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
The federal Mental Health Parity Act of 1996 re-
resulted in modest, if any, cost increases and
increased access to services. For example:
·
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
costs were inconsistent and inconclusive. Many of
these estimation efforts were hampered by reliance
on inappropriate economic and actuarial models
Rhode Island reported a less than one-percent
increase in total plan costs under parity.
·
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:
·
·
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
shelters and services. People who are underinsured
toward individuals with mental disorders;
are forced by arbitrary caps and limits to increasingly
assuring selected health plans do not suffer
selection of treating individuals with the most
serious mental disorders;
rely on the public sector. By providing parity for
mental health, Florida will bring mental health into
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;
·
By failing to appropriately treat adults and children
overcoming discrimination and reducing stigma
financial disadvantages from the adverse
·
expense, lost productivity, and disrupted lives.
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).
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
aid are primarily for patients 21 years of age or under
and 65 years or older. Nevertheless, in restructuring
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.
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
behavioral health
Security Income (SSI), and other welfare programs
“... 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)
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,
individuals have more access to outpatient services,
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.
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
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
Mental Health Parity Act as a significant or primary
health benefits or health coverage since the law was
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).
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
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).
during 1987-1992.
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
The National Advisory Mental Health Council (1997)
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
Thirty-two states (Arizona, Arkansas, California,
Colorado, Connecticut, Delaware, Georgia, Hawaii,
Illinois, Indiana, Kansas, Louisiana, Maine, Mary-
states that have passed more comprehensive or a
greater level of mental health parity legislation to be
exempt from federal law.
land, 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
Pennsylvania The first state-level study of parity,
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-
percent (NIMH funded study prepared by Grazier and
associates, 1999).
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.
over the 1990 census count of 12,937,926 664. In
1
Further, law enforce-
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).
Medicaid program was expected to average 1.53 million
1
The estimated costs of mental health
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,
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-
(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
th
th
rd
Florida law, however,
Statutes, §627.668). In addition, insurers are autho1
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.
Additionally foster care children, who without medical
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.
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
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
benefit that would have affected approximately 35.7
Both House and Senate
staff analyses stated
that mental health
parity is an affordable
benefit for the people of
the state of Florida.
health benefit plan
committee to consider
and recommend modifications to standard, basic,
and limited health benefit
plans. The bill amended
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
Opponents of parity in Florida insist that by mandating
coverage, premium costs will increase. In Kansas
(Praeger, 2001), the negative connotations of the term
persons with severe mental illness who will fall under
the parity law: approximately 114,000 adults and
40,000 children.
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
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
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.
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. As of June 12, 2001, there was no
the demands for new resources from financially
representation from Florida.
strapped public and private purchasers.
30
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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
% of Need
Met
1995
1995
Projected Number of Persons in Need
of Adult Mental Health Care
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
Case Management
State Hospitals
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
07,
7,1
0
988,803
0
1 ,0
71 , 5
72
,07
57
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
Payer and Provider
Type
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%
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
MHSA Costs
% of
all
SA
Costs
Costs
(thousands)
% of
all
Costs*
Payer and Provider
Type
Costs
(thousands)
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
% of
all MH
Costs*
SA Costs
% of
Costs private
(thousands)
SA
Costs*
% of
private MH
Costs
$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
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