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Reprinted with permission, as it appeared in the September 2007 issue of "The Benefit", the official publication of the Texas Association of Benefit Administrators (www.tpbaa.com)".

Is 2007 the Year for Passage of a new Mental Health Parity Bill at the Federal Level?

What is the likelihood of passage?  If it does pass, what will the final bill look like, and what will it mean to self-funded health plans?

By:      Fred Newman, CEO, Interface EAP, Inc.

            fnewman@ieap.com  -  www.ieap.com

The push for mental health parity at the federal level has once again come to the forefront.  Full mental health parity was very close to passing when the tragedy of 9/11 derailed it in 2001.  Since that time, there has not been a major push for parity until now.  With both the Senate and House having introduced competing bills, and with both currently moving through committees, it appears there is a good chance we will see a new mental health parity bill passed in this session of Congress.  If passed and signed into law, a new parity bill would impact self-funded health plans under ERISA, since said legislation is at the federal level.

The timing and co-sponsors of the two bills are very interesting.  First, Senator Edward Kennedy co-sponsored Senate bill 558 (S558), that for the first time motivated certain business groups to support parity because of its softer approach.  Then, Representative Patrick Kennedy introduced House bill 1424 (HR 1424), which is much more heavy-handed than Senate bill S558.  It seems to me that the House bill may exist to help insure passage of the Senate bill???  I see a lot of groups who have never supported mental health parity now behind the current Senate bill.

 Where the two bills agree and differ

 Agree:

Ø      Employers with less than 50 employees would be exempt from parity requirements.¹  

Ø      Neither bill mandates coverage of mental health or substance abuse treatment, but instead they require that if offered, they must be on equal terms with other medical conditions.¹

Ø      If complying with the parity mandates increases health plan costs by at least 2% in   the first year after the law goes into effect, and 1% in succeeding years, the employer can become exempt.¹ 

Ø      There can be no discrimination treatment limitations for covered mental health services.  Therefore, covered mental health services may not have lower day/visit limitations, dollar caps, etc. than other medical conditions.²

Ø      Group health plans may not impose higher cost-sharing requirements (co-payments, deductibles, etc.) for covered mental health and substance abuse treatment than for other medical conditions.²

 Differ: 

Ø      The Senate bill preempts state parity laws that would supersede existing parity laws, on a targeted basis.  Specifically, the Senate bill preempts only the standards in state laws that establish parity for day/visit limits and financial limitations.  The Senate bill does not preempt existing state requirements for plans to either cover or offer mental health benefits.  In addition, the Senate bill does not preempt provisions in state parity laws that require specific diagnosis or a broad listing to be covered.¹ 

Ø      The House Bill contains a reference to it not overriding “any state law that provides greater consumer protections, benefits.”  But the House bill does not define what those are.  What is unclear is whether the House bill would supersede numerical limits on days or visits that are a provision of any state parity law.  Currently, 41 states have some form of mental health parity.¹ 

Ø      The Senate bill leaves it to each health plan to define which mental illnesses will be covered by the health plan.  Then, those defined conditions must meet the parity provisions of the bill.¹ 

Ø      The House bill requires (if mental health benefits are provided) for mental disorders to be covered (if medically necessary) that are covered by the health plan with the greatest enrollment offered to federal employees (basically all diagnosis listed in the DSM-IV).² 

Ø      The Senate bill only requires equalized out-of-network benefits for mental health and substance abuse if the health plan offers out-of-network benefits for mental illness or substance abuse.  It does not require a health plan to provide out-of-network benefits for mental illness or substance abuse.¹ 

Ø      The House bill requires parity for out-of-network benefits to be provided for mental health and substance abuse treatment if out-of-network benefits are offered for other medical conditions.  This would require health plans to provide out-of-network benefits for mental health and substance abuse treatment equal to out-of-network benefits for other medical conditions if the plan provides out-of network medical benefits.¹

Of course, if each side passes their own version, the differences will be worked out in committee.  If enacted into law, the final bill may look different than either bill currently on its own.  There are two items in the House bill that really need to be excluded in any compromise:  1) Mandating which mental health conditions must be covered, and 2) Mandating out-of-network benefits for mental health if out-of-network benefits are provided for other medical conditions.

Having worked with many TPAs and self-funded groups regarding the management of mental health services for over 18 years, my recommendation is to support the Senate bill.  The goal of parity should be to insure the greatest number of employees and dependents receive appropriate behavioral health services.  To that end, self-funded employers need the ability to design their health plans whereby they determine covered behavioral health conditions.  Also, they need to be able to restrict covered benefits to in-network providers.  The Senate bill certainly leans more in that direction.  I believe the broad mandates in the House bill would only cause some employers to drop mental health coverage as a way to comply with the law, which would lead to fewer people receiving appropriate mental health services, resulting in an increase in overall healthcare costs.

The biggest problem relating to mental health treatment in this country today is we already have 80 percent or more of patients with mental health issues seeking their treatment in the general medical setting (an 18 month study by Medco of 84,500 patients who acquired a prescription for an antidepressant reported that only 17 percent were seen by a mental health professional).  This shift to the general medical setting has created an explosion in the prescribing of psychotropic drugs since 1990.  A study published in the Wall Street Journal regarding the cost of treatment for depression in this country over the past decade (1990 to 2000) reported that prescription drug costs to treat depression increased by 452 percent.  The Center for Disease Control in Atlanta just released prescription drug data for the year 2005; antidepressants were the number one class of drugs prescribed in this country – 118 million prescriptions.

The answer to a lack of appropriate mental health services and the resulting medical and productivity costs is not to drive more people into the general medical setting for their treatment – numerous studies have documented significant quality of care issues relating to the screening, treatment, and monitoring practices for mental health within the general medical setting.³  The solution is to move the other way and motivate more patients with mental health issues to engage with a mental health professional.  This is accomplished through a Value-Based plan design, including coordination with the PBM, which is another subject for another day…

For those concerned that any new parity law will increase mental health claims cost, Interface has determined that there is almost zero mental health claims cost difference between ERISA plans with limited behavioral health benefits and non-ERISA plans (political subdivisions) under state parity, when the plans are properly managed.  A five- year analysis of both groups under Interface’s integrated EAP/Behavioral Healthcare Management program shows no significant claims cost difference.  The key to providing appropriate care in a cost efficient manner under either state or federal parity is to utilize a “gatekeeper” approach with an integrated behavioral healthcare management program.  Remember, medical necessity still applies under parity.  So don’t be afraid of providing appropriate behavioral health benefits…just manage them proactively.  The right plan design will not only control unnecessary mental health costs, but will coordinate appropriate behavioral health treatment, leading to a reduction in overall healthcare and pharmacy costs.  Furthermore, the employer will realize additional savings through increased productivity and decreased disability claims, workers comp, presenteeism, etc.

If we are going to truly solve our healthcare problems, we must work to improve health and stop focusing on just reducing costs.  Motivating better health through Value-Based programs will reduce costs long term.  We need to become more proactive with our solutions, and that starts with proper plan design that effects behavior.

I see the odds favoring passage of a mental health parity bill that is close to the Senate version.  If it does pass, be proactive in providing solutions whereby behavioral health benefits are maintained – the alternative will only increase numerous costs.

Notes:

1. “Comparison of the Proposed House and Senate Parity Bills,” National Alliance on Mental Illness, www.nami.org.
2. Jerry Geisel, “House committee passes mental health parity bill,” Business Insurance, July 23, 2207, at pp 1 and 6
3. Summary, “An Employer’s Guide To Behavioral Health Services,” National Business Group on Health (2005) p 4