New Data Show 85% of Costs are for Treating Serious Mental Illness; Broad Mental Health Parity Bill is Affordable.

Business Editors, Health/Medical Writers

WASHINGTON--(BUSINESS WIRE)--Sept. 16, 2002

Today the American Managed Behavioral Healthcare Association (AMBHA) released an analysis showing that 85 percent of billed mental health claims submitted by providers of mental health care are for the treatment of serious mental illnesses (SMI).

"These data should help persuade Members of Congress that passage of a broad-based mental health parity bill, covering needed treatment for all mental health disorders, is affordable. This analysis refutes the assertion of those who argue that requiring parity for disorders other than serious mental illnesses would be costly," said Pamela Greenberg, M.P.P., executive director of AMBHA.

The bulk of the claims are in SMI, covering the additional diagnoses adds minimal cost, decreases administrative burden, and provides fair and equitable coverage for all mental illnesses.

The AMBHA calendar year 2001 data released today from multiple managed behavioral healthcare organizations (MBHOs) represent almost 60 million covered lives, approximately 13 million mental health claims, and over $3 billion in billed mental health claims. These data represent claims from both parity and non-parity benefits with the most common policy typically not imposing limits based on diagnosis.

Currently, MBHOs provide insurance to over 170 million Americans. MBHOs have helped to make mental health parity possible. They are responsible for making behavioral health coverage more accountable and more affordable; the vast majority of employers and health plans contract with MBHOs to manage their mental health and substance abuse benefit.

In fact, these companies have more experience than anyone else in understanding the cost impact of parity legislation.

The majority of the claims, the majority of the costs, are clearly for the treatment of those disorders that most clinicians would characterize as clinically significant and have serious functional impairment.

In order for AMBHA to define serious mental illness, the analysis excluded approximately 70 mental health disorders and conditions listed in the Diagnostic and Statistical Manual of Mental Disorders 4th Edition (DSM-IV) even though most clinicians recognize the excluded disorders as having clinical significance and functional impairment.

For example, the AMBHA analysis excluded adjustment disorders, sleep disorders and gender identity disorders. Furthermore, the study excluded substance abuse as it is not part of the proposed legislation.

Given the Congressional Budget Office's (CBO) estimate that the proposed mental health parity legislation, which covers all mental health conditions, would increase health care premiums by an average of a mere .9 percent, these data clearly document that the cost of parity coverage for the less serious disorders is miniscule.

Greenberg remarked that "these data correspond to the experience of MBHOs over the years; people with less serious mental disorders are not usually heavy users of the system."

"In fact, treating less-serious mental illnesses will save money in the long run. Many less serious mental illnesses, especially those affecting children, can become chronic or severe if left untreated. As we have learned in general healthcare, early intervention makes both health and economic sense," said Greenberg. In addition, the Surgeon General estimated in 1999 that the direct business cost attributable to lack of parity coverage of mental illness was at least $70 billion per year.

Furthermore, limiting the scope of parity legislation to a subcategory of mental illnesses would actually increase administrative costs.

Based on current experience, AMBHA members report that it would take more time, paperwork and money for employers, health plans and providers to determine what disorders are covered and at what rate if policies are allowed to continue to discriminate between mental illnesses.

In July AMBHA released data that showed that claims for treatment of certain DSM-IV disorders singled-out by parity opponents (including jet lag) are rare and have no significant impact on the overall cost of mental health care.

Mental health parity legislation pending in Congress (S. 543 and H.R. 4066) would outlaw the imposition of stricter treatment limits or financial requirements on mental health care than on medical and surgical care. The legislation specifically allows health plans to use a range of techniques to assure that the treatment is appropriate and medically necessary.

AMBHA member companies are both national and regional and are collectively responsible for managing mental health and substance abuse services in the public and private sector for over 110 million individuals across the country.

AMBHA was founded in 1994 to enable the leading managed behavioral healthcare organizations in this industry to work together on key issues of public accountability, quality, public policy and communication.

AMBHA Members: Alliance Behavioral Care, Cincinnati, OH; American Psych Systems, Bethesda, MD; Baymeadow Health Services, Glen Burnie, MD; CORPHEALTH, Fort Worth, TX; Horizon Behavioral Services, Lewisville, TX; Magellan Health Services, Columbia, MD; PacifiCare Behavioral Health, Van Nuys, CA; University Behavioral Healthcare, Piscataway, NJ; ValueOptions, Falls Church, VA.