Managed behavioral healthcare companies believe a new federal law mandating parity for mental health benefits will make their services attractive to more employers and HMOs.
The new law, signed by President Clinton last month, addresses one of what the American Managed Behavioral Healthcare Association calls the "three pillars of discrimination" against mental illness: It bans annual and lifetime caps on mental healthcare benefits that are lower than caps established for physical care, said Clarke Ross, executive director of the association. But the law doesn't address the other two areas of contention: benefit restrictions that are different from those imposed on physical treatments and higher copayments and deductibles, Ross said.
The association represents 19 managed behavioral healthcare companies that are responsible for the mental health services of 120 million covered lives. The companies include Eden Prairie, Minn.-based MCC Behavioral Care, a subsidiary of Cigna Corp.; Vista Behavioral Health Plans, San Diego; Value Behavioral Health, Falls Church, Va.; and Salt Lake City-based Human Affairs International, a subsidiary of Aetna/U.S. Healthcare.
The companies contract with HMOs-in so-called "carve-out" programs-or directly with employers to provide managed mental healthcare services. In-house HMO managed mental health programs cover another 21 million people, according to the AMBHA.
The association contends several loopholes in the law, which takes effect Jan. 1, 1998, allow plans to duck out of the mandate. For example, any employee health plan whose premiums would increase more than 1% under the mandate would be exempt. But Ross said the law "opens the door" to further reform. Now that it has been introduced at the national level, mental healthcare reform won't go away, he said.
With the new mental health parity mandate and the prospect of further reform, payers will have to devote more attention to holding down the costs of providing mental healthcare while maintaining effectiveness and quality. That is, of course, if employers don't just eliminate mental health benefits entirely out of fear they might soar out of control.
Some employers may do that, concedes Keith Dixon, chief executive officer of Vista Behavioral, a subsidiary of Vista Hill Foundation in San Diego. Vista Behavioral, a regional company with annual revenues of $40 million, also owns a psychiatric hospital and clinics.
But major employers are too sophisticated to eliminate mental health benefits, Dixon said. They realize mental problems can be effectively treated, so they're going to provide a benefit. But just as in any other aspect of their businesses, they want to bring good management practices to bear, he said.
That's where managed care comes in. Large employers, through carve-outs and contracting with HMOs that have mental-health programs, demonstrate they know that "without adequately funded behavioral healthcare benefits, the risk is to have that care provided on the medical side," said Daniel Potterton, president of MCC Behavioral. That's just cost-shifting, he said.
It also could end up costing health plans and employers more, Potterton said, because primary-care physicians and other caregivers who lack special training might not provide the appropriate types of treatment.
With the new federal mandate, "more employers will be looking for solutions" as they work to provide the necessary level of services yet keep costs down, Dixon said.
Added Potterton: "It's always been a hope of mine to take the advantages we've given to larger players and make them available to small employers," those with 500 and fewer employees. MCC is targeting those smaller employers, he said.
MCC is preparing materials that will help smaller employers calculate the unknown costs of untreated mental illness, such as lost work time and decreased productivity. That will show how much they can save through managed care, Potterton said. MCC, which serves more than 400 employers and HMOs covering more than 5.5 million enrollees nationwide, has annual revenues of $200 million.
But what of the growing suspicion that managed care is a system that limits necessary treatment? Because of managed care's reputation for being tightfisted with services and its heavy utilization review, some mental health advocates fear extending that system to patients with mental illness.
"We haven't done a good job of getting our message out," Dixon said. He said the truth is that managed mental healthcare is a lot more flexible than traditional mental healthcare programs.
The typical traditional benefit includes 30 days of inpatient care and 20 outpatient visits a year. Managed care "manages the care and not the benefit," Dixon said.
For example, Vista treats patients according to their needs, Dixon said, often bending the health plan's benefits guidelines. "We authorize treatment beyond plan limits because otherwise (patients) will come back and cause us more problems," he said. The cost of services above and beyond the plan's limits is borne by the managed-care firms because they are typically at financial risk.
Recently an adolescent Vista enrollee with severe emotional problems exceeded his parents' $50,000 lifetime maximum. "The phone rang, and he was in trouble again," Dixon said. Vista authorized further treatment because of "the potential of the family completely unraveling" otherwise. "We put together very intensive case management" to keep the situation under control, he said.
"Good managed-care companies figure out what the patient needs to get better in the quickest period of time in the most cost-effective way, irrespective of the plan design," he said. "This is the model most of us operate by, although companies don't talk about it a lot" because there may be legal ramifications, Dixon added.
Advocacy groups have been seeking parity for mental health services for years. "The argument that you can't have it because you can't control the cost is true (through the traditional plans). But you can control the costs through managed care," Dixon said.
Ross said mental health advocates like the "promise" managed care offers of a more flexible, individualized approach to an array of services. "At the moment, they are skeptical but hopeful" managed care can deliver on that promise, he said.