Work needed to close gaps in coverage for mental health, substance abuse treatment

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By Paul Demko

Posted: November 8, 2013 – 2:00 pm ET

Tags: Barack Obama, Behavioral Health, Insurers, Kathleen Sebelius, Mental Health

Work needed to close gaps in coverage for mental health, substance abuse treatment

By Paul Demko, Steven Ross Johnson and Beth Kutscher

Posted: November 8, 2013 – 4:30 pm ET


Mental health advocates praised a long-awaited final rule issued Friday by the Obama administration requiring insurers to cover mental healthcare on the same basis as physical healthcare services. But they cautioned that more work is needed before full parity is achieved.

The final rule, issued jointly by HHS and the Treasury Department, ensures that health plans covering about 85% of the population offer the same deductibles, copayments and limits on visits for mental health services as offered for medical and surgical services.

The rule implements the provisions of the landmark 2008 Mental Health Parity and Addiction Equity Act. It takes effect July 1, 2014. It combines with the Patient Protection and Affordable Care Act to offer an unprecedented level of coverage for people with mental healthcare needs. The ACA includes mental health services among the 10 essential benefits that must be offered by all insurance plans starting in January.

The new rule applies parity requirements to intermediate levels of care in residential treatment and intensive outpatient settings. It also clarifies that parity applies to limits on geography and types of facilities in provider networks and eliminates a provision that allowed insurance companies to make exceptions based on “clinically appropriate standards of care.” Other protections in the final rule require insurers to transparently disclose the rights of plan participants.

The law and the rule do not apply to Medicare and traditional state-run Medicaid, but the administration had previously instructed state officials that their Medicaid programs should meet the 2008 parity law requirements. The law does apply to Medicaid managed-care plans, though the administration is expected to issue separate guidance for those plans, said Chuck Ingoglia, senior vice president for public policy at the National Council for Behavioral Health.

“For way too long the healthcare system has openly discriminated against Americans with behavioral health problems,”HHS Secretary Kathleen Sebelius said on a call Friday with reporters. “We are finally closing these gaps in coverage.”

“The final rule provides a crucial step forward to ensure that patients receive the benefits they deserve and are entitled to under the law,” said Dr. Jeffrey Lieberman, president of the American Psychiatric Association. “In addition to providing equal benefits for mental illness as physical illness, I am hopeful that there will be strong monitoring and enforcement at both the state and federal levels.”

The National Institute of Mental Health has estimated that 26% of American adults experience a mental disorder in any given year and that an estimated 15 million receive mental health services. While such services represent a little more than 5% of the $2.6 trillion in annual U.S. healthcare spending, insurance coverage for these services has been limited compared with coverage for physical health services. Insurers often have questioned the medical necessity of such services.

Jamison Monroe, CEO of Newport Academy, an adolescent residential treatment center for mental health and addiction disorders in California and Connecticut, said the better insurance coverage for mental health services required by the new parity rule and the Affordable Care Act will make it more attractive for healthcare providers and investors to operate mental health facilities. Experts say many areas of the country are underserved.

But providers and advocates say the rule leaves gaps and lingering questions. “The work is just beginning now,” said Ron Honberg, national director for policy and legal affairs for the National Alliance on Mental Illness, a patient advocacy group. “The specifics of parity are going to be shaped over the next few years.”

There also are concerns that state insurance commissioners will have primary responsibility for enforcing the rules on commercial insurers and that they lack the resources and the political will to do the job.

The rule would apply to nearly all private insurance plans, including employer-based, group and individual plans but not to Medicaid managed care plans, which are the largest single providers of mental healthcare. The Obama administration has already issued guidance to states on how such plans should meet parity requirements.

“The (Medicaid) guidance wasn’t as detailed as this rule is, so unless there’s some way to link that guidance with this rule, we’re not sure it’s going to be as helpful as we had hoped it would be,” Honberg said.

The rule builds on a federal law that Congress passed in 1996 requiring parity in lifetime and annual benefit limits for mental health coverage. HHS received more than 5,400 public comments on its draft rule. President Barack Obama had promised that the rule would be issued this year. It was among 23 executive actions that his administration outlined to address gaps in mental healthcare highlighted in the wake of the mass shooting last December in Newtown, Conn. There is bipartisan agreement that better and more accessible mental healthcare services are needed to help prevent such incidents.

“This is another important step in building the foundation for ensuring that people have appropriate and adequate mental health and addiction coverage compared to what they have on the medical side of things,” said Mark Covall, president of the National Association of Psychiatric Health Systems.

Policy experts praised the final rules for providing greater guidance in several important areas. For instance, they make clear that insurers will be required to cover what are typically called “intermediate services.” That could include residential treatment or intensive outpatient care. “That’s a big step toward leveling the playing field and making sure that people who have this coverage are getting all the services that they need,” Covall said.

In addition, the final rule provides more explicit instructions for insurers on what information they must disclose to subscribers about whether treatment is covered and under what conditions.

How The Affordable Care Act Pays For Insurance Subsidies

November 07, 2013 2:57 AM

The new health care law will provide around $1 trillion in subsidies to low- and middle-income Americans over the next decade to help them pay for health insurance.

Johanna Humbert of Galien, Mich., was pleasantly surprised to discover that she qualifies for an insurance subsidy, since her current plan is being canceled. Humbert makes about $30,000 a year, so she’ll get a subsidy of about $300 a month. The new plan is similar to her current one, but it will cost $250 — about half of what she pays now.

But where will the money come from to pay for subsidies like these?

