The Impact of 42 CFR Part 2 on Care Coordination by Health Plans for Members with Substance Use Disorder

States have increasingly turned to Medicaid managed care organizations (MCO) to provide coordinated, integrated care in a cost-effective manner for people with Medicaid coverage, including people with special needs. Medicaid MCOs have developed care coordination
programs under which they assess their members’ needs, identify treatment gaps, engage members, develop individualized care plans, and coordinate care delivery.

These programs include initiatives to coordinate and facilitate access to care and social services for Medicaid beneficiaries with substance use disorders (SUD). However, in many cases plans seeking to coordinate care for members with SUD have experienced challenges to coordination arising from regulations that predate current models of care. These barriers lead to worse health outcomes, higher costs to Medicaid programs, and frustrate efforts to integrate behavioral and physical health for people experiencing SUD.

In 2011, almost 12 percent of adult Medicaid beneficiaries were estimated to have an SUD. For individuals newly eligible for Medicaid, the percentage was higher: about 15 percent. These individuals have complex health care needs that often include co-occurring mental and physical health diagnoses.

People with SUD may have physical health conditions directly attributable to their addiction, including liver disease and pancreatitis.4
In some instances, an SUD is related to a physical  health condition with associated chronic pain that has been treated with opioid pain relievers. For  these individuals, their pain must continue to be managed while addressing their addiction.

In fact, those suffering from SUD are some of the highest utilizers of health care services among Medicaid beneficiaries. For example, individuals with untreated alcohol use disorders use twice as much health care and cost twice as much as those with treated alcohol use disorders. About 12.5 percent of all emergency department visits across payers are due to mental health or substance abuse treatment needs.

Care coordination initiatives involving Medicaid beneficiaries with SUDs have had remarkable success. However, appropriate care coordination of Medicaid beneficiaries with SUDs who are enrolled in managed care requires the exchange of patient health information among physical and behavioral health providers and with the beneficiary’s MCO. Physical health providers (e.g., a PCP who is treating an individual for chronic pain) need to know about the SUD diagnoses of their patients and whether they are receiving treatment for the SUD. SUD treatment programs need information about the physical health status of their clients and the care they are receiving. All of these providers must also be able to share information with their patients’ mental health providers. To facilitate whole-person care and coordinate care across all providers, MCOs must know which of their members have SUDs, whether those members are receiving SUD treatment,
and know their physical and behavioral health needs.


When individuals with both physical and behavioral health conditions are subject to a fragmented system of care with little or no coordination across providers, the result is poorer quality and higher costs.8 Poor coordination of care increases health care spending because it leads to preventable hospitalizations and duplicative tests.

Today, in large part due to the federal rules protecting confidentiality of substance abuse records, 2 CFR Part 2 (Part 2), SUD treatment programs often operate in silos, and the integration of SUD services with mental and physical health care is impeded. Exchange of information about patients receiving SUD treatment in substance abuse treatment programs defined in regulation as “federally assisted” is subject to Part 2 and cannot be shared without patients’ explicit consent, even for care coordination purposes.

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