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Legislation: Federal
A Study Of Mental Health Parity And The Federal Employee Health Benefits Program
A long awaited independent study of the impact of mental health and substance
abuse (MH/SA) parity on the Federal Employee Health Benefits Program (FEHB)
concludes there was negligible impact on plan costs, little or no impact on plan
quality of care, and access to and utilization of MH/SA services showed no
increase for adults and children while substance abuse services alone showed a
slight but consistent increase across all plans.
The FEHB is the largest employer-sponsored health insurance program in the
country serving more than 8 million Federal employees, annuitants, and their
dependents. The Office of Personnel Management (OPM) administers the Program
which currently has about 250 plans providing more than $29 billion in health
care benefits annually. The study was conducted by Northrop Grumman, the
University of Maryland at Baltimore, Harvard Medical School, the Rand
Corporation, and Westat under a contract with the Department of Health and Human
Services (HHS). Nine plans serving over 3.2 million beneficiaries were selected
for the study. The analysis was based on benefit costs with an accompanying
assumption that premium costs would change proportionally.
The study reports that MH/SA services, as a percent of total health benefits
grew an extra one percentage point from 2000 to 2001. Sixty percent of this was
attributable to higher benefit rates for mental health, 30% was attributable to
beneficiaries purchasing more services, and 10% attributable to beneficiaries
purchasing more expensive services. This confirms a separate analysis by OPM
that most of the increase in spending was from improved benefit levels.
The study also found that the policy afforded its beneficiaries some improvement
in financial protection in that five of the nine plans experienced significant
decreases in out-of-pocket spending while no plan's child beneficiaries
experienced any increase in out-of-pocket spending greater than other health
services trends.
The study reported that both adults and children were more likely to use MH/SA
services after parity but at a rate consistent with other health services trends
and, thus, concluded that the increase was unlikely a direct result of parity.
The same is true for mental health services alone. Access to substance abuse
services alone increased slightly but significantly in all nine plans studied
but the increase remained significant in only four of the plans once adjustments
for other health services trends were made. Utilization of substance abuse
services alone was low both before and after the implementation of the policy,
equaling less than 1% in nearly all plans.
The study also found that all FEHB plans complied with the parity policy and
that there were no withdrawals from the Program. Most plans, then, enhanced
their MH/SA benefits with 84% of the plans making changes in the amount, scope,
or duration of mental health benefits and 73% making such changes for substance
abuse benefits. However, plans were more likely to use carve-out arrangements
after the implementation of parity when compared to non-FEHB plans and, while
many plans required treatment plans prior to parity many more required them
after the policy was implemented.
Two-thirds of the plans reported no increase in administrative costs as a result
of parity and none reported any concern about any cost increases they did incur.
In addition, as a result of focus group studies, the study found that FEHB plan
providers had little awareness of the parity policy, had very limited
understanding of the parity benefit itself, and often confused the FEHB policy
with their state parity laws.
Historically, the FEHB has worked toward improved MH/SA benefits. From 1967 to
1975 the FEHB's two nationwide plans offered parity as a result of President
Kennedy's directive that they do so. Beginning in 1975, however, MH/SA benefits
began to erode as more flexibility in plan design was allowed. The trend
continued into the late 1990s when, in 1997, MH/SA benefits accounted for only
1.9% of the claims and reflected MH/SA coverage in the larger health care
market. The study also pointed out that other health care cost escalated during
this period.
At a White House Conference on Mental Health in 1999, President Clinton directed
OPM to institute a policy of parity in the FEHB. The policy required that MH/SA
benefits be equal to the benefits for general medical services. This meant
expanding coverage for MH/SA services by removing special limits on care (such
as annual and lifetime ceilings on expenditures and limits on the number of
outpatient visits or inpatient days) or reducing copayments or deductibles.
For the general public, the passage of the 1998 Mental Health Parity Act was the
first Federal parity legislation that would affect them. This legislation,
however, focused on only one aspect of the differences in MH/SA coverage –
catastrophic benefits – and prohibited lifetime and annual limits that were
different from general medical care. The limitations of this Act were many and
significant. The Act's provisions did not apply to other forms of benefit limits
such as copayments, deductibles, and per-episode limits on length of stay or
visits. Also, employers with fewer than 50 employees were exempt and an insurer
experiencing a rise of more than 1% in premiums, as a result of parity, could
receive an exemption. Substance abuse was not included in the Act's provisions
at all.
To date, 37 states have enacted statutes that might broadly be called parity
laws. As expected, they vary substantially in terms of the type of benefits
covered, diagnoses included, populations eligible, and level of explicit
regulatory direction regarding the use of managed care. Twenty-six of the 37
states have prohibited imposing special inpatient day limits and outpatient
dollar limits among other provisions.
It should be noted that except for extending the 1998 legislation for a year,
parity legislation has failed to move out of either the House or the Senate.
More than three years ago President Bush declared his support for parity but
even while urged to action by mental health advocates, the White House remains
silent on this issue.
To view the full study go to http://aspe.hhs.gov/daltcp/reports/parity.htm .
The Federal Action Agenda On Transforming Mental Health Services In America
On July 22, 2003, the Presidents Freedom Commission on Mental Health released
its final report calling for a fundamental transformation of the mental health
care delivery system. The Commission characterized the current status of the
delivery and financing of services as disconnected, inadequate, fragmented,
delivering uneven quality; a system that makes it much harder for service
providers to deliver, and consumers to access, needed care (see ED Notebook July
2003). The Commission emphasized building a system that is recovery focused,
consumer driven, and evidence based. Having an existence of only one year, the
Commission called upon the Administration to develop and present an action plan
within one year for the issuance of its final report.
Exactly two years later the Administration released its Action Agenda which is
described as a multi-year effort to alter the form and function of the mental
health system. Six cabinet level departments – Education, HHS, Housing and Urban
Development, Justice, Labor, Veterans Affairs, and the Social Security
Administration – have outlined 70 specific steps to the Agenda.
An Executive Steering Committee has been established to guide the work of
transforming the mental health care system. The Committee consists of
representatives from the above departments as well as Agriculture and
Transportation. While recognizing that Federal agencies must act as leaders,
partners, and facilitators, the Agenda calls for the states to be the center for
system transformation.
Among the goals of the Agenda are:
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Act immediately to reduce the number of suicides throughout the country.
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Reinforce the message that mental illnesses and emotional disturbances are treatable and that recovery is an expectation.
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Initiate a national effort focused on the mental health needs of children that promotes prevention and, with the consent of parents, early intervention.
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Increase the employment of persons with psychiatric disabilities.
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Help states develop the infrastructure necessary to include the capacity to create individualized recovery plans.
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Develop a plan to promote a mental health workforce better qualified to deliver care that is culturally sensitive.
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Develop a plan for the delivery of mental health care that is evidence-based in both specialty settings and at the primary care level.
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Design and initiate an electronic health records and information system that will protect the privacy and confidentiality of consumers' health information.
The repot is available at http://www.samhsa.gov by clicking on mental health transformation.
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