Health Care Plan Design and Cost Trends - 1988 through 1998
III. Findings
Cost Trends
The National Association of Psychiatric Health Systems (NAPHS) and the Association of Behavioral Group Practices (ABGP) asked the Hay Group to analyze trends in the proportion of employer health care dollars spent on behavioral health care. This analysis includes trends in absolute and proportionate expenditures in health care costs and trends in behavioral health care plan design over the last eleven years. In addition, this report shows specific characteristics of plans regarding the treatment of inpatient and outpatient mental health services and provides statistics on lengths of stay and utilization.
The total value of employer provided health care benefits decreased by 14.2 percent from 1988 through 1998. This decrease in total value is attributed to the shift towards managed care. The value of general health care benefits decreased by 11.5 percent since 1988, while the value of behavioral health care benefits decreased by 54.7 percent. As a proportion of the total value, behavioral health care decreased from 6.1 percent in 1988 to 3.2 percent in 1998. Although there is a slight increase in the proportion of employer health care dollars attributed to behavioral health care from 1997 to 1998, the value of behavioral health benefits remains significantly below the 1988 level.
The table below shows the total benefits value, general health benefits value and behavioral health benefits value for each year from 1988 through 1998. The dollar values shown are per single employee per year. In addition, the table shows the behavioral health value as a percent of the total value.
Table 1: Behavioral Health Care Benefit Costs
as a Percent of Total Health Care Benefit Costs
(All Values are in 1998 Dollars)
Year
Total
ValueGeneral Health Value
Behavioral Health Value
Behavioral Health as a Percent of Total
1988
$2,526.49
$2,372.01
$154.48
6.1%
1989
$2,528.85
$2,381.51
$147.33
5.8%
1990
$2,503.04
$2,365.36
$137.68
5.5%
1991
$2,490.59
$2,361.07
$129.51
5.2%
1992
$2,470.83
$2,349.80
$121.04
4.9%
1993
$2,420.83
$2,312.62
$107.64
4.4%
1994
$2,383.85
$2,287.27
$96.58
4.1%
1995
$2,336.77
$2,250.33
$86.44
3.7%
1996
$2,281.00
$2,203.60
$77.40
3.4%
1997
$2,268.38
$2,197.42
$70.96
3.1%
1998
$2,168.55
$2,098.68
$69.87
3.2%
% Change 1988 – 1998
-14.2%
-11.5%
-54.7%
(View Figure 1: Change in General Health Care Value 1988-1998)(View Figure 2: Change in Behavioral Health Care Value 1988-1997)
(View Figure 3: Percentage Change in Health Care Value 1988-1997)
Plan Design Trends
Over the last several years, the way health care is managed has changed dramatically. Health care plans can be classified into four types with differing levels of management: fee-for-service plans (FFS), Preferred Provider Organizations (PPO), Point of Service Plans (POS), and Health Maintenance Organizations (HMO).
- Fee-for-service plan: A fee-for-service plan allows patients to choose any provider and does not require patients to obtain referrals to see specialists. They are considered loosely managed.
- Preferred Provider Organization: A PPO allows patients to receive medical services at a lower cost by obtaining care from network providers. Patients may choose to receive care from a non-network provider; however, out-of-pocket costs for these services are substantially higher than for services provided by network providers. Patients do not need a referral to see a specialist. These plans are considered moderately managed.
- Point of Service Plan: A POS plan is similar to a PPO plan, except that patients are required to receive a referral from their primary care physician prior to receiving care from a specialist. These plans are also considered moderately managed.
- Health Maintenance Organization: An HMO requires patients to receive care through a system of affiliated providers. Out-of-network services are not available, except in emergencies. Patients must receive a referral from their primary care physician prior to receiving care from another provider. HMOs are considered tightly managed.
