Senate Bill 49

House Insurance Committee

The Kansas Mental Health Coalition supports Senate Bill 49 as introduced by the Kansas Insurance Department to bring Kansas statutes into compliance with federal mental health parity legislation passed in October 2008.  This session, the Coalition also introduced HB 2231 to promote important improvements to the Kansas mental health insurance statutes.   

Today, we are here to advocate for compromise legislation being developed by representatives of the Kansas Mental Health Coalition and representatives of the insurance industry.  The discussions surrounding these proposed changes to Kansas statute have gone on for three weeks and have just reached consensus today.  I apologize that we do not have the language to distribute today.  We must get approval on the exact language first.  As you know, the devil is in the details.  Assuming the language will be acceptable to both parties, we expect to have it available for your consideration this week.

BACKGROUND

Federal Mental Health Parity Legislation:

The objective of the Paul Wellstone and Pete Domenici Mental Health Parity and Addictions Equity Act of

2008 is to require insurance coverage and administration that is equal to, but not superior to, other medical conditions such as cancer, diabetes or heart disease. It can be seen as an important step toward the greater goal of ensuring that persons with a mental illness have the same opportunities in their quest for receiving appropriate treatment as do those with a physical illness and a step towards ending discrimination against consumers seeking treatment for mental illness.

The law, for most health plans, will take effect Jan. 1, 2010. According to the Washington Post (Oct. 10, 2008), supporters of the measure say change in coverage requirements for health plans "represents a fundamental shift in how the mentally ill are treated" and "an important step in erasing the stigma often associated with such illnesses as post-traumatic stress disorder or anxiety-related conditions." Doug Walter, counsel for legislative and regulatory affairs at the American Psychological Association, said, "This is absolutely milestone legislation for those people who have mental health and substance abuse problems," adding, "It ends the discrimination against people who have long needed the help."

The enactment of mental health parity legislation "resolved a 12-year struggle on Capitol Hill to close gaps in insurance coverage that have put at great disadvantage mental health patients and their families," an Akron Beacon Journal editorial stated. According to the editorial, "It is telling ... that critical as it is, parity in coverage made it into law only as part of a bill Congress and the White House desperately needed to approve to shore up confidence in the financial system."

The editorial states, "Disparities in coverage prove harmful to millions of patients when arbitrary caps force them to pay high out-of-pocket costs or abandon treatments that can restore mental stability and a degree of productivity." It concludes, "The new law closes a gap that long has been indefensible" (Akron Beacon Journal, 10/10).

Under the new law, the U.S. Department of Labor must submit biannual reports to Congress on group health plan compliance. The law allows managed care companies to refuse to pay for care if they deem it not medically necessary or "clinically appropriate," but insurers must reveal their criteria for determining medical necessity and their reason for denying any mental health claim, according to the Times (New York Times, 10/6).

This act, included as an amendment to the Emergency Economic Stabilization Act of 2008 signed by President Bush on October 3, amends the Mental Health Parity Act of 1996. Some major points of the act are as follows:

• Requires that a group health plan of 50 or more employees that provides both medical and surgical benefits and mental health or substance use benefits ensure that financial requirements/treatment limitations applicable to mental health/substance use disorder benefits are no more restrictive than those requirements and limitations placed on medical/surgical benefits.
• Equity coverage will apply to all financial requirements, including deductibles, copayments, coinsurance, and out-of-pocket expenses, and to all treatment limitations, including frequency of treatment, number of visits, days of coverage, or other similar limits.
• A plan may not apply separate cost sharing requirements or treatment limitations to mental health and substance use disorder benefits.
• If a plan offers two or more benefit packages, the requirements of this Act will be applied separately to each package.
• Mental health or substance use benefit coverage is not mandated. However, if a plan offers such coverage, it must be provided at parity in accordance with this Act.
• Out-Of-Network Benefits-A group health plan (or coverage) that provides out-of-network coverage for medical/surgical benefits must also provide out-of-network coverage, at parity, for mental health/substance use disorder benefits.
• Preservation of State Law-The current HIPAA preemption standard applies. This means stronger State parity and other consumer protection laws remain in place.

Kansas Statute

The Kansas Legislature intended for K.S.A. 40-2,105a-Kansas’ mental health parity act passed in 2001-and K.S.A. 40-2258 (re: lifetime/annual limits) to be parity provisions and are examples of legislation that provided improved insurance coverage for certain mental illnesses. However, K.S.A. 41-2,105a is not true “parity” as it specifies annual coverage for 45 inpatient 45 and outpatient days of treatment. Also, K.S.A. 40-2,105a, applicable to group coverage only, is mandated coverage for services rendered in the treatment of certain, specifically defined, mental illnesses deemed to be biological in nature.

