Mental health matters - Column

Business & Health, Sept, 1996 by Janet Gemignani

Mental health care is a term that spans a broad range of conditions and treatments: It encompasses everything from paranoid schizophrenia to mild anxiety or depression. And mental disorders affect an equally broad cross section of the population: Just over a quarter of Americans experience some mental health or addictive disorder in any given year, the National Advisory Mental Health Council on the Cost and Treatment of Severe Mental Illness estimates. Yet only 5 to 7 percent of health plan enrollees typically get treatment.

Even so, the country spent a total of $42.4 billion on mental health care in 1990, the last year for which definitive figures are available, says Ron Finch, an analyst at benefits consultant Coopers & Lybrand. Private health insurance, most of which is employment-based, picked up the tab for nearly 45 percent of that total. And that's not counting other work-related costs. Depression alone is believed to run up the corporate tab by $44 billion a year, for example, 55 percent of that attributed to absenteeism, lowered productivity and other factors that are difficult to measure. The rule of thumb is that employers generally spend about 10 percent of their health benefit costs on mental health care.

Indeed, the big bucks and the prevalence of mental health problems helped fuel employers' increasing involvement in workers' emotional well-being and may have speeded up the move to managed care. Nearly two thirds of employers now offer employee assistance plans, for instance, and wellness programs that include stress management are also gaining popularity.

Close to 70 percent of the estimated 181.4 million Americans with health insurance are now enrolled in a specialty managed behavioral health program, a January survey by the Gettysburg, Pa.-based researchers Open Minds, found. For the nation's 300-odd managed behavioral health vendors, that amounts to an annual revenue of some $2.6 billion.

Costs for mental health and substance abuse (MHSA) coverage started to skyrocket at double digit rates a decade ago, driven by inflation and an increase in demand for services. Four out of five employers have now placed limitations on both inpatient and outpatient care, according to Foster Higgins' 1995 survey of employer-sponsored health plans. Restrictions on inpatient psychiatric treatment imposed by managed care plans and employers reduced the average length of stay by 23 percent over a two-year period, to 15.2 days in 1994, according to the National Association of Psychiatric Health Systems. Intensive day or evening programs, often called partial admissions, have more than doubled to nearly a quarter of all admissions to psych treatment programs. The biggest growth--a whopping 128 percent--has been in outpatient treatment, which accounted for 12 percent of all admissions to psychiatric care in 1994.

Limitations on MHSA benefits tend to be far more restrictive than those for physical ailments. (See Head to Head on page 79, which addresses the battle for parity.) That's especially true in fee-for-service, "where the employer is liable for a lot of medically unnecessary treatment or overutilization," says Glenn Meister of Foster Higgins. It's not unusual for an indemnity plan to have a $25,000 to $50,000 lifetime maximum on MHSA coverage, for instance, or to limit counseling sessions to once a week for six months with a 50 percent coinsurance rate. Compare this with the $ 1 million average lifetime major medical limit. HMOs use other means to limit mental health care, including gatekeeper referral, restricted panels of providers, second opinions and concurrent review.

Most employers offer mental health coverage through their medical plan, but about 20 percent use a specialty carveout, Foster Higgins found. Such carveouts have tripled since 1993, particularly among firms with 5,000 or more employees. EAPs, which three out of four of the firms that offer them report help reduce their mental health or medical costs, are typically carveout services, too.

Choosing the right kind of mental health coverage, experts advise, calls for questioning prospective vendors about structure, staffing and management systems. Find out how patients are referred and whether self-referral is permitted. (It should be.) Review the credentials and experience of the providers and determine whether the mix of specialists--board-certified psychiatrists, PhD-level psychologists and licensed masters-level social workers--fits the needs of the population to be covered. Verify that the providers' fee schedules or salaries are in line with those of accomplished practitioners in their locale. Ask about guidelines, utilization review and quality assurance measures-and any financial incentives providers get for limiting treatment.