On his show last Friday, liberal comedian Bill Maher called the Affordable Care Act a “Robin Hood” plan. “It does take from the rich to make better the poor,” he said.

You can certainly make a case for that, says economist Joseph Antos of the American Enterprise Institute. “In a general sense, the rich, of course, subsidize the poor. The rich pay more income taxes,” he says. “So, yes, absolutely, that’s how subsidies are supposed to work.”

So if you’re a low-income person getting a tax credit from the U.S. Treasury to subsidize your health care, a big chunk of that credit is coming from taxes paid by the well-off.

The Cost Of Subsidies

But the authors of the Affordable Care Act didn’t want the subsidies to become a drain on the Treasury and add to the deficits. So they included provisions designed to offset the cost of the subsidies.

MIT economist Jonathan Gruber, who helped develop the law, says about half the costs are offset by projected savings in Medicare payments to insurers and hospitals. Another quarter is offset by added taxes on medical-device makers and drug companies.

“The other source of revenue is a tax increase on the wealthiest Americans,” he says. “Those families with incomes above $250,000 a year will now have to pay more in Medicare payroll taxes.”

Those provisions actually make the bill a net positive for the federal budget, according to the nonpartisan Congressional Budget Office. By the CBO’s accounting, Obamacare will produce a surplus. Gruber says the law will “actually lower the deficit by about $100 billion over the next decade and by $1 trillion in the decade after.”

However, many Republicans have expressed skepticism about those findings.

New Policy, New Marketplace

The subsidies do mean some low-income people will pay almost nothing for insurance, while higher-income people will pay the full market price.

Dentist Aaron McLemore of Louisville, Ky., makes more than $100,000 a year, and doesn’t qualify for any subsidy on the Obamacare exchange. The 31-year-old’s current policy is being canceled. A new policy from the exchange will more than double his monthly premium and boost his annual deductible to $7,000.

His higher costs aren’t subsidizing lower-income policy holders, whose subsidy has already been paid by the government. But he is providing a subsidy in another way: The Affordable Care Act requires him to buy a policy with features he doesn’t need.

“Seeing as I’m a single male with no kids or dependents, and I’m paying for pediatric dental care and maternity care, it doesn’t make a whole lot of sense to me,” McLemore says.

What Obamacare is doing is moving McLemore out of the individual market — where people are sorted by age and health history and scope of coverage — to a market more like the traditional, employer-based group policy, in which young and old workers get the same coverage and pay the same premium.

Gruber, the MIT economist, says that model reflects the basic idea of insurance.

“The notion of insurance is we’re protected against risk,” he says. “What that means is that [during] a period of time when we’re healthy, we pay more in premiums than we collect in benefits. In those periods of time we’re sick — and we all go through them — we collect more in benefits than we pay in premiums.”

Young, healthy people subsidize older people, who are more likely to be sick. Of course, most of those younger folks will eventually become old folks and experience the same benefit.

UPDATE 1-Two U.S. hospital chains dismiss Obamacare technical woes

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Tue Nov 5, 2013 2:49pm EST

By Susan Kelly

Nov 5 (Reuters) – Two U.S. hospital operators said on Tuesday technology problems bedeviling the federal government’s online health insurance marketplace were gradually diminishing and will not stop them from pushing ahead with plans to provide care to those who sign up.

“If any company had three years’ notice about having a website functioning for a major product launch on October 1, it would have worked. It’s frustrating that it did not work,” hospital operator Tenet Healthcare Corp’s Chief Executive Trevor Fetter said in an interview with Reuters following the company’s third-quarter earnings conference call.

While the glitches that have prevented many potential health plan enrollees from signing up are disappointing, “we’re not terribly concerned about it,” Fetter said.

That is because those uninsured patients will not be able to access the new plans until January anyway, so there is still plenty of time to sign up, he said.

Fetter said problems with online access to the federal insurance exchange have been lessening, and patients can also enroll through call centers, where waiting times have been coming down. State exchanges such as the one set up in California are working much better and are offering a selection of affordable plans, he added.

“This is a really important innovation,” Fetter said. “I wouldn’t judge it by the initial performance of the federal website.”

HCA Holdings Inc Chief Executive Richard Bracken said issues with the federal website have not deterred the company from its own plans to contract with insurers to provide care to new patients.

Ninety-seven percent of HCA’s U.S. hospitals have an exchange contract with access to a bronze level insurance plan, he said. Such plans have the lowest premiums.

“We are well-positioned to participate and provide healthcare services,” Bracken said on the company’s earnings conference call.

Tenet said it has contracts with about three-quarters of all the exchange plans that are offered in its markets.


Hospital companies have a lot riding on the success of the insurance exchanges. Hospitals are struggling with declining admissions as many Americans have stayed away from the doctor due to lack of insurance or high deductible on their plans.

The companies expect patient admissions to grow and bad debts to decline as more patients gain insurance to pay for their care.

Tenet shares fell about 9 percent on Tuesday, to $43.96, after it provided a disappointing outlook for the fourth quarter when it released its third-quarter results on Monday.

HCA, the largest publicly owned U.S. hospital operator, was one of the only hospital chains to report a modest increase of less than 1 percent in admissions to its facilities in the third quarter. Its shares fell 2.5 percent Tuesday to $46.53.

Jefferies & Co analyst Brian Tanquilut said he believes hospitals in 2014 will benefit primarily from more people being eligible for the Medicaid health insurance program that serves the poor.

“The health reform story is intact, but near term, the volume headwinds, which have been hampering hospitals for five years, continue to persist,” he said.