hope and capacity for transformation, the healthcare industry can too.