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Parity in Mental Health Coverage Poses Little Extra Cost, Study Finds

Posted on: Thursday, 30 March 2006, 06:00 CST

By M. William Salganik, The Baltimore Sun

Mar. 30--For years, mental health professionals and support groups have pushed insurers to provide the same benefit dollars, access to doctors and hospitalization coverage for mental health as they do for physical illness. And for years, opponents of behavioral-health parity have argued that loosening the often-stricter limits on mental health coverage would be too costly. A study published today in the New England Journal of Medicine attempts to measure what that added cost would be - and estimates it at close to zero. "The bottom line is that we found it was possible to achieve parity without any adverse impacts on cost and quality," said the study's lead author, Dr. Howard H. Goldman, a professor of psychiatry and director of mental health policy studies at the University of Maryland School of Medicine. There were, however, two important qualifications to the no-cost conclusion. One is that HMO-like care management, added at the same time as parity, appeared to be an important element in controlling spending. The other is that while overall costs were steady, a reduction in co-payments and other out-of-pocket charges to patients means that insurance premiums might increase slightly. The results add more fuel to a long-running debate in Congress and in state legislatures about how much mental health coverage should be required. The national Mental Health Parity Act, passed in 1996, was set to expire in 2001 but has received four extensions, the most recent taking it through the end of this year. The law has substantial limitations, touching off debate each year, said Mila Kofman, who helped administer it as a Department of Labor official and now is a health policy researcher at Georgetown University. For example, she said, it exempts small employers, allows employers to opt out if mental health coverage would increase costs by more than 1 percent and allows insurers to limit the number of visits to a therapist as long as there isn't a dollar value attached. The study published today tracked health plans in the federal employee benefit program, which imposed parity rules in 2001. Costs and use of mental health care went up in the plans after parity was imposed, but no more than in a group of commercial plans that continued to operate without parity rules. By comparing not just before-and-after costs, but looking at a matched set of plans that didn't require parity, the study was designed to control for changes over time that aren't related to parity, such as the surge in mental health service usage that occurred after the Sept. 11, 2001, terrorist attacks. 'Compelling evidence' "The compelling evidence presented suggests that in today's environment, parity in health insurance coverage is both economically feasible and socially desirable," says an accompanying editorial in the New England Journal of Medicine written by Sherry Glied and Alison Cuellar, health policy professors at Columbia University. Most of the health plans studied switched mental-health benefits management to a form of health maintenance organization, called behavioral health care managers, when they began requiring parity. These managers seek to control costs by negotiating discounted rates with a network of therapists and hospitals, by reviewing treatment plans for medical necessity and efficiency and sometimes by steering patients from higher-cost to lower-cost therapies. Of the seven plans studied, only one didn't contract with a mental health benefits manager - and that was the only one where use of services went up significantly more than the matched commercial plan. While overall costs went up somewhat, out-of-pocket costs to patients dropped. That's because parity rules forced the insurers to reduce the costs they had imposed on mental health clients. For instance, before parity began, the seven insurers required patients to shoulder a 30 percent or 40 percent share of the costs for mental health hospitalizations, far more than the out-of-pocket costs charged for hospital stays for a matter of physical health, such as heart surgery. Co-payments cut Also, before parity, the plans limited the number of outpatient visits, generally to 25 a year, and asked patients for co-payments, typically $25, for visits to therapists. Under parity, the insurers cut co-payments to $15 for outpatient visits, and dropped the hefty out-of-pocket charges for hospitalizations, limits on the number of therapist visits and caps on the number of days of hospitalization that were covered. With insurers picking up more of the costs that patients had paid, premiums might increase a little, but probably less than half of 1 percent, estimated Richard Frank, a health economist from Harvard who was a co-author of the study. That shift of cost represents"a good deal," he said, because it's better for everyone to pay a little than for a few people who get sick to have to pay thousands of dollars each. Under parity, Frank said, "The big winners are those who are hospitalized." The authors said they had only limited ability to measure whether parity affected the quality of care.However, they reported, a look at one measure - whether patients received appropriate follow-up care for depression - found significant improvement in three of the seven plans after parity was instituted. The authors said they didn't measure depression follow-up in the nonparity plans. "If people are going to have good coverage for cancer or heart disease, they should have good coverage for serious mental illness," said Dr. Steven S. Sharfstein, president of the American Psychiatric Association and chief executive officer of Sheppard Pratt Health System, which operates a Towson hospital and outpatient centers. Sharfstein participated in the design phase of the study, although he was not an author of the final report. Those who oppose parity laws, however, remained unconvinced. "The concern is more than just a cost issue," said Paul Dennett, vice president for health policy at American Benefits Council, a group that represents large employers and opposes parity. "It's much more driven by a concern that the federal government will begin to micromanage plan design." Study 'very short' Freedom to tailor benefits - for example, with varied co-payment levels on prescriptions or limits on the number of physical therapy sessions - is the best way to encourage employers to offer "the most affordable and comprehensive coverage they can," Dennett said. Another critic of parity rules said the study tracked too short a period - two years before parity and two years after - to provide a definitive answer. "It's a very, very short snapshot of a major policy change," said Robert E. Moffit, director of health policy at the Heritage Foundation, a conservative Washington think tank. When benefits are improved, he said, "usually, you don't get a change in utilization for a few years." Frank said a two-year period was long enough to measure impact, and that this was confirmed in other studies, such as smaller-scale research on the imposition of parity for state workers in Massachusetts and Ohio. Goldman said tighter limits on mental health benefits may have been "rational" when mental health therapies tended to be long and expensive, but are no longer justified as treatments have become more efficient. When he came to Sheppard Pratt 20 years ago, Sharfstein said, the average inpatient stay was 80 days; now it is less than 10. About two-thirds of states have some kind of mental health coverage requirements, but these vary considerably in terms of what conditions are covered and which employers are exempted. In Maryland Maryland has "good parity legislation," Sharfstein said, but most large employers are exempt under state law. A study for the Maryland Health Care Commission estimated that the mental health mandate costs, on average, $34 a year for each family covered, or six-tenths of 1 percent of premiums, above the costs of benefits insurers would provide without the parity rules.

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Source: The Baltimore Sun, Maryland

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