University of South Florida From the SelectedWorks of Ardis Hanson July 2001 Mental health parity: National and state perspectives 2001: A report to the Florida Legislature Contact Author Start Your Own SelectedWorks Notify Me of New Work Available at: htp://works.bepress.com/ardis_hanson/77 The Louis de la Parte Florida Mental Health Institute Mental Health Parity NATIONAL AND STATE PERSPECTIVES 2001 A REPORT TO THE FLORIDA LEGISLATURE Authors: Bruce Lubotsky Levin, Dr.P.H. Louis de la Parte Florida Mental Health Institute and the College of Public Health University of South Florida Ardis Hanson, M.L.S. Louis de la Parte Florida Mental Health Institute University of South Florida Richard Coe, Ph.D. New College July 2001 Preferred citation: Levin, B.L., Hanson, A., & Coe, R.D., (2001). Mental Health Parity; National and State perspectives 2001: A report to the Florida Legislature. Tampa, Florida: The Louis de la Parte Florida Mental Health Institute. Additional copies of this report may be ordered from The Louis de la Parte Florida Mental Health Institute, University of South Florida, 13301 Bruce B. Downs Boulevard. 33612-3899 or downloaded from the website at http://publications.fmhi.usf.edu. Any of this report may be reproduced or used as a part of another publication with proper attribution to the authors of the report and to the Institute. c2001 The Institute TABLE OF CONTENTS EXECUTIVE SUMMARY.......................................................................................................... 3 PREVALENCE OF MENTAL ILLNESS AND SUBSTANCE ABUSE ....................................................... 5 EXPENDITURES & SERVICES FOR MENTAL HEALTH ................................................................. 6 Expenditures, Services & Coverage, Entitlement Programs MANAGED CARE ............................................................................................................... 8 Overview, Public Sector Managed Behavioral Care, Financing, Purchasing and Contracting Arrangements, Populations Covered, Highlights of Benefit/Cost Analysis and Actuarial Studies COST OF TREATMENT ISSUES .......................................................................................... 13 Direct Costs, Indirect Costs, Public and Private Sector Issues EXPERIENCES OF STATES AND THE PUBLIC/PRIVATE SECTORS ............................................... 19 States’ Experiences with Non-discriminatory Benefits, Public Sector Experiences with Non-discriminatory Benefits, Private Sector Experiences with Non-discriminatory Benefits IMPACT ON FLORIDA ......................................................................................................... 23 Healthcare Expenditures, Health Benefits and Mandates, Managed Care, A Short Legislative History of Florida’s Parity Bills, Impact of Parity Legislation on Benefits Design, A Preliminary Estimate of Benefits for Florida CONCLUSION AND REFERENCES ......................................................................................... 30 APPENDIX A - TABLE OF STATES AND STATUS OF PARITY LEGISLATION .................................. 39 APPENDIX B - STATISTICS ............................................................................................... 49 EXECUTIVE SUMMARY Limitations in private insurance coverage for serious (which used data based on the fee-for-service model) mental illness often bankrupts covered individuals and and a lack of empirical information on current their families and often forces an individual to cycle practice patterns. between episodes of acute illness without the ability to use the full range of outpatient services in the community. This cycle affects all ages, all ethnic and cultural groups, and all socio-economic levels. Economic Analyses Recent empirical studies and economic simulations across diverse populations show that the introduction of parity within a managed care environment Overview resulted in modest, if any, cost increases and increased access to services. For example: The federal Mental Health Parity Act of 1996 re· quires insurers to offer the same benefits for mental In Maryland, full parity in all state-regulated disorders and substance abuse as they would for plans raised costs by 0.6 percent per member physical disorders, including any annual or lifetime per month. limitations and restrictions placed upon such cover- · age. Without parity, the difference between coverage that operating under the parity law for mental for physical and mental illness is striking. While the health and chemical dependency added $0.26 typical lifetime cap for mental health treatment is per member per month to the health premium, about $500,000 and the annual limit runs about while Blue Cross/Blue Shield reduced its $5,000, insurers routinely provide a $1 million insurance premium by five percent under lifetime cap for physical illnesses with no annual limit. In Minnesota, Allina Health System reported parity. Thirty-two states have parity laws for mental health and /or substance abuse. In addition, forty- · In Texas, between 1991 and 1999, when four states (including the District of Columbia) across mental health parity coverage for state and the nation have enacted laws for mental health and/ local government employees was implemented, or substance abuse benefits. and 1995, there was a 48 percent decrease in mental health and chemical dependency costs. The estimated costs of implementation of parity still appear to hamper states’ decisions to adopt parity · legislation. Earlier information on utilization and Rhode Island reported a less than one-percent increase in total plan costs under parity. costs were inconsistent and inconclusive. Many of these estimation efforts were hampered by reliance on inappropriate economic and actuarial models · New Hampshire insurance providers reported no cost increases as a result of implementing parity. The de la Parte Institute 3 EXECUTIVE SUMMARY · A Rand study concluded that companies complying with parity by equalizing annual limits · and increasing the productivity to society of individuals with mental disorders. increased access to mental health services while increasing costs by $1 per year per enrollee. · Studies show that small businesses are as likely to offer a managed care plan as larger businesses.· Recent actuarial studies from the National Mental Health Advisory Council and Mathematica Policy Research, Inc. indicate that predicted cost increases for full mental health In addition, mental health parity legislation could potentially reduce the degree to which financial responsibility for the treatment of mental illness is shifted to government, especially to state and local governments. There is substantial evidence that both mental health and addictions treatment is effective in reducing the utilization and costs of medical services. parity benefits range from less than one percent to three percent. A comprehensive, flexible approach has many advantages for both mental health consumers and the · Only four benefit-purchasing organizations public sector. As shown in the following report, representing groups of employers have invoked adopting a flexible, integrated benefit for mental exemption, according to U.S. Labor Department health care can provide delivery of appropriate statistics. mental health services to those most in need. Or we can continue to pay the cost in high health care Benefits from Parity There has been a fundamental shift in the way behavioral health services are delivered in the United States with a focus on shorter stays, lower costs, and expanded access to care. While more recent cost experiences show modest increases, numerous additional benefits can be realized from implementing parity legislation: · expense, lost productivity, and disrupted lives. By failing to appropriately treat adults and children with severe mental illness, we incur enormous social costs through payments for disability benefits (Medicaid, SSI, SSDI), increased medical expenses, accidents and suicides, avoidable criminal justice proceedings, lost productivity, and increased need for homeless overcoming discrimination and reducing stigma shelters and services. People who are underinsured toward individuals with mental disorders; are forced by arbitrary caps and limits to increasingly rely on the public sector. By providing parity for · assuring selected health plans do not suffer financial disadvantages from the adverse selection of treating individuals with the most serious mental disorders; · the mainstream of health care and become a leader in dispelling the prejudice that surrounds treatment of persons with severe mental illness. reducing out-of-pocket expenses for individuals with mental disorders and/or substance abuse; · mental health, Florida will bring mental health into reducing disability through improved access to effective treatment; Mental health is fundamental to a person’s overall health, indispensable to personal well-being and instrumental to leading a balanced and productive life. David Satcher, Surgeon General, 1999 4 Mental Health Parity NATIONAL AND STATE PERSPECTIVES 2001 PREVALENCE OF MENTAL ILLNESS AND SUBSTANCE ABUSE Fundamental to any discussion of policy change affecting the health and well being of a specified population is a clear understanding of epidemiology, the study of the factors that determine the frequency and distribution of disease in a specific (often at-risk) population(s). Problem Significance Regier et al., 1985) that examined prevalence and Mental disorders remain significant public health incidence of mental disorders in the community as well problems in twenty-first century America. The World as in institutional settings. Results from the ECA study Bank and the World Health Organization reported indicated, overall, that twenty percent of the popula- findings from a study of the indirect costs of mental tion had an active mental disorder in the past twelve disorders associated with years lived with a disability, months. with and without years of life lost due to premature death. A striking finding from the study, The Global Burden of Disease, was that mental disorders account for more than 15 percent of the burden of disease in established market economies. Among the top ten causes of disability worldwide were unipolar major depression, bipolar disorder, schizophrenia, and obsessive-compulsive disorders (Murray & Lopez, 1996). National Comorbidity Study A second significant study was the National Comorbidity Survey (NCS) (Kessler et al., 1994)*. The NCS incorporated DSM-III-R (Diagnostic and Standards Manual 3rd revision) nomenclature and extensively examined risk factors that affect particular mental disorders to determine the comorbidity of psychiatric disorders (Blazer et al., 1994). Results from the NCS According to the report from the United States Surgeon indicated that thirteen percent of the population aged General (U.S. Department of Health and Human fifteen to fifty-four had both a substance abuse and a Services, 1999), mental disorders comprise four of the mental disorder in their lifetime. ten leading causes of disability for individuals who are five years and older, with depression the leading cause of disability, and suicide one of the leading preventable causes of death in the United States. Mental disorders are also significant contributors to the burden of disease, ranking second only to cardiovascular illnesses in disease burden in this country. The National Institute of Mental Health (NIMH) estimated the number of persons with severe mental illness and a co-occurring substance disorder at 1.8 million (Regier et al., 1988). Other findings from the NCS and follow-up reports indicate that 83.5 percent of those with lifetime comorbidity say that their first mental disorder preceded their first addictive disorder, and in general, co-occurring disorders tend to be more The ECA Study and the NCS chronic than pure psychiatric disorders (Special Issue, The best known and comprehensive epidemiologic study 1996). A second study by Kessler, Nelson, et al. (1996) on mental health was the Epidemiologic Catchment stated that the total number of persons with co-occur- Area Study (ECA) begun in 1978 (Regier et al., 1993; ring disorders was between 7 million and 9.9 million Robins & Regier, 1991; Regier, Boyd, et al., 1988; people, depending on the definition of alcohol abuse. 5 * Comorbidity refers to the occurrence of both a substance disorder and any psychiatric illness in an individual as described in the Diagnostic and Standards Manual. The de la Parte Institute 5 EXPENDITURES & SERVICES FOR MENTAL HEALTH Expenditures Services & Coverage Between 1987 and 1997, according to the United States Historically, trends in health care influence mental General Accounting Office (2000), the growth in health (and substance abuse) services and spending. mental health spending in the United States roughly Factors affecting behavioral health expenditures paralleled the growth in overall health care spending. include managed care constraints, changes in how However, federal mental health spending grew at more hospitals are used, increases in outpatient treatment than twice the rate of state and local spending. Increas- relative to residential care, the rapidity in discoveries ingly, Medicaid and Medicare expenditures accounted and promotion of pharmaceutical therapies. for a larger federal share, with combined federal and state Medicaid expenditures accounting for 20 percent of all mental health spending in 1997 (United States General Accounting Office, 2001). Rouse (1995) estimated the total (direct and indirect) costs to society for mental disorders and substance abuse in 1994 far exceeded the costs of cancer ($104 billion), respiratory disease ($99 billion), AIDS ($66 billion), or coronary heart disease ($43 billion). McKusick et al. (1998) reviewed only the direct costs of treatment by analyzing national spending trends during this decade by studying formal health care services used to diagnose and treat mental health and substance abuse conditions. They estimated that, in 1996, expenditures for mental health and substance abuse diagnosis and treatment were $79.3 billion. The largest share went to mental illnesses ($66.7 billion), $5.0 billion went to alcohol abuse, and $7.6 billion went for abuse of other substances. A more recent study by Coffey et al. (2000) estimated that 1997 expenditures for treatment of In 1997, health maintenance organizations, preferred provider organizations, and at-risk contracts accounted for 29.2 percent of inpatient admissions, an increase of 18.2 percent over 1996 (Health Care Financing Review, 1999). Government programs accounted for 40.7 percent of all inpatient admissions in 1997 (Medicare, 22.3 percent and Medicaid, 18.4 percent). Inpatient admissions covered by other payers, commercial insurers (including Blue Cross and Blue Shield) covered 16.2 percent ; CHAMPUS (Civilian Health and Medical Program of the Uniformed Services), 1.2 percent; other government organizations and state health departments, 1.5 percent; employer contracts, 1.7 percent; and self-pay, 4.0 percent. In addition, the proportion of inpatient care covered by health maintenance organizations, preferred provider organizations (PPOs) and other at-risk contracts grew 18.2 percent between 1996 and 1997, covering 24.7 percent of inpatient admissions in 1996 and 29.2 percent by 1997 (Kaplan, 1999). mental health and substance abuse were $85.3 billion. Recent analyses indicate that over 78 percent of Of the total, $73.4 billion went to mental illnesses and insured Americans (approximately 140.6 million $11.9 billion went to substance abuse disorders. people) are enrolled in some type of managed behav- 6 Mental Health Parity NATIONAL AND STATE PERSPECTIVES 2001 5 EXPENDITURES & SERVICES FOR MENTAL HEALTH ioral health program (Fox et al., 1999). In addition, it eligible due to psychiatric disability, will need inpatient has been estimated that 16 percent of the population in as well as outpatient services (Kaplan, 1999). the United States is uninsured (US Census Bureau, 2000), and mental health coverage is limited for those who are insured (Frank et al., 1994). The public sector paid for more than half of the funding for mental health and substance abuse treatment (with Medicaid and state and local government funding accounting for nearly 20 percent each, Medicare funding accounting for 14 percent of mental health costs, and other federal government programs accounting for 2 percent). Private health insurance paid 47 percent of the direct expenditures for mental disorders (McKusick et al., 1998). The aged, blind, and disabled recipients of Medicaid together consume the lion’s share of Medicaid resources. Nationally, disabled individuals comprised about 15 percent of the Medicaid population and accounted for 39 percent of the Medicaid expenditures, including longterm care (United States General Accounting Office, 1996). Medicaid expenditures (per person) for individuals with disabilities averaged $2,072 for inpatient services; $443 for physician, lab, and x-ray services; $773 for outpatient services; $1,183 for prescription drugs, case management, therapy, and other practitio- Entitlement Programs ner care; and $3,485 for long-term care, for a total of $7,956 for all services. Unfortunately, neither infor- Established in 1965 as Title XIX of the Social Security mation on breakdown by type of mental disability nor Act, Medicaid programs have been required by law to updated figures were available (United States General provide eligible individuals with certain short- and long- Accounting Office, 1996). term benefits. The Health Care Financing Administration (HCFA)* administers this program. In 1996, public Medicaid inpatient admissions rose by 3.3 percent in spending for Medicaid totaled $121 billion. Two years 1997. The federal Medicaid rule, known as the Institu- later, total Medicaid spending was $170.6 billion in tions for Mental Diseases (IMD) exclusion, prohibits 1998, an increase of 6.6 percent over the 1997 level. coverage for persons between ages 22 and 64 in private Medicaid also paid for 15 percent of all health spending in hospitals. Therefore, inpatient admissions from Medic1998 (Health Care Financing Administration, 1999c). aid are primarily for patients 21 years of age or under and 65 years or older. Nevertheless, in restructuring Of the 31,117,679 persons enrolled nationally in Medicaid programs, 16,834,390 (54.1%) are enrolled in a managed care program (Health Care Financing their Medicaid programs, many states are applying for federal waivers to the IMD exclusion. These waivers Administration, 1999b) compared to 10 percent in could potentially contribute to an increase in Medicaid- 1991 (Health Care Financing Administration in covered admissions (Kaplan, 1999). Freund & Hurley, 1995). Fiscal pressures, such as the loss of federal “matching dollars” and the move to Medicaid waivers, have been the main impetus for states to adopt managed care for their Medicaid populations (Ridgely & Goldman, 1996). As the