Mental Health Parity and the Role of the Health Plan
Although costly on the surface, addressing mental health has benefits far exceeding the costs to both employers and health plans
By Jay I. Pomerantz, MD – Executive Medical Director for Health Integrated
Mental health parity is the term that describes the practice of managing any ailment termed ‘mental health’, in the same manner as any other physical ailment. Mental health parity is not new though. The Mental Health Parity Act (MHPA) was signed into law in 1996. This law required that any annual or lifetime limits and other financial requirements on benefits paid be no different than the similar dollar limits for other medical benefits offered by health insurance or group health plans[1]. In 2008, mostly under TARP[2], the MHPA was extended and added to with the Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008 signed into law by then President Bush. The MHPAEA preserves the key aspects of the MHPA, but adds some new protections as well. The program was further supported with the issuance of new rules by President Obama in January of this year for all employers with 50 or more employees and choosing to offer mental health coverage as part of their insurance package. This program amends both ERISA[3] and PHSA[4] and was effective as of July 1, 2010.
So with the legislative details as a backdrop, what does this actually mean, and what is the impact to health plans?
The impact of mental health in our society has been documented for years. It is significant, particularly as it relates to the work place. Depression is the most common disorder affecting almost 10% of employees[5]. According to the National Alliance on Mental Illness (NAMI), roughly 75% of people with depression are not diagnosed, and 72% of these are in the workforce[6]. Mental illness that goes under treated or not treated often results in performance-related issues including absenteeism, lower productivity, errors on the job and other job-related costs. It is estimated that the indirect cost of mental illness may exceed $79 billion annually. Most of this is reflected in lost or diminished productivity. It is further estimated that mental illness causes more work loss than other chronic conditions including diabetes, asthma, arthritis, back pain, hypertension or heart disease. Co-morbidities only exacerbate the problem. From NAMI[7], based on mental illness, the numbers are quite dramatic:
- 217 million lost workdays per year
- Depressed employees lose 5.6 hours per week (vs. 1.5 hours for non-depressed)
- Workers with depression cost employers $44 billion in lost productivity
- Employees with co-morbidities including mental illness use more resources and are on disability for longer durations
- Mental-illness related job costs are four times that of medically-related treatments
The Partnership for Workplace Mental Health found that 86% and 81.6% of employer-sponsored health plans contained mental health and substance abuse benefits (respectively)[8]. Although most health plans have offered mental health services for years, the plan’s benefit levels were lower than that of the medical counterparts – higher co-pays, fewer visits, etc. Statistics from the Society of Actuaries confirm this parity difference[9]. There has been significant debate as to whether or not overall costs will increase. Consulting groups like Milliman believe not. The rub comes with the addition of substance abuse into the law as there is much less experience with regard to the cost/benefit of this particular behavioral health issue. SAMHSA (Substance Abuse and Mental Health Services Administration) cites several studies that support positive outcomes as well[10]. Health Integrated has core competency in the areas of pure behavioral management, mixed substance abuse/behavioral health and pure substance abuse, all of which are manageable and thus can have positive outcomes. With the requirements of parity in the new law, this program can help manage the added substance abuse requirement and mitigate associated risks.
The new law has not driven companies to terminate their mental health benefits for employees as was one sited scenario. In fact, enlightened corporations seem to realize that mental health is treatable and has a positive return on their investment. A recent survey of 70 Fortune 500 companies conducted by Hewitt Associates found that none of these companies had eliminated mental health benefits due to this new legislation. Mental illness is not only treatable, but the treatment works in many cases. NAMI further reports that after just three weeks of treatment, employees living with mental illness reduced work impairment by almost 50%[11]. In general, those suffering from depression not only regain their job footing, but each dollar invested in a company’s Employee Assistance Program (EAP) returned between $2 and $4 in savings based on improved productivity and decreased absenteeism. With this kind of track record, and mental illness being responsible for 4 out of the top 10 chronic conditions documented for lost productivity, this would be an obtainable target everyone should get behind. The Synergy Targeted Population Management® product from Health Integrated can assist health plans in identifying and targeting these key chronically-ill population groups to improve overall clinical outcomes while decreasing associated costs.
For health plans though, the regulation attached to the bill – the “non-quantitative treatment limits” provision provides some cost-management challenges. The “non-quantitative” measures include medical management standards, formulary design and other cost-based decision criteria. The new bill states that a group health plan cannot impose any non-quantitative limitations in regard to mental health benefits. Health plans have argued that this bill was signed to guarantee parity in benefits, not parity in reimbursement. There are other financial constraints imposed as well, including the bundled deductable – putting both mental and medical costs against a single deductable.
It seems that the challenge continues in balancing the costs and benefits of the services provided. As with the ACO discussion last week, I believe health plans have a critical role to play here. By better understanding the whole patient, including the behavioral side, improvements can be seen in both outcomes and cost. With the statistics of lost productivity, days on the job, and affected measures detailed above, although these costs are higher than current expenses, they have a positive return on the employer’s investment and actually help to reduce costs going forward.
What do you think?
As I shared last week, Health Integrated is hosting their Fall Executive Leadership Series Event in Chicago on September 22 – 23. This post touches on one of the presentation topics. The detailed session at the ELS will review Parity and PPACA – (a View from Milliman). I encourage your participation. As well, I look forward to meeting you there. Visit our website for more details.
Thanks for reading. Feel free to comment directly or send me your thoughts on this post as well as other topics that would interest you. You can reach me directly at healthexecforum@healthintegrated.com.
Best Regards,
Jay I. Pomerantz, MD
[1] The Mental Health Parity Act, http://www.dol.gov/ebsa/newsroom/fsmhparity.html
[2]Troubled Asset Relief Program: Text of TARP bill, H.R. 384, http://www.opencongress.org/bill/111-h384/text
[3] Employee Retirement Income Security Act
[4] Public Health Service Act
[5] Fogarty, S., “Comorbidity Addressed Effectively via an Integrated Solution,” Compensation & Benefits Review 38(5), (2006).
[6] NAMI – Mental Illness and the Workplace, http://www.nami.org/Content/NavigationMenu/State_Advocacy/About_the_Issue/Workplace.pdf
[7] http://www.nami.org/Content/NavigationMenu/State_Advocacy/About_the_Issue/Workplace.pdf
[8] Survey: http://www.workplacementalhealth.org/pdf/EmployerParitySurveyResults20090528.pdf
[9] National Underwriter, http://www.lifeandhealthinsurancenews.com/Pages/default.aspx
[10] SAMHSA, http://mentalhealth.samhsa.gov/publications/allpubs/SMA-01-3542/SMA01-3542ch3.asp
[11] Langlieb, A.M., & Kahn, J.P., “How Much Does Quality Mental Health Care Profit Employers?” Journal of Occupational and Environmental Medicine 47(11), (2005).
