Big Companies Must Pay Their Federal Mental Health Bills

Big Companies Must Pay Their Federal Mental Health Bills

Federal law will soon mandate more generous mental health care benefits and end drive-through deliveries, but the cost is expected to be modest.

Congressional conferees agreed last week to accept two amendments to a broader measure appropriating funds for two federal agencies.

Those amendments will  require:

* Employers with more than 50 employees to offer in their group medical plans the same annual and lifetime limits for treatment of mental illness and disorders as they provide for physical problems.

healthinsGroup plans, though, could continue to offer different and higher deductibles and coinsurance requirements for mental disorders than for physical problems, while parity would not be required for treatment of substance abuse and chemical dependency.

In addition, employers would be exempt from this new, but limited mental health care benefits parity requirement if they can prove that parity will increase plan costs by at least 1%. There are questions, though, on how employers would have to prove that they are entitled to such an exemption.

The federal mental health care benefit mandate itself would expire on Sept. 30, 2001.

* Group health care plans to offer at least 48 hours of inpatient coverage for mothers and their newborns after a normal vaginal delivery and 96 hours of coverage after a Caesarean section.

Patients would be free to leave a hospital sooner, but that decision would have to be a mutual one of the physician and mother rather than required by an insurer or employer.

These amendments were included as part of a broader measure that appropriates funds for the U.S. Veterans Administration and the Department of Housing and Urban Development. Final passage of the measure was expected late last week or this week. President Clinton is expected to sign the bill.

Last week’s action ended weeks of suspense and an unsuccessful employer lobbying campaign that began after the two amendments were added to the appropriations bills on the Senate floor.

For some employer lobbying groups, there was bitterness over the passage of the amendments and fear on what it portends.

“What is disturbing is that Congress is willing to entertain legislation of this scope in the absence of hearings, or written records. It spells out an extraordinary danger to the employer community regardless of who controls the Congress,” said Mark Ugoretz, president of the ERISA Industry Committee in Washington.

The congressional action, Mr. Ugoretz said, is election-year politics. “This is election survival. This is typical of the feeding frenzy that occurs at the end of a session,” he added.

But advocates of the amendments put a different spin on the congressional action.

Sen. Pete Domenici, R-N.M., the chief Senate sponsor of the mental health care benefits amendment, said its passage “begins to move us out of the Dark Ages. . .and beyond the discrimination. It gets rid of a terrible stigma. It is a breakthrough for the mentally ill.”

Mental health care advocates also were jubilant. “This is a step toward elimination of discrimination” in coverage of mental health care services, said Russ Newman, executive director for professional practice at the American Psychological Assn. in Washington.

Backers of expanded hospital coverage for mothers and their newborns said its enactment will – appropriately so – leave medical decisions with the patient and her physician.

“The decision is appropriately placed where it should be and that is with the physician and the mother,” said Rep. Bill Thomas, R-Calif., chairman of the House Ways and Means Health subcommittee.

While employer lobbying failed to stop the amendments, it succeeded in narrowing the scope of the mental health care amendment. Sen. Domenici had originally pressed for legislation that would have mandated coverage equity for physical and mental health care benefits. Such a mandate would have increased group health care plan costs from between 4% to 9%, according to various studies.

The amendment agreed to by conferees falls far short of that. Employers still will be able to offer different cost-sharing arrangements for mental health care services compared with coverage for physical medical problems.

For example, employers will be able, as many now do, to require employees obtaining mental health care services to pay 50% of each bill, while requiring employees obtaining services for physical medical care to pay only 20% of the bill.

In addition, employers still will be able to direct employees to managed mental health care networks so that employees using the network will have lower out-of-pocket costs than those who go outside the network.

The legislation does however, bar the common practice of imposing lower annual and lifetime benefits for mental health care services compared to those for physical problems.

So long as employers can continue to manage utilization through networks, there should be little, if any, cost increase, said Joan Pearson, a principal in the Seattle office of Towers Perrin.

Congressional backers of mental health care benefits parity have said plan costs could increase anywhere between .16% and .4%.

Mental health care costs, which a decade ago were soaring, have been decreasing sharply in recent years as care has been better managed through medication and expanded use of day treatment rather than hospitalization, said Ms. Pearson.

The legislation does, however, exempt group plans from the mandate if they can prove that mental health care benefits parity increases plan costs by at least 1%.

While regulations will have to be developed to lay out how such proof or certification could be supplied, a congressional staffer said it wouldn’t be enough for an employer to provide a statement from an actuary saying plan costs would increase 1%.

Benefit consultants say the cost of the maternity provision also should be modest.

More than two dozen states already have imposed such requirements on commercial insurance companies and health maintenance organizations. HMOs, especially in California, led the drive – and triggered the public backlash – for shorter hospital stays, often dubbed drive-through deliveries.

“This will have only a negligible impact on health care costs,” said Woody McDonald, a Towers Perrin principal in Overland Park, Kan.

“Because the cost impact is so negligible, logic would dictate that this would not result in rate increases for HMOs in competitive markets,” he added.

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