U.S. population ages, the proportion of older adults in treatment, including those covered by Medicare, is likely to increase. At There are “recurrent concerns regarding the adequacy of resources; the way they are used; and how best to increase the equity, efficiency, and effectiveness of health care.” Manfred Huber, 1999 the same time, a large number of Medicare beneficiaries, * In 2001, the name of the Health Care Financing Administration (HCFA) was changed to the Centers for Medicare & Medicaid Services (CMMS). For purposes of this report, the Health Care Financing Administration and/or HCFA will continue to serve as the name of the agency. The de la Parte Institute 7 MANAGED CARE Health insurance benefit design is generally based upon an acute care model and confined to traditional medical services...it has not been defined within a long-term care treatment environment...needs of persons with severe mental illness involve community rehabilitation and long-term services that are typically not covered under private health insurance policies. (David Mechanic, 1998) Overview nance organization (HMO) plans from 9 percent to The concept of “managing” health care can be traced 24 percent. Point-of-service (POS) plans rose more to the early part of the twentieth century and the slowly as the principal medical plan, from 16 percent evolution of prepaid health plans in the United States in 1992 to 22 percent in 1997. (Levin in Manderscheid and Sonnenschein, 1992). Today, managed care has become the most dominant form of health and mental health coverage for individuals with private insurance. This continued growth of managed care “…has [increasingly] blurred the distinction between organizations bearing financial risk for health care (insurers), organizations managing care (health maintenance and utilization management organizations), and organizations making clinical treatment decisions (provider groups or individual clinicians)” (Sturm, 1999, p. 362). At the same time, the aggressive and rapid growth of managed care in America has raised concerns that reduction in health and mental health care costs may have resulted in cost shifting to public programs and/ or consumers themselves. Managed care organizations have become more active in their expansion into the public sector, where more and more public mental health systems have shifted their priorities from providing mental health and substance abuse services to purchasing these services, and from maintaining institutions and other services to the utilization of a systems of care approach to service delivery (Essock & Goldman, 1995). During the last 15 years, an increasing number of employers and government programs have “carved-out” or separated mental health service benefits from general health care benefits through contractual arrangements with specialized vendors that may assume some level of financial risk. Carve-out programs are more likely to cover specialty services (i.e., residential, rehabilitation, support, and consumer-run Managed care now covers 75 to 80 percent of all U.S. services), while integrated programs are more likely employees (Jensen et al., 1997). The Hay/Huggins to cover pharmacy services. Specialty managed Benefits Reports documented trends from 1992- mental health organizations have subsequently 1997 in primary health benefit plans for over 1,000 emerged under the rubric of “managed behavioral medium- to large-size employers. During this period, health care organizations” (MBHOs). MBHOs have fee-for-service (FFS) plans dropped from being the attempted to reduce the costs of mental health care most prevalent primary medical plan (62 percent) through the utilization of mental health practitioners in 1992 to being the least prevalent (20 percent) in at discounted fees, reduction in the length of mental 1997. Preferred-provider organization (PPO) plans health treatment, decreased use of hospital treat- rose from 13 percent to 34 percent of primary medi- ment, as well as through the increased use of ambula- cal plans, with a similar rapid rise in health mainte tory mental health care treatment. 8 Mental Health Parity NATIONAL AND STATE PERSPECTIVES 2001 MANAGED CARE While initially contracting with employers in the benefits were carved-out of the medical plan and private sector, insurers, as well as sub-contracting managed care was increased. Prior to the carve-out, with HMOs and other models of managed health care cost increased by 20% annually. Post carve-out, costs plans, a number of studies have reported significant decreased by 40%. Cost reduction was not due to declines in the costs of mental health care under these decreased access. MBHOs (Cuffel, Goldman, Schlensinger, 1999; Goldman, McCulloch, Sturm, 1998; Grazier et al., 1999; Ma & McGuire, 1998; Congressional Budget Office, 1995; National Advisory Mental Health Council, 1998). Public Sector Managed Behavioral Health Care The number of states with public sector managed behavioral health care programs has tripled in three years (Lewin Group, 2000). In 1996, fourteen states implemented managed care programs. By 1999, A study by the Hay Group (1998) indicates that forty-two states (including the District of Columbia) health care costs increased by only 0.7 percent per operated some form of managed behavioral health year from 1994-1997 under managed care. Prior to care. In recent years, public sector enrollment in the implementation of managed care (1988 to 1993), managed care plans has increased dramatically, healthcare costs increased by 16.8 percent per year. accounting for approximately 13 percent of the 38 Studies from Peat Marwick (Jensen et al., 1997), million Medicare beneficiaries, and approximately 54 William M. Mercer (1997), Rand Corporation (Sturm, percent of the 31 million Medicaid beneficiaries 1997; Goldman, McCulloch, Sturm, 1998), and the (http://www.hcfa.gov/medicare/mgdcar.htm, 2001). Lewin Group (1997, 2000) have provided support regarding the success of these arrangements. For Financing example, a study by the Rand Corporation (Sturm, Medicaid is the largest source of funding for public 1997) examined claims from 24 managed care managed behavioral health care programs. Ninety- carve-out plans that offered unlimited mental health eight percent of all states with managed behavioral benefits with minimal co-payments. Results of the health care programs use Medicaid to either fully or study indicated that companies which complied with partially fund their programs (Lewin Group, 2000). the federal mental health parity law by removing an Medicaid finances integrated programs almost annual limit of $25,000 for mental health care would exclusively. In contrast, carve-outs are much more incur an approximately $1 per enrollee per year likely to include a combination of Medicaid and non- increase in mental health care costs. In addition, Medicaid funding. Thirty-seven states (eighty-eight removal of more costly limitations (i.e. 30 inpatients percent of states with managed care) contract with a days and 20 outpatient visits) would translate into a managed care organization on a capitated basis for at cost increase of less than $7 per enrollee per year. The least one of their programs. The next most common Rand study also found that access to mental health payment arrangement consists of fixed fees (twelve services increased in these managed care carve-out states) and FFS (ten states). Administrative service plans. only (ASO) contracts account for seven of the twelve A second RAND study (Goldman, McCulloch, Sturm, 1997) tracked access, utilization, and costs for states using fixed fees. In contrast to managed care mental health care for one large employer in Califor- organizations, providers are predominantly paid on nia during a period in which behavioral health care a fee-for-service basis (thirty-four states). The de la Parte Institute 9 MANAGED CARE Purchasing and Contracting Arrangements percent of states with integrated programs, compared While Medicaid agencies most often serve as the with sixty-nine percent of states with carve-outs. Lewin primary purchaser for managed behavioral health care also noted that integrated programs most often con- programs, state mental health and substance abuse tracted with private sector managed care organiza- authorities work in collaboration with Medicaid tions. Of thirty states with integrated programs, agencies, particularly for carve-out programs. The ninety-three percent contracted with private entities, complexity of the contractual arrangements between primarily health maintenance organizations. Public state and local governments and managed behavioral sector managed care organizations were more prevalent health care organizations (MBHOs) varies considerably in carve-out programs. Of the twenty-nine states with (Findlay, 1999). Some programs are comprehensive, carve-outs, fifty-nine percent contracted with a public covering multiple populations or areas across the state entity, primarily county, local governments, or while others are limited to certain populations or one community mental health centers. Counties also county or region. Most programs are risk-based, while dominated among all types of public sector contractors, still others remain fee-for-service through ASO con- regardless of model. Ten states (twenty-four percent) tracts. In 1999, for example, two states (Montana and had ASO contracts with private organizations to operate North Carolina) terminated their managed behavioral managed care programs with no clinical responsibilities health care programs and reverted to fee-for-service or financial risk. systems (Lewin Group, 2000). Some states contract directly with MBHOs or sub- Populations Covered contract with HMOs, paying a capitated fee to provide Over the past thirty years, Medicaid, Medicare, Social mental health services, with the MBHO or HMO Security Disability Insurance (SSDI)/Supplemental assuming the risk. Security Income (SSI), and other welfare programs However, other states prefer to retain full risk and contract with MBHOs (or subcontract with HMOs or other managed care plans) to manage mental health or “... while state mental health parity laws address minimum coverage for the treatment of mental and/or substance abuse disorders, it will be the responsibility of managed behavioral health care to deliver the actual mental health benefits.” NAMHC, 1997 have significantly influenced the ways in which public sector treatment for mental illness is paid (Mechanic, 1999). In 1998, 36 states operated 46 Medicaid waivers to provide innovative approaches to organize and finance mental health services through various behavioral health carve-out strategies. Eight states ran voluntary Medicaid HMOs and twenty-six states had managed care programs in place in related state systems (National Conference of State Legislatures, 1999). Among the states (including Florida) behavioral health with approved or pending Section 1115 waiver benefits. Other requests, the most common approach was to offer MBHOs have been contracted only to conduct utiliza- acute but limited mental health benefits to all Medic- tion review and case management services. A recent aid recipients, but to carve-out persons with more Lewin Group report (2000) described how Medicaid severe mental illness and treatment needs (Ridgely & agencies acted as the purchaser in ninety-three Goldman, 1996). 10 Mental Health Parity NATIONAL AND STATE PERSPECTIVES 2001 MANAGED CARE Currently, SSI populations are required to enroll in A 1998 Parity Workgroup (National Advisory Mental more than half of the managed care programs provid- Health Council, 1998), ran a simulation study using ing behavioral health services (Lewin Group, 2000). Of the Hay/Huggins Mental Health Benefits Value the seventy-one Medicaid programs in forty-one states, Comparison (MHBVC) actuarial model to estimate sixty-six percent have mandatory enrollment for TANF explicitly the premium costs of mental health services (Temporary Assistance to Needy Families) populations under HMOs and managed behavioral carve-out plans and fifty-one percent have mandatory enrollment for based on benefit design and newer managed care SSI (Lewin Group, 2000). approaches.1 The baseline cost data from Hay/ Huggins were then adjusted to reflect the experience of Medicare funds a much smaller proportion of publicly supported mental health services. The large differences HMOs and managed behavioral carve-out plans from empirical studies. between Medicaid and Medicare reflects the age-specific prevalence of mental health (and substance abuse) Despite opposition by those who have claimed that problems in the United States. A recent study, which parity would increase expenditures, additional studies excluded dementia from its study of mental illness, (Sing et al., 1998; National Advisory Mental Health concluded the differences in funding reflected the age- Council, 1998; Sturm, 1997; Lewin Group, 1997; specific prevalence of mental illnesses and may reflect Congressional Budget Office, 1996; Goldman, generational attitudes toward the acceptance of mental McCulloch, Sturm, 1998; Grazier et al., 1999; Sturm & illnesses as treatable conditions (Coffey et al., 2000). McCulloch, 1998; Ma & McGuire, 1998) have shown this to be inaccurate. A 1999 study, Effects of the Mental Highlights of Benefit/Cost Analysis and Actuarial Studies It has been argued that limited coverage for mental illness in health insurance policies increases the cost of treatment to the patient and/or the health care provider, and thus provides a disincentive to seeking treatment. Because the primary purpose of parity legislation is to ensure the availability of treatment services, direct treatment costs may potentially increase under a parity bill. However, the increased flexibility and comprehensiveness of treatment allowed by parity plans hold the promise of more costeffective treatment. For example, if under parity, Health Parity Act of 1996, based on data from the Mercer/Foster Higgins National Survey of EmployerSponsored Health Plans (1999) indicated that the effects of the federal Mental Health Parity Act has been positive. Eighty-six percent of plans surveyed indicated that they had made no compensatory changes to their benefit, because they expected the cost increases to be minimal or nonexistent. The remainder did make some type of compensatory changes in benefits or administration; most commonly increasing limits on inpatient days and/or outpatient visits. According to the Survey, the Mental Health Parity Act had an unintended beneficial effect of also improving coverage for substance abuse benefits in many plans. individuals have more access to outpatient services, rather than being forced into inpatient treatment due A report by the United States General Accounting Office to insurance restrictions, then treatment may become (2000, May) indicated that although most employers more cost effective as well as less restrictive. are complying with the federal mental health parity 1 The MHBVC produces a standardized benefits value based on the input of over 125 items describing the benefit design of a health plan. These include deductibles, coinsurance, maximum out-of-pocket and coverage limitations. For behavioral health care plans, the model includes over 25 items, for example day, dollar, and visit limits. The standardized benefits value is equivalent to the average premium for healthcare for medium The de la Parte Institute 11 and large employers in the United States. MANAGED CARE law, compliance may actually have little effect on While most employers have not examined changes in employees’ access to mental health services. Eighty- their plans’ claims costs, the federal parity law appears six percent of the responding employers in the to have had a negligible effect on these costs. Approxi- twenty-six states and the District of Columbia mately 3 percent of responding employers reported that reported, that as of December 1999, their plans were compliance with the law increased their claims costs, in compliance with the federal parity requirement. and virtually no employers have dropped their mental health benefits or health coverage since the law was The GAO survey found that fourteen percent of plans were noncompliant, which was a rate similar to the Department of Labor’s preliminary estimates based on investigations of employer-sponsored plans. In contrast, in 1996 before the parity law was enacted, approximately fifty-five percent of responding employers reported offering parity in dollar limits. Many responding employers cited the federal enacted (United States General Accounting Office, 2000). In addition, published estimates of the cost of federal parity are typically less than one percent. More comprehensive parity laws as enacted by some states are generally estimated to have modest cost increases of about two to four percent compared to earlier estimates ranging from six percent or higher (United States General Accounting Office, 2000). Mental Health Parity Act as a significant or primary reason for changing the dollar limits in their health The GAO (2000) reviewed two agencies that have benefit plans. oversight roles under the parity law: the Department of Labor and the Health Care Financing Admin- Although most employers’ plans now have parity in dollar limits for mental health coverage, eightyseven percent of those that comply with the federal law contain at least one other benefits design feature that is more restrictive for mental health benefits than for medical and surgical benefits. The GAO found that sixty-five percent of plans restricted the number of covered outpatient office visits and istration (HCFA). According to the GAO, the Department of Labor is using a complaint-driven approach used in its oversight of private employer-sponsored health plans as well as randomly selected employer investigations to gauge overall compliance with parity and other federal standards. The HCFA has not yet fully determined the nature and extent of its oversight responsibilities. hospital days for mental health treatment more than those for other health treatment. It also found Initially HCFA identified seven states that appeared that many employers may have adopted newly not to have a parity law. By May 2000, HCFA restrictive mental health benefit design features reported that four of these states are enforcing the since 1996, specifically to offset the more generous federal standards through conforming legislation or dollar limits they adopted as a result of the federal other means. It is still working with the three other law. Finally, the GAO reported that about two-thirds states to assist them in enacting similar protections. of these newly compliant employers changed at least Although HCFA determined that laws in 20 states one other mental health benefit design feature to a appear to fully conform to the federal standards, it is more restrictive one compared with only about one- still evaluating whether laws in the remaining twenty- fourth of the employers that did not change their four states fully conform to the federal standards dollar limits. (United States General Accounting Office, 2000). 