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Care Grows In A Fractured System

California's law requiring that health plans treat mental illnesses the same way they do physical illnesses could become a model for the nation, but its results here have been a mixed bag.

The first two years under the "mental health parity" rules created by Assembly Bill 88 of 1999 have improved access to care for many patients at a lower out-of-pocket cost.

They also have seen the healthcare market splinter. Except for Kaiser, all the major health plans that serve the Sacramento area now contract for mental health services with separate "carve-out" companies that specialize in behavioral health. The fragmentation has created new complications and obstacles for some patients, forcing them to leave longtime therapists or seek care in a market where many providers aren't accepting new patients.

Fears that health insurance premiums would go sky-high to cope with a deluge of new patients were wrong. Small rate increases to provide mental health parity were masked by double-digit increases to cover other costs such as prescription drugs. Demand for services also rose, but industry sources expect that will subside as treatment stabilizes patients.

Most of the mix of care providers contacted by the Business Journal say AB 88 is a great idea done badly. The carve-outs fractured the system, marginalized mental illness and blocked coordination of care between many primary-care doctors and mental health professionals, they say.

HMO executives describe mental health parity as everything from a "non-event" to a "royal pain in the neck."

AB 88 took effect in July 2000. Two years later, regulations and more legislation are in the works in California to pin down the gray areas of what many call a "work in progress."

Tracking the experiment: Interest in California's experiment has been keen. A study released in February on the first year of mental health parity in California, by Cambridge, Mass.-based Mathematica Policy Research Inc., concluded that fears of large premium increases — and employers dropping healthcare coverage — were not borne out, but that the full impact may not be known for years.

A number of issues cropped up, however, the study found. Among them:

• The shift to managed behavioral health carve-outs disrupted care for some patients. The problems were exacerbated by poor communication and a short lead time to prepare for the changes.
    
• The decision to limit mental health parity to eight serious conditions, not all mental illness, caused confusion and created administrative problems.
    
• The role of the private-sector in providing services to children with severe emotional disturbances needs clarification.

• Consumer education about the expanded benefits needs to be improved.

Mathematica has just kicked off a second study of AB 88, said Tim Lake, one of the authors of the first report.

Regulators scrutinize evolving system: One of the first tasks of the new California Department of Managed Health Care was to make sure health plans adhered to the mandates of AB 88. The new agency started operations on July 1, 2000. Its hands-on approach has drawn kudos from all sides.

"The department … has worked incredibly hard to implement a brand-new, exceedingly difficult bill," said Democratic Assemblywoman Helen Thomson of Davis, who wrote AB 88. "They've been very proactive."

Most recently, the department released proposed regulations to clarify some gray areas in the law. The public comment period closes Sept. 30.

"The legislation did not require regulations, but we've had enough complaints from patients through our help line that we decided to take the extra steps to define some of this," said department director Daniel Zingale.

The proposed rules clarify that mental health parity applies to all basic health services, including preventive care, rehabilitative therapy and others. They also require plans to allow all licensed mental health professionals — not just doctors — to treat patients within their scope of practice.

In addition, the proposed rules define "pervasive developmental disorders" for children — conditions which are covered but not specified under AB 88 — and specify that these include autism. Finally, the department will require plans to provide timely referral and ready access to mental health care, as well as continuity of services.

The proposed regulations follow a study of consumer complaints. Between Jan. 1, 2001 and July 31, 2002, the Department of Managed Health Care received 9,802 consumer complaints, 1,436 of which were related to mental health issues. A total of 1,204 of these were referred to the department's independent medical review process. There were 60 cases related to autism and 16 involved problems with carve-outs.

"One of the areas we're continuing to watch is severe emotional disturbances among children," said Joy Higa, deputy director for plan and provider relations at the department. Disputes on the point relate to what constitutes medical care and should be covered by the health plan and what is education and should come from another source. For example, HMOs argue that they shouldn't foot the bill for play therapy, while patients and some doctors say it is medically necessary treatment and shouldn't be left to schools.

State regulators also are watching the carve-outs to see if patients are falling through the cracks, Higa said.

The agency has received a total of 29 complaints by doctors and therapists since November 2001. Twenty-four of them involved payment issues.

Thomson weighs in: AB 88 got off to a rough start, Thomson said, but some initial problems have unwrinkled over time.

Carve-outs stem from the notion that HMOs can better manage costs by sending patients to a company that specializes in mental illness which can get economies of scale by handling a lot of patients. The problem is that some do a better — and more responsible — job than others, Thomson said.

"They are going to need to put elbow grease into how they bring together the private and public sector," she said.

AB 1422, a Thomson bill approved by legislators and awaiting the governor's signature at press time, would establish a California Mental Health Advocacy Commission to promote access to mental health services and combat stigma and discrimination.

The issue of what is medically necessary treatment for children with severe emotional disturbances and what should be covered by other programs does need to be clarified, she said.

AB 88 was an important first step, but more needs to be done, Thomson added.

"People are not always aware of the benefits. When people need mental health care, they are not reading a book. Insurance companies need to do a better job, consumer advocates need to help and physicians in primary care should know more about it."