These are: Schizophrenia, schizoaffective disorder, schizophreniform disorder, brief reactive psychosis, paranoid or delusional disorder, atypical psychosis, major affective disorders (bipolar and major depression), cyclothymic and dysthymic disorder, including autism, attention deficit disorder and attention deficit hyperactive disorder.

The balance of the statute regulating state insurance policies coverage of mental health treatment – K.S.A. 41-2,105 – is an example of mandated minimum insurance coverage for mental health issues including specified co-pays and lifetime limits. Under K.S.A. 40-2,105, individual policies, large and small group coverage have mandated benefits for services rendered in treatment of alcoholism, drug abuse and nervous and mental conditions. This is “first-dollar” coverage, which is limited to not less than 100 percent of the first $100, 80 percent of the next $100 and 50 percent of the next $1,640.  This first-dollar coverage is only applicable to this statute. Coverage for inpatient care is limited to 30 days a year.

The Kansas Mental Health Coalition supports amending these statutes to provide true parity – equal coverage - by eliminating “first dollar coverage” and specified “days of coverage” and including for parity treatment all mental health diagnoses as defined by the Diagnostic and Statistical Manual of Mental Disorders, fourth edition, (DSM-IV) of the American Psychiatric Association.

The coverage specifications in current law have provided life saving treatment for Kansans since the original statute was passed in 1977.  Unfortunately, the limits delineated in K.S.A. 40-2,105 are woefully inadequate today.  These specifications are important to retain as long as we do not provide true equal coverage for Kansans with mental illness.  However, it is time to move beyond these limitations. 

GMHSPC Mental Health Parity Task Force

In 2006 the Governor’s Mental Health Services Planning Council appointed a Mental Health Parity Task Force to study the impact and effectiveness of current law. A task force appointed by the Council met throughout 2006 and issued the “Mental Health Parity Task Force Report” in November 2006. Key findings of this report were:

-Consumers are routinely denied full access to their mental health benefits by some insurance companies. Data provided by the Kansas Insurance Department showed that the average number of outpatient sessions was sixundefinedno matter what the mental health diagnosis was or how severe the condition was.  The average number of inpatient days per episode of acute illness was also only six days.

-The increased cost of mental health parity to consumers, employers, and insurers is less than 1% a year. Some argued that covering mental health care would dramatically increase the overall cost of healthcare. That did not turn out to be true. In fact, a study commissioned as part of the 2001 legislation showed that mental health parity increased costs of health care in Kansas by less than 1% a year.   

-Full mental health parity has the potential of reducing overall medical costs by 20%. A 1999 study suggests that having full mental health coverage and benefits could reduce the overall cost of health care by as much as 20%. This is referred to as the “cost-offset” data. Every dollar spent on mental health care results in greater cost savings on the medical-surgical side.  (Chiles, J.A., et.al. 1999: “The Impact of Psychological Interventions on Medical Cost Offset: A Meta-analytic Review,” Clinical Psychology: Science and Practice, V6, Summer)

-Confidentiality of patient material is seriously compromised by some insurance companies doing business in Kansas. Some companies require more information than is necessary or more than they would request for treatment of a physical ailment.  Information about a person’s mental disorder is particularly sensitive and must be vigorously protected.

-Full mental health parity is the desired outcome for all Kansans. Full mental health parity would result in all mental illnesses being covered and treated in an equivalent way to illnesses requiring medical/surgical treatment.

Other Notes on Cost:

We know that the costs of implementing limited parity in Kansas have been minimal – less than 1% . We have data from the impacts of current statutes on the private market and the State Employees Health Care Plan.  We also anticipate having additional data from the State Employees Health Care Plan regarding expanded access to mental health benefits as it was implemented in January 2009.  We encourage you to invite representatives of the State Plan to discuss the benefit plan design.

Beyond our state, there have been volumes written on the subject.  According to one analysis of the costs of mental health parity, “Parity in mental health benefits rectifies unfairness in health insurance coverage and reduces financial risk for those with mental illness. However, increased coverage for mental illness has been seen as creating inefficiencies and increasing total spending, based largely on results from the RAND Health Insurance Experiment conducted in the 1970s. Newer evidence suggests that cost control techniques associated with managed care give health plans alternatives to discriminatory coverage for containing costs. We review both eras of research on mental health insurance and conclude that comprehensive parity implemented in the context of managed care would have little impact on total spending.”  (Barry, Frank and McGuire, 2006, “The Costs of Mental Health Parity: Still an Impediment?”, Health Affairs, 25, no.3: 623-634)

An actuarial study from 2005 examined the experience of the Office of Personnel Management and numerous states that implemented their own parity statutes.  “The Mental Health Parity Act of 1996 required that the annual and lifetime dollar limits of mental health benefits and medical benefits be equal for employers with at least 50 employees offering mental health coverage. Since its implementation, new federal proposals have been presented that would extend the 1996 Act, some requiring full parity for all categories of mental health conditions as listed in the DSM-IV (the Diagnostic and Statistical Manual of Mental Disorders). Opponents of such legislation argue that the combined pressures of general cost increases and a need to pay fully for mental health care will make it impossible for employers to continue offering affordable coverage, often citing initial estimates that placed resulting premium increases from full parity between 3.2 percent and 8.7 percent. However, as actual experience has emerged, it has become clear that these estimates were conservatively high. In fact, with implementation of mental health parity at the same time as managed behavioral health care, many states have discovered that overall health care costs increased minimally and in some cases were even reduced.

