AMBHA Examples


PRESS RELEASE September 23, 1997 Version IX (7-2-98)
	Further Information: Clarke Ross 202-434-4565 Prepared for the Behavioral Healthcare Tomorrow Press Conference, "Parity Briefing on Nondiscriminatory Coverage for Mental Health and Addiction Treatment." Legislative debates of parity are largely focused on three issues - nondiscrimination in benefit coverage, treatment effectiveness, and affordability.

Lesson: Parity is Dependent Upon the Use of Managed Care
	"Participants reported that the introduction of managed care techniques, along with the presence of an EAP, gave them, as decision makers, a higher level of comfort with the concept of parity." -William M. Mercer, Case Studies: A Guide to Implementing Parity for Mental Illness, 1997
	"As managed care reduces cost, parity bills become less expensive." -Frank, Koyanagi, and McGuire, July/August 1997, Health Affairs
	"Unlimited mental health benefits won't break the bank as long as one is willing to accept comprehensively managed mental health care." - Roland Sturm, Ph.D., JAMA, November 12, 1997
	"Cost and organizational philosophy are determinants of employer response to this legislation· Progressive organizations recognize the crucial role of behavioral health services in maintaining the overall health and well-being of their employees, and the impact that the lack thereof has on the productivity of their 'human capital' investment. Each employer's response to this legislation sends a message to employees about how the firm values and treats its people." - Kathryn Welds, Ph.D., Behavioral Healthcare Tomorrow, August 1997
	"In the late 1980s, the majority (70%) of mental health funds spent by Medicaid and private insurance went for inpatient care, leading many researchers, clinicians, and advocates to question the imbalance and to search for policy changes. Only the introduction of managed care arrangements has led to a significant shift away from costly and often unnecessary inpatient stays to a more appropriate range of outpatient and community-based care." -Institute of Medicine, National Academy of Science Managing Managed Care, 1996
Managed Behavioral Healthcare, Some Examples:
	Managed behavioral health care - regardless of payer type - generally results in increased use of behavioral health services, reduced expenditures for behavioral health services, and a substitution of day treatment, psychiatric rehabilitation, medication monitoring, case management, crisis interventions, and residential treatment for inpatient hospitalization and solo practice psychotherapy. Examples include:
	Private Employers "In the plans studied (24 managed carve out plans), costs are lower owing to reduced hospitalization rates, a relative shift to outpatient care, and reduced payments per service. However, access to mental health specialty care increased (7.0% of enrollees) compared with the preceding fee-for-service plans (6.5%)." Roland Sturm, Ph.D., JAMA, November 12, 1997
	"Prior to the carve-out, mental health care cost increased at about 20% annually; immediately after this switch, costs dropped 40%; in the four follow-up years, costs have remained stable·The proportion of individuals using any mental health care actually increased following the switch. Instead the cost reduction was due to a) reduced probability of an inpatient admission, b) reduced length of stay for an inpatient episode, and c) substantially lower cost per unit of service. Overall, the shift to a carve-out accelerated an existing trend towards substituting outpatient for inpatient care." Experience of UBH and Pacific Bell; 1988-1995; 180,000 enrollees -Goldman, McCulloch, Sturm, UCLA Working Paper No. 108, February 1997
	In a national sample of six large employers with 670,000 covered lives, compared to the non-managed care enrollees, the HMO plan experienced lower payments per inpatient day, higher payments per outpatient claimant, and a greater percent of all care occurring in outpatient settings. -Medstat Group, Center for Mental Health Services Project October 1, 1997 presentation
	"Major corporations such as DuPont, Dow, Federal Express, and Xerox have reported cost reductions of 30-50 percent over one or two years and have increased the flexibility of their mental health benefits by eliminating certain coverage limits." - Richard Frank, Harvard University; Tom McGuire, Boston University; Joseph Newhouse, Harvard University; Health Affairs, fall 1995
