This study is the first to examine a parity implementation that restricted non-quantitative treatment limitations, which is the approach that has been favored in the MHPAEA. The Oregon Insurance Division actively interpreted the statute to mean that the behavioral health benefit could not be managed in a way that was different from the medical-surgical benefit. Our results suggest that this form of parity did not result in increases in expenditures for mental health and substance abuse services that were substantially larger than those observed among a comparison group of privately insured individuals not subject to the parity law.
The point estimate for the change in spending for our four PPO plans was positive and ranged between $12 and $26, and none differed significantly from zero. One possible explanation for this negative finding is that our evaluation lacked the necessary power to show a statistically significant effect. However, the pooled analysis (using 100,328 individuals covered by parity) was not significantly different from zero.
The negative finding could also be related to the notion that parity primarily affects a relatively small population of individuals who need additional outpatient treatment. The added expense of this increase in outpatient utilization may be relatively small when compared to the overall year-to-year spending attributable to inpatient care and prescription drug use for mental health and substance abuse services. The lack of a significant increase in expenditures may also be related to plans’ pre-parity approach to the quantitative limits. During our structured interviews with health plans, several indicated that these limitations were not 100% binding and exceptions could be made. These exceptions could occur with providers who were in the plan’s behavioral health network, and would be managed and observed closely. According to plans, before parity, there was never any exception for providers who were out of network.
provides some indication of the “exceptions” that plans made to their visit limitations prior to the parity implementation. (We note that our estimate is likely to be biased upwards since health plans may have differentiated between different types of outpatient behavioral health visits). In general, approximately 5% of patients with any behavioral health visit exceeded the specified limits of that plan. The apparent flexibility in these “limits” prior to the parity law may be one reason that the implementation of parity did not lead to large increases in spending.
Pre-parity prevalence of visits exceeding outpatient mental health limits
Our negative findings suggest that the impact of federal parity on total health care spending could be relatively small. Overall, behavioral health expenditures are a small portion of total spending. In our study, expenditures for mental health and substance abuse services accounted for approximately 6.0% to 7.4% of total expenditures, depending on the health plan. An increase in behavioral health spending of $25 (the largest point estimate in our study) would be equivalent to a 1.0% increase in total spending. Thus, even if parity did result in statistically significant expenditures that our study was not powered to detect, the impact on the total premium would still be relatively modest.
While many observers believe that managing the behavioral health benefit is beneficial for patients, some have described the partnering of parity and managed care as “a Faustian bargain”: undesirable but necessary to keep costs in check.(18
) The Oregon experience suggests that the Faustian bargain may not be necessary. That is, it may be possible to remove visit limitations without imposing onerous managed care utilization methods on behavioral health services. However, this does not mean that no
managed care would be optimal. Oregon’s commercial health plans continued to use traditional managed care tools to control costs and utilization. The distinction enforced by the Oregon Insurance Division was that plans were not allowed to differentially manage
behavioral health services.
Our study has several limitations that should be noted. In our quasi-experimental design, our comparison group consisted of individuals in Oregon who had commercial insurance and whose employers were self insured and thus not affected by Oregon’s parity law. There is a risk that this was not the appropriate comparison group or that this choice did not adequately control for secular trends. However, it is reassuring that individuals from the self insured plans generally had similar demographic and spending characteristics and were located in the same geographical and service areas. Our negative finding could also be attributed to statewide changes in the ways that providers cared for all of their patients after parity was implemented. For example, providers may have been confused or unable to discern which patients were covered by the parity statute and which were not, and may have recommended additional visits for their entire patient population. If this were the case, it might mask the increases in spending attributable to parity because the control group was also receiving more intensive treatment.
However, close inspection of the self insured data did not detect discrete changes in spending after the Oregon parity law. Rather, spending in the control group followed a relatively smooth, linear time trend over the four year study period. displays the average quarterly spending for our self-insured group, compared to a linear trend forecast based on the first eight quarters (pre-parity) of spending. These data do not suggest any large changes in spending that coincided with the implementation of the Oregon parity law. Additional evidence to support our comparison group is provided in the online supplement
Thick dark line represents average quarterly spending for MarketScan individuals. The thin line represents a linear trend forecast based on the first eight quarters.
This study is also limited in its analysis of only four PPO plans in Oregon. While these plans represented the majority of the non-self insured commercial market, they may not be representative of other commercial plans in Oregon or commercial plans throughout the United States. Although we conducted extensive interviews with key informants in each of those plans and documented their management practices, there may be unobserved factors particular to our four study plans (e.g., cooperative relationships with providers) that allowed them to keep costs in check.
It is also possible that there may have been other non-quantitative treatment limitations that were responsible for controlling costs. We focused our attention on the same set of utilization management techniques that were studied in the Federal Employees Health Benefits Program(19
) and in a recent survey of 368 commercial health plans.(20
) However, there may have been other relevant indicators that we did not study. Furthermore, we also only examined whether plans had certain utilization management policies and not how strict health plans were in applying them. These data are difficult to obtain and beyond the scope of this study.
This study is also limited by its time frame, which covered two years of pre-parity and two years of post-parity observations. While we would expect that this would be adequate to capture changes in patient behavior, it may not be long enough to capture changes in provider behavior. In particular, if providers see parity laws as an opportunity to expand business and services, they may invest in infrastructure and facilities that could have longer-term consequences for the costs of treating behavioral health disorders.
Certain aspects of Oregon’s insurance market and health care delivery system may not be generalizable to other parts of the country. Oregon is generally considered to have a competitive insurance market. At least seven Oregon-based plans participate in the non-self insured group market, with the largest plan only capturing 31% of those beneficiaries.(21
) The state has authority to review proposed rate increases, as well as to regulate health plans for financial solvency, policy form approval, and consumer protection.(21
) There are undoubtedly differences in the health care markets across states that might affect the generalizability of our findings. In particular, psychiatric inpatient beds are generally considered highly constrained in Oregon, which may have limited increases in inpatient use after parity.
Our findings may presage the experience of health plans around the country as federal parity is implemented. The experience of Oregon suggests that management of the behavioral health benefit does not necessarily need to be different than management of the medical-surgical benefit in order to control costs as the federal parity law goes into place. Nonetheless, it does not mean that no management is optimal. In particular, given the widespread and broad-based nature of the federal law, we need a greater understanding of the types of benefit management that are best at controlling costs and improving quality, in order to reap the greatest advantages from the opportunity offered by a national parity law.