Summary: Facts on the “Paul Wellstone Mental Health Equitable Treatment Act” (MHETA), and on how this bill closes parity loopholes. The document also discusses the need to secure, in all Medicare reform bills, outpatient mental health coinsurance parity. Relevant bills are introduced.

March 2003 -- Congress should end insurance discrimination against mental health coverage by passing the “Paul Wellstone Mental Health Equitable Treatment Act” (MHETA). This bill is sponsored by Senators Domenici and Kennedy (S. 486) and Representatives Ramstad and Kennedy (H.R. 953). The Mental Health Parity Act of 1996 prevents larger health plans only from imposing lifetime and annual dollar limits on mental health benefits that are different from those imposed on medical/surgical benefits. Because the 1996 Act does not provide full parity for all aspects of coverage, the GAO found that 87% of those employers that comply with the law have reduced other aspects of their mental health coverage, such as day and visit limits. MHETA closes these loopholes that allow employers to avoid the spirit of the 1996 law by requiring full parity for all aspects of a plan, including dollar limits, day/visit limits, coinsurance, deductibles and out-of-pocket maximums. The 1996 Act expires on December 31, 2003.

Amendments in Senate markup addressed employer concerns. When MHETA was approved 21-0 by the Senate Health Committee in 2001, numerous amendments were adopted. Small employers (50 or fewer employees) are exempted from the bill’s requirements and substance abuse parity is not required. Like the Federal Employee Health Benefit Plan on which it is modeled, MHETA proposes parity only for in-network services. Employers and health plans may use preadmission and other care review techniques to deliver cost-effective mental health care.

The Congressional Budget Office projects that the bill would raise costs just 0.9%. This cost increase is shared between the employer and employee, with the employer typically paying 0.36% of the total. Actuarial analysis by PricewaterhouseCoopers agrees, and shows that MHPA would cost the typical plan only four and one half cents per covered person per day.

MHETA should continue to cover all diagnoses, as listed in the Diagnostic and Statistical Manual of Mental Disorders (“DSM-IV”). Some have suggested that parity be provided only for “biologically-based” severe mental illnesses (“SMI”). Persons in our country, however, suffer debilitating and severe mental illnesses, regardless of whether their illnesses are considered biologically-based or not. Since science cannot say with certainty which mental illnesses are completely biologically-based, an SMI list is necessarily random with potentially harmful consequences for persons with diagnoses not on the list. People who suffer physical illnesses are covered for and provided care even when the origin of their illness is unknown (such as certain types of muscular dystrophy). No insurance policy would cover heart disease but not cancer. Persons with mental illness should not be treated differently.

The DSM-IV is the current insurance industry standard for determining mental diagnoses for purposes such as claims reimbursement. While the DSM-IV contains the full range of possible diagnoses, insurers today do not cover all diagnoses. Congressional enactment of MHETA will not require insurance coverage for every DSM-IV diagnosis. Medical necessity will determine, as in current practice, coverage for diagnoses listed in the DSM-IV.

The Federal Employee Health Benefits Program (FEHBP) provides parity coverage for all DSM-IV diagnoses. DSM-IV codes are used for Medicare and Medicaid reimbursement. Many state parity laws do not define mental diagnoses for which parity is required, and therefore DSM-IV as an industry standard applies. Some states, like Connecticut, Kentucky and Georgia, have specifically defined their parity laws to cover DSM-IV diagnoses. All of these states and programs have provided parity for all DSM-IV diagnoses with no change in coverage requirements or any but minimal cost increases.

The Paul Wellstone Mental Health Equitable Treatment Act can provide parity for all persons with mental illness for about the same cost as providing parity only for some with SMI. SAMHSA has found that providing parity coverage for SMI costs about 90% of the cost of parity coverage for all diagnoses. Since CBO determined that the bill will increase costs by about 0.9%, this means that SMI coverage would cost about 0.81%. Ensuring parity coverage for all persons regardless of diagnosis could be accomplished with a cost difference of less than one tenth of one percent (0.09%).

LACK OF MEDICARE PARITY A SIGNIFICANT BARRIER

Medicare beneficiaries in need of mental health treatment services face financial discrimination which contributes to their not receiving needed care. Congress should include in all Medicare reform bills outpatient mental health coinsurance parity. Members should cosponsor and pass Medicare parity as proposed by Senators Snowe and Kerry (S. 853) and Representatives Foley and Neal. Outpatient parity is also part of a broader Medicare bill by Senator Corzine (S. 646) and Representative Stark (H.R. 1340).

Medicare reimburses 80% of the cost for most services, but only 50% for the outpatient mental health services of a psychologist, psychiatrist, clinical social worker or psychiatric nurse. For a typical outpatient psychotherapy treatment session, the cost to the patient would be approximately $50. Without the current limitation on outpatient mental health services the patient's cost would be about $20. For many elderly and disabled people this difference makes it extremely difficult or impossible to secure needed care. This higher out-of-pocket expense is a barrier to cost-effective outpatient psychological services, particularly for the great majority of beneficiaries who do not have expensive Medigap insurance paying the difference. Medicare also has a discriminatory lifetime cap on inpatient psychiatric facility days, but no cap on other inpatient services.

Importance of Access to Quality Mental Health Care for the Elderly and Disabled

The mental health needs of the nation’s elderly are great. According to the U.S. Surgeon General, 37% of seniors in primary care settings display symptoms of depression. In addition, older people have the highest rate of suicide of any age group, accounting for 20% of all suicide deaths. Approximately 17% of adults over 65 suffer from addiction or substance abuse, particularly alcohol and prescription drug abuse. For Medicare beneficiaries receiving Social Security Disability Insurance mental illness represents the single largest diagnostic category (27%).

The need for mental health services for the nation's elderly will increase significantly as the baby boom generation ages. Many will face stress due to physical health problems and limitations. Changes such as retirement or relocation to a different community can disrupt seniors' intellectual and social activities, factors that the Surgeon General recognized as important for maintaining mental health in later life. The loss of family members and friends will test their coping abilities as well as affecting their overall wellbeing.

Psychological intervention can improve quality of life, mental health and potentially reduce overall medical costs for this population. For those with dementia, psychological services can alleviate or control many of the serious emotional/behavioral problems that accompany this disorder. Research shows that lack of quality and timely mental health treatment can lead to increases in medical costs associated with misdiagnosed conditions, inappropriate treatment or overmedication. For example, patients suffering from untreated depressive and anxiety disorders often do not respond well or quickly to medical and physical rehabilitation and recover more slowly after medical interventions such as surgery.