Will Medicare Provide Parity in its Mental Health Services? It’s Time

While Medicare makes strides in modernizing its coverage for physical illnesses, its coverage for mental health care continues to lag behind. Mental health care has changed dramatically since Congress enacted Medicare 42 years ago in 1965, yet many seniors and people with disabilities are denied the up-to-date mental health services they need. This past spring Congressman Pete Stark introduced the Medicare Health Modernization Act of 2007 (H.R. 1663) to provide parity in Medicare for mental health services and improve coverage for cost-effective and community-based mental health treatment services for seniors and people with disabilities.

Currently, one in five older adults experiences mental problems that are not related to the normal aging process. In primary care settings, more than a third of older adults demonstrate symptoms of depression. Older Americans also have the highest rate of suicide of any segment of our population. Yet Medicare’s existing mental health benefits, such as the 190-day lifetime limit on inpatient mental health services and the discriminatory 50 percent copayment for outpatient mental health services compared to the 20 percent level applied to other Part B services, limit access to essential treatment and do not adequately meet beneficiaries’ needs.

A recent 2006 George Washington University report also found that 59 percent of Medicare beneficiaries with disabilities had a mental illness, and 37 percent had a mental illness classified as serious. (See Psychiatric News Journal article, “APA Tells Congress: End Medicare’s Higher Copay for MH Treatment,” May 4, 2007) The 50 percent copayment requirement is especially challenging to the non-elderly disabled Medicare population because many them have severe mental illness along with low incomes and high medical expenses. A 50 percent coinsurance requirement can create a serious burden and barrier to care among these beneficiaries.

Not only does this 50 percent copayment create large costs for beneficiaries, it may also keep mental health care costs higher for Medicare. Several advocates testifying before the House Ways and Means Committee last March mentioned that having a lowered copayment may likely result in cost savings for Medicare. David Shern, Ph.D., president and CEO of Mental Health America, testified that the cost and limits on outpatient care in Medicare have resulted in much higher utilization of expensive inpatient care among Medicare beneficiaries than other populations.

For example, a 2002 Substance Abuse and Mental Health Services Administration (SAMHSA) analysis found that Medicare beneficiaries were much more likely than Medicaid beneficiaries to receive inpatient mental health and substance abuse care, if they receive any such services at all, and that Medicare beneficiaries were less likely than Medicaid beneficiaries to receive mental health and substance abuse treatment in ambulatory outpatient facilities. When Medicare beneficiaries do receive inpatient care, according to the report, the care is more intensive, presumably because these individuals have not been able to access adequate outpatient care.

In introducing HR 1663, Congressman Stark also echoed the cost justification for an end to the discriminatory Medicare copayment by noting that Medicare mental health expenses have historically been heavily skewed toward more expensive inpatient services, with 56 percent of the program’s mental health spending going to inpatient care and only 30 percent to outpatient services in 2001. This relationship is in contrast to national trends showing a reversal in inpatient and outpatient spending over the past decade. Over the last 10 years, inpatient spending has declined from 40 percent to 24 percent, and outpatient spending has increased from 36 percent to 50 percent of all mental health spending.

If passed, the Medicare Mental Health Modernization Act would improve Medicare’s mental health benefits as follows:

  • It reduces the discriminatory co-payment for outpatient mental health services from 50 percent to the 20 percent level charged for most other Part B medical services.
  • It eliminates the arbitrary 190-day lifetime cap on inpatient services in psychiatric hospitals.
  • It improves beneficiary access to mental health services by including within Medicare a number of community-based residential and intensive outpatient mental health services that characterize today’s state-of-the-art clinical practices.
  • It further improves access to needed mental health services by addressing the shortage of qualified mental health professionals serving older and disabled Americans in rural and other medically underserved areas by allowing state licensed marriage and family therapists and mental health counselors to provide Medicare-covered services.
  • Similarly, it corrects a legislative oversight that will facilitate the provision of mental health services by clinical social workers within skilled nursing facilities.
  • It requires the Secretary of Health and Human Services to conduct a study to examine whether the Medicare criteria to cover therapeutic services to beneficiaries with Alzheimer’s and related cognitive disorders discriminates by being too restrictive.

Five years ago President Bush identified unfair treatment limitations placed on mental health benefits as a major barrier to mental health care and urged Congress to enact legislation that would provide full parity in the health insurance coverage of mental and physical illnesses. Great improvements have been made for the under-65 population. Twenty-six states have enacted full mental health parity. The Federal Employees Health Benefits Plan (FEHBP) was improved in 2001 to assure that all federal employees and members of Congress are provided parity for mental health and substance abuse treatment. Last spring, Representatives Kennedy (D-RI) and Ramstad (R-MN) introduced HR 1424, the Paul Wellstone Mental Health and Addiction Equity Act, to provide full parity for mental health and substance abuse in the private insurance market nationwide.

While some in the business community are concerned about increased costs associated with providing these benefits, a recent study of the FEHBP mental health coverage concluded that implementation of parity benefits led to a negligible cost increases. In fact, some businesses are now embracing parity because they recognize the increased productivity from workers over the long run and how improving access to mental health services has the potential to avoid other additional costly care.

Modernizing the Medicare mental health benefit may also most likely reduce unnecessary spending. Most mental conditions no longer require long-term hospitalizations, and can be effectively treated in less restrictive community settings. This bill recognizes these advances in clinical treatment practices and adjusts Medicare’s mental health coverage to account for them.

The Medicare Mental Health Modernization Act removes discriminatory features from the Medicare mental health benefits while facilitating access to up-to-date and affordable mental health services for our senior citizens and people with disabilities. H.R. 1663 is currently awaiting a hearing in both the House Ways and Means Subcommittee on Health and the House Energy and Commerce Subcommittee on Health. The Children’s Health and Medicare Protection Act (the CHAMP Act; H.R. 3162) introduced in late July 2007 also has provisions to bring parity to Medicare’s mental health coverage. See the brief article on the CHAMP Act in this issue for more information.

Karen Joy Fletcher

Our blogger Karen Joy Fletcher is CHA’s Communications Director. With a Masters in Public Health from UC Berkeley, she is the online “public face” of the organization, provides technical expertise, writing and research on Medicare and other health care issues. She is responsible for digital content creation, management of CHA’s editorial calendar, and managing all aspects of CHA’s social media presence. She loves being a “communicator” and enjoys networking and collaborating with the passionate people and agencies in the health advocacy field. See her current articles.