12 Mental Health Parity NATIONAL AND STATE PERSPECTIVES 2001 COST OF TREATMENT ISSUES COST OF TREATMENT ISSUES The costs of mental health services can be partitioned disorders account for more than 15 percent of the burden into budgeted or direct costs (or actual costs) and social of disease in established market economies. Among the or indirect costs (the cost of mental disorders due to lost top ten causes of disability worldwide were unipolar productivity, etc.) (Dickey et al., 1986; Clark et al., major depression, bipolar disorder, schizophrenia, and 1994; Dickey & Azeni, 1996; Chandler et al., 1997). obsessive-compulsive (Murray & Lopez, 1996). Rouse (1995) estimated percentage breakouts of expenditures included 34 percent of the costs from loss Direct Costs of productivity, 26 percent of the costs due to the According to Mark et al. (1998), $69 billion was spent somatic health consequences of mental disorders, and for mental health services (more than 7 percent of total 22 percent of the costs due to crime, criminal justice health spending). Spending for direct treatment of costs, and property damage. Persons with severe substance abuse was almost $13 billion (more than 1 mental illness often require assistance in funding, if not percent of total health spending). A second study by outright provision of, housing. They are also likely to Coffey et al. (2000) estimated that specialty providers utilize the services of state and federal social services accounted for 71.0 percent ($60.6 billion) of the $85.3 agencies, and can become involved with the criminal billion of the total expenditure on mental health and justice system due to inconsistent and occasionally substance abuse in 1997. General providers received violent behavior (Teplin, 1990; Teplin, Abram, 14.3 percent ($12.2 billion). Public payers funded the McClelland, 1996). This figure does not include the majority of mental health and substance abuse spending actual transfer of payments made by social service compared to all health spending, 58 percent to 46 agencies. Such payments, from society’s perspective, percent respectively. The remaining money, nearly 15 represent either a transfer payment, a resource cost, or percent, was spent on prescription drugs and adminis- are already included in direct treatment costs. trative expenses of insurance. The Global Burden of Disease, a publication of the World Bank and the World Health Organization, reported on Direct Treatment Costs the indirect costs of mental disorders associated with Because the primary purpose of parity legislation was to years lived with a disability, with and without years of increase utilization of treatment services, direct treat- life lost due to premature death. The metric developed ment costs would presumably increase under a parity for this report, Disability Adjusted Life Years (DALYs), bill. Indeed, such increases would be considered a cost is now being used to describe the burden of disability associated with the legislation, rather than a benefit. No and premature death resulting from the full range of attempt was made here to estimate those costs, but other mental and physical disorders throughout the world. A studies have indicated that such costs, in the form of striking finding from the study has been that mental increased premium payments, would be relatively The de la Parte Institute 13 COST OF TREATMENT ISSUES small. However, the increased flexibility and compre- $9,038,000 on retail prescription drugs for outpatient hensiveness of treatment allowed by parity plans do care (Coffey et al., 2000). Insurance administration, hold out the promise of more cost-effective treatment. which included the administrative expense of all third- For example, if under parity patients have more access party payers and profit and reserve adjustment for to outpatient services, rather than being forced into private insurers, totaled $2,870,000. One item of inpatient treatment due to insurance restrictions, then interest from Coffey et al. is that the growth rate for treatment may become more cost effective as well as insurance administration during 1992-1997 was 2.3 medically effective. percent compared to a growth rate of 8.6 percent during 1987-1992. In 1997, fifty-three percent of money spent on mental health and substance abuse treatment nationally was based in non-hospital based care (Coffey et al., 2000). Related Medical Treatment or Assistance Costs Using the state of Massachusetts as an example, the There is ample evidence that, as a group, those with state contracted in 1992 for a Medicaid managed mental or substance abuse disorders consume a mental health program, which includes the disabled in disproportionate amount of other medical services the covered population. The first year of the Massachu- (Manning & Wells, 1992; Simon et al, 1995). This is setts program claimed a 22 percent saving to Medicaid. especially true for those with severe mental or The savings came from 37 percent reductions among addictive disorders, and is also true for those with the disabled and 16 percent reductions among the non- other forms of disabilities, which lead to eligibility for disabled. Clearly some of these savings are attributable Medicaid and/or Medicare. It is also estimated that to lower reimbursement rates for the same services, non-mental health providers deliver at least half of but some are also due to shifting of care to lower cost the mental health care services used in the United settings and providers, and some to reduction in States (Center for Health Policy Studies, 1996). “unnecessary” care (Center for Health Policy, 1996). There is substantial evidence in the literature that Furthermore, it is possible that state parity legislation both mental health and addictions treatment are will alter the mix of service providers. Such legislation effective in reducing the utilization and cost of would shift some of the costs of caring for persons with medical services (Borus, 1985; Holder & Blose, 1987; severe mental illness from the public sector to the Massad et al. 1990; Pallak et al 1994; Mechanic et private sector. Private sector coverage has in the past al., 1995; Olfson & Pincus, 1999; Moran, 1999). relied more heavily on community outpatient service Cummings et al. (1993) and Cummings (1996) than has publicly funded insurance. State expendi- showed that, depending upon the subgroup of users, tures in particular are highly weighted toward state the costs of providing managed mental health hospital inpatient treatment. This potential shift in services were recovered in terms of reduced medical service providers should prove to be cost effective. offset within 5-21 months. Shemo (1985) suggests that the offset effect may be higher in managed care In 1997, the United States spent an estimated programs and that the more intense the mental $21,714,000 on hospital-based care, $37,136,000 on health intervention, the higher the savings on other outpatient and residential treatment, and subsequent physical health expenditures. In other 14 Mental Health Parity NATIONAL AND STATE PERSPECTIVES 2001 COST OF TREATMENT ISSUES words, the reduction in medical costs would offset the cost of providing mental health (or substance abuse) services (Mumford et al., 1984; Pallak et al., 1993). In addition, savings have been found in “collateral cost-offsets,” where there is a reduction in the utilization and costs of medical services by families of individuals when a family member receives treatment for substance abuse (Langenbucher, 1994; Zuvekas et al., 1998). Indirect Costs When economists calculate the costs of an illness, they also attempt to identify indirect costs. Indirect costs include morbidity as well as other resource use costs. Morbidity costs comprise about 80 percent of the indirect costs of all mental illness. This indicates an important characteristic of mental disorders. Although mortality is relatively low, onset is often at a younger age, and most of the indirect costs are These observations, and the failure to control for derived from lost or reduced productivity at the them, could have profound impacts on the cost- workplace, school, and home as well as increased effectiveness observed for managed behavioral health absenteeism (Clark et al., 1994; Rupp et al., 1998; plans in comparison with traditional FFS indemnity Greenberg, 1995; Greenberg et al., 1999). Further- insurance plans. If the financial incentives in one more, the increased mortality rates associated with managed care plan are for generalists to treat minor severe mental illness lowers the productive capability mental health or substance abuse problems, but are of the economy (Glied, 1996). Certain events, such as structured to encourage the referral to mental health involuntary hospitalization or arrests, have predict- or substance abuse specialists in another, very able sequences of resource use, such as psychiatric different conclusions might be reached by looking and medical evaluation, transportation by law only at the mental health or substance abuse service enforcement officers from point of contact to hospital costs, or by looking at all health costs combined or jail, preliminary hearing, and court proceedings. (Center for Health Policy Studies, 1996). Public and Private Sector Issues Treatment Efficacy Rate Funding for mental health systems comes from both The National Institute of Mental Health reports the public and private sources. In 1996, approximately following treatment efficacy rates: schizophrenia -60 53 percent ($37 billion) of the funding for mental percent; major depression - 65 percent; bipolar health treatment came from public payers. Of the 47 disorder - 80 percent; and panic disorder - 70 to 90 percent ($32 billion) of expenditures from private percent (Hyman, 1996). These are fully comparable sources, more than half ($18 billion) were from to efficacy rates of treatment in many areas of private insurance (Regier et al., 1993; Kessler, medicine (Goodwin, 1993). The NIMH, recognizing Berglund, et al., 1996). Most of the remainder was that the total costs of depression are skewed to various out-of-pocket payments. These out-of-pocket pay- indirect cost categories, has stated that “the shift in ments include co-payments from individuals with even a small portion of the … indirect costs into direct private insurance, co-payments and prescription treatment costs could produce a profound improve- costs not covered by Medicare or Medigap (i.e., ment in the lives of those currently untreated and supplementary) insurance, and payment for direct undertreated” (Regier, Hirschfield, et al., 1988). treatment from the uninsured or insured who choose The de la Parte Institute 15 COST OF TREATMENT ISSUES not to use their insurance coverage for mental health (55.8 percent) than either children (76.7 percent) or care (Mark et al., 1998). persons 65 years of age and older (96.6 percent). For the working poor, 52.5 percent were insured in 1999 Coffey et al. (2000) also reviewed out-of-pocket expenses in 1997. When viewing aggregate dollars (combined public and private spending), public dollars often more than compensate for private copayments that come directly from patients or their families. However, public-private trade-offs are not made for the same individuals. For individuals with mental illnesses receiving private care, patients paid compared to 59.2 percent of poor non-workers covered in 1999. For the near poor (those with a family income greater than the poverty level but less than 125% of the poverty level), 25.7 percent (3.1 million people) had no health insurance coverage. Although approximately 33.4 of the foreign-born population was uninsured, coverage increases with length of residence and citizenship.* 85 percent to psychiatrists or other mental health professionals and 18 percent to non-specialist physi- During the past twenty years, the role of direct state cians. Out-of-pocket expenses indicate that private funding of mental health care has been reduced and insurance for mental illnesses has higher cost shar- Medicaid funding of mental health care has in- ing, co-insurance rates, and deductibles than private creased. In addition, changes in reimbursement insurance for somatic illnesses. It is also possible that policies, legislative and regulatory requirements, and many people seeking treatment for mental illnesses population demographics, saw the growth of mental do not have insurance to cover the cost of private health funding from public sources from 49 percent practitioners (Coffey et al., 2000; Levit et al., 1998). to 53 percent (Mark et al., 1998). Since Medicaid For example, in 1993 only 34 percent of HMO program design is critical in shaping the delivery of enrollees had co-payments of $10 or more per physi- mental health services, state mental health authori- cian visit while four years later, 70 percent of ties have acquired more administrative responsibil- enrollees were required to pay at least $10, with ity for mental health services (Shore, 1994). similar trends occurring in point-of-service (POS) plans. In 1997 these two plan types covered about half of all private health insurance enrollees in medium and large private firms (Levit et al., 1998). People who receive their care in the public sector differ significantly from those who receive their care in the private sector in both the kinds of mental disorders from which they suffer and in terms of their sociodemo- Key demographic factors as well as economic status graphic characteristics (Minkin et al, 1994), e.g., affect health insurance coverage. According to the individuals with long-term and severe mental disorders United States Census Bureau (2000), persons 18-24 such as schizophrenia, treatment resistant bipolar years of age were less likely to have health insurance disorder, co-occurring mental illnesses and substance coverage in 1999 (71.0 percent). Most persons 65 abuse disorders, and severe character disorders that can years and older had health insurance due to Medicare lead to criminal activity and impairment in social coverage (98.7 percent). The likelihood of being functioning and those who have no families, social covered by health insurance rose with income. support systems, or other social or economic resources Among persons living in poverty, adults ages 18 to (Minden & Hassol, 1996). 64 had markedly lower health insurance coverage * Natives are persons born in the United States, Puerto Rico, Guam, the U.S. Virgin Islands, or who had a parent who was a United States citizen. 16 Mental Health Parity NATIONAL AND STATE PERSPECTIVES 2001 COST OF TREATMENT ISSUES The passage of a mental illness parity law could shift Due to many reasons, the estimated savings for some of the costs of providing treatment for mental private sector plans are larger than have been illness from the state (and federal) government to the reported for most, but not all, Medicaid managed care private sector, specifically to the private business programs. First, the practices of many Medicaid fee- sector (either employer or employee). Currently, the for-service (FFS) programs are to pay well below burden of paying for treatment costs not covered market reimbursement rates and to offer limited under private insurance plans often falls on state or coverage. Second, Medicaid beneficiaries sometimes federal agencies. Nationally, need to receive care in some state and local governmental circumstances for which sources accounted for 31 percent of the funding for treatment of serious mental illnesses in 1990. The federal government’s Medicaid and Medicare programs accounted for an additional 26 percent. Nationally, 64 percent of persons with severe mental illness have private insurance (National Advisory Mental Health Council, 1993). “High bad debt numbers reflect discriminatory benefit restrictions that continue to plague behavioral health. Despite limited progress to full parity, many benefit plans place arbitrary caps or treatment limits on behavioral benefits that do not apply to general health care. When patients with severe behavioral disorders find their benefits exhausted, hospitals continue to provide medically necessary care, which is often written off as bad debt.” Medicaid is not billed. Third, many Medicaid recipients receive mental health and/or substance abuse services from general medical providers which is not identified as a mental health and/or substance abuse cost (Center for Health Policy Studies, 1996). Upon examining 1987 National Medical Expenditure Survey data, Olfson and Revenue streams for the NAPHS, 2000 Pincus (1994) determined costs of providing treatment Annual Survey Report, p.19. that the proportion of the are divided into private sample population considered sources (commercial insur- to have used a mental health ance payments, philan- outpatient service during the thropy, and out-of pocket payments) totaling 44.3 year could vary from 1.3 percent to 9 percent, percent and public sources (state and local govern- depending on the definition used for a mental health ment general revenues, Medicaid, Medicare, Veter- outpatient service. Further, over the past ten years, ans Affairs, and ADM block grants) totaling 55.7 most Medicaid managed care programs have first percent (Frank et al, 1994). The incredible diversity enrolled the TANF and “TANF-like” populations, of financing mechanisms and the functional differen- groups with relatively low use of mental health or tiation of the mental health and substance abuse substance abuse services, in comparison with the service systems have made the development of a disabled and the general assistance eligibility catego- comprehensive national policy very difficult (Ridgely ries. In addition, many Medicaid managed care programs & Goldman, 1996; Drake et al., 1998). have excluded mental health or substance abuse benefits, The de la Parte Institute 17 COST OF TREATMENT ISSUES retaining these as fee-for-service reimbursed unmanaged specific financial incentives within the managed services (Center for Health Policy Studies, 1996). behavioral health contracts (National Advisory Mental Health Council, 1997). The National Advisory Mental Health Council (1997) report suggested that while state mental health parity While there have been two recent studies which have laws address minimum coverage for the treatment of examined the impact of specific managed behavioral mental and/or substance abuse disorders, it will be the health care on the utilization and costs of mental health responsibility of managed behavioral health care to services (Huskamp, 1997; Sturm, 1997), there has deliver the actual mental health benefits. Thus, it is been inadequate empirical evidence which examines critical to understand how managed behavioral health the impact of managed care on the utilization and costs care impacts the cost and quality of mental health care of mental health services in states with and without in America. This is dependent upon a number of mental health parity