You may need to spell out the configuration parameters in full in addition to the URL method:
production:
adapter: mysql2
username: username
password: password
host: hostname
database: databasename
url: <%+ ENV["DATABASE_URL"] %>
I hope they actually parse the url
value in future versions of Rails because this seems to be a bit of duplicated effort.
Any changes to config/database.yml
will require restarting your Rails process(es).