Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, February 14, 1994 TAG: 9402180009
SECTION: EDITORIAL PAGE: A7 EDITION: METRO
SOURCE: LOUIS PERROTT
DATELINE: LENGTH: Long
By not structuring benefit packages to give consumers incentives to use less expensive treatment services, insurance companies have fueled rises in the costs of mental-health care.
About 16 percent of all health-care costs go to providing mental-health services. In 1980, this figure was only about 8 percent. Why the increase? In 1980, inpatient mental-health services were about 4 percent of total health-care costs. Outpatient services were also about 4 percent. Today's outpatient figure has not changed. However, inpatient mental-health costs have risen to 12 percent.
Why? Most insurance companies reimburse the higher-cost inpatient services at a full 100 percent of total cost. Outpatient services, costing much less, are reimbursed at rates often 50 percent or less of total cost. Faced with paying substantial dollars out-of-pocket versus paying nothing at all out-of-pocket, consumers have been economically driven to use the more expensive services.
To illustrate, let's take some specific examples. A typical 14-day mental-health stay at a hospital at a daily cost of $700 (not including physician's charges) would cost $9,800. Insurance pays $9,800. Patient pays nothing. Alternatively, without any utilization review, approximately 90 precent of f+iallo outpatient treatment over the past 15 years has been carried out in fewer than 26 sessions. If a typical psychotherapy session costs $90, the total cost of 25 sessions is $2,250, a savings of $7,550. Of that $2,250, however, insurance, at 50 percent copayment, pays only $1,125. The patient must pay $1,125.
Demanded by insurance-benefit design, this out-of-pocket payment by patients actually encourages use of the more expensive service, thus adding to overall health-care costs. Since outpatient therapy is just as effective for most mental disorders, why not set up the insurance-benefit structure to encourage use of less expensive treatment?
Later in the 1980s, as overall health-care costs began to rise, insurance companies devised other tactics to limit their expenditures. In fairness, what doubtless motivated them in part was an effort to hold down large premiums to their subscribers. The tactics devised to limit expenditures for mental-health benefits include:
Restricting the total number of inpatient days per year allowable, but still reimbursing 100 percent of total cost.
Placing annual limits on insurance reimbursement for outpatient mental-health services.
Increasing deductibles (the amount subscribers pay out-of-pocket before reimbursement begins).
Decreasing the percentage of total cost the insurance company will pay for outpatient mental-health services (i.e., increasing subscribers' copayment).
Putting a lifetime limit on the company's total mental health expenditure for each subscriber.
Adding restrictive "pre-existing condition" clauses to prevent people with established mental conditions from being covered.
Setting differential ratings to permit insurance companies to charge higher premiums to people with a history of mental-health treatment, or else to deny them coverage altogether.
As before, the impact of these financial restrictions likewise acted to drive consumers toward using more expensive, but fully reimbursed, inpatient services. The use of less expensive but often equally effective outpatient services has systematically been discouraged. A rise of 300 percent in the cost of inpatient services between 1980 and 1990 has resulted. This dramatic increase helped push up overall health-care costs.
But the trend in insurance practices has not stopped there. To hold down or reduce mental-health costs, insurance companies have begun to hire managed-care companies to provide utilization review of both inpatient and outpatient mental-health services. When poorly applied, this system evolves into an elaborate means of holding down the insurance company's immediate costs by restricting mental-health services, thereby denying benefits to subscribers. True, in the short run total costs are "managed" downward, but at the human cost of erosion of quantity and quality of services. When more and more mental-health treatment is denied, longer-range costs show up elsewhere in overall health-care costs:
Untreated or under-treated mental-health problems will gradually become more severe, eventually necessitating use of more expensive inpatient services.
Since patients with emotional problems average twice as many visits to primary-care doctors, physical medical resources are over-utilized, driving health-care costs up.
Why not omit pre-certification and utilization review of outpatient services until the 26th session, but require pre-certification and reasonable utilization review of the more expensive inpatient treatment? Managing mental-health treatment costs with only a short-term outlook is ultimately short-sighted.
Unfortunately, President Clinton's reforms do not remedy this trend. Actually, the proposed mental-health benefits mimic the present system. The reform plan provides for 30 visits of outpatient treatment, reimbursed at 50 percent, but also allots 60 days of inpatient treatment, reimbursed at 80 percent. Although an improvement, this proposal continues the incentive to use the more expensive service.
Why not level the playing field to allow consumers to more freely choose to use appropriate outpatient treatments without financial penalty? Reimburse both inpatient and outpatient services at 80 percent. Economically, it is senseless to encourage use of more expensive inpatient services when less expensive outpatient treatment is at least as effective.
If the proposed mental-health plan does not reshape inequities in the present system, our nation's drive toward the brink of bankruptcy will continue.
\ Louis Perrott is a licensed clinical psychologist in private practice in Roanoke and Salem.
by CNB