Managed Mental Health Care Plans Likely to Impose Arbitrary Benefit Limits

Through the use of professional judgment and sound care-management practices, managed mental health care plans were expected to avoid such cost-containment strategies as arbitrarily limiting benefits or requiring consumers to share costs. Recent research, however, indicates that health maintenance organizations (HMOs) and mental health carve-out plans (administered by separately designated organizations) are actually more likely to include some type of benefit limits and cost-sharing provisions. These findings were published in the December 1999 issue of Psychiatric Services, a journal of the American Psychiatric Association.

Lead author David S. Salkever, PhD, professor, Health Policy and Management, Johns Hopkins School of Public Health, said, "Our paper presents evidence that managed care organizations do not make less use of arbitrary benefit limits and cost-sharing provisions even though in theory they should be able to manage costs and the use of services without placing a financial burden on the consumer."

In late 1996, researchers mailed a questionnaire to 1,433 employers across the country who had active long-term disability insurance policies with UNUM, a major disability insurance provider. The employers were asked to describe each health plan offered to employees. Data were obtained on 577 plans from 250 employers.

The researchers then statistically compared the use of benefit limits and cost-sharing provisions by HMOs and non-HMOs and by carve-out and non-carve-out plans, and evaluated the types of limits and cost-sharing, as well as the stringency of each. Limits on benefits for mental health treatment included the number of inpatient hospital days or outpatient visits covered within a year. Cost-sharing requirements imposed on consumers were copayments (fixed dollar charges per visit or day of inpatient stay) or coinsurance (fixed percentage of costs for covered services).

Results show HMOs were more likely than non-HMOs to use service exclusions and did not make less use of benefit limits. HMOs were significantly more likely to exclude service coverage for substance abuse and for partial hospitalization, also referred to as "day hospital treatment." Compared to non-carve-out plans, carve-out plans were less likely to use some coverage exclusions. Comparisons of stringency of limits and cost-sharing provisions did not show consistent differences.

Research for the paper was supported under a contract with UNUM and by a grant from the National Institute of Mental Health.