	Per person cost for 13.2 million covered lives in managed indemnity plans was $139; per person cost for 35.4 million covered lives in specialty managed behavioral healthcare programs was $87. - Milliman and Robertson for AMBHA, 1994
	"Some large employers, such as Xerox, Sterling-Winthrop, Alcan Aluminum, and Conoco, have reported overall savings in plan costs for mental health/substance abuse care of about 40% over 2 years after the introduction of managed care." -Richard Frank, Harvard University, and Thomas McGuire, Boston University, Health Affairs, 1995
	In the Fed Ex Employee Benefits Program, regarding access to appropriate level of care, inpatient use declined, outpatient use (defined as sessions/1,000, duration of treatment, and number of participants in treatment) increased, EAP use increased from 4% to 9.5%, and residential treatment increased slightly. - A. Lu Crowder, R.N., CPHQ., Manager, Fed Ex Employee Benefits, February 4, 1998 presentation to the Alliance for Health Reform Congressional Staff Briefing
	West Coast based employer: "Prior to the carve-out, mental health costs increased by around 30 percent annually; in the first year after the change, costs dropped by more that 40 percent; in the six follow-up years, costs continued to decline slowly. This cost reduction was not attributable to decreased initial access, as the number of persons using any mental health care increased following the change. Instead, the cost reduction was the result of (1) fewer outpatient sessions per user, (2) reduced probability of an inpatient admission, (3) reduced length-of-stay for an inpatient episode, (4) substantially lower costs per unit of service· An important element of the carve-out design was that it included coverage of residential and partial hospitalization, both of which were excluded prior to carve-out." - Goldman, McCullock, and Sturm. Health Affairs, March-April 1998
	IBM established a managed mental health program in 1990, integrated its EAP and managed mental health program in 1995, and reconstructed its program in 1998. Results include: cost reductions, followed by moderation in cost trends; reduced inpatient stays with reduced recidivism; increased outpatient therapy; increased availability of transition care; effective case management focused on adolescent cases; increased education of beneficiaries; and increased customer satisfaction. There are no limits on medically necessary behavioral health benefits except a 60 day inpatient lifetime limit on substance abuse. - Barbara Brickmeier, IBM to January 22, 1998 IBH Conference
	During the managed mental health program's first year at McDonnell Douglas, "per capita costs declined 34%. There was a 50% drop in psychiatric inpatient admissions and a 29% decrease in chemical dependency inpatient admissions. Average length of hospital stay dropped 47%." - The American Hospital Association's 1997 "Issues in Mental Health Coverage."
	The Digital Corporation has developed a managed behavioral care program which uses no arbitrary benefit limits while stressing triage guidelines and case management to ensure early and appropriate services. In 1991, 80% of Digital's employees were enrolled in fee-for-service plans; by 1995, 82% of Digital's employees were enrolled in managed care plans. - Digital presentations to SAMHSA and IOM, 1995 and 1996
	"In an unmanaged environment, mental health care represents 15% - 20% of total employee health care costs. In a managed program, you can bring that down to 8% or 10%." Mary E. Clark Hewitt Associates New York Times, May 2, 1996
	"The experience of the Bell South Corporation illustrates her point. Mental health services, which once accounted for 17% of employee health costs, were cut to 8% of the total after the company adopted a managed care program emphasizing alternatives to hospitalization. - "Wider Mental Health Policies Seen as Feasible Requirement." New York Times, May 2, 1996
