Healthcare Business News

Mental health spending rises following parity rules, report says

By Melanie Evans
Posted: February 27, 2013 - 12:01 am ET

Hospital stays for mental illness or substance abuse increased as hospital visits for other medical care declined the first year insurers were required to treat behavioral health as any other medical condition, a new report found. However it's unclear to what degree the new rules, the economy, changing health benefits or less stigma associated with mental illness contributed to the demand.

The results, an analysis of five years of mental health and substance abuse spending by four giant insurers, found hospitalization for mental illness increased 5.9% in 2011 from the prior year. Substance abuse hospital stays increased 19.5% in the same period.

Spending on mental health and substance abuse hospital treatment increased in 2011, the first full year after which new health benefit rules for those services went into effect under the Mental Health Parity and Addiction Equity Act of 2008. Under the law, mental health and substance abuse benefits must be equivalent to other medical benefits, including required out-of-pocket spending and treatment limits. Federal health officials have yet to issue final rules for the 2008 parity law, but released interim final rules that went into effect for plans after June 30, 2010.

Meanwhile, U.S. health spending slowed during that period, said Carolina Herrera, director of research for the Health Care Cost Institute, which released the report.

Advertisement | View Media Kit


Greater use of hospitals drove mental health and substance abuse inpatient spending growth, Herrera said. “This is much, must faster and a different direction than the rest of inpatient care,” she said of hospitalizations for mental illness and substance abuse.

David Newman, executive director of Health Care Cost Institute, said a number of factors, may have contributed to the growth, including an increase in privately insured young adults under the 2010 health reform law, which allowed adults up to age 26 to remain covered by a parent's insurance as of September of that year.

The Health Care Cost Institute, is a not-for-profit launched in 2011 to analyze spending by Aetna, Humana, Kaiser Permanente and UnitedHealthcare. The analysis includes individuals with insurance through an employer.

John McConnell, an economist and associate professor at the Oregon Health & Science University, called the results interesting but said without a comparison of trends spending and use for patients not covered by the 2008 law, it's unclear what role the new insurance rules played in increased use or spending.

Increased hospital psychiatric care won't contribute significantly to overall growth in health spending, said Tami Mark, senior director of the division of behavioral health and quality research for Truven Health Analytics, formerly Thomson Reuters Healthcare. Mental health spending accounts for a small share of total insurance costs and inpatient hospital costs, she said.

On average, behavioral health spending accounted for 0.3% of the annual growth in health spending among large employers between 2001 and 2009, according to an analysis of 110.5 million privately insured patients employed by large businesses.

She also noted that the amount “is still a miniscule amount of utilization relative to the need.”

Mental health and substance-abuse patients paid a larger share of the bill in 2011 and saw out-of-pocket costs increase more quickly that year than other medical or surgical patients, the HCCI report said.

Mental health and substance abuse patients paid 10% and 12% of spending for hospital care compared with 4% of the total bill by medical or surgical patients.

Mental health out-of-pocket costs for each hospital stay increased 6.6% to $766 in 2011 and substance abuse out-of-pocket costs climbed 10.71% to $889 compared with growth of 5.29% for medical and surgical hospital visit out-of-pocket costs, to $796.

Newman said that out-of-pocket difference after the 2008 law may reflect greater use of services among those grappling with mental illness and substance abuse. For example, daily required co-pays under the 2008 law may be $100, regardless of whether hospital patients need psychiatric or other medical care, but psychiatric patients may spend more days in the hospital.

What do you think?

Share your opinion. Send a letter to the Editor or Post a comment below.

Post a comment

Loading Comments Loading comments...



Switch to the new Modern Healthcare Daily News app

For the best experience of on your iPad, switch to the new Modern Healthcare app — it's optimized for your device but there is no need to download.