Large employers need to start planning, if they haven’t already, to meet new regulations issued under the Mental Health Parity and Addiction Equity Act of 2008. New rules around the act were published on Feb. 2 and impact any plan years beginning on or after July 1, 2010. Essentially, the act says that employers and group health plans cannot provide less coverage for mental health care than for the treatment of physical conditions like cancer and heart disease.
The impact to employers is a review of their plan designs. Specifically, they’ll want to determine the predominant financial requirements and treatment limits for medical/surgical benefits for each health plan, compare mental health and substance abuse benefits to medical surgical benefits for each health plan, identify all applicable state parity mandates, and then make adjustments to mental health and substance abuse benefits or medical and surgical benefit to ensure they’re in compliance.
Several studies have been conducted on the cost of these changes for employers, including an estimate by the Congressional Budget Office that determined the parity act will increase total plan costs by only 0.4 percent. Instead, many benefit and behavior experts predict the changes could, in the long run, save employers money. That’s because not treating mental health and addiction-related behaviors have hard-dollar impacts on health plan costs.
As reported in SHRM.org, CIGNA Behavioral Health estimates forgoing mental health and substance abuse benefits can adversely impact medical costs by 25 to 50 percent. And, a person with depression and a chronic medical condition costs 1.7 times more to treat than people without those combined conditions.
There are also hidden costs in the form of lost productivity. CIGNA finds depressed individuals are 1 to 2 hours a day less productive than non-depressed individuals and one-third of sick days can be attributed to substance abuse issues.
According to the National Council for Behavioral Healthcare, more Americans than we might realize need treatment, but don’t receive it. The organization estimates 80 percent of children and 67 percent of adults don’t receive treatment – and half of those in need don’t get it because of a lack of insurance coverage.
The American Psychological Association supports the new regulations under the act. In a statement, the organization’s executive director said, “We are delighted that under these regulations consumers are protected from insurance discrimination to the greatest extent possible.”
For employers, there is also the possibility of designing more efficient treatment options under the parity rules. For example, CIGNA reports that 80 percent of people who are treated with prescription drugs for depression are not also receiving care through mental health providers. Integrating this care is expected to produce more positive outcomes, especially if employers choose to implement or enhance benefits like employee assistance programs. According to the Society for Human Resources Management, 73 percent of employers are using EAPs to deal with the parity law.
The rules were developed by the Labor Department, the Department of Health and Human Services and the Internal Revenue Service, which share responsibility for their enforcement.
Michelle Hicks is a communications consultant with Buck Consultants. Contact her by e-mail at email@example.com.