legislation. Thus, any estimation factors, including: mental health service utilization of a change in costs resulting from the implementation levels prior to implementation of managed behavioral of mental health parity legislation must include the health care; demographic and employment characteris- impact of specific managed behavioral health care on tics of the enrolled population; local and regional mental health costs (National Advisory Mental Health variations in mental health services delivery; and Council , 1997). In summary, based on new knowledge derived from empirical case studies and updated actuarial models, the cost increases due to parity are modest compared to previous Summary of Selected States and Impact States California Colorado Maryland Minnesota North Carolina Pennsylvania Texas Impact minimal increase minimal increase decrease minimal increase decrease minimal increase decrease 18 Mental Health Parity NATIONAL AND STATE PERSPECTIVES 2001 EXPERIENCES OF STATES AND THE PUBLIC/PRIVATE SECTORS the District of Columbia address mental health States’ Experiences with Nondiscriminatory Benefits coverage in employer-sponsored group plans and to a There is considerable variability in how states define, lesser extent coverage sold in the individual market determine eligibility standards, and set service (US General Accounting Office, 2000). Further, with limitations for mental health and substance abuse regard to group plans, twenty-nine states have laws parity legislation throughout the United States. more comprehensive than the parity law in that they Thus, while parity in Maryland means coverage for require parity in dollar amounts and in service limits all mental disorders and substance abuse treatment or cost-sharing provisions. Many of these twenty- vis-à-vis coverage for physical illnesses, parity in New nine states also mandate that mental health benefits Hampshire refers to treatment coverage for specific be included in all plans sold. Six states have laws that biologically based severe mental disorders. Further- essentially mirror the federal law. Eight states and more, current exemptions in state insurance regula- the District of Columbia have laws that are more tions potentially further limit the number of compa- limited and may not conform to federal law, while nies (thus individuals) forced to comply with state seven states have no laws addressing mental health mental health parity laws and other (mental health benefits. Finally, forty-one states and the District of and substance abuse) insurance coverage mandates. Columbia either address substance abuse within the For example, in Maryland, companies with fewer scope of their mental health laws or have separate than 50 employees have been exempt from the parity statutes addressing coverage for substance abuse. law, along with self-insured companies. Also, for However, thirteen states address only alcoholism. those with individual health policies, parity is (United States General Accounting Office, 2000). optional. Finally, the federal parity law permits As of March 1, 2000, laws in effect in 43 states and states that have passed more comprehensive or a Thirty-two states (Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Georgia, Hawaii, greater level of mental health parity legislation to be exempt from federal law. Illinois, Indiana, Kansas, Louisiana, Maine, Maryland, Minnesota, Missouri, Montana, Nebraska, What impact do these state parity laws have on the Nevada, New Hampshire, New Jersey, New Mexico, organization, financing, and delivery of mental North Carolina, Oklahoma, Pennsylvania, Rhode health and substance abuse services? At the present Island, South Carolina, South Dakota, Tennessee, time, since most state parity laws have been enacted Texas, Vermont, and Virginia) currently have parity for a short time, relatively few states have sufficient laws for mental health and/or substance abuse. A experience to evaluate the impact parity has on table of states’ parity laws and recent activity is found service costs. Nevertheless, increasing cases have in the Appendix of this report. been documented in the literature that highlight the The de la Parte Institute 19 EXPERIENCES OF STATES AND THE PUBLIC/PRIVATE SECTORS experience of selected public and private sector Institutes of Health reported in 1997 that for organizational health costs since parity has been Maryland’s most experienced managed care com- implemented. (Shore, 1994; National Mental Health pany, the percent of total medical premium attribut- Advisory Council, 1997). able to the mental health benefit decreased 0.2 Public Sector Experiences with Nondiscriminatory Benefits Selected States California A recent RAND study found removing annual benefit limitations of $10,000 on substance abuse treatment increased expenditures by 6 cents per member per year. Furthermore, annual costs for behavioral health plans in the study were 43 cents per member per month (Sturm et al, 1999a). percent after the institution of full parity. Minnesota A large managed health care organization in Minnesota, Allina Health System, recently reported that the parity law for mental health and chemical dependency would add $0.26 per member per month for the 460,000 enrollees. Another major insurer in Minnesota, Blue Cross/ Blue Shield, reduced the insurance premium by five to six percent in health plans it writes for small businesses in the state after one year’s experience Colorado A study of Colorado’s Medicaid managed under the Minnesota parity law. Additionally, the mental health pilot program found that costs de- Minnesota Comprehensive Health Association, creased $6.5 million in the first year of the pilot which directs the high-risk re-insurance pool for program’s inception. During this time period, the individuals in Minnesota who are uninsurable, variety of services available increased, access to raised the lifetime cap for its covered members. services increased, inpatient costs dropped from 50 Finally, the Minnesota Department of Employee percent to 17 percent of Colorado’s public mental health Relations, Employee Insurance Division, reported spending. The study showed similar outcomes for the that, under the Minnesota parity law, there would managed care pilot program as for the fee-for-service be a one to two percent premium increase in the system (Hausman, Wallace & Bloom, 1998). cost of health insurance for all state employees. Maryland The Maryland Health Resources Planning North Carolina The utilization and costs of Commission has reported continued decreases of mental disorders were studied in the North Caro- inpatient stays in psychiatric units of general hospitals lina state employee health plan after implementing one year after passage of Maryland’s parity law. Only both parity and managed mental health legislation 11 individuals were hospitalized for more than 60 days in 1992. Per member per month costs decreased in 1995, compared to 21 people in 1993. In 1993, the from $5.93 in 1991 to $4.58 (including cost of percentage of individuals staying longer than 20 days administrative overhead) in 1996. Mental health in private psychiatric hospitals was 24 percent, while payments as a portion of total health payments in 1995, one year after passage of the parity law, it decreased from 6.4 percent to 3.4 percent, repre- was less than 18 percent. In Maryland, full parity in senting a 47 percent reduction in costs. (National all state regulated plans increased costs by 0.6 percent Advisory Mental Health Council, 1998; United per member per month. However, the National States General Accounting Office, 2000). 20 Mental Health Parity NATIONAL AND STATE PERSPECTIVES 2001 EXPERIENCES OF STATES AND THE PUBLIC/PRIVATE SECTORS Texas Between the inception of mental health parity Grazier et al. A 3-year study of a large national coverage for state and local government employees employer instituting managed behavioral healthcare from 1992 to 1995, there was an approximately 50 implemented through a carve-out program decreased percent decrease in per member per month cost of outpatient costs by 28 percent and the average mental health services for Texas state employees number of outpatient visits by 19 percent, while (National Advisory Mental Health Council, 1998). increasing outpatient treated prevalence by 1.1 percent (NIMH funded study prepared by Grazier and Pennsylvania The first state-level study of parity, associates, 1999). conducted in the fall of 1998, found only minimal impact (0.1 percent) on the number of uninsured if parity legislation were to be enacted. Vermont In 1999 the Vermont Health Care Adminis- RAND Major corporations such as DuPont, Dow, Federal Express, Sterling-Winthrop, Alcan Aluminum, Conoco, and Xerox have reported cost reduc- tration testified before the Vermont legislature that the tions of 30 to 50 percent over one to two years while cost of implementing their substance abuse and mental eliminating certain coverage limits and, therefore, health parity (as reported by the managed care increasing the flexibility of their mental health companies) has been less than the projected 3.4 percent. benefits (Sturm & McCulloch, 1998). (Note: Vermont is considered to have the most comprehensive state parity legislation—defining “mental RAND In a study of a large West Coast based em- health” to include any condition/disorder involving ployer, costs dropped more than 40 percent after the mental illness/substance abuse falling under any inception of a behavioral health carve-out plan. In category in the mental disorders section of the Interna- the six years after its inception, the number of persons tional Classification of Diseases) (Bateman, 2000). using mental health care increased, however costs continued to decline due to fewer outpatient sessions, Private Sector Experiences with Nondiscriminatory Benefits reduced likelihood of inpatient admissions and shorter Washington Business Group on Health A review of Sturm, 1998). inpatient lengths of stay (Goldman, McCulloch, eight large employers that insure more than 2.4 million Americans through managed care programs for Black and Decker introduced a managed behavioral mental illnesses reported an across-the- board elimina- healthcare program eliminating all arbitrary benefit tion of most of the day and lifetime limits and signifi- limits, and integrating EAP and managed treatment. cantly decreased co-payments. Although there has Between 1993 and 1996, overall behavioral health been an increase overall in the use of benefits, it has benefit costs decreased by 60 percent, with the per been accompanied by a corresponding use of outpatient employee per year costs dropping from $190 to $104, and alternative treatment settings with a decrease in and behavioral health costs as a percentage of total inpatient care. Factors contributing to the success of medical costs dropping from 6.6 percent to 3.5 these programs include a full continuum of treatment percent (William M. Mercer, 1997). settings in a managed care network and strong referral systems to connect employees to appropriate services (Apgar, 2000). The de la Parte Institute 21 EXPERIENCES OF STATES AND THE PUBLIC/PRIVATE SECTORS IBM IBM reconstructed its managed mental health firms. These findings suggest that community pricing* program in 1998, providing an integrated EAP and would actually decrease insurance costs for many large managed care program with no limits on medically firms and small firms. Mid-sized firms, on average, necessary behavioral health benefits (apart from a 60 would see their premiums rise slightly. (Young & day lifetime limit on inpatient substance abuse treat- McLinden, 2001). ment). Results showed a reduction in costs, inpatient stays, and recidivism. Increased outpatient therapy, In summary, there is growing evidence that instituting availability of transition care, and education and mental health parity in both the public and private satisfaction of beneficiaries were indicated (Barbara sector in Florida as well as other states is feasible under Brickmeier, IBM to January 22, 1998 IBH Confer- managed care. Cost increases in these examples are ence). minimal, and in some cases nonexistent, while service access and utilization were increased despite some Robert Wood Johnson Foundation Study A study earlier predictions that parity would actually present funded by the Changes in Health Care Financing and disincentives to seek treatment (Hennessy & Stephens, Organization (HCFO) of The Robert Wood Johnson 1997; National Advisory Mental Health Council, 1998; Foundation compared the health care costs and utiliza- Ma & McGuire, 1998; Substance Abuse and Mental Health tion for employees at small firms and individual health Services Administration, 1999a; Sturm et al., 1999b). As plan subscribers with employees at large firms. It found stated earlier, only four benefit-purchasing organiza- that employees at small firms use health care services tions representing groups of employers have invoked at a rate similar to employees at large firms. Mid-sized exemption (Substance Abuse and Mental Health firms (50 to 500 employees) actually had lower per- Services Administration, 1999b). subscriber health care costs than either small or large * The name of the practice used when insurers charge firms of all sizes a uniform premium rate based on community use of health care instead of the firm’s employees’ use of health care rating. 22 Mental Health Parity NATIONAL AND STATE PERSPECTIVES 2001 IMPACT ON FLORIDA Florida’s service systems for mental illnesses and would experience a substance abuse disorder in a addictive disorders have changed significantly over the twelve-month period. last thirty years. According to a 2001 report by the Florida Commission on Mental Health and Sustance Abuse, Florida’s service delivery systems have evolved into a complex hybrid of traditional and non-traditional service providers and treatment milieus. Mental illnesses and addictions disorders are treated by a patchwork of community-based settings comprising both public and private sector care and general health and specialty mental health providers. The traditional services provided under the auspices of Florida’s Unfortunately, the prevalence figures in the Committee’s study did not reflect the unique population characteristics specific to Florida, including seasonal residents, a large Hispanic population of Caribbean descent, as well as year-round migration to the sunshine state. Approximately one-third of Florida’s migration is from international movement, and the remaining two-thirds is movement from other states (Office of Economic and Demographic Research, 2000). Department of Children and Families programs are Florida’s Office of Economic and Demographic Research augmented by a number of other state agencies that (2000) estimated the total state population to be provide or finance services for persons with mental 15,524.481 on April 1, 2000, an increase of 2,586,555 illnesses or addictions disorders. 1 Further, law enforce- over the 1990 census count of 12,937,926 664. In ment and the judicial system have assumed a addition, Florida’s Hispanic population grew to an gatekeeper role to the dual treatment systems for estimated 2,304,515 persons and its African American mental illnesses and addictions disorders. population grew to an estimated 2,137,368 persons (Office of Economic and Demographic Research, 2000). Mental Health and Substance Abuse Nevertheless, since no statewide prevalence studies are A 1999 report by the Committee on Children and available regarding rates of individuals with mental Families estimated the prevalence of serious mental disorders, figures extrapolated from national estimates disorders in Florida. For persons residing in a private indicated that 2.8 percent of the total population household, the Committee estimated that 5.4 percent suffers from severe mental disorders. (approximately 544,798 persons) would experience a serious mental disorders over a twelve-month period. Florida’s population profile is also compounded by the For persons living in jails, prisons, hospitals, nursing continuation of an aging state population. In 1980, homes, other residential care facilities, or for persons there were 1,687,573 Floridians aged 65 and older who are homeless, the figure increases to more than (17.3 percent of the total population). The 1990 795,117. Additionally, the Committee estimated that census enumerated 2,355,926 elderly (18.2 percent 7.07 percent of Floridians (approximately 1,074,439) of total), and by April 1, 2010, this age group will 1 These include the Departments of Education, Corrections, Juvenile Justice, Health, and the Agency for Health Care Administration. The de la Parte Institute 23 IMPACT ON FLORIDA number 3,395,208, constituting 18.9 percent of the Fifty-one percent of expenditures for outpatient mental total population. These changes represent increases of health services in the public sector were funded by 39.6 percent between 1980 and 1990 and 19.4 Medicaid, Medicare, and other federal, state, and local percent between 2000 and 2010. The population government. aged 85 and older was one of the fastest growing age estimated prevalence as well as mental illnesses and groups during the 1980s, increasing by 75.1 percent. substance abuse expenditures, the reader is referred to This group was expected to double once again, num- Kip (2000). For more detailed information on 1998 bering 330,220 by April 1, 2000. High rates of growth will continue for this age group through the Entitlement Programs in Florida first decade of this century, with the age 85 and older The federal Medicaid program, administered by the population projected at 489,635 by 2010 (Office of Agency for Health Care Administration, is a major Economic and Demographic Research, 2000). source of funding for behavioral health services, In contrast, the youth population (ages 0-19) will including substance abuse services in Florida. continue to increase in size, but not as rapidly as the In 1998, there were 1,440,331 persons enrolled in elderly population. It is estimated that in 2000 there Medicaid of which 865,358 were enrolled in a managed was 3,877,483 persons age 19 and younger, still care plan (60.08%) (Health Care Financing Adminis- representing 25 percent of the total state population tration, 1999b). Out of the statewide total, 257,265 (Office of Economic and Demographic Research, 2000). were blind or disabled persons (Health Care Financing Administration, 1999a). 2 In fiscal year 1996, Florida Healthcare Expenditures paid $3,382,000 in Medicaid costs (Florida Statistical While Florida currently ranks 9th in total state mental Abstract, 1998a, Table 20.74). Revised projections of health expenditures, it ranks 42nd in per capita state Medicaid expenditures for the 1998-99 fiscal year were expenditures for mental health services. Petrila and projected at $6.88 billion, a reduction of $49 million Stiles (1996) have examined estimates of the cost of from the appropriation. Of this amount, the federal mental health (not including alcohol and drug abuse government will pay $3.8 billion or 55.7%. The services). 