Behavioral healthcare benefit plan designs are closely aligned with medical plan designs. As with medical plans, behavioral benefit plans are either network-based (HMO, POS or PPO), or non-network based (indemnity). A large employer or purchasing group often will customize a behavioral healthcare carve-out plan to provide a standard plan design to all members regardless of their medical coverage. This greatly facilitates plan administration, but insurance and utilization review laws, and third-party administrator licenses vary from state to state, complicating behavioral plan administration. To fully understand behavioral health-care benefit plan design, it is essential to first understand funding arrangements.
Fully Insured Arrangements
In a fully insured funding arrangement, often called "full risk" or "risk-based," MBHOs assume the financial risk for providing behavioral services paying the claims submitted by providers for behavioral services rendered. Financial risk falls on the MBHO. When service utilization and corresponding claims costs exceed expected levels, the MBHO absorbs those increased costs. Purchasers pay MBHOs a predetermined, fixed (usually monthly) premium for assuming financial risk for behavioral treatment costs. On average, a monthly premium for a fully insured, full-risk behavioral plan, excluding EAP, ranges between 3 and 6 percent of a medical plan's premium, although rates can vary depending upon a group's utilization experience, number of members, geographic location, benefit plan, and state parity laws. The two primary cost drivers for a fully insured funding arrangement are group utilization rates and unit costs for practitioner and facility care.
A variation of a fully insured funding arrangement is a shared-risk arrangement, in which purchasers agree to assume financial risk for claims payment up to a certain amount. Premiums are based on projected claims costs. If claims exceed a prespecified amount, the MBHO assumes those claims costs or a percentage of those costs. If claims come in below the targeted amount, the balance can be shared by the MBHO and client or refunded to the client. There are many iterations of these shared agreements.
Administrative Services Only
Under an administrative services only (ASO) arrangement, an MBHO, for a fee, will handle medical management, utilization review, benefit and other administrative functions, such as claims payment (although some ASO contracts do not include claims payment). Often called a "self-funded" or "self-insured" arrangement, the purchaser assumes the financial risk for the health care costs for its members. Self-funded plans may also be administered by independent organizations called third party administrators (TPAs), which often provide administrative and medical management services in addition to claims processing. The larger the group, the more likely it is to self-fund because the financial risk is spread across more employees and its budget is large enough to absorb the risk. Self-funded groups typically have stop-loss insurance, which protects them from catastrophic losses.
A key advantage of an ASO arrangement is that employers can offer the same benefit to employees working in different states. Because ERISA exempts self-funded health plans from compliance with state laws and regulations, employers that self-fund can avoid individual state regulations such as diverse state mental health parity laws. Self-funded employers may also be able to save money because they can limit the risk pool to their own employees, avoid state taxes on insurance company premium revenues, and have complete control over benefit packages. In addition, some employers may self-fund to access claims data, allowing them to understand the true costs of their health care plans and tailor their plans accordingly. Figure 1 outlines benefit plan design and funding arrangement options.
Sample Managed Behavioral Healthcare Benefit Plan Design
Figure shows an example of a managed behavioral healthcare combined HMO/POS plan design that complies with California's mental health parity legislation.
HMO
|
POS[*]
| ||
|---|---|---|---|
In-Network
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Out-of-Network
| ||
Mental Health
| |||
Inpatient deductible
|
None
|
None
|
N/A
|
Inpatient per admission fee
|
None
|
None
|
N/A
|
Inpatient treatment annual maximum benefit including partial and day treatment
|
Unlimited days at 100% based on medical necessity
|
Maximum of 30 days (combined with chemical dependency)
|
Not covered
|
Outpatient treatment
|
30 visits at $0 copayment
|
40 visits (combined with out-of network) at $0 copayment
|
40 visits (combined with in-network) per calendar year 50% of UCR up to $40 per visit
|
Chemical Dependency/Substance Abuse
| |||
Inpatient and outpatient (includes detox)
|
$25,000 per calendar year
|
Maximum of 30 days (combined with mental health)
|
$200 deductible per calendar year 50% of UCR up to a maximum of $1,000 per calendar year
|
Severe Mental Illness Benefit[**]
| |||
Inpatient deductible
|
None
|
None
|
N/A
|
Inpatient per admission fee
|
None
|
None
|
N/A
|
Inpatient, partial and day treatment
|
Unlimited days covered at 100%
|
Unlimited days covered at 100%
|
N/A
|
Outpatient mental health visits
|
Unlimited visits at $0 copayment
|
Unlimited visits covered at $0 copayment
|
N/A
|
[*] Pre-authorization required for all in-network and in-patient services both in and out of network. Chemical dependency and substance abuse combined in- and out-of-network maximum of $35,000 per calendar year. Chemical dependency and substance abuse combined in- and out-of-network maximum of $50,000 per lifetime.
[**] Severe mental illness diagnoses include: anorexia nervosa, bipolar disorder, bulimia nervosa, major depressive disorder, obsessive-compulsive disorder, panic disorder, pervasive developmental disorder or autism, schizoaffective disorder, schizophrenia. In addition, the Severe Mental Illness Benefit includes coverage of serious emotional disturbance of children (SED).
| |||
Figure 2: Sample Managed Behavioral Healthcare Combined HMO/POS Plan Design With A Typical Mental Health Parity Benefit
An employee assistance program is a confidential, short-term counseling service to assist employees and their family members with personal problems that negatively affect their job performance. These programs vary considerably in design and scope, and are offered by MBHOs, stand-alone EAP companies, and work/life companies. EAPs originally focused on substance abuse problems, but most today take a comprehensive approach to support members with a range of employee and family issues. Some include proactive prevention and health and wellness programs, and may even be linked to the health plan and MBHO benefit structure. While most EAPs offer a wide range of services, they generally refer members to other professionals or agencies that can offer more, or extended, help in particular areas. EAPs also provide human resource support through management consultation, on-site employee and employer seminars and critical incident stress management after catastrophic workplace events. The average utilization rate for an EAP ranges between six to seven percent, but it jumps to between seven and 10 percent when adding work/life programs.
24-hour toll-free access to the EAP
|
Confidential services
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Available to all household and dependent family members
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Unlimited calls
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Five face-to-face counseling sessions (per incident) with EAP provider
|
Child and elder care referral services
|
Legal assistance and referral
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Financial counseling and debt management
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Alternative medicine referral
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Concierge services
|
Figure 3: Typical Employee Assistance Program Benefit Summary
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