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The Short Answer: Federal Parity Enforcement Is Paused, State Enforcement Is Not, and Operators Should Plan for Both
The 2024 MHPAEA Final Rule is still on the books, but the Departments of Labor, Health and Human Services, and the Treasury have publicly committed to not enforce the new provisions until the ERIC litigation concludes plus an additional 18 months. In their May 15, 2025 joint statement, the agencies wrote that they “will not enforce the 2024 Final Rule or otherwise pursue enforcement actions, based on a failure to comply that occurs prior to a final decision in the litigation, plus an additional 18 months.” That is not a rescission. The action is a decision of nonenforcement, not a rescission of the 2024 Final Rule itself; rescinding or revising that rule would require the Administrative Procedure Act’s notice and comment process.
For operators, that distinction matters. The relief applies only to those portions of the 2024 Final Rule that are new in relation to the 2013 rule, and MHPAEA’s statutory obligations, as amended by the CAA, 2021, continue to have effect. Translation: the comparative analysis requirement is still real, the 2013 rule still governs, and states are moving on their own. Despite the federal government’s retreat, some states are moving forward with their own strong standards and enforcement, sometimes in ways that explicitly embrace the federal rule, while in other states uncertainty regarding the fate of the rule is undermining state efforts.
What the 2024 Rule Actually Targeted: NQTLs, Not Copays
The 2024 rule never centered on dollar limits. It went after the levers payers actually use to manage behavioral health utilization. Examples of NQTLs include prior authorization requirements and other medical management techniques, standards related to network composition, and methodologies to determine out-of-network reimbursement rates. The rule required plans and issuers to collect and evaluate data and take reasonable action, as necessary, to address material differences in access to MH/SUD benefits as compared to M/S benefits that result from application of NQTLs, where the relevant data suggest that the NQTL contributes to material differences in access.
That is the design behavioral health providers have been waiting on for 17 years. The Departments said as much in the rulemaking. The stated goal of the 2024 Final Rule was “to strengthen consumer protections consistent with MHPAEA’s fundamental purpose,” and they were planning to implement that goal through tighter restrictions on NQTLs, enhanced data collection and evaluations, and prohibiting the use of potentially discriminatory information related to mental health and substance use disorder benefits.
Why does the pause hurt? Because federal investigators were already slow before they lost runway. A recent report by the Department of Labor Office of Inspector General on MHPAEA enforcement noted that it has often taken up to three years for DOL investigators to complete NQTL comparative analysis reviews, and funding that supports over one-third of DOL’s frontline investigators was set to expire in September 2025. Operators who counted on federal NQTL pressure to discipline payer behavior should plan as if that pressure is not coming.
SAMHSA's $2 Billion Whiplash and What It Told Operators About Cash Flow Risk
The grant episode in January 2026 was not a rumor. It was a real cash event for thousands of organizations. After a tense day of confusion and backroom negotiations, the Trump administration moved Wednesday night to restore roughly $2 billion in federal grant money for mental health and addiction programs nationwide, after the money had been cut off late Tuesday without warning, sending shockwaves through a segment of the country’s patchwork system of public health that relies on grant funding. Multiple sources told STAT that the number of overall grants originally canceled could number as high as 2,800, with the total dollars affected as high as $1.9 billion, over one-quarter of the agency’s overall budget.
The damage was not theoretical even after the reversal. Nonprofit behavioral health organization Centerstone released a statement saying it received word of changes to federal grant programs that would result in the loss of $14.3 million in funding from now through the end of 2026, impacting 28 programs across seven of the states it operates in, where about 3,000 individuals received more than 30,000 instances of treatment and/or care as a result of the impacted grants in 2025. Boards saw that number. Lenders saw that number. And some organizations had already made difficult decisions in response to the cuts, including laying off employees and canceling scheduled trainings, all before the reversal landed.
The lesson for CEOs running grant-dependent programs in Tennessee, Ohio, Florida, or anywhere else: a 24-hour federal action can force layoffs. The Washington Post reported the reversal followed intense backlash, and public health organizations told NPR that the termination letters demoralized staff in a system already weakened by deep cuts to Medicaid enacted by Congress. If your pro-forma assumes SAMHSA awards renew as scheduled, your pro-forma is wrong.
What States Are Actually Doing While Washington Reconsiders
The Commonwealth Fund piece dated January 21, 2026 is the cleanest summary of the state response. Authors JoAnn Volk and Madison Harden-Stein wrote that “the Trump administration’s failure to defend or enforce the 2024 rule undermines the progress made in federal enforcement efforts and has thwarted some states’ plans to move forward.” That fragmentation is what multi-site operators should be modeling.
Some examples worth tracking:
- Washington enacted legislation that requires insurers to comply with the federal rule as published in 2024, anchoring state law to a strong set of parity protections that will remain in place even if the federal rule is rescinded.
- Colorado used the 2024 rule to strengthen its own statutory protections, and Maryland adopted stricter requirements for insurers’ parity analyses where failure to submit a complete analysis constitutes a violation, triggering enforcement authority beyond what the federal rule mandates.
- West Virginia issued a request for insurers to report data such as number of denied claims and the outcome of prior authorization requests; Oregon issued its fourth annual parity report, noting disparities in claims denials, provider reimbursement, and documentation required for prior authorization and utilization review of behavioral health services; Georgia took enforcement action against insurers based on outcome data regularly collected under state law.
- Federal nonenforcement has created uncertainty in some states, with Arizona pausing efforts to update its parity standards to align with the 2024 federal rule, citing pending legal challenges.
