The Sane Approach to Mental Health Care

By Belichick, Robert | Risk Management, May 1991 | Go to article overview

The Sane Approach to Mental Health Care


Belichick, Robert, Risk Management


At the American Psychiatric Association's annual meeting in San Francisco in 1989, a standing-room-only crowd attended a seminar on managed mental health care. The response was indicative of the fact that mental health care costs, according to A. Foster Higgins Co., had increased by almost 30 percent, to about $5.5 billion, in 1988 alone, while overall medical care costs had risen by only 17 percent. As a result of such recent cost surges, employers are now spending more money --30 percent of their health care budgets--on psychiatric and substance abuse care.

In the past, mental health and substance abuse benefits were combined with medical and surgical benefits, and both were managed by employee benefits or human resource manages. However, to be truly effective, these benefits should be carved out of medical benefits plans and administered by people trained in evaluating mental health and substance abuse problems and recommending appropriate treatment. This specialized approach ensures better results and cost-effectiveness because mental health and substance abuse treatment involves a greater range of choices and prices than other medical care.

Because of the subjective nature of making diagnoses and the unpredictability of treatment length, employees and their doctors are more likely to abuse mental health and substance abuse benefits than other medical/surgical benefits, further driving up the benefits' costs. Doctors cannot accurately predict how soon someone will recover from, for example, a nervous breakdown because each patient responds differently to treatment. This also makes it difficult to question provider bills and gauge the cost of mental health and substance abuse care, which has traditionally been driven by employee benefits.

Limit Problems

Another problem is the fact that many employers set a health care coverage limit of $1 million, which often includes medical, surgical and mental health benefits. No doubt some mental health and substance abuse providers will view such a limit as a blank check. One major U.S. airline, which had not carved out its mental health benefits, found that some psychiatric facilities were keeping its employees as patients as long as possible when the almost unlimited dollar benefit was discovered. Conversely, managed mental health plans set limits so providers know from the outset how much they will be reimbursed.

Possibly the largest area of abuse is inpatient care for adolescent substance abuse and psychiatric problems. Due to more facilities and increasing utilization, treatment for adolescents grew from $1.5 billion in 1983 to $4 billion in 1988, according to the American Psychiatric Association. In both adult and adolescent cases, huge sums of money are wasted simply because there are no programs in place to monitor patients' progress. In many instances, benefit dollars could be saved just by making sure the patient receives the proper level of treatment. For example, discharging a patient from a $700-a-day inpatient program into less expensive but more appropriate outpatient care automatically contains costs.

Hit with staggering mental health care bills, employers initially attempted to contain costs by limiting benefits. Some reduced mental health and substance abuse benefits to a $5,000 to $10,000 lifetime limit. But this approach barely provides any coverage for mental health or substance abuse problems and forces employees and dependents to try to get their treatment covered under other medical benefits. For example, employers without appropriate mental health benefits could end up paying for alcoholism-induced stomach and liver problems under other medical benefits.

In many cases, employers do not even obtain enough information to determine if coverage is adequate, only to discover later that their employees have not obtained treatment because their problems are not covered. This hurts both the employee and employer, as was the case with the employees of a large California school district with a $10,000 lifetime mental health benefit who were, at one time, being referred to inexpensive programs that offered poor or incorrect treatment. …

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