1 The estimated costs of mental health Medicaid program was expected to average 1.53 million services clearly showed that most funds for mental cases this year, or about 10% of the state’s population. health services in Florida support state hospitals, while For the 1999-2000 fiscal year, Medicaid expenditures community hospitals received funds from entitlement were forecasted at $7.47 billion, or $513.1 million programs and insurance providers. However, the greater than that year’s appropriation base. (Florida Florida Commission on Mental Health and Substance Consensus Estimating Conference, 1999). In 1998, in Abuse (2000) estimated that in 1998, twenty-three Florida, there were 257,265 disabled workers receiving percent of estimated public and private mental health Social Security benefits, at a total cost of $92 million per expenditures were for hospital-based services. month to the state of Florida (Social Security Adminis- 1 2 Two 1994 data sources were used to estimate the mental health costs in Florida: the Alcohol, Drug Abuse, and Mental Health Program Office of the Florida Department of Health and Rehabilitative Services (ADM) and the Agency for Health Care Administration (AHCA). The ADM data consisted of information collected from organizations that received financial support from ADM, excluding general and private hospitals during 1994. The AHCA data contained information from all non-statesupported hospitals, and was based upon Medicare and insurance revenues reported by the hospitals that had individuals with mental disorders. However, substance abuse diagnoses were not in the data. There was no further breakout by HCFA for this group. 24 22 Mental Health Parity NATIONAL AND STATE PERSPECTIVES 2001 IMPACT ON FLORIDA tration, 1998b). In 1998, there were 263,163 indi- Health Benefits and Mandates viduals with disabilities in Florida who received Health insurance regulation is a patchwork of federal Supplemental Security Income at a total of $103 and state laws. The rules for a health plan will differ million (Social Security Administration, 1998). As with depending on whether the health insurance is self- the data for the Health Care Financing Administration, purchased, employer-purchased or if the insurance is there was no further breakout of the data. However, in part of something called a self-funded ERISA plan. The fiscal year 1996-1997, Florida paid $2,645,191 in Employee Retirement Income Security Act (ERISA) disability insurance payments (Florida Statistical created national standards for employee benefit plans Abstract, 1998). In Florida, there were a total of and limits state efforts to expand health care coverage 43,879 individuals with a mental disorder (other than and regulate insurance markets. ERISA essentially mental retardation) receiving Supplemental Security prevents states from requiring self-insured employee Disability Income, including 31,000 adults and 12,879 plans to participate in purchasing pools or even to children (Social Security Administration, 1998). report data. If a health plan is part of ERISA plan, then In 1999, Florida3 ranked fourth out of the fifty states (fifty-one with Washington, DC) in total population, eighth out of 51 as to total number of persons uninsured (United States Census Bureau, 2000); twenty-eighth out of 51 as to total number of persons on Medicaid, and twenty-fifth out of 51 as to number of persons in Medicaid MCOs (Health Care Financing Administration, 1999). Fourteen percent of Florida’s population lives below poverty level (15th out of 51) (United States Census Bureau, 2000). the health plan has to comply with minimal federal regulations due to a law passed over two decades ago which exempts self-funded ERISA plans from state 3 regulation. Mid-to-larger sized employers will often choose to fund their own health benefits plans for their employees — those are ERISA plans. But if an employer buys health insurance from an insurance company, or if a consumer purchases their own private plan, then additional state regulations apply. State regulations entitle the consumer (private individual or employer) to certain kinds of coverage, the specifics of which vary In 1997, Florida spent $637, 878,797 on mental health from state to state. In some places, the plan entitles expenditures and $270,485,154 on substance abuse policyholders treatment for alcoholism. In other places, th rd expenditures (ranking 6 out of 51 and 3 out of 51 the policyholder will have to pay for other types of care. respectively) (Lutterman, Hirad, & Poindexter, 1999) . Florida law does not guarantee that all individuals have The number of children and adolescents estimated to access to a health insurance policy (Committee on have a severe emotional disturbance 1 was 81,185 (50th Banking and Insurance, 1999). Furthermore, there is out of 51) (Lewin Group, 2000). The number of persons no statutory requirement that mandates the inclusion estimated to have a serious mental illness was 543,871 of mental health or substance abuse treatment benefits (29th out of 51) . The number of persons estimated to for health insurance coverage. have chronic substance abuse problems was 186,106 does require insurers and health maintenance organiza- th Florida law, however, (13 out of 26 states for which data was available) tions to offer the option of coverage for mental illness or (Lewin Group, 2000). nervous disorders to the group policyholder (Florida Statutes, §627.668). In addition, insurers are autho- 1 2 3 Ranks go from largest to smallest percent, most to least expenditures. Although Mental Health: A Report of the Surgeon General (1999) reported an SED prevalence of 5 percent for all states. For more information, the reader is referred to ERISA Preemption Manual for State Health Policymakers authored by the Alpha Center and the National Academy for State Health Policy [http://statecoverage.net/erisa2-2000.pdf] The de la Parte Institute 25 IMPACT ON FLORIDA rized to charge “an appropriate additional premium”. The law also requires the insurer to offer a range of from managed care. These organizations then pay a cost-based rate per service unit (Lewin Group, 2000). coverage. The number of inpatient days and the amount of outpatient benefits are limited. Insurers may price the coverage separately and may vary the benefits for inpatient or outpatient services for hospitalization. The “standard” and “basic” small group insurance plans currently define “mental and nervous disorder” from the most recently published edition of the Diagnostic and statistical manual of mental disorders (DSM). Managed Care Florida provides access to Medicaid managed care through four programs: a statewide primary care case management plan, a statewide voluntary HMO, a prepaid mental health plan (PMHP) stand-alone program in the Tampa Bay area, and Behavioral Health Care Utilization Management Service for inpatient behavioral health services (Lewin Group, 2000). While all four managed care programs offer behavioral health services, three offer it under a fee-forservice basis. The exception, the Prepaid Mental Health Plan (PMHP), operates within five counties in the Tampa Bay area (Hillsborough, Hardee, Highlands, Manatee, and Polk). Eligible recipients receive aid through the Temporary Aid to Needy Families (TANF), Sixth Omnibus Budget Reconciliation Act (SOBRA), and Supplemental Security Insurance (SSI) with no Medicare categories. Eligible foster care children receive federal foster care or adoption assistance under Title IVE of the Social Security Act or state adoption assistance. The resources and services provided through the Department of Children and Families as well as the programs funded by Medicaid in the Agency for Health Care Administration represent just a fraction of the service system for individuals with mental illnesses and addictions disorders. Services are also provided in emergency rooms and hospitals, crisis centers, jails, prisons, juvenile detention centers, nursing homes, assisted living facilities, residential programs, detoxification facilities, physicians’ offices, and schools as well as in individual homes. Thus, there are a variety of credentialed/non-credentialed providers within the mental health delivery systems. A Short Legislative History of Parity in Florida Under existing state insurance laws, disability or health care service plans may not discriminate based on race, color, religion, national origin, ancestry, or sexual orientation. These guidelines are derived from federal anti-discrimination laws. Parity, implemented either for mental health and/or chemical dependency, would further prohibit insurers or health care service plans from discriminating between coverage offered for mental illnesses, biologically based mental illnesses, or chemical dependency. In short, parity requires insurers to offer the same benefits for mental illnesses, biologically-based mental illnesses or chemical dependency as they do for physical illnesses. Additionally foster care children, who without medical assistance could not be adopted or who are involved The concept of “parity” was first introduced in 1992 with child welfare services and qualify on the basis of with the redesign of basic benefits plan for mental poverty or disability, are also eligible. Florida’s State health services for the Agency for Health Care Adminis- Mental Health Authority contracts with local provid- tration (AHCA) (Levin et al., 1999). The Florida ers, comprehensive community health centers, and Council for Community Mental Health (FCCMH) non-limited purpose organizations for community-based presented specific benefit design recommendations. The public sector mental health services that are excluded model benefit plan in the state council report was seen 26 22 Mental Health Parity NATIONAL AND STATE PERSPECTIVES 2001 IMPACT ON FLORIDA as a first step toward parity between physical, mental, session ended, parity legislation did not pass. In 2000, a and substance abuse treatment benefits (Florida bill was introduced as S 1658 by State Senator Myers. Council for Community Mental Health, 1992). A The bill stated, in part, that the current requirement substantiating study showed how providing a “con- for group insurers to offer coverage for mental health tinuum of care” could reduce the costs of psychiatric conditions did not apply to serious mental illness; care (Hay/Huggins, 1992). The subsequent AHCA required group health insurers and HMOs to provide design incorporated a few of the suggestions into the coverage for serious mental illness; and required the health benefit plan benefit design, but parity for services was not included. In 1995, “The Mental Illness Insurance Parity Act” was first introduced in the legislature. An independent report (Milliman & Robertson, 1995) indicated an increase in expenditure (per employee per month) of $2.01 with a change in the mandated offering of Both House and Senate staff analyses stated that mental health parity is an affordable benefit for the people of the state of Florida. committee to consider and recommend modifications to standard, basic, and limited health benefit plans. The bill amended benefit that would have affected approximately 35.7 Chapters 627 and 641 of percent of Florida’s population (i.e., the non-Medicare the Florida Statutes. It was referred to the Banking and population who was not covered by Medicaid, was not Insurance Committee and the Fiscal Policy Committee self-insured, was not uninsured, or was not covered with no further action taken in the 2000 legislative under the federal employees health plan). The bill session (SB1658, 2000). In the 2001 legislative session, didn’t pass. It was introduced again in 1996 and 1997, mental health parity legislation was not introduced in still with no legislation enacted. In the 1997 session, either the House or the Senate. “The Mental Illness Insurance Parity Act” was unanimously approved by the Senate Banking and Insurance Two Interim Project Summary reports, by the Commit- Committee and had near unanimous approval by the tee on Children and Families (1999) and Government House and Senate, however, it still didn’t pass. In Appropriations, defined publicly funded mental health 1998, the bill, now known as the “Diane Steele Mental and substance abuse services and priority population Illness Insurance Parity Act”, required HMOs and groups. These two reports, when viewed with previous carriers to provide inpatient hospital benefits, partial House and Senate staff analyses, indicate that treat- hospitalization benefits, and outpatient benefits for ment for persons with mental illnesses and/or addic- mental conditions consistent with annual and lifetime tions disorders is affordable and of overall benefit to the physical coverage. The coverage was limited to those state of Florida. mental illnesses that were biological in origin. It also Impact of Parity Legislation on Benefits Design required treatment for substance abuse associated with What specific changes would parity legislation mean for mental illness. The Senate Staff Analysis and Economic Florida? First, statutes would be affected, specifically Impact Statement recommended that, at a minimum, S.627.688, .6472, .6515, 641.31, F.S., relating to optional the Insurance code be amended to conform Florida law coverage for mental and nervous disorders and a new to the Federal Mental Health Parity Act (State of section, S.627.6681, would be created. Second, confiden- Florida Legislative Staff, 1998). The bill did not pass. In tiality of records would be required for those records 1999, the bill was again introduced. However, as the relating to serious mental illness. Third, every insurer The de la Parte Institute 27 IMPACT ON FLORIDA and HMO in Florida transacting group health insurance or prepaid health care would be required to provide treatment for serious mental illness. Fourth, for those who have a co-occurring substance abuse disorder, treatment would be included for the substance abuse disorder. Fifth, the health insurance mandate would apply to local government health insurance plans. 1 Finally, severe mental illness is defined as any biological disorder of the brain that substantially limits the life activities of the patient.2 In House staff analyses of the Florida parity legislation, it was determined that if a parity model similar to the Texas state employee model were enacted, the cost to the state would be $2.50 per member per month or $405,600 (Commiteee on General Government Appropriations, 1997). For the A Preliminary Estimate of Benefits for Florida A Scenario Based on Persons with Severe Mental Illness In this section we provide a rough estimate of the magnitude of benefits to the state of Florida from a mental illness parity law. In 1998 the population of Florida was 14.92 million persons: 3.54 million persons under the age of 18 and 11.38 million adults. (Statistical Abstract of the United States, 1999, Table 33.) If Florida has the same incidence of severe mental illness as exists in the country as a whole, then 319,000 adults (2.8 percent times 11.38) and 113,000 children (3.2 percent times 3.54 million) currently suffer from severe mental illness, a total of 432,000 persons in Florida. public sector, there ultimately would be reduced costs Milliman & Robertson (1995) estimated that 35.7 for health care and extended coverage would reduce percent of Florida’s population would be affected by the direct and indirect costs of treatment. For the private proposed parity law. Certain groups are exempted from sector, although there would be an initial increase in the proposed legislation, most importantly the self- utilization and costs, there would also be a reduction in insured, those employed by small businesses, and those total health costs resulting from the more comprehensive covered by Medicare and Medicaid. Applying this treatment of these conditions (Commiteee on General percentage to the number of persons in Florida with Government Appropriations, 1997; Levin et al., 1999). severe mental illness results in an estimate of 154,000 persons with severe mental illness who will fall under Opponents of parity in Florida insist that by mandating coverage, premium costs will increase. In Kansas the parity law: approximately 114,000 adults and 40,000 children. (Praeger, 2001), the negative connotations of the term mandate made it difficult for legislators to overcome cost If treatment utilization rates in Florida are roughly concerns of implementing parity, even though actu- comparable to rates for the rest of the country, then 60 arial data from other states and business organizations percent of the adults (68,300) and 29 percent of those demonstrate that those fears are overstated. Burnam under the age of 18 (11,700) are currently receiving and Escarce (1999) argue, that in an era of managed treatment for severe mental illness (annual average). care, “full benefit parity” is an important step toward a If the parity law, via its reduced cost of treatment, broader goal of ensuring that persons with mental increases the number of persons who seek treatment by illnesses or addiction disorders have the same 20 percent, then approximately 13,700 additional opportunites for seeking and receiving care as those adults and 2,300 addition youths will seek treatment if persons with somatic illnesses. a parity law is enacted, a total of 16,000 additional 1 2 The State Constitution allows a general law such as this one if the legislature determines the law fulfills an important state interest. Each time Legislature has determined that the bill fulfills a critical state interest. The latest edition of the relevant manuals of the American Psychiatric Association or the International Classification of Diseases would define severe mental illness. 