Implications/Impact of Parity Legislation
and Healthcare Reform for Behavioral
Health: Systems Perspectives
Chuck Ingoglia
Vice President, Public Policy
National Council for Community Behavioral
Healthcare
Healthcare Reform and the
Behavioral Health Safety Net Overview
We are on the cusp of the second (and most significant) wave of
public behavioral health change in the last 25 years
Not a moment too soon...
Healthcare Reform and the
Behavioral Health Safety Net Overview
Where does the Safety Net MH/SU fit into the equation?
“Hypothesis #1”:
– Due to greater understanding of how many
Americans suffer from mental health and
substance use disorders and how expensive
the total healthcare expenditures are for this group...
– We have reached a tipping point in understanding the importance of
treating the healthcare needs of persons with serious mental
illness and the behavioral healthcare needs of all Americans...
– Which are creating a set of exciting opportunities for the
Community Behavioral Healthcare Organizations in the U.S.
Healthcare Reform and the
Behavioral Health Safety Net Overview
Where does the Safety Net MH/SU fit into the equation?
“Hypothesis #2”:
– Due to greater understanding of how many
Americans suffer from mental health and
substance use disorders and how expensive
the total healthcare expenditures are for this
group...
– We have reached a tipping point in understanding the importance of
treating the healthcare needs of persons with serious mental
illness and the behavioral healthcare needs of all Americans...
– Which are creating a set of unprecedented threats for the
Community Behavioral Healthcare Organizations in the U.S.
National Healthcare Reform
Root Cause Analysis
• Root Cause Analysis: Wrong incentives and many disincentives that
lead to:
– Lack of Access due 48 million citizens without insurance and resource
misallocation
– Overuse of unnecessary, high cost tests and procedures
– Underuse of prevention, early intervention primary care and behavioral health
services
– Medical errors due to poor
coordination among providers,
poor communication with patients,
and more..
• As much as 30 percent of health
care costs (over $700 billion per
year) could be eliminated without
reducing quality
National Healthcare Reform
Four Key Strategies
U.S. health care reform, with or without federal legislation, is
moving forward to address key issues
7
Coverage Expansion: Federal Healthcare Bill
• The President’s Proposal:
– Requires most individuals to have Coverage
– Provides Credits & Subsidies up to 400%
Poverty
– Employer Coverage Requirements (>50
employees)
– Small Business Tax Credits
– Private Insurance policy costs include $1,000
per year of Uncompensated Care
– Creates State Health Insurance Exchanges
– Expands Medicaid
Coverage Expansion – Parity Legislation
• Law: Mental Health and Substance Use Services must be
provided at parity with general healthcare services (no
discrimination)
– Large Employers (Parity Act)
– Medicaid (Parity Act & Reform Legislation)
– Health Insurance Exchanges for Individual and Small
Group Policies (Health Reform Legislation)
– Medicare: more to do (Medicare Improvements
Act – MIPPA)
• The controversial question is whether
insurance companies will provide adequate
“scope of services” for persons with SMI/SED
9
Coverage Expansion: Most Members
of the Safety Net will have Coverage Including MH and SU
Impact of U.S. Health Reform on Coverage for Non-Elderly
Senate Finance Committee Reform Bill
Current
Law 2019
(Millions)
Medicaid/CHIP
35
Private/Other Insured
193
Covered Non-Elderly
228
Reform
Impact
(Millions)
15
16
31
• $15 to $23 billion in added
spending for MH/SU from
insurance expansion
• No credible info yet on
$ impact of Parity Act
Reform
Total
(Millions)
50
209
259
Reform
Impact
%
43%
8%
• 15 Million increase in
Medicaid enrollees (43%)
• 16 Million increase in
Privately Insured
Senate Healthcare Reform Bill
Medicaid & SCHIP Expansion
Healthcare Exchange Subsidies
Total Expansion Funding
Behavioral Health Spending @ 8%
Behavioral Health Spending @ 10%
Behavioral Health Spending @ 12%
2019
$87,000,000,000
$106,000,000,000
$193,000,000,000
$15,440,000,000
$19,300,000,000
$23,160,000,000
10
Coverage Expansion: Most Members
of the Safety Net will have Coverage Including MH and SU
And a much
greater demand
for service
providers
Note that these
figures are based
on closing the gap
halfway for just
the indigent &
uninsured
individuals with a
SMI/SED
11
Insurance Reform
• The President’s Proposal:
–
–
–
–
Requires guaranteed issue and renewal
Prohibits all annual and lifetime limits
Bans pre-existing condition exclusions
Create an essential health benefits package that
provides comprehensive services including
MH/SU at Parity
– Requires health plans to spend 80%/85% of
premiums on clinical services
– Creates a new Health Insurance Rate Authority to
provide oversight at the Federal level and help
States determine how rate review will be enforced
Service Delivery Redesign and
Payment Reform
• $700 Billion Question: Will the
current legislative and regulatory
tools at our disposal be enough to
improve the health status of
Americans and bend the cost curve?