	Between 1988 and 1990 mental health costs rose at Prime Tanning Company from $195 per employee per year to $303. With the introduction of a managed network which waived copayments for the first eight EAP and outpatient visits and which contained out-of-pocket penalties for use out-of-network, volume of services increased and PEPY costs declined to $106 in 1995 and $149 in 1996. - William M. Mercer Case Studies: A Guide to Implementing Parity for Mental Illness, 1997
	Between 1988 and 1990 behavioral health costs increased 134% at the Lubrizol Corporation. In 1990 behavioral health costs were 18.5% of total medical costs. In 1990 Lubrizol converted to a managed care vendor, removed arbitrary benefit limits, allowed both point-of-service and network services, and used higher out-of-pocket obligations for out-of-network services. In the first year of operation (1991), behavioral health costs dropped to 5.8% of total medical costs and in 1995 behavioral health costs were 3.5% of total medical costs. - William M. Mercer Case Studies: A Guide to Implementing Parity for Mental Illness, 1997
	In 1990 Black and Decker introduced a managed behavioral healthcare program, administered by MCC Behavioral Care, which eliminated all arbitrary benefit limits, authorized three free assessments per year, introduced precertification of services after the assessments, integrated EAP and managed treatment, and used clear financial incentives for the use of network providers. Between 1993-1996 there was a 60% decrease in overall behavioral health benefit costs, with these costs dropping per employee per year from $190 to $104 and with behavioral costs as a percentage of total medical costs dropping from 6.6% to 3.5%. - William M. Mercer Case Studies: A Guide to Implementing Parity for Mental Illness, 1997
	First National Bank of Chicago's managed mental health program experince includes overall costs declining 30%, decrease in unneccessary hospitalizations, increased range of ambulatory services, and increased utilization of outpatient services and costs . -The American Hospital Association's 1997 "Issues in Mental Health Coverage."
	A 3 year study of mental health benefits for a large national employer with 45,000 employees and dependents showed that managed care - implemented through a mental health carve-out - decreased outpatient costs by 28% and decreased the average number of outpatient visits by 19%. At the same time, outpatient treated prevalence increased from 8.6% to 9.7%. - NIMH funded study (RO1 MH54135) by K. Grazier and associates.
	EAPs In 1995: 62% of responding employers offered EAP services; and in 1988: 46% of responding employers offered EAP services. - Foster Higgins, 1995
	EAP Successes "Perhaps the best known study of the effectiveness of an EAP involved workers at the McDonnell Douglas Corporation in St. Louis· The employees who used McDonnell Douglas' EAP services had fewer absences, generated fewer medical claims, and remained with the company longer than their counterparts who went through treatment for the same problems but did not use the EAP. William Glazer and Nancy Bell. Mental Health Benefits: A Purchaser's Guide, 1993
	EAP Successes "General Motors: One year after treatment, 60-70% of those employees were still abstaining from alcohol and drugs." "Kimberly Clark: 43% reduction in absenteeism and a 70% reduction in accidents among a sample of employees who participated in their EAP." - J. Wrich for CBO, January 1996
	"EAPs have triggered a 66% decline in absenteeism after alcohol abusers have been identified and treated, and a 30-33% decline in the use of sick benefits and worker's compensation claims." - Kay Springer, quoted in the American Hospital Association's 1997 "Issues in Mental Health Coverage."
	"EAPs have yielded a 28% reduction in the cost of mental health benefits." - Jan/Feb 1992 Journal of Health Care Benefits as quoted in the American Hospital Association's 1997 "Issues in Mental Health Coverage."
	Pitney Bowes, using an integrated EAP - managed behavioral health plan, cut behavioral health costs 56%, from $2.4 million in 1995 to $1.3 million in 1997. The vendor increased the number of free EAP sessions from 3 to 8 and conducted 54 wellness seminars in 1997. Use of the EAP went from 4% in 1996 to 10.4% in 1997. Ninety-five percent of patients rated the vendor a score of 3 or better on a scale of 4 and 73% of patients reported clinical improvement. - "Managed Behavioral Health News," June 25, 1998.