28 22 Mental Health Parity NATIONAL AND STATE PERSPECTIVES 2001 IMPACT ON FLORIDA persons. Treatment efficacy rates for serious mental impact on and response of managed care systems on illness have been estimated to be in the neighborhood benefit changes in the behavioral health delivery of 70 percent. If this rate holds true for Florida, then systems and may actually overestimate the true cost of approximately 11,200 persons (16,000 times .70) will parity. A second reason to think that the benefit show significant improvement in their condition as a estimate derived above represents a lower bound result of the enactment of a parity law. estimate is that several factors were omitted that should be accounted for in a more complete analysis. Most Nationally, the annual per person social cost (i.e., costs, such as lost productivity, in addition to treatment costs) of serious mental illness were estimated to notable among these are: 1. are currently receiving treatment, which would be approximately $6,700 in 1990. This implies that presumably result in improved mental health, the benefits resulting from the successful treatment of thus increasing benefits; a person with serious mental illness would be $8,540 in 1999 dollars. Multiplying this figure by the the increased treatment utilization of those who 2. the improved cost effectiveness in treatment that should occur as a result of the law, as care estimated 11,200 persons who would show significant providers are no longer constrained by insur- improvement in their serious mental illness as a result ance provisions to utilize sub-optimal treatment of enactment of a parity law yields an estimated annual methods (e.g., in-patient rather than more social benefit for the state of Florida of $95.7 million. inexpensive out-patient care); While this is obviously a rough calculation, there are 3. reasons to believe that it represents a lower bound estimate of the benefits to Florida of a parity law. In 1990, the National Advisory Mental Health Council the reduction in costs for physical health care (roughly estimated to equal $83 million); and 4. the financial benefit to the state of the transfer of treatment costs to the private sector. estimated that a nationwide parity law would yield $7.5 billion in benefits in the form of reduced social costs from serious mental illness (as well as an additional $1.2 billion in reduced health care costs for physical illness). If these benefits were converted to 1999 dollars and prorated on the basis of 1998 population data, Florida’s share of the benefits from reduced social costs would equal $530 million, more than five times the estimate derived above (Florida’s share of the reduced health care costs would equal an additional $83 million). Ten years later, the Council (2000) postulated a 1.4 percent cost increase in total health insurance coverage with the caveat that State policymakers, charged with budgeting expenditures should be aware that estimating the costs of any major change in insurance benefits is difficult. Understanding the effects of specific forms of managed care on behavioral health will be of great value in making accurate cost estimates. Studies cited within this report are evidence of the effectiveness of managed behavioral health care. Finally, policymakers should also be aware of the implications of shifting boundaries between publicly and privately insured mental health care systems when separating cost shifts from new use (Frank & Lave, 1984; Rupp et al., 1984). forecasting models do not account adequately for the The de la Parte Institute 29 CONCLUSION Efforts to amend the federal parity legislation for the Benefits of such legislation will be a function of in- treatment of mental illnesses and substance abuse creased treatment, increased treatment efficacy rates, disorders has continued to evolve. On a federal level, and decreased social costs that mental illnesses and Senators Pete Domenici (R-NM) and Paul Wellstone (D- addictions impose on society. MN), have introduced new legislation to eliminate the would affect not only the individuals in treatment and discrimination between mental health and somatic their families but also employers, federal, state, and health care. Notably, The Mental Health Equitable These decreased costs local governments, and ultimately the taxpayer. Treatment Act of 2001 (S. 543), introduced in March 2001, would prohibit the practice of providing unequal Florida has the opportunity to establish a policy for benefits and financial requirements. The legislation mental health parity vìs -a-vìs somatic health services. builds on the existing 1996 Parity Act (P.L. 104-204 ), Based upon the experiences of other states, this initia- which bans different lifetime and annual spending caps tive will provide availability to mental health insur- for mental and general health care. It would extend full ance coverage as well as reduce the total costs to resi- parity to all individuals with a condition listed in the dents who live in Florida. Implementing parity would Diagnostic and Statistical Manual of Mental Disorders mean that decisions about benefit coverage would be Fourth Edition (DSM-IV). Specifically, S. 543 would prohibit health insurance plans from imposing inpatient hospital day and outpatient visit limits and from applying different deductibles, co-payments, out-ofnetwork charges and other financial requirements for mental health treatment, practices discussed in the recent GAO report (2001). made according to the same that govern the treatment coverage of physical disorders. “Fairness” to beneficiaries, as opposed to strictly identical benefits, would be the guiding principle. All medical services that show similar price responsiveness should be treated the same. Consumers, payers, and providers of mental health Among other key provisions, the bill would amend the services focus increasingly on outcomes-oriented data 1996 Parity Act to eliminate the sunset provision, aimed at improving the well being of the citizens of the under which the 1996 parity law would terminate on State of Florida. Florida will need to reorganize epide- September 30, 2001; increase the scope of its coverage miologic, financing, and service delivery data, and link so as to include small businesses with 25 or more databases in order to reduce waste, improve efficiency, employees; and eliminate the exemption from the 1996 contain costs, and provide services for persons with law currently permitted for employers who show that severe mental disorders. their health insurance premiums rose more than one percent as a result of complying with the Parity Act. A public health focus on the well-being of entire popula- S. 543 would only apply to plans that already provide tions, including enrollees in commercial health care mental health benefits; it would not require plans to plans and Medicaid beneficiaries, can help Florida offer such benefits. Over thirty senators have signed the provide needed mental health services, as well as limit bill as co-sponsors. 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States, 1992 (DHHS Publication No. (SMA) 92- Spending for mental health and substance abuse 1942, pp. 208-217). Rockville, MD: Substance treatment, 1996. Health Affairs, 17(5), 147-157. (1998). Abuse and Mental Health Services Administration. Mark, T., McKusick, D., King, E., Harwood, H., & Levin, B.L., Hanson, A., & Coe, R.D. (1999). Mental Genuardi, J. (1998). National expenditures for Health Parity: 1998 National and state perspectives. mental health, alcohol, and other drug abuse Tampa, Florida: Louis de la Parte Florida Mental treatment, 1996. Rockville, MD: Substance Abuse Health Institute, University of South Florida. and Mental Health Services Administration. Available: http://publications.fmhi.usf.edu/. Mechanic, D., Schlesinger, M., & McAlpine, D.D. Levit, K., Cowan, C., Braden, B., Stiller, J., Sensenig, (1995). Management of mental health and A., & Lazenby, H. (1998). National Health substance abuse services: State of the art and early Expenditures in 1997: More Slow Growth. Health results. Milbank Quarterly, 73(1), 19-55. Affairs, 17(6), 99-110. Mechanic, D. (1999). Mental Health and Social Policy: The Emergence of Managed Care (4th edition.). Boston, MA: Allyn and Bacon. 34 Mental Health Parity NATIONAL AND STATE PERSPECTIVES 2001 REFERENCES Mercer/Foster Higgins. (1999). National Survey of National Advisory Mental Health Council. (2000). Employer-Sponsored Health Plans. Washington, Insurance Parity for Mental Health: Cost, Access, DC: Substance Abuse and Mental Health Services and Quality: Final report to Congress by the National Administration. Advisory Mental Health Council . Rockville, MD: The Council. [Kirschstein, Ruth L. listed on cover] Milliman & Robertson. (1995). Estimation of the Increase in the Cost of Providing Mental Health National Advisory Mental Health Council. (1998). Insurance Benefits Associated with Florida HB 299. 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(1994). Measuring outpa- integrative health care. Clinical Psychology- tient mental health care in the United States. Science & Practice, 6(2), 242-244. Health Affairs, Winter 13(5), 172-180. Mumford, E. et al. (1984). A new look at evidence Olfson, M., & Pincus, H.A. (1999). Outpatient psycho- of the reduced cost of medical utilization therapy in the United States: The National Medical following mental health treatment. American Expenditure Survey. In Miller, N.E. & Magruder, Journal of Psychiatry, 141(10), 1145-1150. K.M. (Eds.), Cost-effectiveness of psychotherapy: A guide for practitioners, researchers, and Murray, C. J., & Lopez, A. D. (Eds.). (1996). The global burden of disease: A comprehensive assess- policymakers (pp. 45-51). New York, NY, US: Oxford University Press. ment of mortality and disability from diseases, injuries, and risk factors in 1990 and projected to 2020. Cambridge, MA: Harvard University Press. Pallak, M.S. et al. (1993). Managed mental health, Medicaid, and medical cost offset. In Shore, M.F. (ed.), Managed Care, the Private Sector, and Medic- National Advisory Mental Health Council. (1993). aid Mental Health and Substance Abuse Services. Health care reform for Americans with severe New Directions for Mental Health Services, 72, mental illness: report of the National Advisory (Winter), 27-40. Mental Health Council. American Journal of Psychiatry, 150(10), 1447-1465. Pallak, M.S., Cummings, N.A., Dorken, H., et al. (1994). Medical costs, Medicaid, and managed National Advisory Mental Health Council. (1997). Parity in Coverage of Mental Health Services in an mental health treatment: the Hawaii study. Managed Care Quarterly, 2(2), 64-70. Era of Managed Care: an interim report to Congress. Rockville, MD: The Council. The de la Parte Institute 35 REFERENCES Petrila, J., & Stiles, P. (1996). Chronically mentally ill: Rouse, B.A. (Ed.). (1995). Substance Abuse and Mental projected needs and costs, 1995-2010. In Long Term Health Statistics Sourcebook. Washington, DC: Care in Florida: A Policy Analysis. Tampa, FL: Univer- Substance Abuse and Mental Health Services sity of South Florida, Florida Policy Center on Aging. Administration.Rupp, A. et al. (1984). The effect Praeger, S. (2001). Parity or insurance mandate? The case for mental health parity in Kansas. Health Affairs, 20 (4), 77-79. Regier, D.A. et al. (1985). Historical context, major objectives, and study design. In Eaton, W.E., Kessler, L.G. (Eds.), Epidemiologic Field Methods in Psychiatry. Orlando, FL: Academic Press. Regier, D.A., Boyd, J.H., Burke, J.D., Rae, D.S., et al. (1988). One month prevalence of mental disorders in the United States: based on five epidemiologic catchment area sites. Archives of General Psychiatry, 45(11), 977-986. Regier, D.A., Hirschfield, R.M.A., Goodwin, F.K., et al. (1988). The NIMH Depression Awareness, Recognition, and Treatment Program: structure, aims, and scientific basis. American Journal of Psychiatry, 145(11), 1351-1357. Regier, D. A., Narrow, W., Rae, D. S., Manderscheid, R. W., Locke, B. Z., & Goodwin, F. K. (1993). The de facto US mental and addictive disorders service system. Epidemiologic Catchment Area prospective of hospital payment methods on the pattern and cost of mental health care. Hospital & Community Psychiatry, 35(5), 456-459. Rupp, A., Gause, E., & Regier, D. A. (1998). Research policy implications of cost-of-illness studies for mental disorders. British Journal of Psychiatry, Supplement, 173(36), 19–25. Shemo, J.P. (1985-86). Cost-effectiveness of providing mental health services: The offset effect. International Journal of Psychiatry in Medicine, 15(1), 1930. Shore, M.F. (1994). An overview of managed behavioral health care. In Shore, M.F. (ed.), Managed Care, the Private Sector, and Medicaid Mental Health and Substance Abuse Services. New Directions in Mental Health Services, 72(Winter), 3-12. Simon, G., Ormel, J., VonKorff, M., & Barlow, W. (1995). Health care costs associated with depressive and anxiety disorders in primary care. American Journal of Psychiatry, 152(3), 352-357. Sing, M., Hill, S., Smolkin, S., & Heiser, Nancy. 1-year prevalence rates of disorders and services. (1998). The Costs and Effects of Parity for Mental Archives of General Psychiatry, 50, 85–94. Health and Substance Abuse Insurance Benefits. Ridgely, M.S., & Goldman, H.H. (1996). Health law symposium: putting the failure of national health care reform in perspective: mental health benefits Rockville, MD: U.S. Department of Health and Human Services. Social Security Administration. (1998, December). and the ‘benefit’ of incrementalism. Saint Louis SSI: Number of persons receiving federally University Law Journal, 40(2), 407-435. administered payments and average monthly Robins, L.N., & Regier, D.A. (Eds.). (1991). Psychiatric Disorders in America: The Epidemiologic Catchment Area Study. New York: Free Press. amount, by category and State (Table 2.A9). Available: ftp://ftp.ssa.gov/pub/statistics/2a9. Special Issue. (1996). Co-occurring disorders. Mental Health Weekly, 5(42). 36 Mental Health Parity NATIONAL AND STATE PERSPECTIVES 2001 REFERENCES State of Florida Legislative Staff. (1998, February 17). Teplin, L.A. (1990). The prevalence of severe mental Senate Staff Analysis and Economic Impact State- disorders among male urban jail detainees: ment for CS/SB 268. Tallahassee, FL: The Staff. Comparison with the Epidemiologic Catchment Sturm, R., Zhang, W., & Schoenbaum, M. (1999a). How expensive are unlimited substance abuse benefits under managed care? Journal of Behavioral Health Services & Research, 26(2), 203-210. Sturm, R., McCulloch, J., & Goldman, W. (1999b). (Working Paper No. 128). Mental health and substance abuse parity: A case study of Ohio’s state Area Program. American Journal of Public Health, 80, 663-669. Teplin, L.A., Abram, K.M., & McClelland, G.M. (1996). Prevalence of psychiatric disorders among incarcerated women: pretrial jail detainees. Archives of General Psychiatry, 53(6), 505-512. United States Census Bureau. (2000). Current Popula- employee program. Los Angeles: UCLA/RAND tion reports: Health Insurance Coverage: Consumer Center on Managed Care for Psychiatric Disorders. income. Washington, DC: The Bureau. Sturm, R. (1999). Tracking changes in behavioral United States Census Bureau. (1996). Current Popula- health services: How have carve-outs changed tion Reports: Americans with Disabilities: 1994- care? Journal of Behavioral Health Services & 1995. Washington, DC: The Bureau. Research, 26(4), 360-371. United States General Accounting Office: Medicaid Sturm, R. (1997). How expensive is unlimited mental health care coverage under managed care? Managed Care: Serving the Disabled Challenges State Programs. Washington DC: GAO, 1996. Journal of the American Medical Association, 278(18), 1533-1537. United States General Accounting Office: Mental Health Parity Act: Despite New Federal Standards, Mental Sturm, R., & McCulloch, J. (1998). Mental health and substance abuse benefits in carve-out plans and Health Benefits Remain Limited. Rockville, MD: The Office, 2000 (May). the Mental Health Parity Act of 1996. Journal of Health Care Finance, 24(3), 82-92. United States General Accounting Office: Report to the Committee on Finance, U.S. Senate: Community-Based Substance Abuse and Mental Health Services Administration. (1999a). Partners in planning: consumer’s Care Increases for People With Serious Mental Illness. Rockville, MD: The Office, 2001 (January). role in contracting for public sector-managed mental health and addiction services : a quick reference William M. Mercer, Inc. (1997). Case Studies: a Guide to guide. Rockville, MD.: U.S. Dept. of Health and Implementing Parity for Mental Illness. New York: Human Services, Substance Abuse and Mental William M. Mercer, Inc, 1997. Health Services Administration. State of Florida Legislative Staff. (1998, February 17). Young, W.W. & McLinden S. (2001). Comparative Analysis of Small vs. Large Group Health Care Use Senate Staff Analysis and Economic Impact Statement and Costs In Gauthier AK et al. ((eds.) National for CS/SB 268. Tallahassee, FL: The Staff. Program Report: Changes In Health Care Financing And Organization. Robert Wood Johnson Foundation. Substance Abuse and Mental Health Services Administration. (1999b). Background reports: Effects of the Zuvekas, S. H., Banthin, J. S., & Selden, T. M. (1998). Mental Health Parity Act of 1996. Washington, DC: Mental health parity: What are the gaps in coverage? The Administration. Journal of Mental Health Policy and Economics, 1, 135– 146. The de la Parte Institute 37 Appendix A: Summary of State Parity Legislation State Bills Alabama No specific mental health parity legislation passed. Alaska Provides for study of parity. 1998 Arizona Mirrors 1996 federal law, excludes substance abuse. Enacted: 1997 HB 26651: HMO’s, group and individual insurers must offer coverage for mental illness and Effective: 7/21/97 substance abuse under same terms as for mental illness. Enacted: 2/98 From 7/1/99-6/30/00 insurers will offer at least 60 days of inpatient and outpatient care for mental Effective: 1/1/99 illness a nd substance abuse. From 6/1/00, insurers must offer at least the same number of days that are offered for physical illness. Failed: 3/8/01 Senate Banking & Insurance Comm. H 2173: S 1088 amends the current law to require insurers to provide mental health coverage. Requires insurers that issue group plans that provide coverage for physical health conditions to a group of at least 25 also provide coverage for the treatment of mental health conditions. Defines mental health condition as any condition or disorder that involves mental illness or substance abuse and that falls under any of the diagnostic categories listed in the mental disorders section of the ICD. Further requires that policies cannot contain co-pays, coinsurance or cost sharing requirements that place a greater financial burden on the policyholder. Passed Senate Comms March 01 S 1463 amends the current state employee health plan to require that it include benefits for mental Arkansas HB 1525: Provides equal coverage of mental illness & developmental disorders (not substance health conditions. The requirements of this bill are the same as S 1088. Enacted: 4/97 abuse); exempts state employees, companies of less than 50 employees, Effective: 8/1/97 and those that anticipate cost increases of over 1.5%. Enacted: 3/13/01 H 1562: provides parity mental health benefits under the CHIPS program called ARKids First Program. Enacted: 3/25/01 S176: amends existing law by requiring health plans offered by employers with 50 or fewer employees will not impose limits on coverage for mental health treatment. This law allows insurers in groups of 51 or more employees to impose an annual maximum of 8 inpatient/partial hospitalization days together with 40 outpatient days. California Enacted: 1999 AB 306: Provides for persons of any age equal coverage for specific biologically-based severe mental illness and serious emotional disturbance in children with one or more Effective: 7/1/00 mental disorders other than a primary substance abuse disorder. No small business exemption. 