• MH/SU Question: Is the answer to
the above question the same for
Americans with mental health and/or
substance use disorders?
National Healthcare Reform
Strategies and the MH/SU Safety Net
• 49% of Medicaid beneficiaries with disabilities have a psychiatric illness
(this is new information; previous studies that excluded pharmacy claims
calculated the rate at 29%); AND this is the most expensive population...
The Faces of Medicaid III: Refining the Portrait of People with Multiple Chronic Conditions
Center for Health Care Strategies, Inc., October 2009
14
National Healthcare Reform
Strategies and the MH/SU Safety Net
There is huge
variation among the
states in MH
funding
Most states have
less than half the
funding of the
average of the 10
most well-funded
states
How will HC
Reform address
this?
SMHA-Controlled Mental Health Revenue by State, FY 2006
State
Pennsylvania
Maine
District of Columbia
Alaska
New Hampshire
Maryland
New Jersey
Minnesota
Vermont
New York
Top 10 Average
Total State
Target # of
Revenue
Mental Health
Persons to per Target
Revenue
Serve/Year
Client
Rank
$3,332,904,698
544,949
$6,116
1
$464,300,000
76,362
$6,080
2
$229,400,000
38,093
$6,022
3
$183,200,000
33,512
$5,467
4
$166,100,000
38,394
$4,326
5
$810,000,000
233,097
$3,475
6
$1,241,600,000
365,082
$3,401
7
$721,100,000
213,635
$3,375
8
$122,500,000
36,426
$3,363
9
$3,982,300,000
1,287,434
$3,093 10
$4,472
Montana
Wisconsin
Wyoming
Iowa
Arizona
California
Oregon
North Carolina
Michigan
Washington
$137,500,000
$600,400,000
$52,600,000
$299,300,000
$977,900,000
$5,300,000,000
$432,300,000
$1,105,400,000
$1,010,000,000
$624,500,000
51,778
230,727
22,248
133,468
447,063
2,474,848
202,819
530,609
485,839
304,553
$2,656
$2,602
$2,364
$2,242
$2,187
$2,142
$2,131
$2,083
$2,079
$2,051
11
12
13
14
15
16
17
18
19
20
$ Over
% Over
(Under)
(Under)
Top 10
Top 10
Average
Average
$1,644
37%
$1,608
36%
$1,550
35%
$995
22%
-$146
-3%
-$997
-22%
-$1,071
-24%
-$1,096
-25%
-$1,109
-25%
-$1,379
-31%
-$1,816
-$1,870
-$2,108
-$2,229
-$2,284
-$2,330
-$2,340
-$2,389
-$2,393
-$2,421
-41%
-42%
-47%
-50%
-51%
-52%
-52%
-53%
-54%
-54%
National Healthcare Reform
Strategies and the MH/SU Safety Net
The underfunding problem is even
greater in Substance Use
– In Treatment: 2.3 million
– Not in Treatment:
• Tens of millions (McClellan)
• 21% + (Willenbring)
How do we even begin to
address these gaps as
states and health plans
realize they have to
provide SU services
at parity?
In Treatment ~2.3 million
“Abuse/Dependence” ~23 million
“Unhealthy Use” ?? million
Little/No Substance Use
National Healthcare Reform
Strategies and the MH/SU Safety Net
Relevance of:
• Coverage Expansion: YES, YES, YES
• Insurance Reform: YES (dumping); this will become more important as
Exchanges cover those between 134% and 400% Poverty Level
• Service Delivery Redesign: MAYBE
– Will the general healthcare system be willing to treat persons with > Mild MH/SUD?
– Will Medical Home Prevention, Early Intervention and Care Management strategies
get close to meeting the needs of persons with > Mild MH/SUD?
– Will payors support embedding Primary Care in CBHOs to the extent needed to
serve those with serious/severe MH/SU disorders?
– Will the CBHO system be invited (late) to the $20B HIT Incentives “party”?
• Payment Reform: Even more of a MAYBE
– Will funding levels (beyond newly insured) come closer to matching need? What
about in the states that are 1/3 or 1/4 of the average of the top 10?
– Will new payment models be applies to MH/SU and will existing payment barriers be
removed?
Emerging BH Safety Net Service Delivery Models
• This translates into my hypothesis that CBHOs will need to ensure that
they meet a set core competencies in order to continue being an
important part of the healthcare delivery system.
