Costs And Use Of Mental Health Services Before And After Managed Care

PROLOGUE: Advocates of mentally ill Americans have been fighting for years to gain parity for mental health coverage— that is, to get health plans to apply the same reimbursement rates and lifetime limits to coverage for mental disorders as for physical ailments. New federal legislation passed in September 1996 and signed by President Bill Clinton achieved partial parity; that legislation began to go into effect 1 January 1998. However, many businesses have continued to oppose parity on the grounds that it will raise their health care costs. Studying six years of data found that use of managed behavioral health care by a large, West Coast–based employer resulted in a nearly 40 percent drop in its cost of mental health care, which has persisted. This research, along with “other new research … suggests that parity in benefits for mental health care is feasible without ‘breaking the bank',” the authors write. William Goldman is the medical director and senior vice-president for behavioral health sciences at United Behavioral Health (UBH, formerly U.S. Behavioral Health). He also is a clinical professor of psychiatry at the University of California, San Francisco. He holds a medical degree from Columbia University. Joyce McCulloch is director of data analysis and integration at UBH. She holds a master's degree in clinical psychology from San Francisco State University. Roland Sturm is a well-known contributor to the mental health knowledge base. He directs the Economic and Policy Analysis Core of the UCLA/RAND Managed Care Center. He holds a doctorate in economics from Stanford. ABSTRACT: This paper tracks access, utilization, and costs of mental health care for a private employer over nine years during which mental health benefits were carved out of the medical plan and managed care was introduced. Prior to the carve-out, mental health costs increased by around 30 percent annually; in the first year after the change, costs dropped by more than 40 percent; in the six follow-up years, costs continued to decline slowly. This cost reduction was not attributable to decreased initial access, as the number of persons using any mental health care increased following the change. Instead, the cost reduction was the result of (1) fewer outpatient sessions per user, (2) reduced probability of an inpatient admission, (3) reduced length-of-stay for an inpatient episode, and (4) substantially lower costs per unit of service.