Mental Health Parity Won't Work Without Ethical Managed Care

It's hard to tell the "good guys" from the "bad guys" in implementing the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act.

The act, signed into law by President Bush in October 2008, requires employers with more than 50 employees who offer health insurance that includes mental health, to cover mental health and addiction conditions on the same terms as medical/surgical conditions. The law rectifies clinically unwise and ethically unjustifiable insurance practices I experienced from early in my practice.

In the 1970s I was responsible for an inpatient psychiatric unit at a public hospital. Nearby private hospitals regularly transferred patients to us after twenty-nine days, one day before they hit the insurance limit of thirty days. We called that "dumping." And when I moved to the Harvard Community Health Plan HMO we worked within the typical limit of twenty outpatient visits per year.

In some ways the limit stimulated efficiency and creativity. Along with others we pioneered time-limited therapies. I had the privilege of developing an outpatient program for patients with chronic psychiatric illnesses built around a flexible "continuing care" group. But for many patients the limit didn't allow patients to achieve outcomes reasonable to hope for in a society as wealthy as ours.

Advocates fought for "parity" with medical/surgical coverage. Their argument was straightforward. Mental health and substance abuse conditions caused suffering and disability comparable to medical/surgical conditions. Effective treatments were available. Selectively disadvantaging mental health care could not be justified on clinical or ethical grounds.

The bugaboo was cost. Employers and insurers feared that mental health and addiction care would be a bottomless pit. But when President Clinton required the Federal Employees Health Benefits Program to provide parity, costs did not soar. (see here) Managed care became the advocates' best friend!

Managed mental health care, which made parity possible by showing that costs could be contained to an acceptable level, is the focus of the implementation fight. The implementation rules can be found in an arcane forty-three page document, but the fight is over these fifty-seven words:

Any processes, strategies, evidentiary standards, or other factors used in applying the nonquantitative treatment limitation to mental health or substance use disorder benefits in a classification must be comparable to, and applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in applying the limitation with respect to medical surgical/benefits in the classification.

Clinicians hate "nonquantitative" management techniques like closed networks, requirements that less costly therapies be tried first, and recurrent treatment reviews. But management techniques like these, which are not used to the same extent in medicine/surgery, made parity possible. Advocates now argue, however, that parity means similar care management techniques, not just similar benefits in the insurance contract.

This argument risks an employer backlash:

Woodman's Market, a grocery store chain that employs 2,800 people and is based in Janesville, Wis., is among [the employers considering dropping mental health coverage].

"We can't have an open checkbook," company vice president Clint Woodman told the Capital Times in Madison.

"If an employee went to a psychiatrist and ran up a million dollars, it would come out of our pockets," he said.

When asked about an employee who incurred similar expenses after a cancer diagnosis, Woodman said in the Capital Times: "Cancer is different. That's an identifiable physical situation."

Paradoxically, a tough-minded manager would say - "The advocates are right. Mental health and medicine/surgery should be managed by the same means. Since health costs are out of control, let's bring the tougher mental health approach to medicine and surgery!"

This won't happen. We tried widespread third party managed care in the 1990s, and while it slowed the cost trend for a few years, providers and the public rebelled, and we chucked the approach, except in mental health.

The big picture of what we need to do is clear. Providers, as through "Accountable Care Organizations," must take more direct responsibility for cost management along with care management. And patients who want more choices than that system allows should have those choices available, but at their own expense.