1. A full Array of Specialty Behavioral Health Services
2. A well defined Assessment Process and Level of Care System
3. A solid approach to Prevention, Early Intervention, and Recovery
4. The ability to practice as a Team to Coordinate Care
5. Demonstrated use of Clinical Guidelines
6. Measurement Systems and Tools that measure consumer improvement
7. A robust Electronic Health Record that includes Patient Registries
8. Quality Improvement Processes and supporting Data Systems
9. Financial Systems to manage Case Rate Payments & the FQBHC
Prospective Payment System (see below)
Emerging Behavioral Healthcare System Models
• Starting with assessing how things will unfold in your state
Emerging Behavioral Healthcare System Models
Things
get really
exciting
when we
think
about
MH/SU
Carve-In
and
CarveOut
models
The Big Transition – In Your State and Community
Present
Preparation
- Identify Need
- Create Design Team
- Develop (Re)Design
Workplan
(Re)Design Process
Prioritize External Changes
- Payor Negotiation/RFP Process
- Network Formation
- Merger & Acquisition
- MSO/ASO Service
Test Changes for
Financial Feasibility
- Demand/Capacity
- Make/Buy
- Revenue/Expense
- Alternative Scenarios
Future
Workplan
Implementation
External Market
Analysis
- Patients and Population
- Funders and Payors
- Colleagues and
Competitors
Internal Assessment
- Select/Design a Tool
- Complete the Assessment
- Determine Strengths and
Weaknesses
Prioritize Internal Changes
1. Leadership and Vision
2. Human Resources
3. Service Delivery
4. Quality Improvement
5. Service Utilization
6. Financial Planning/Management
7. Patient/Financial Accounting
8. Management Information
9. Marketing/Public Relations
Detailed Workplan
- Change Areas
- Area Lead
- Tasks
- Staff Resources
- Other Resources
- Timeline
Ongoing
System
Improvement
Additional Financing Flow Concept
• Assuming that parity will be embedded as a requirement for most health plans
in the final healthcare reform legislation and a broader behavioral health benefit
will be available for most people with coverage, and …
• Drawing on the California Integration Policy Initiative framework of Mild,
Moderate, Serious and Severe Levels of Care, and …
Untangling the MH/SU Funding
Current
Healthcare
Funding
Current
MH/SU
Funding
General Healthcare System Funds
MH/SU Services for Mild &
Moderate Levels of Care (mostly in
Primary Care Settings)
Specialty MH/SU System Funds MH/
SU Services for Serious & Severe
Levels of Care (mostly in Specialty
Care Settings)
For example, the new ABD managed care plans should have a MH/SU benefit
for primary care-based brief services
22
Introduction
• Paul Wellstone and Pete Domenici Mental Health Parity and
Addiction Equity Act of 2008 (MHPAEA)
– Generally effective for plan years after October 3, 2009
– Applies to both mental health and substance use disorder
(MH/SUD) benefits
• Interim Final Regs issued February 2, 2010 (75 Fed. Reg. 5410)
– Agencies are requesting comments-- they may issue revisions
– Most health plans will need to be reviewed and possibly
amended in light of these rules
23
Session Overview
• Provide an overview of new parity regulations, explaining
important components as well as what was left out
• Describe how the regulations will impact the benefit plans
and policies of Medicaid plans, health insurance exchanges,
and private health insurance companies
• Discuss the implications for persons with mental health and
substance use conditions and organizations that serve them
• Impact on access to various services and provider-types
• Consider action steps by providers in related to parity regs.
24
General Information on Mental
Health Parity and Addiction Equity Act
• Regulations apply for plan years beginning July 2, 2010
• Collectively bargained plans have slightly different dates
• General rule – parity applies to if a plan offers
medical/surgical and MH/SUD benefits (> 50 employees)
• A plan may not apply any financial requirement or
treatment limitation to mental health or substance use
disorder benefits requirement or treatment limitation
applied to in any classification that is more restrictive
than the predominant financial substantially all
medical/surgical benefits in the same classification
25
Requirements/Limitations
• Financial requirements – e.g., deductibles, copayments,
coinsurance, out-of-pocket maximums
• Treatment limitations – limit benefits based on frequency
of treatment, number of visits, days of coverage, days in a
waiting period, and “other similar limits on the scope
and duration of treatment”.