If you operate in multiple states, your payer playbook now has to be jurisdiction specific. The denial pattern you build evidence against in Oregon will not look like the denial pattern in Arizona. Build for that. An estimated 153 million workers and dependents covered by employer-sponsored plans now sit with weaker protections, only 13 states have laws or enforcement activity that go beyond the federal baseline, and ParityTrack gave 32 states an “F” grade on its statutory evaluation.
What Behavioral Health CEOs Should Do in the Next 90 Days
Atlantic Health Strategies tells clients to stop waiting for federal clarity and run four parallel workstreams.
- Tighten the parity evidence trail. Track authorization turnaround, denial reason categorization, overturn rates on appeal, and network adequacy friction by service line and payer. Even with federal pause, plans and issuers are still required to comply with the statutory obligations under MHPAEA, including the NQTL comparative analysis requirement in accordance with the CAA, 2021. States, plaintiffs’ lawyers, and employer plan sponsors are using that data. Make sure yours is clean before someone else’s data tells your story.
- Renegotiate payer contracts with specificity. Push for clarity on medical necessity criteria sources, peer reviewer specialty matching, ASAM Criteria 4th Edition application for SUD level of care decisions, timely filing windows, and appeal pathways. Ambiguity is now a payer asset.
- Run grant continuity drills. Map which programs are SAMHSA dependent, what the obligations attached to each award actually are, and what a 30 day funding pause would cost in staffing and census. Dr. Yngvild Olsen, who served as director for the Center for Substance Abuse Treatment inside SAMHSA until July 2025, said the turmoil raised questions about who in the Trump administration is making key public health decisions, and all of the roughly 2,000 organizations affected by the whiplash were being notified of restoration only after panic had already cost staff and trust. Plan for the next event, because there will be one.
- Standardize across sites if you run an MSO model. If you have 4 programs in Florida and 2 in Tennessee, the appeal language and the documentation thresholds should not be reinvented by each program director. Centralized utilization management, templated documentation that meets criteria without bloating notes, and dashboards that flag payer outliers early protect clinical time and revenue.
The bigger point: states have primary responsibility for enforcing health insurance standards, including MHPAEA. Operators who built their compliance posture on federal enforcement intensity need to rebuild it around state market conduct exams, network adequacy reporting, and payer accountability at the contract level. That is the operational backbone that will hold up regardless of which way the ERIC litigation breaks.
Frequently asked questions
Is the 2024 MHPAEA Final Rule still in effect?
Yes, the rule remains on the books but key new provisions are not being enforced. The Departments of Labor, HHS, and Treasury stated on May 15, 2025 that they will not enforce the new provisions “based on a failure to comply that occurs prior to a final decision in the litigation, plus an additional 18 months,” while MHPAEA’s statutory obligations, as amended by the CAA, 2021, continue to have effect. A rescission would require formal Administrative Procedure Act notice and comment rulemaking, which has not occurred.
Do behavioral health providers still need to worry about NQTL comparative analyses?
Yes. The CAA, 2021 NQTL comparative analysis requirement went into effect on February 10, 2021 and continues to remain in effect for group health plans regardless of the 2024 rule’s enforcement status. States retain primary authority over insurance regulation, and states like Washington, Colorado, Maryland, Oregon, West Virginia, and Georgia are actively enforcing parity using outcome data, claims denial rates, and prior authorization patterns.
How exposed is my organization to another SAMHSA-style funding disruption?
It depends on grant mix, but the January 2026 episode showed that nearly $2 billion across roughly 2,000 to 2,800 grants can be terminated in a single evening, representing about one-quarter of SAMHSA’s overall budget. Even though funds were restored within 24 hours, organizations like Centerstone reported $14.3 million in projected losses across 28 programs in seven states, and several grantees had already laid off staff and canceled trainings. Operators should map every grant-dependent program line by line and model a 30 to 90 day pause.
Which states are most aggressive on parity enforcement right now?
According to the Commonwealth Fund’s January 2026 analysis and downstream reporting, Washington codified the 2024 federal rule into state law via HB 1432, Colorado used the rule to strengthen statutory protections, Maryland adopted stricter parity analysis requirements where incomplete submissions trigger enforcement, Oregon issued its fourth annual parity report, West Virginia has issued data requests on claims denials and prior auth outcomes, and Georgia has taken enforcement action against insurers based on outcome data. Arizona has paused alignment with the 2024 rule citing pending litigation.
References
- U.S. Department of Labor, HHS, and Treasury, Statement Regarding Enforcement of the Final Rule on Requirements Related to MHPAEA (May 15, 2025)
- Federal Register, Requirements Related to the Mental Health Parity and Addiction Equity Act, Final Rule (Sept. 23, 2024)
- Commonwealth Fund, Volk and Harden-Stein, “Behavioral Health Parity Takes Step Backward Under Trump Administration” (Jan. 21, 2026)
- NPR, “24 hours of chaos as mental health grants are slashed then restored” (Jan. 15, 2026)
- The Washington Post, “SAMHSA cuts hundreds of millions in addiction, mental health grants” (Jan. 14, 2026)
- STAT News, “Trump administration reverses course on $1.9 billion in cuts to addiction and mental health grants” (Jan. 14, 2026)
- Epstein Becker Green, “Mental Health Parity: What Non-Enforcement of the 2024 Parity Rule Means for Employer Plans” (May 2025)
- CMS, The Mental Health Parity and Addiction Equity Act (MHPAEA)
- Fierce Healthcare, “HHS cancels then reinstates $2B in SAMHSA grants” (Jan. 16, 2026)