First Steps toward Mental Health-Care Reform
Welch, Bryant L., National Forum
There are two long-standing structural anomalies wasting millions of badly needed dollars in our mental-health system. First, we are needlessly using very expensive hospital-based treatment for significant numbers of patients who, research shows, could be better treated in outpatient settings.
All documented evidence shows that recent increases in mental health-care costs have occurred only in inpatient alcohol and drug treatment and in inpatient adolescent care. At the same time, research now concludes that nearly 50 percent of these patients could be treated more effectively in outpatient settings.
Why aren't these individuals treated in outpatient settings? The reason is based on current economic and insurance incentives. First, in 1984 when the Medicare Prospective Payment Diagnosis Related Groups system was established, it was not applied to psychiatric units or psychiatric hospitals. As a result, entrepreneurial hospital dollars were directed into purely psychiatric facilities, providing a doubling of the number of such facilities between 1984 and 1988. This, of course, led to much greater "provider demand" for patients.
Second, hospital-based treatment is covered often at 100 percent reimbursement with little or no expense to the beneficiary, while outpatient benefits are extremely limited and require significant sharing of costs. What this poses to a family is a decision of whether to keep a disturbed family member at home with outpatient treatment or, instead, to put the patient in a hospital-giving the family respite and eliminating its financial burden as well. It is this dual dynamic that has created the cost problem in mental health care. If we are to allocate resources to those most in need, we must fund patients rather than facilities and provide incentives to use appropriate, less expensive care.
The second anomaly in the mental-health system is found in the outpatient sector, where increasingly we are providing a level of coverage that treats the healthiest patients and excludes the sickest from any care at all. How did this come about? Managed-care companies and, more recently, other third-party payers have redefined traditional outpatient care to make it so brief that it is evidently inadequate for those in greatest need.
Twenty-session treatments for healthy adults going through difficult transitions in life such as divorce or death of a family member, can be justified and are good mental hygiene. But we cannot treat a learning-disabled child or even an abused child in twenty sessions of crisis intervention. …