“As debate over the federal legislation continues, 35 states have enacted their own versions of mental health parity laws. (Note: now 39 states) The emerging results of their programs dispel the cost arguments of parity critics.  These states are finding cost increases of less than 2 percent and in some cases cost decreases of up to 50 percent, depending on whether mental health care management was already in place.”  (Melek, Steve, "The Costs of Mental Health Parity" Copyright 2005 by the Society of Actuaries, Schaumburg, Illinois, Health Section News, March 2005)

KMHC Principles for Comprehensive Parity:

Decades of research provide evidence that mental disorders can be treated effectively and that persons with mental illnesses who receive such treatments can lead fulfilling and engaging lives. The recent surgeon general’s report on mental health provides important evidence to counter outdated beliefs that mental illnesses are somehow less real than physical ones, or that mental health treatments are ineffective.[1]

The current law, as demonstrated in the Task Force report, is clearly inadequate to assure persons with mental illness the treatment they need to recover both health and quality of life.  Further, the current law reinforces stigma, by treating mental illness as “different” than other conditions.

KHMC has identified the following principles that it believes should guide the development of legislative changes so as to ensure that all Kansans receive the mental health care and treatment they deserve, and that illnesses of the brain are treated like any other biological illness.

• Equal co-pays for mental health care as for other providers
• One deductible for all health care expenses, including mental illness and medical/surgical
• Mandated coverage of mental health treatment
• Definition of covered conditions:
•  “Mental health condition” means any condition or disorder that involves mental illness or alcohol and other drug abuse as defined in the most recent edition of the American Psychiatric Association’s ”Diagnostic and Statistical Manual of Mental Disorders” (DSM). (DSM criteria are included in Medicare, virtually all state Medicaid laws and the Federal Employees Health Benefits Program. DSM criteria are used by the FDA and the legal system throughout the country)
• Uniform language for individual and small group plans
• Equivalent and no more restrictive financial and durational treatment limits
• Managed care provisions are no more restrictive or burdensome for mental illness than for other medical conditions
• Out of network coverage should be comparable for all medical conditions
• Equivalent coverage for prescription medications
• Establish administrative regulations to implement and ensure compliance with statutory provisions
• Apply utilization review statutes to mental health claims

The Parity discussion:

Obviously, the creation of any compromise necessitates concessions by both parties involved.  By no means will our compromise bring comprehensive mental health parity to all Kansans who are covered by private insurance.  It will provide significant improvement to mental health coverage overall.

In an ideal situation, the Kansas Legislature would:

• pass a parity bill which applies to health plans that provide medical, surgical and mental health benefits
• ensure that within these plans that treatment limitations for mental health are no more restrictive than any limitations applied to substantially all medical and surgical treatments, including limits on frequency of treatment, number of visits, days of coverage, or other similar limits on the scope or duration of treatment.
• ensure that within these plans that the financial requirements that apply to mental health benefits are no more restrictive than those applied to all medical and surgical benefits, including deductibles, copayments, coinsurance, out-of-pocket expenses, and annual and lifetime limits,
• prevent plans from establishing separate cost sharing requirements that are applicable only to mental health benefits.

The current compromise will streamline the administration of policy requirements, eliminate day limits, and eliminate dollar limits for large group policies.  It will equalize coverage offered for different categories of mental health diagnoses and improve small group coverage.  We urge you to support the compromise put forward this session to improve upon the language of SB 49 and to modernize and streamline our current insurance coverage statutes.

Thank you for the opportunity to submit these comments.  Please do not hesitate to contact us to discuss this or any other issue relating to mental health.

For More Information, Contact:                                                                       Kansas Mental Health Coalition

                                                                                                                       c/o Amy A. Campbell, Lobbyist

                                                                                                                   P.O. Box 4103, Topeka, KS 66604

                                                    785-234-9702, cell: 785-969-1617;  fx: 785-234-9718, kmhc@amycampbell.com

                                                                                                                     c/o Roy W. Menninger, MD, Chair

                                                                                            85 SW Pepper Tree Lane, Topeka, KS 66611-2072