BENEFITS BUSINESS
By Len Strazewski
Agencies need to be conversant in mental health benefits
Agents may soon need to be ready to provide guidance, referrals and cost evaluation services for their anxious and confused clients, say mental health service providers. History is pointing in that direction.
Are you depressed about the state of the economy? Confused about the Middle East? Anxious about your business prospects? Afraid of air travel in a world of terrorism?
So are your commercial clients and their employees. And the more the world weighs heavy on their minds and spirits, the more they may need mental health services provided by their employee benefits plan.
Proposed prescription drug plans under Medicare are taking center stage in Congress right now and overall rising health insurance premiums are getting all the business press attention, but mental health issues and the benefits that fund treatments and services are a growing concern, now getting national attention at the presidential level.
Though agents and brokers have generally not been involved in placing or evaluating the behavioral health service networks that provide mental health benefits, they may soon need to be ready to provide guidance, referrals and cost evaluation services for their anxious and confused clients, say mental health service providers.
The history is pointing in that direction. Mental health benefits first became a coverage and cost issue in 1996 when Congress passed the Mental Health Parity Act that prohibited separate dollar limits for mental health benefits and other medical or surgical benefits. Until then, many plans capped expenditures at $25,000 to $50,000.
The law came with some controls, however. Small employers with 50 or fewer employees were exempted, and plans that anticipated a more than 1% increase in costs as a result of compliance were also exempted until the law expired at the end of September 2001.
Employers, however, can still set non-cash value limitations, including the number of therapy visits under Employee Assistance Plans (EAPs), and the number of inpatient days in psychiatric treatment centers.
The law was extended twice, most recently in April when President George W. Bush extended the law until the end of 2003 and established a new commission on mental health to study expanding parity legislation in the future.
President Bush has a history of support for mental health parity and mental health benefits, extending back to his term as governor of Texas when he signed legislation requiring health plans to provide fair access to treatment for patients with severe mental health problems and to encourage utilization.
"The stigma of mental illness often discourages patients from seeking care despite the existence of new drugs and therapies that have vastly improved the chances for effective treatment and recovery," notes a White House policy statement on mental health.
"Without access to necessary and effective quality care, far too many Americans will live with untreated mental illness that too often can lead to homelessness, drug and alcohol addiction or incarceration."
Mental health issues have more than societal costs. Though mental health benefits account for only 3% to 5% of all health costs under traditional health insurance, increased utilization of mental health benefits will contribute to overall health insurance premiums.
Also, according to recent research, mental health issues are big contributors to short- and long-term disability costs.
A new study conducted by Watson Wyatt Worldwide in Toronto tracked STD, LTD costs in Canada and cited stress, anxiety, depression and psychological conditions as the leading causes of short- and long-term disabilities, resulting in 79% of STD and 73% of LTD claims.
The study also noted that few employers target mental health issues and less than one fourth of Canadian employers have mental health programs. Only 36% offer stress management programs.
"Organizations must consider implementing disability management programs that reflect a healthy workplace approach, focusing on both prevention and management," notes Joseph Riccluti, national director of the group and health care practice for Watson Wyatt in Canada.
U.S. employers may be a little more progressive than Canadian counterparts, providing EAP services and work/life benefits, say behavioral service providers, but few employers are effectively tracking costs and performance of these programs. Few employers are effectively communicating these benefits and encouraging preventive remedial care.
What can agents and brokers do directly about these problems? Not only can they provide information to their clients along with traditional health care products, they can assist in the marketing and evaluation process.
Most mental health benefits are provided by behavioral treatment specialists through "carve out" contracts with insurers and third-party administrators (TPAs).
As employers become more concerned about rising costs, they are naturally going to be more concerned with the performance of these providers and their ability to control costs. Producers may want to be able to assist their clients--particularly self-insured employers--in tracking and understanding their costs as well as evaluating these providers.
"Since September 11, 2001, employers have become more sensitive to mental health issues and the way they impact their employees," explains Dr. Jerry Vaccaro, president and chief executive officer of PacifiCare Behavioral Health (www.pbhi.com) in Laguna Hills, California. "Depression has become the number one cause of disability."
PacifiCare provides EAP services, mental health and chemical dependency services and manages a network of behavioral treatment professionals for public and private sector employers and health plan providers.
"As a result, many employers now see the role mental health services provide in addressing the needs of their employees," he says.
Mental health services also have a good risk management track record, he says. A 2002 study of the company's managed care plan called Assertive Care Management (ACM) revealed a 36% reduction in inpatient/residential care for enrollees and an 18% reduction in inpatient days for members who received that level of care.
"These results show that we made a difference in people's lives," Vaccaro says.
Employers are also progressively more interested in unbundling the services previously provided under consolidated health plan or administration contracts, explains Paulette Wellisch, marketing director at Horizon Behavioral Services (www.horizoncare.net) in Lewisville, Texas.
Horizon provides EAP and critical mental health case management services directly to employers, TPAs and health insurers. Clients include public and private sector employers.
Wellisch says the company has evolved a risk management approach to mental health benefits, balancing effective treatment with cost management. "EAPs have a proven record of cost savings based on reducing or eliminating the need for critical care in some cases and reducing absenteeism," she says.
Horizon cites a study at the city of Phoenix, Arizona, which reported saving $2.5 million in one year with an investment of $58,000 in EAP services.
"Agents and brokers can prove a real service to their clients--particularly smaller employers--in making them aware of the value of EAPs and managed behavioral health services," she says.
"As costs continue to escalate, employers will be seeking solutions and they are likely to turn to their agents for help."
The company also provides extensive online employee assistance, including some good mental health tips (www.horizoncare.net/mental_health_solutions.html). *
The author
Len Strazewski has been covering employee benefits issues for more than 20 years and is employee benefits editor of Human Resource Executive magazine. He has an M.A. in Industrial Relations from Loyola University.