	"Campbell Soup Co. has seen its mental health costs drop from 8.9 percent of its total medical bill in 1989 to 5.1 percent last year. 'We credit getting people seen earlier and steering them into the appropriate level of care so problems don't fester and escalate,' says Diane Linke, Campbell's employee assistance program administrator." - Gloria Hochmann, Inquirer, 1995
	Penetration Rate Comparison ECA (1980s) Penetration Rate Experience (specialty mental health) 5.9% [Epidemiological Catchment Area] NCS (early 1990s) Penetration Rate Experience (specialty mental health) 5.8% [National Comorbidity Survey] MBHOs Penetration Rate Experience (specialty mental health) A range from 1.6% to 11.6% Within one MBHO with multiple contracts, the range was 1.7% to 5.7% These studies did not examine the actual benefit, the degree of management, not the presence of a EAP program. NIMH concluded "The variation found in treated prevalence under diverse types of managed care invites further investigation." - Parity in Financing Mental Health Services, NIMH, June 1998
	Medicaid Initial results from the Massachusetts Medicaid Mental Health project: (1) persons using services increased 5%; (2) expenditures were reduced by 22%; (3) hospital readmissions were reduced; and (4) a more comprehensive array of services were provided. - James Callahan, Donald Shepard, and Richard Beinecke, Brandies University, Evaluation of the Massachusetts Medicaid Mental Health/Substance Abuse Program, 1994
	"Colorado's Medicaid managed mental health pilot program saved $6.5 million in its first year and spawned a vast menu of services that weren't covered under fee-for-service Medicaid·Among the findings (51 of the state's 63 counties participating):" "Access to services increased under managed care. The penetration rate climbed from 10.17% in the year before the pilot to 10.33% in the managed care program's first 11 months." "Inpatient hospitalization costs plummeted." Dropped from 50% to 17% of Colorado's public mental health spending. "Appointment waiting times shortened." "Clinicians and parents of children discharged from state mental health institutes were more satisfied under the pilot." "Managed care and fee-for-service outcomes were the same· Physical functioning, social functioning, general health, housing adequacy, and satisfaction." Western Consortium for Public Health, University of California - Berkeley, as reported in Managed Behavioral Health News. January 30, 1997.
	After the introduction of a fully capitated Medicaid program in Boulder County, Colorado the following new services, previously not available, were available: family care, crisis-respite homes, hospital diversion, and mobile treatment teams. Case management staffing and clubhouses were significantly increased. The number of individuals hospitalized declined 57% and the number of units of outpatient treatment declined 19%. The proportion of patients taking "novel" antipsychotic medication significantly increased and for these persons, they shared significantly improved psychopathology functioning. After capitation, participants reported greater quality of life, particularly work (both sustained employment and average duration of work), personal financial stability, greater housing stability, and greater reliance on a friend. Consumer satisfaction with services declined slightly. - Warner and Huxley, Psychiatric Services, June 1998.
	First year data from Iowa's Medicaid mental health managed care program documents that: (1) Expenditures were cut $15.3 million; (2) Access to services increased from 5.5% using mental health services each month to 7%; (3) Consumer satisfaction as documented by the University of Iowa increased from 67% to 84%; (4) Inpatient hospital length of stays declined from 11.8 days to 7 days; (5) Inpatient admissions declined; and (6) Previously unfunded services - group homes, shelter care, therapeutic foster care, crisis stabilization, mobile crisis and mobile counseling, respite care, and home-based care - were available and utilized. - Open Minds February 1997
	"In the Oregon Health Plan (25% phase-in), initial findings are: (1) Paperwork has been reduced; (2) Clinician flexibility has been increased; (3) Fraction of Medicaid enrollees using MH services is higher in prepaid counties than in FFS counties; (4) Number of critical incidents, such as suicide attempts and hospitalizations, have not increased." - Bentson McFarland, Kevin Winthrop, and David Cutler Psychiatric Services, February 1997
	Treatment provided as a result of a broad screening program reduced the rate of hospitalization by more than 50% among Medicaid patients. Kaiser Permanente in Vallejo and Sacramento, California - RWJ Fighting Back Program, quoted in National Health Policy Forum, "Training Primary Care Physicians to Recognize and Treat Substance Abuse," September 1997. In examining over six years of experience in Utah, after the introduction of Medicaid capitation, hospitalization declined, hospital length of stay declined, and outpatient expenditures increased. - Stoner, Munning, Christianson, Gray, Marriott, Health Care Financing Administration, Spring 1997.