Under any of these four arrangements, a carve-out plan can be implemented to provide mental health and substance abuse services. A carve-out plan is a managed care approach that provides uniform care for mental health and substance abuse treatment regardless of what type of plan provides for general health benefits. Carve-out plans are considered tightly managed. Under a carve-out plan, costs are contained by individual case management of the treatment each patient receives. Any treatment for mental health or substance abuse must be pre-approved by a case manager.
The extent to which carve out plans are being used to provide mental health benefits is not fully known. However, some survey data are now available. In 1998, the Hay Benefits Report collected data on the prevalence of carve out plans for mental health benefits. The following table shows the results of Hay’s survey and indicates that approximately 20 percent of the 204 employers responding provide in- and outpatient mental health benefits through a carve out arrangement.
Table 2: Is your plan’s mental health/psychiatric care a "carve-out" plan?
Answer
Number
Percent
Response Rate
204
20%
Of those, who responded: Yes, inpatient only
0
0%
Yes, outpatient only
0
0%
Yes, both
39
19%
Yes, other
1
Less than 1%
No
164
80%
Over the last 12 years, fee-for-service medical plans have become significantly less prevalent as the primary medical plan (plan type covering most employees) while managed care plans continue to gain in prevalence. The chart below shows the shift in health care delivery systems from 1987 through 1998. Unless otherwise noted, data presented in this report are from the Hay Benefits Report.
(View Figure 4: Design of Primary Medical Plan)
The last decade has also seen a shift in the way behavioral health care services are managed. Specifically, there have been shifts in the way limits are imposed on both inpatient and outpatient psychiatric health care.
The Mental Health Parity Act of 1996 (MHPA) prohibits health care plans from imposing more restrictive annual or lifetime limits on mental health benefits than on medical/surgical benefits. For example, if a plan imposes an aggregate lifetime expense limit or an annual dollar limit on medical/surgical benefits, it cannot impose more restrictive limits on mental health benefits. The law does not require a plan to provide mental health benefits. In addition, the MHPA allows plans to adopt higher copayments and deductibles and, to impose limits on the number of visits or days. The requirements of the MHPA do not apply to substance abuse benefits. The Act is effective for plan years beginning January 1, 1998 or later.
All the pre-1998 data in this report were collected prior to implementation of the MHPA. However, some plans in the 1998 Hay Benefits Report database have benefit provisions that are not in compliance with the MHPA because these plans do not operate on a calendar year basis and may not have modified their provisions to comply with the Act at the time our 1998 survey was completed. Also, small employer plans (fewer than 50 employees) and government plans are exempt from the provisions of the MHPA. It is also possible that a small number of plans were simply not in compliance or data were reported incorrectly.
Inpatient Psychiatric Care – Day Limits
In 1988, 38 percent of all plans imposed a day limit on inpatient psychiatric care. By 1998, day limits were imposed by 62 percent of plans. While more plans are imposing limits, the limit has remained stable. Of the plans imposing a day limit, 59 percent imposed a limit of 30 days in 1988 and in 1998.
Inpatient Psychiatric Care Room and Board - Level of Coverage
The level of coverage for inpatient psychiatric care is measured by the percentage covered, as well as any maximums imposed on the amount of coverage (day limits, for example). The percentage of plans covering inpatient psychiatric care at the same maximum as other confinements (total of rows 1 and 3 in the table below) decreased from 37 percent in 1990 to 12 percent in 1998. The percentage of plans covering inpatient psychiatric care at 100 percent of reasonable and customary (total of rows 1 and 2 in the table below) has remained relatively stable over the years. In 1988, 46 percent of plans covered inpatient psychiatric care at 100 percent of reasonable and customary. In 1998, 48 percent of plans covered inpatient psychiatric care at 100 percent of reasonable and customary.