6/4/2001 SB 599: Amends existing law & requires health care plans by 1/1/2002 to provide coverage for Passed Senate substance abuse disorders at parity. Coverage & funding for outpatient visits, residential/inpatient referred to Assembly treatment days, payments, lifetime benefits, & catastrophic coverage offered at parity with physical illness. The de la Parte Institute 39 APPENDIX A: SUMMARY OF STATE PARITY LEGISLATION Colorado HB 1192: Provides for coverage of specific biologically based major mental illness that is no less Enacted: 1997 extensive than that provided for other physical illness. Effective: 1/1/98 Referred: 3/7/01 H 1273: Requires health plans that provide coverage for substance abuse treatment provide coverage House Approp Comm regardless whether it occurs as a result of contact with the legal system. Substance abuse services added as an optional service under Medicaid. Establishes a study committee comprised of legislators and members of the general public to study substance abuse and report any potential cost savings to the state general fund. Referred:3/26/01 S 153: Makes current mandatory health insurance coverage for mental illnesses & biologically basedmental Senate Comm. on illness optional provisions at the discretion of consumer. Exempts plans issued by valid multi-state associa- Health, Environ., tion from requirements to issue a health benefit plan that includes coverage for mental illness, biologically Children, & Family based mental illness, or alcoholism &coverage for business groups of one. Effective after 01/01/2002. 5/29/01 H 1236: Amends existing parity law- requires insurance carrier to use preauthorization or utilization review Governor’s desk that is the same as, or no more restrictive than, used to provide coverage for physical illness. Connecticut Two bills enacted. Enacted: 1997 HB 6883: Provides for coverage of biologically based major mental illness and nervous conditions. Effective: 10/1/97 Defines “biologically-based mental illness.” Enacted: 1999 HB 7032:Part of omnibus managed care bill. Requires full parity for mental health and substance Effective: 10/1/99 abuse benefits. Delaware Enacted: 1998 Effective: 1/1/99 HB 156: Provides for coverage of severe biologically based mental illness under the same terms and conditions of coverage offered for physical illness. 5/9/01 Amended mental by House H 100: Provides complete parity for health plans issued for mental disorders. Deletes “serious illness” from existing law and adds the words “mental disorder” (described as any mental illness that falls under the diagnostic categories listed in the most recent edition of the DSM, including, but not limited to, schizophrenia, bipolar disorder, OCD, major depressive disorder, panic disorder, anorexia nervosa, bulimia nervosa, schizo-affective disorder, delusional disorder, ADHD, autism, alcoholism & drug dependence). District of Columbia No mental health parity legislation activity. Florida No mental health parity legislation passed Georgia SB 620: Requires employers that choose to provide mental health benefits to provide equal lifetime Enacted: 1998 and annual caps for mental health benefits. “Mental Illness” covers all brain disorders in DSM-IV. Effective: 4/6/98 40 Mental Health Parity NATIONAL AND STATE PERSPECTIVES 2001 APPENDIX A: SUMMARY OF STATE PARITY LEGISLATION Hawaii Three bills passed. Enacted: 1999 SB 844: Makes health insurance coverage for mental illness no less extensive than that for other Effective: 7/1/99 medical illnesses. Does not include coverage for substance abuse or disorders other than schizo phrenia, schizoaffective disorder or bipolar mood disorder. Exempts small businesses with 25 or fewer employees. Established mental health parity task force. Intro. & Passed: SB 2973: Requires parity for in insurance coverage for mental health benefits; defines serious 1/26/00 mental illness as mental disorders as defined in the Diagnostic and Statistical Manual, except for specified conditions; deletes exception for employers with 25 or fewer employees; clarifies duties of the Hawaii mental health insurance task force. Intro. & Passed: SB 2891: Requires health insurers to equitably reimburse providers for mental health treatment. 1/25/00 & 1/26/00 5/14/01 carried S 825 (H 841): Adds major depression to list of illnesses covered under existing law. Deletes to 2002 session language from existing law that creates unique limits by episode in the treatment of addictions. Idaho No specific mental health parity legislation passed Illinois No mental health parity legislation passed. Indiana Enacted: 5/13/97 HB 1400: Mirrors federal law with full parity for state employees; no provisions for substance abuse. Effective: 67/1/97 Sunsets: 9/29/01 Enacted 1999 HB 1108: Amends 1997 parity law to cover “services for mental illness” as defined by contract, policy Effective: 7/1/99 & or plan for health services. No provisions for substance abuse. Exempts businesses with 50 or 1/2/00 fewer employees and provides for a four & cost-increase exemption. Removes sunset provision. Enacted: 1/10/00 SB 0392: Includes parity for substance abuse treatment. Effective: 7/1/2000 Enacted: 1/10/00 SB 0395: Amends 1999 law to provide exemption for businesses with 25 or fewer employees. Effective: 7/1/2000 Enacted: 5/3/01 H 112: Adds pervasive developmental disorder to list of mental disorders covered under existing law. Iowa S 1341: Creates parity for coverage of serious mental illness and minimum mandated benefits for 5/31/01 amended other mental illnesses and substance abuse. Includes study of mental health benefit coverage. & on Gov’s desk Contains small business exemption. “Serious mental illness” defined as: schizophrenia, paranoid and other psychotic disorders, bipolar disorders, major depressive disorders, schizoaffective disor ders, PDD OCD, childhood depression and panic disorders. Provides medical necessity language. Sunsets 12/31/2005. 4/6/01 Failed in H 72: Policies must provide coverage at parity for mental conditions. Mental health conditions Commitee. Parity defined conditions or disorders involving mental illness or alcohol or substance abuse that fall in Gov’s Approp Bill under any of the diagnostic categories found in the ICD. The de la Parte Institute 41 APPENDIX A: SUMMARY OF STATE PARITY LEGISLATION Kansas S 204: Limited parity for mental health benefits mirrors 1996 federal law, refers to mental health Enacted: 5/15/97 services as defined under terms of the policy. Substance abuse &chemical dependency specifically Effective: 1/1/98 excluded. Does not extend to small businesses/groups whose policy increases more than 1%. HR 5005: resolves that the Kansas Legislature enact legislation to provide health insurance parity for persons with mental illness. No detail was provided in the resolution. Enacted: 5/21/01 H 2033: Amends current law to require parity for any group health plan providing MH benefits. Effective: 1/1/02 Annual coverage - 45 days each inpatient care/ outpatient care. Includes access, use & cost study. Defines MI as schizophrenia, schizoaffective disorder, schizophreniform disorder, brief reactive psychosis, paranoid or delusional disorder, atypical psychosis, major affective disorder, cyclothymic/ dysthymic disorders, OCD, panic disorder, PDD including autism, ADD and ADHD as defined in DSM IV,. Does not include conditions not attributable to a mental disorder that are a focus of attention or treatment. Applies to state employee plan. Requires parity in coverage of prescription drugs used outside a physician’s office or hospital. Kentucky **No mental health parity legislative activity. Louisiana Enacts law mirroring 1996 federal law (1997) Enacted: 1999 HB 1300: Insurer’s group plans must include equitable coverage for severe mental illness. Effective: 1/1/00 Coverage for mental illness must be under the same terms as coverage for other illnesses. No small business exemption. Policies must offer optional coverage for other disorders at the expense of the policyholder. Set minimum benefits: 45 in-patient days & 52 outpatient visits/year. Enacted: 5/24/01 H 859: Prohibits different aggregate lifetime/annual limits on MH benefits on other medical benefits under certain large employer group health plans as of 09/30/2001. Existing law will not require group plan to provide mental health benefits. Includes 1% cap & small business exemption. Maine PL 407/HB 432- LD 595: Provides for coverage for specific major mental and nervous disorders to Enacted 1995 be no less than that of physical illness. Does not include substance abuse and excludes groups of Effective: 7/1/96 20 or fewer employees. Maryland HB 1359, HB 1197, HB756: Establishes full parity. Prohibits insurers and HMOs from discriminating Enacted: 1993 against any person with mental illness, emotional disorder or substance abuse by failing to provide & 1994 treatment or diagnosis equal to that of physical illnesses. Does not define “mental health” or “ Effective: 8/1/94 mental illness.” Massachusetts Administrative order(state employees only): Requires parity coverage for outpatient/intermediate/ inpatient mental health/substance abuse care that state plan determines to be medically necessary. The order defines mental illnesses as the categories listed in the current version of the DSM-IV, excluding certain disorders. 4/2/01 S 763: Adds the treatment and diagnosis of alcoholism and chemical dependency to the existing In committee parity law. Effective: 01/01/02 42 Mental Health Parity NATIONAL AND STATE PERSPECTIVES 2001 APPENDIX A: SUMMARY OF STATE PARITY LEGISLATION Massachusetts (continued) In committee 4/2/01 H 3120: Adds addiction treatment to the existing parity law. Health plans required to cover clinically effective and appropriate services. Outlines qualifications of treatment staff. In committee S 1433: Requires state employee health plan/private health plans cover at parity treatment & 4/26/01 diagnosis of specific pervasive developmental disorders: 1) autistic disorders, 2) Asperger’s disorder, 3) PDD, 4) Rett’s disorder, and 5) childhood disintegrative disorder. Bill requires minimum of 60 days of inpatient & 24 outpatient visits. Michigan S 101: Requires parity for cost-sharing requirements and benefits or service limitations found in In committee health plans for outpatient/inpatient mental health/substance abuse services. (S 102- mirrors bill 2/6/01 for health care corporations writing plans after 1/1/2002) Minnesota SB845: Establishes full parity. Requires cost of inpatient and outpatient mental health and chemical Enacted: 8/1/95 dependency services to be not greater or more restrictive than for similar medical services. Does not Effective: 8/1/95 define “mental illness” or “substance abuse.” Mississippi H 667: Requires (some exceptions) policies covering mental illness provide minimum of 30 days Enacted: 4/6/01 inpatient services, minimum 60 days partial hospitalization, & minimum 52 outpatient visits/year. Requires individual and group health insurance policies (includes plans offered by small employers) that currently do not offer mental illness benefits, offer benefits. Includes 100 employee small business exemption. Specifies that this coverage will be offered on an optional basis. Includes a 1% opt-out clause for businesses. Allows for parity for rate payments for inpatient services and partial hospitalization. Rate payment for outpatient visits would be capped at a maximum payment of fifty dollars per visit. Missouri Two bills. Enacted: 6/25/97 HB 335: As part of larger managed care regulatory measure, covers all disorders in the DSM-IV in Effective: 9/1/97 managed care plans only, equal to that of physical illness. Enacted: 7/13/99 Effective: 1/1/00 Expires: 1/1/05 HB 191: specifies that coverage for mental illness benefits shall not place greater financial burdens on the insured than that of physical illnesses. Substance abuse only covered if co-morbid with other mental illness and coverage can be limited to one detox session not to exceed 4 days. Insurer may apply different deductibles, co-pays and co-insurance terms. Business can apply for exemption if cost increase exceeds 2%. Provides for impact study. Montana SB 378 Sec 9: Addresses mental health parity in the context of managed care reform. Mirrors 1996 Enacted: 4/97 federal law. States mental health benefits must be offered and must not be more restrictive than Effective: 1/1/98 plans for general health conditions. Enacted: 1999 SB 219: Provides equitable health insurance and disability insurance for severe biologically based Effective: 1/1/00 mental illnesses that is no less than that provided for other physical illnesses. Effective: 4/01 S 310: Revises certain requirements of Montana’s high-risk pool. Adds severe mental illness to the pool. Raises the maximum pharmacy benefit to an annual maximum of $2000. Effective: 4/01 H 504: Amends existing law & removes the inpatient limit for alcoholism and drug addiction only. The de la Parte Institute 43 APPENDIX A: SUMMARY OF STATE PARITY LEGISLATION Nebraska LB 355: Prior to January 1, 2002 plans to provide coverage for schizophrenia, schizoaffective Enacted: 5/25/99 disorder, delusional disorder, bipolar affective disorder, bipolar disorder, major depression and Effective: 1/1/00 obsessive-compulsive disorder shall not place financial burden for treatment than for physical health conditions. Parity must be provided for annual and lifetime limits and the number of inpatient and outpatient visits. Parity is not required in co-pays, co-insurance and deductibles. After January 1, 2002 the law applies to any mental health condition that current medical science affirms is caused by a biological disorder of the brain and substantially limits the life activities of the person with the illness. Exempts business of fewer than 15 employees. Not a mandate. Adopted by L 563 requires parity for co-payments, coinsurance, or out of pocket limits. Comm. 3/20/01 Introduced: 5/7/01 LR 88 creates study of 1999 health insurance parity law with review of costs and utilization. Nevada AB 521: Broad health care reform bill with specific reference to mental health parity in section 88. Enacted: 1997 Mirrors 1996 federal law. Health plans must offer equitable benefits for mental health care if they Effective: do offer such care. Intended for large group health plans and plans are exempt if their cost (Sec 88) 1/1/98 increases more than 1%. Expires 9/30/01 Enacted 5/30/99 AB 557: Mandates coverage for those with severe mental illness. Annual, lifetime, and out-of-pocket Effective: 1/1/00 limits must be equal to that of other medical/surgical benefits. Minimum 30 inpatient and 27 outpatient visits annually. Outpatient visits for medication management come out of standard medical coverage. Co-pays are maximum of $18 for outpatient visits and $180 per inpatient visit. Businesses of 25 or fewer employees are exempt from mandate. New Hampshire SB 767: Provides parity for biologically based severe mental illness. Applies to groups and HMOs Enacted: 1994 only regardless of size. Effective: 1/1/95 In House commitee H 672: Creates parity for health plans covering the assessment, diagnosis & treatment of mental/ 5/5/01 nervous conditions by psychiatrists, psychiatric/mental health advanced nurse practitioners, & mental health practitioners. Substance abuse is covered under the definition of mental disorder. Previous definition of “biologically-based mental illnesses” repealed. Now defined as any mental or nervous conditions or mental disorders as defined in the most recent editions of ICD or DSM. New Jersey S 86: An Act concerning Health Insurance Benefits of Mental Health covers biologically based Enacted: 5/13/99 mental illness. Effective: 8/99 New York In Senate commitee S 1744 and A 733 require parity for group plans. New Mexico HB 452: Provides equal coverage for mental illness in health insurance plans that are new or Enacted: 2/15/00 renewed starting Oct. 1, 2000. Allows companies with up to 49 workers to opt out of the Effective: 10/1/00 coverage if premiums increase more than 1.5 percent. Companies with 50 or more to opt out if the increase exceeds 2 percent. Businesses can negotiate some reduction in coverage or develop a cost-sharing arrangement with employees. Self-insured businesses are not included. 44 Mental Health Parity NATIONAL AND STATE PERSPECTIVES 2001 APPENDIX A: SUMMARY OF STATE PARITY LEGISLATION New Mexico (continued) HB 452: Provides equal coverage for mental illness in health insurance plans that are new or Enacted: 2/15/00 renewed starting Oct. 1, 2000. Allows companies with up to 49 workers to opt out of the Effective: 10/1/00 coverage if premiums increase more than 1.5 percent. Companies with 50 or more to opt out if the increase exceeds 2 percent. Businesses can negotiate some reduction in coverage or develop a cost-sharing arrangement with employees. Self-insured businesses are not included. Enacted: 4/5/01 HR 81: Requests the legislative finance committee study & make recommendations related to the programs of the publicly funded health care agency created by the Health Care Purchasing Act. Mental health parity statutes will be studied as part of this process. North Carolina Three bills. Enacted: 1991 HB 279: Provides for employees of local and state government to have treatment of mental illness Effective: 1/1/92 subject to the same deductibles, durational limits and coinsurance factors as for physical illness. Enacted: 7/3/97 HB 434: Established full parity by amending North Carolina’s insurance laws to comply with federal legislation. Does not require mental health coverage to be provided, but if it is it must be equal to that of physical illness. Now known as CH SL 97-0259. Enacted 8/28/97 HB 435: Amends state employees’ health plan to include benefits for treatment of chemical dependency subject to the same deductibles, durational limits and coinsurance factors as for physical illness. Now known as CH SL 97-0512 North Dakota Provides for study of parity. 1994 Ohio H 33: Creates parity in health plans for the coverage of mental illness and substance abuse. In House commitee Both mental health & substance are defined as any condition or disorder as defined in most recent 3/26/01 edition of DSM or ICD. Oklahoma SB 2 Provides equitable coverage for severe mental illness. Exempts employers with 50 or fewer Enacted: 5/13/99 employees and those who experience a premium increase of 2% or more. The law is repealed in Effective: 11/1/99? 