– Quantitative treatment limitation – expressed numerically,
e.g., annual limit of 50 outpatient visits
– Nonquantitative treatment limitation – not expressed
numerically but otherwise limits the scope or duration of
benefits
26
Classifications of Benefits
• 6 classifications of benefits:
–
–
–
–
–
–
Inpatient, in-network
Inpatient, out-of-network
Outpatient, in-network
Outpatient, out-of-network
Emergency care
Prescription drugs
• These are the only classifications used for MHPAEA
• Distinctions between generalists and specialists are not
separate classifications (eg. same copays required)
27
Classification of Benefits (cont’d)
• A plan must provide MH/SUD benefits in each
classification in which it provides medical/surgical benefits
– The complete exclusion of coverage in a classification is
considered a treatment limitation
– Rules do not require an expansion of the range of
conditions/disorders covered under the plan
– - This is a clear example of the regulations requiring parity
in scope of services i.e. all levels and types of care for
Med/Surg benefits in these 6 classifications must be
provided for MHSUD
– Inpatient, outpatient, and emergency care are defined
by the plan – must be applied uniformly
28
Analyzing Plan Benefits
• Part 1 - A requirement/limit applies to substantially all
medical/surgical benefits in a classification if it applies to at
least 2/3 of the benefits in that classification
– If not, it cannot be applied to MH/SUD benefits in that
category
• Part 2 - The predominant level is the one that applies to
more than 1/2 of medical/surgical benefits subject to the
requirement/limit in that classification
• Measurement is performed on medical/surgical benefits
alone and then applied to MH/SUD benefits
• Type (eg. copays) or level (eg. dollar amount, days, or
percent) of limitation or financial requirement
29
Analyzing Plan Benefits (cont’d)
• Example:
- If 70% of the projected payments for inpatient, in-network
medical/surgical benefits were subject to a $15 copay….
…then…
- No inpatient, in-network MH/SUD could be subject to a copay
greater than $15
30
Cumulative Requirements
• Definitions:
– Cumulative financial requirements
– e.g., deductibles (excludes lifetime and annual dollar
limits)
– Cumulative quantitative treatment limitations
– e.g., annual or lifetime day or visit limits
• MH/SUD and medical/surgical benefits must accumulate
toward the same, combined deductible (or other
cumulative requirement/limit) within a classification
– In other words, separate but equal deductibles are not
allowed (even if a plan uses more than one service provider)
31
Nonquantitative Treatment Limitations
• Definition - Not expressed numerically but otherwise limits the
scope or duration of benefits
• Non-exhaustive list of examples:
– Medical management (e.g., utilization review, preauthorization,
concurrent review, retrospective review, case management, etc.)
– Prescription drug formulary design
– Standards for provider participation in a network, incl, reimb.
rates
– Determinations of UCR amounts
– Fail-first or step therapy protocols
– Conditioning benefits on completing a course of treatment
32
Nonquantitative Treatment Limitations (cont’d)
• Any processes, strategies, evidentiary standards, or other
factors used in applying the nonquantitative treatment
limitations to MH/SUD benefits in a classification must be
comparable to, and applied no more stringently than, those
applied to medical/surgical benefits
• Plans must use both a comparable test e.g. is medical
necessity applied to a Medical benefit within a class e.g.
Inpatient but also cannot apply that medical necessity process
in a more stringent manner e.g. no precertification for MH
inpatient unless Precertification is used for Medical Inpatient
• Cannot require to exhaust EAP benefits unless have a similar
gatekeeper requirement for medical/surgical benefits
33
Prescription Drug Benefits
• Tiering: A plan satisfies the parity requirements if it has
different levels of financial requirements on different tiers of
prescription drugs based on reasonable factors and without
regard to whether a drug is generally prescribed with
respect to medical/surgical or MH/SUD benefits
– Reasonable factors: e.g., cost, efficacy, generic vs. brand,
mail order vs. pharmacy
– Reasonableness must be determined in accordance with
requirements for nonquantitative treatment limitations
34
Other Requirements and Provisions
• Disclosure of criteria for medically necessary
determinations must be made available to participants,
beneficiaries, or contracting providers upon request
• The reason for any denial of benefits must be made
available automatically and free of charge
• Exemptions: A group health plan must implement
parity requirements for one full plan year. If plan costs
increased more than 2%, exempt from parity
requirements for one year
• A group health plan sponsored by a small employer
(<50) does not have to comply with MHPAEA
35
Interaction with State Laws
• “States may continue to apply State Law requirements
except to the extent that such requirements prevent the
application of the MHPAEA requirements that are the
subject of this rulemaking. State insurance laws that
are more stringent than the federal requirements
are unlikely to “prevent the application of”
MHPAEA, and be preempted. Accordingly, States
have significant latitude to impose requirements on
health insurance insurers that are more restrictive than
the federal law” [p. 5430]
• More restrictive in this situation means increased
consumer protection
36
Interaction with State Laws
• MHPAEA applies to both fully insured and self-insured
plans--of the plans provide for MH or SUD benefits
• Fully insured are subject to state laws
• A government employer (nonfederal) can opt-out of the
federal parity requirements
37
Expect Additional Guidance from Federal Agencies
• State law pre-emption
• Application to Medicaid managed care plans
• Cost exemption--if plan can show 2% increased cost, it
can be exempt for one year—
– Future Years can be exempted based on a 1% increase
• Enforcement:
• Private enforcement started Oct 3 ,2009
– Self-insured = Dept. of Labor and IRS
– Non-federal government employees: HHS
– Fully insured employer plans = State Ins. commissioner & HHS
38