Ruling paves way for fairness in mental health coverage

TRAVERSE CITY – Grand Rapids-based Pine Rest Christian Mental Health Services has been busy.

The number of outpatients visiting the nonprofit's 25 clinics, including its Traverse City clinic, climbed seven percent last fiscal year, and its COO wouldn't be surprised if they hit 10 percent this year without adding any new clinics.

"In a down economy, wouldn't you expect to see outpatient numbers drop because co-pays are increasing, companies are passing more costs onto employees and deductibles are higher?" asks Pine Rest's Bob Nykamp. "I was expecting those numbers to drop, and they haven't. I think the reality is, the stressors in our society are outweighing people not electing to come in."

Fortunately, new federal rules released in February are paving the way for fairness in mental health coverage.

The rules implement the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008, which puts an end to health insurance benefits inequity between mental health/substance use disorders and medical/surgical benefits.

MHPAEA applies to employers with 50 or more workers and requires that any group health plan that currently includes mental health and substance use disorder benefits along with standard medical and surgical coverage must treat them equally in terms of out-of-pocket costs, benefit limits and practices, such as prior authorization and utilization review.

"So, if you have an office visit (to a family doctor) for $25, you can't have an office visit to a psychiatrist for $50," Nykamp explains. "And the number of office visits has to be the same for medical health and mental health."

It went into effect Jan. 1 of this year for most plans, except those covered by collective bargaining agreements. It greatly expands on an earlier law – the Mental Health Parity Act of 1996 – that required parity only in aggregate lifetime and annual dollar limits between the benefits categories, and didn't extend to substance use disorder benefits.

"From our perspective, this is much long overdue good news as we continue to identify incredible needs in the population and how the stigma keeps people from care," says Nykamp, who's also treasurer of the National Association of Psychiatric Health Systems (NAPHS), which was active in getting the regulations approved. "Behavioral care is as important as physical care."

Just another regulation?

The bottom line for employers who do offer behavioral healthcare in their group plans: they can expect to see about a two percent increase in costs under the new rules.

Steve Perdue, president/CEO of Grand Traverse Industries, says the new law hasn't impacted the company financially – yet. GTI offers outpatient mental health care coverage to its workers, and Perdue supports the idea of parity.

"I have always known mental health should be treated as other health issues, so I would have no problem with additional coverage cost – within reason," he said.

The American Society of Employers (ASE) has not yet taken a position on the law. "We've not heard very much from our members about it as of yet," says Executive Vice President Michael Burns.

However, the owner of a Traverse City insurance agency was ready to share his perspective.

"As for me, I do not support yet another mandated program. The regulations on employers are burdensome enough already and programs targeted to 'larger' employers are a disincentive to adding staff," says David Ford, owner of Ford Insurance Agency. "In our current economy, adding more cost to the employee benefit package means something else in the employer's budget will be cut or their staff will be absorbing more of the cost."

"Employer groups are never excited about any benefit being mandated," adds Jim McDonnell, an agent with Ford Insurance. "I can see the patient side of this issue, however, and believe that more good will result from this than bad."

But Nykamp points out that among the 38 states that have existing parity laws (and Michigan is not one of them), costs did not soar as first expected.

"We found that the cost of health care didn't go up, as was feared… it went down!" he says. "We think they'll see that it doesn't cost more. That if someone takes care of their mental illness, they'll start to eliminate other costs, like going to the ER."

Not a panacea

Nykamp sees two flaws with the law: It doesn't include government plans, like Medicare or care for the armed forces, and a company with 50-plus employees can opt out of behavioral care if it can demonstrate costs will go up by two percent. "We think that's a bad part of the law," he notes.

But the ASE's Burns thinks this opt-out provision would be very difficult to get approval for, implement and comply with.

"Only very sophisticated plans and organizations may have the resources to use the opt-out election," he says. "My information tells me that the opt-out has to be re-applied for each year, making it that much more difficult."

While the pro-parity ruling doesn't appear to be a panacea in the treatment of mental and substance abuse disorders, the National Association of Psychiatric Health Systems calls it a win for America.

"Mental health is integral to overall health," says Mark Covall, president/CEO of the organization. "And clear guidelines for implementing the federal law will go a long way toward putting mental health and addiction treatment on equal footing with all other medical conditions." BN