2003 if an Oklahoma Insurance Department study shows a premium increase of 6% over three years. Oregon S 112: Creates parity in insurance coverage for mental illness/substance abuse with other medical condi In Senate committee tions. Schools, halfway houses, psychoanalysis or psychotherapy for educational or training purposes 1/12/01 excluded from coverage at parity. Managed care & cost sharing requirements are outlined. Would take effect on 1/01/2003. In Senate committee S 624 creates parity in group health plans for the treatment of mental conditions and addictions. Contains 2/10/01 same service exclusions as S 112. In House committee H 2472 requires group health plans cover expenses arising from treatment of severe mental illnesses/ 1/24/01 serious emotional disturbances in children/adolescents. Eliminates monetary limits on treatment for children/adolescents. Limits for minimum total payouts for all treatments of chemical dependency listed. The de la Parte Institute 45 APPENDIX A: SUMMARY OF STATE PARITY LEGISLATION Pennsylvania Health plans required to cover 30 days of inpatient mental health treatment and 60 outpatient visits. Enacted: 1998 Plans must cover emergency screenings and stabilization for plan members. Rhode Island S 2017: Provides coverage for serious mental illness that current medical science affirms is caused Enacted: 1994 by a biological disorder of the brain and substantially limits life activities. Effective: 1/1/95 5/29/01 Passed H 5478: Requires health insurance on provided at parity for mental illness and addictions on or after House & Senate 01/01/2002. Significantly broadens existing law redefines SMI & adds addiction coverage at parity. MI committees. coverage includes inpatient, partial hospitalization, intensive outpatient services and community residen- Amended by Lt Gov tial care for addictions only. Continues medical necessity guidelines. Limits placed on outpatient services, community residential coverage, detoxification & addictions outpatient services. Held for study S 406 amends the existing parity law to deletes the definition of serious mental illness and mandate the 3/27/01 insurers provide equal coverage for the medical treatment of all mental illness and substance abuse. South Carolina S 288: Broad based parity in insurance contracts offering mental health benefits. Group policies Enacted: 3/31/97 must offer same lifetime and annual benefits as offered for medical/surgical benefits. Small Effective: group employers exempt as are plans not offering mental health benefits. Substance abuse excluded plans 11/1/98 and mental illness not specifically defined. Expires 9/30/01 South Dakota Two bills. Enacted: 3/13/98 HB 1262: Requires insurance companies to offer coverage for biologically based severe mental Effective: 7/1/98 disorders that is equal to that offered for severe somatic illnesses. Enacted: 1999 HB 1264: Clarifies definition of “biologically-based mental illness” Affective: 1999 Tennessee SB 1699/HB 1825: Features a section (17) with language for parity based on federal parity Enacted: 4/30/97 requirements in the context of broad HIPAA compliance legislation. Applies to group health plans Effective: 1/1/98 that offer mental health benefits. Small businesses and those that experience more than a 1% increase in premiums are exempt. Enacted: 1998 HB 3177: Provides mental health coverage mirroring 1996 federal law but does not cover Effective: 1/1/00 substance abuse. Lifetime and annual limits must be equal to other medical and surgical benefits. Businesses with 25 or fewer employees or an increase of more than 1% in premiums are exempt. Texas HB 2: Covers all public state and local employees including teachers and university system Enacted & employees for schizophrenia, schizoaffective disorder, bipolar disorder, and major depression. Effective: 1991 Enacted: 1997 Effective: 1997 HB 1173: Specifies requirements for group insurance coverage for serious mental illness, no lifetime limit on inpatient/outpatient benefits. Requires same deductibles, limits, co-pays & coinsurance for serious mental illness as for physical illness. Does not include chemical dependency. In House committee H 189: Creates parity in delivery of disability insurance policies written in Texas. Disability plans/policies 3/6/01 cannot exclude or reduce the payment of benefits to or on behalf an enrollee because of MI unless the limitation consistent across all physical disabilities. Effective on 09/01/200. 42 46 Mental Health Parity NATIONAL AND STATE PERSPECTIVES 2001 APPENDIX A: SUMMARY OF STATE PARITY LEGISLATION Texas (continued) In House committee H 2099: Expands existing law with coverage for children with SED, list of serious mental illness to be 2/27/01 covered, removes limits for inpatient days & outpatient visits, deletes the small employer exemption. Serious mental illness defined as “schizophrenia, paranoid and other psychotic disorders, bipolar disorders, major depressive disorders, schizo-affective disorder, PDD, OCD, anorexia nervosa, bulimia nervosa and depression in childhood and adolescence”. Utah Utah passed full parity for mental health, excluding substance abuse coverage. Mirrors federal Mental Health Parity Act of 1996. Annual and lifetime limits on mental health benefits must be equal to physical health benefits (NCSL, 2000). Vermont HB 57: Full parity. Broad definition of mental illness and substance abuse, covering any conditions Enacted: 5/28/97 within the diagnostic categories in the international classification of disease. Children and Effective: 1/1/98 substance abuse fully covered. Applies to any policy offered by any health insurer or administered by the state. Managed care organizations must comply with state insurance commissioner. Virginia HB 430: Requires that insured plans offer the same level of coverage for biologically based Enacted: 9/25/99 mental illness as for physical conditions including ADD, autism, drug and alcohol addiction Effective: 1/1/00 Effective: 3/20/01 H 2095 allows for additional category for certification of substance abuse counseling assistants. Outlines the scope of practice between a substance abuse counselor and an assistant. Washington 1998 Provided for study of parity Failed in committee H 1080 (S 5211): Provide parity for coverage under health plans for public employees, disability 4/25/01 insurance contracts providing health care coverage to groups 50 or more, health care contracts & HMO plans for groups 50 or more and for groups with at least 25 persons but fewer than 50 issued or renewed after July 1, 2003. Requires single annual maximum for out of pocket limits. Allows for separate mental health deductible that must be offered at parity. Plans serving adults allowed to have differential co-pays/coinsurance requirements. Wellness/preventive services for children reimbursable at 100%. Mental health services include outpatient and inpatient services to treat any mental disorder found in the DSM and prescription drugs. Amended to focus on access for children to mental health services by making co-pays comparable to medical/surgical services, and providing for a single deduct ible for all health care services. Managed care language dropped. Includes minimum standards for health plans of 30 outpatient visits, and 15 inpatient days. Includes a small business exemption of less than 25 employees. Effective date 01/01/ 2002. West Virginia 1997 Provided for study of parity The de la Parte Institute 47 APPENDIX A: SUMMARY OF STATE PARITY LEGISLATION West Virginia Both bills failed on floor 5/15/01 S 390: Provides coverage at parity in private group health plans & state employees health plan for SMIdefined as schizophrenia & other psychotic disorders, bipolar illness, depressive disorders, substance abuse & anxiety disorders. Provides benefit for children (18 years and younger) for ADHD, attachment disorder, disruptive behavior disorder, eating disorder & oppositional defiance disorder. 2% cost increase exclusion cap. Requires a study by commissioner of insurance. H 2601: Health plans will provide coverage to individual/group members for expenses arising from the treatment of mental illness. SMI defined as schizophrenia & other psychotic disorders, bipolar disorder, depressive disorder, substance abuse & anxiety disorders. Includes children to the age of nineteen years ADHD, attachment disorder, disruptive behavior disorder, eating disorder and ODD. Contains a 2% increase cap. Removes visit limits found in existing law. Requires insurance commissioner conduct an impact study of bill with report to Legislature. Impact on state employee plan reported separately. Sunsets 2006. Wisconsin S 157: Parity in group policies written for mental health & addictions. Includes rates, deductibles, co- In Senate committee pays, coinsurance, annual & lifetime limits, out of pocket & out of network limits, visits limits & medical 4/25/01 necessity definitions. Individual policies required to offer coverage at parity if they offer MH/addictions coverage. Contains language describing parity coverage under collective bargaining agreements. Wyoming H 59: Parity for coverage provided in individual/group plans for treatment of biologically based mental Failed in committee illness - defined as schizophrenia, schizoaffective disorder, bipolar affective disorder, major depressive 1/29/01 disorder, OCD and panic disorder. Effective 07/01/2001. REFERENCE SOURCES: The Health Policy Tracking Service, National Conference of State Legislatures, the American Psychiatric Association’s State of the States: Parity Laws [http://www.psych.org/pub_pol_adv/paritysos0401_5201.cfm], and the following legislative web sites: Alabama [http://www.legislature.state.al.us] Alaska [http://www.legis.state.ak.us] Arizona [http://www.azleg.state.az.us] Arkansas [http://www.arkleg.state.ar.us] California [http://www.leginfo.ca.gov] Colorado [http://www.state.co.us/gov_dir/stateleg.html] Connecticut [http://www.cga.state.ct.us/] Delaware [http://www.state.de.us/research/assembly.htm] Florida [http://www.leg.state.fl.us/] Georgia [http://www2.state.ga.us/Legis/] Hawai’i [http://www.capitol.hawaii.gov/] Idaho [http://www2.state.id.us/legislat/legislat.html] Illinois [http://www.state.il.us/state/legis/] Indiana [http://www.state.in.us/legislative/] Iowa [http://www.legis.state.ia.us/] Kansas [http://www.state.ks.us/public/legislative/] Kentucky [http://www.lrc.state.ky.us/home.htm] Louisiana [http://www.legis.state.la.us/] Maine [http://janus.state.me.us/legis/] Maryland [http://mlis.state.md.us/] Massachusetts [http://www.magnet.state.ma.us/legis/legis.htm] Michigan [http://michiganlegislature.org/] Minnesota [http://www.leg.state.mn.us/] Mississippi [http://www.ls.state.ms.us/] Missouri [http://www.moga.state.mo.us/] 42 48 Mental Health Parity NATIONAL AND STATE PERSPECTIVES 2001 Montana [http://www.mt.gov/leg/branch/branch.htm] Nebraska [http://www.unicam.state.ne.us/index.htm] Nevada [http://www.leg.state.nv.us/] New Hampshire [http://www.state.nh.us/gencourt/gencourt.htm] New Jersey [http://www.njleg.state.nj.us/] New Mexico [http://legis.state.nm.us/] New York [http://assembly.state.ny.us] North Carolina [http://www.ncga.state.nc.us/] North Dakota [http://www.state.nd.us/lr/] Ohio [http://www.state.oh.us/ohio/legislat.htm] Oklahoma [http://www.lsb.state.ok.us/] Oregon [http://www.leg.state.or.us/] Pennsylvania [http://www.legis.state.pa.us] Rhode Island [http://www.rilin.state.ri.us/] South Carolina [http://www.leginfo.state.sc.us/] South Dakota [http://www.state.sd.us/state/legis/lrc.htm] Tennessee [http://www.legislature.state.tn.us/] Texas [http://www.capitol.state.tx.us/] Utah [http://www.le.state.ut.us] Vermont [http://www.leg.state.vt.us/] Virginia [http://legis.state.va.us/] Washington [http://www.leg.wa.gov/] West Virginia [http://www.legis.state.wv.us/] Wisconsin [http://www.legis.state.wi.us/] Wyoming [http://legisweb.state.wy.us] Appendix B: Statistics TABLE 1 Projected Need of Adult Mental Health in Florida, 1995-2010 Services by Cost Center BY YEAR Assessment Case Management State Hospitals % of Need Met 1995 Projected Number of Persons in Need of Adult Mental Health Care 1995 2000 2005 2010 8.05 42,761 47,173 51,148 55,722 10.09 171,042 188,692 205,671 222,887 145.31 3,269 3,629 3,955 4,286 Crisis Stabilization 84.37 48,791 54,430 59,328 64,294 Crisis Support 42.18 50,436 55,640 59,328 65,723 Day-Night 34.76 42,761 47,173 51,148 55,722 18,574 Drop-In/Self 499.71 14,254 15,724 17,139 Forensic 90.05 1,664 2,419 2,637 2,858 Intervention 14.41 24,450 26,601 29,005 31,433 Outpatient 44.33 142,535 157,243 171,393 185,739 Outpatient Medical 0. 118,414 128,214 139,751 151,449 Overlay 5.51 46,596 52,011 56,691 61,437 Prevention & Prevention/Interv. Day 0 0 0 0 Residential Level 1 37.13 0 3,289 3,629 3,955 4,286 Residential Level 2 58.07 4,386 4,838 5,274 5,715 Residential Level 3 30.83 6,579 6,048 6,592 7,144 Residential Level 4 0 7,675 8,467 9,229 10,001 Respite 0 0 0 0 0 Sheltered Employment 5.86 5,700 6,048 6,592 7,144 Supported Employment 7.60 14,254 15,724 17,319 18,574 Supported Housing 0.48 75,105 83,460 90,970 98,585 0 19.59 0 823,961 0 90 7, 171 7,1 07, 0 988,803 0 72 71 , 5 1 ,0 57 ,07 TASC T OTA L Source: Petrila & Stiles, 1995 The de la Parte Institute 49 APPENDIX B: STATISTICS TABLE 2. Estimates of the Number of Persons in Florida with Severe Mental Illness (SMI) by Age, Race, and Sex, 1995-2010 Age Distribution Year Population SMI (2.8%) 18-64 65+ Gender Distribution Male Female Race Distribution White Non-White 1995 11,014,012 308,392 305,962 9,965 111,949 203,978 249,234 58,742 2000 12,095,616 338,677 340,543 10,884 113,823 228,701 272,078 66,403 2005 13,184,043 369,163 367,038 11,751 122,726 244,966 295,509 74,572 2010 14,287,630 400,053 394,392 13,050 143,654 263,788 315,423 83,335 65% 81% % 100% 97% 3% 35% 19% Source: Petrila & Stiles, 1995 Notes: (a) Prevalence rates for individuals in the youngest end of the distribution are higher than for individuals in the older ages. (b) One explanation between the large spread between men and women is explained by the greater number of females with affective disorders. (c) The mathematical variability within 2.8% is such that none of the numbers in the aggregate per demographic distribution will add to the figure derived from 2.8% of the total population. However, when you divide the categorical numbers by their representative totals, each of the numbers equates to approximately 2.8% of the population. During any twelvemonth period, 5.4 % of Floridians will experience a mental illness and 7 % of Floridians will experience a substance abuse disorder. Committee on Children and Families 1999 50 The de la Parte Institute APPENDIX B: STATISTICS TABLE 3. Estimated Public Mental Health and Substance Abuse Expenditures in Florida in 1998 MH Costs SA Costs MHSA Costs Costs (thousands) % of public MH Costs % of all MH Costs* Costs (thousands) % of public SA Costs % of all SA Costs* Costs (thousands) % of all Costs* Medicare Hospital-based a Other Outpatient/Residentalb Retail Prescription Drugs c Insurance Adm inistration d $1,026,965 $491,076 41.7% 19.9% 23.9% 11.4% $91,587 $23,073 20.5% 5.2% 13.2% 3.3% $1,118,552 $514,149 22.4% 10.3% $314,901 12.8% 7.3% $67,886 15.2% 9.8% $382,787 7.7% $196,396 8.0% 4.6% $252 0.1% 0.0% $196,648 3.9% $24,592 1.0% 0.6% $376 0.1% 0.1% $24,968 0.5% Medicaid Hospital-based a Other Outpatient/Residentalb Retail Prescription Drugs c Insurance Adm inistration d $725,825 $140,705 29.4% 5.7% 16.9% 3.3% $132,286 $4,614 29.6% 1.0% 19.1% 0.7% $858,111 $145,319 17.2% 2.9% $372,077 15.1% 8.6% $126,345 28.3% 18.2% $498,422 10.0% $183,986 7.5% 4.3% $627 0.1% 0.1% $184,613 3.7% $29,057 1.2% 0.7% $699 0.2% 0.1% $29,757 0.6% Other Federal Hospital-based a Other Outpatient/Residentalb Retail Prescription Drugs c Insurance Adm inistration d $121,213 $12,823 4.9% 0.5% 2.8% 0.3% $95,580 $767 21.4% 0.2% 13.8% 0.1% $216,793 $13,590 4.3% 0.3% $92,537 3.8% 2.2% $93,784 21.0% 13.5% $186,320 3.7% $8,626 0.3% 0.2% $511 0.1% 0.1% $9,137 0.2% $7,227 0.3% 0.2% $519 0.1% 0.1% $7,746 0.2% $591,281 $25,582 24.0% 1.0% 13.7% 0.6% $126,994 $7,031 28.4% 1.6% 18.3% 1.0% $718,275 $32,613 14.4% 0.7% $485,689 19.7% 11.3% $118,667 26.6% 17.1% $604,356 12.1% $42,080 1.7% 1.0% $640 0.1% 0.1% $42,719 0.9% $37,930 1.5% 0.9% $657 0.1% 0.1% $38,587 0.8% $2,465,284 $670,186 100.0% 27.2% 57.3% 15.6% $446,447 $35,485 100.0% 7.9% 64.3% 5.1% $2,911,730 $705,671 58.3% 14.1% $1,265,203 51.3% 29.4% $406,681 91.1% 58.6% $1,671,885 33.5% $431,088 17.5% 10.0% $2,030 0.5% 0.3% $433,117 8.7% $98,806 4.0% 2.3% $2,251 0.5% 0.3% $101,057 2.0% Payer and Provider Type Other State and Local Hospital-based a Other Outpatient/Residentalb Retail Prescription Drugs c Insurance Adm inistration d Total – All Public Payers Hospital-based a Other Outpatient/Residentalb Retail Prescription Drugs c Insurance Adm inistration d SOURCE: Kip, K.E. (2000). See page 52 for all footnoted citations (*, a-d). The de la Parte Institute 51 APPENDIX B: STATISTICS TABLE 4. Estimated Private Mental Health and Substance Abuse Expenditures in Florida in 1998 MH Costs % of all MH Costs* SA Costs % of Costs private SA (thousands) Costs* MHSA Costs % of all SA Costs Costs (thousands) % of all Costs* Payer and Provider Type Costs (thousands) % of private MH Costs Out-of-Pocket Hospital-baseda Other Outpatient/ Residentalb Retail Prescription Drugsc Insurance Administrationd $681,768 $50,944 37.1% 2.8% 15.8% 1.2% $67,581 $18,823 27.3% 7.6% 9.7% 2.7% $749,348 $69,767 15.0% 1.4% $467,469 25.4% 10.9% $48,201 19.4% 6.9% $515,670 10.3% $126,848 6.9% 2.9% $290 0.1% 0.0% $127,138 2.5% $36,507 2.0% 0.8% $267 0.1% 0.0% $36,774 0.7% $1,051,986 $243,837 57.3% 13.3% 24.5% 5.7% $160,793 $26,054 64.9% 10.5% 23.2% 3.8% $1,212,779 $269,891 24.3% 5.4% $583,215 31.7% 13.6% $133,256 53.8% 19.2% $716,471 14.3% $179,388 9.8% 4.2% $745 0.3% 0.1% $180,133 3.6% $45,546 2.5% 1.1% $738 0.3% 0.1% $46,284 0.9% $103,378 $14,621 5.6% 0.8% 2.4% 0.3% $19,498 $5,296 7.9% 2.1% 2.8% 0.8% $122,876 $19,917 2.5% 0.4% $68,403 3.7% 1.6% $14,033 5.7% 2.0% $82,436 1.6% $15,012 0.8% 0.3% $92 0.0% 0.0% $15,103 0.3% $5,342 0.3% 0.1% $78 0.0% 0.0% $5,420 0.1% $1,837,131 100.0% 42.7% $247,872 100.0% 35.7% $2,085,003 41.7% Insurance Hospital-baseda Other Outpatient/Residentalb Retail Prescription Drugsc Insurance Administrationd Other Private Hospital-baseda Other Outpatient/ Residentalb Retail Prescription Drugsc Insurance Administrationd Total – All Private Payers Hospital-baseda Other Outpatient/ Residentalb Retail Prescription Drugsc Insurance Administrationd $309,402 16.8% 7.2% $50,173 20.2% 7.2% $359,575 7.2% $1,119,087 60.9% 26.0% $195,490 78.9% 28.2% $1,314,577 26.3% $321,247 17.5% 7.5% $1,127 0.5% 0.2% $322,374 6.5% $87,395 4.8% 2.0% $1,082 0.4% 0.2% $88,477 1.8% *Public and private costs combined. SOURCE: Kip, K.E. (2000) a ”Hospital-based” services include all services owned and operated by hospitals – inpatient, outpatient (including clinics and home health), and residential facilities (including nursing homes). b ”Other out-patient and residential care” includes all providers except hospital-based services, retail prescription drugs, and insurance administration. Note: hospital-based services include outpatient services, which are thus excluded from the “other out-patient and residential care” category. This latter category captures most out-patient and non-hospital based services to MH/SA clients. c ”Retail prescription drugs” includes prescriptions obtained through retail (pharmacy or mail order) distribution. Inpatient drug treatment and facilities which dispense drugs through public programs, such as methadone clinics, are not included in this category, but rather as part of the specific facility expenditure. d ”Insurance administration” includes the administrative expenses of all third-party payers and profit and reserve adjustment for private insurers. 52 The de la Parte Institute