Table 4: Inpatient Psychiatric Room and Board Level of Coverage
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
100% of R&C
Same Maximum as Other Confinements22%
22%
14%
10%
7%
7%
4%
5%
6%
7%
5%
100% of R&C
Separate Maximum24%
21%
33%
30%
32%
40%
38%
40%
40%
40%
43%
Less than 100% of R&C
(Same Maximum)23%
16%
12%
9%
9%
8%
7%
7%
7%
Less than 100% of R&C (Separate Maximum) 54%*
57%*
30%
44%
49%
44%
49%
47%
47%
46%
45%
* In 1988 & 1989, these amounts were reported as "Less than 100% of R&C - Same or Separate Maximum."
In Hospital Psychiatric Care - Limits
The number of plans imposing any type limit on inpatient psychiatric care increased from 63 percent in 1990 to 88 percent in 1998. Also, the number of plans that impose more than one limit increased from 16 percent in 1988 to 24 percent in 1998. The first row of the table below shows the percentage of plans that impose a limit. The remaining rows show the type of limits and the percentage of plans with limits that impose each type. For example, in 1998, 88 percent of plans impose a limit and, of these, 55 percent impose a limit on the number of days of inpatient care that are covered.
Table 5: Inpatient Psychiatric Care Limits
1990
1991
1992
1993
1994
1995
1996
1997
1998
Plans with limits
63%
74%
81%
84%
87%
87%
87%
86%
88%
Have a Maximum Number of Days Only
59%
46%
42%
41%
42%
47%
47%
47%
55%
Have an Annual Dollar Limit Only
7%
5%
5%
5%
5%
4%
4%
4%
5%
Have a Lifetime Dollar Limit Only 18%
25%
25%
24%
23%
21%
21%
21%
16%
Have a Combination of Limits 16%
24%
28%
30%
30%
28%
28%
28%
24%
(Data for 1988 & 1989 are unavailable)
Maximum Number of Visits Per Year for Outpatient Psychiatric Care
Outpatient psychiatric care limits have also changed. In 1988, 26 percent of plans imposed an annual visit limit. In 1998, 57 percent of plans imposed such a limit. In addition to an increase in the number of plans imposing a limit, the number of visits allowed has decreased. In 1988, 46 percent of plans that imposed a limit allowed a maximum of 50 visits. In 1998, the most prevalent limit was 20 visits. One possible explanation for the increase in the number of plans imposing a visit limit from 1997 to 1998 is that plan designs have been modified to offset the costs of compliance with the MHPA, although no supporting data are yet available.
Table 6: Annual Outpatient Psychiatric Care Visit Limits
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
Plans with Visit Limit
26%
28%
33%
35%
34%
39%
40%
43%
47%
48%
57%
Fewer than 20
7%
6%
5%
4%
4%
4%
4%
5%
4%
20
16%
22%
25%
28%
31%
34%
39%
38%
39%
21 – 29
5%
3%
4%
4%
4%
3%
4%
5%
5%
30
29%*
34%*
11%
12%
14%
17%
16%
17%
16%
17%
19%
31 – 49
4%
3%
7%
8%
8%
9%
9%
7%
8%
8%
9%
50
46%
42%
36%
35%
30%
25%
25%
23%
20%
17%
14%
51 – 75
16%
18%
15%
13%
13%
12%
10%
11%
8%
9%
9%
More than 75
5%
3%
3%
1%
1%
1%
1%
1%
1%
1%
1%
* In 1988 and 1989, the data are shown for 30 visits and less
Outpatient Psychiatric Care - Maximum Benefit Per Visit
In addition to annual visit limits, plans impose per visit dollar limits and annual dollar limits on outpatient psychiatric care. The table below shows the percentage of plans imposing a per visit dollar limit and the limits imposed by these plans. The amounts shown are not adjusted for inflation. Based on the overall trend in health care costs, a limit of $50 in 1988 is equal to a limit of $101 in 1998. Therefore, even though fewer plans are imposing per visit dollar limits, the amount of the average limit is more restrictive than in 1988.