	"Experience from the States that have already moved to managed care suggest that savings in the range of 5% may not result in drastic service cuts or significant underfunding of the new system. Of course, this depends to a large extent on the adequacy of prior funding levels." - SAMHSA draft guide, Partners In Planning, 1998, quoting Frank, McGuire, and Goldman 1996 Bazelon Center for Mental Health Law Buying In The Public Interest.
	CHAMPUS CHAMPUS "experimented with an at-risk preferred provider organization (PPO) during the late 1980s in the Virginia Tidewater area. This region was known for its high mental health costs. The demonstration showed significant savings (about 31 percent below expected costs) stemming largely from reduced inpatient care." -Richard Frank, Harvard University; Tom McGuire, Boston University; and Joseph Newhouse, Harvard University Health Affairs, fall 1995
	FHC Options CHAMPUS 1986-1994 experience in the Virginia-North Carolina region: (1) persons enrolled increased from 219,764 to 256,839; (2) persons receiving services increased from 7,600 to 19,180; (3) average length of hospital stay declined from 58.11 days to 7.2 days; (4) average cost per inpatient admission declined from $18,539 to $2,013; and (5) partial hospitalization and related day admissions per 1000 persons increased from 0 to 3.2. - FHC Options presentation to Global Business Research conference, 1995
	Public Employees Value Behavioral Health New York State Employees 1993 experience: (1) Mental health and substance abuse services delivered increased 20% from the previous year; (2) acute inpatient hospital admissions per 1000 persons declined from 6 to 3.8 from the previous year; (3) New York State saved $25 million from the previous year; (4) use of outpatient chemical dependency treatment visits rose from 20 per 1,000 persons to 71.6; and (5) admissions for alternative levels of care increased from 0 to 1.5 per 1,000 persons. - Value Behavioral Health presentation to SAMHSA, 1995
	United Behavioral Health Ohio Employees Seven Year Experience: Parity for both mental health and substance abuse was first implemented in July 1990. In 1995 the state selected a "carve-out" organization to manage its behavioral health care benefits. During the first three years there was a $18 million savings from the previous fee-for-service system. Ever since there has been a million dollar savings per year compared with the 1989 baseline. More people receive more services each year. Intensive outpatient services and residential treatment, which did not exist in 1990, are much utilized today. Inpatient hospitalizations have been greatly reduced. The state requires both a 24 hour telephone access system operated by licensed clinical professionals and an EAP, operated separately from the MBHO. Prior to 1990 psychotherapists billed the health plan for their own professional training, three times a week, at a psychotherapy institute. This has been terminated. The health plan prohibits the payment of court-ordered three day DWI treatment. Marriage and family counseling are allowed. The HMO, not the carve-out, pays for emergency room admissions. - Garry Hall, Specialty Benefits Manager, Ohio State Employee Benefits Plan September 23, 1997 presentation to Behavioral Healthcare Tomorrow
	In the Ohio State Employee Program, after the introduction of managed carve-out care, access to specialty care increased from 5% of the membership to between 7-9% while there was a 75% reduction in inpatient days per 1000 members, a reduction in outpatient visits, increased use of intermediate services, such as residential care intensive outpatient care, and recovery homes. Many of the cost decreases do not reflect reductions in quantity or quality of clinical services, but increased efficiencies in care delivery - a maturing network with faster referrals and increasing acceptance of network providers by patients, renegotiated rates made possible by larger volume of referrals, and increased use of group practices which share overhead expenses and scheduling. - Sturm, Goldman, and McCullock; UCLA-RAND Working Paper No. 128, March 1998
Conclusion
	Managed behavioral healthcare organizations are demonstrating that nondiscriminatory benefits, which are managed, are both affordable and can be matched to meet an individual's unique and complex treatment needs. The attainment of parity is dependent upon the use of managed care.