Table 7: Outpatient Psychiatric Care Per Visit Dollar Limits
1990
1991
1992
1993
1994
1995
1996
1997
1998
Plans with Per Visit Dollar Limit
27%
26%
25%
23%
21%
19%
17%
17%
14%
Less than $20
3%
9%
5%
4%
3%
2%
2%
0%
4%
$20 - $29
13%
25%
27%
24%
22%
24%
19%
23%
22%
$30 - $39
7%
20%
18%
17%
17%
18%
13%
18%
14%
$40 - $49
18%
19%
19%
16%
14%
13%
15%
13%
14%
$50 - $59
24%
14%
14%
21%
23%
26%
26%
23%
25%
$60 - $69
13%
7%
6%
5%
5%
5%
7%
8%
6%
$70 or greater
22%
6%
11%
13%
16%
12%
18%
15%
15%
Annual Dollar Maximum for Outpatient Psychiatric CareIn 1988, 45 percent of plans imposed annual dollar limits on outpatient psychiatric care. Of these, 34 percent imposed limits of $751 to $1,000; 21 percent imposed limits of $1,001 to $1,999; and, 15 percent imposed limits of $2,000 to $2,500. By 1998, the percentage of plans imposing limits had decreased to 35 percent. Of these, 17 percent imposed a limit of $1,000; 22 percent imposed limits of $1,500 to $1,999; 16 percent imposed limits of $2,000 to $2,499. Ten percent of plans imposed limits greater than or equal to $5,000. Again these numbers are not adjusted for inflation. Therefore, a limit of $1,000 in 1988 is equal to a limit of $2,011 in 1998.
Outpatient Psychiatric Care Coverage
There is a growing trend of providing outpatient psychiatric care with a separate per visit copayment as opposed to providing these benefits under the general medical plan deductible. The percentage of plans that do not cover outpatient psychiatric care has remained stable. In 1998, three plans out of 1,017 responding did not cover outpatient psychiatric treatment, which resulted in zero percent when rounded to the next whole percentage in the following table.
Table 8: Outpatient Psychiatric Care Coverage
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
Provided Subject to Medical Plan Deductible
85%
85%
79%
74%
72%
64%
58%
49%
41%
38%
35%
Provided Subject to Separate Per Visit Copay/Deductible
6%
6%
10%
13%
14%
18%
21%
26%
32%
35%
39%
Provided and Not Subject to Deductible
7%
8%
10%
12%
13%
17%
20%
24%
26%
26%
26%
Not
Covered
2%
1%
1%
1%
1%
1%
1%
1%
1%
1%
0%*
*Three plans do not cover outpatient psychiatric care.
Percentage of Reasonable and Customary Charges Paid for Outpatient Psychiatric Care
The typical percentage of reasonable and customary charges paid for outpatient psychiatric care varies from 50 percent to 100 percent. Payment of 100 percent of reasonable and customary is increasing in popularity while both 50 percent and 80 percent of reasonable and customary coverage are declining. It is important to remember that coinsurance is not the only measure of the amount of coverage provided. The use of other limits (such as per visit or annual dollar limits and limits on the number of visits) decreases the actual amount of charges that a plan covers.
Table 9: Outpatient Psychiatric Care Coinsurance
Columns do not total 100%. Some plans offer coinsurance rates that are not shown in this table.
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
50%
68%
63%
55%
52%
50%
43%
42%
37%
32%
31%
26%
80%
23%
23%
23%
22%
20%
20%
16%
16%
16%
90%
4%
5%
6%
8%
7%
7%
8%
9%
9%
100%
13%
13%
15%
22%
23%
30%
36%
38%
44%
*Data for 1988 & 1989 were not reported in this manner.
Summary of Maximums on Outpatient Psychiatric Care
The table on the following page shows a summary of the changes in maximums on outpatient psychiatric care. The dollar values shown in this table have not been adjusted for inflation. Therefore, a limit of $1,000 in 1988 is equal to a limit of $1,573 in 1992 and $2,011 in 1998.
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