Proposed Mental Health Parity Rules Will Increase Behavioral Health Tech Investments, Spur Innovation

The updated rules would help make mental health parity a reality by requiring payers to take “reasonable steps” to close behavioral health care access disparities, such as increasing investments in innovative behavioral health technologies.

By Inseparable, American Foundation for Suicide Prevention, American Psychological Association, Eating Disorders Coalition, Mental Health America, National Alliance on Mental Illness (NAMI), and The Kennedy Forum.

America continues to experience overwhelming mental health and addiction challenges. Though the need for mental health treatment has increased, health insurance plans continue to restrict access to lifesaving care. This is despite the fact that 15 years ago, Congress passed the bipartisan Mental Health Parity and Addiction Equity Act (Federal Parity Act) to stop insurers from discriminating against policyholders in need of mental health care. Through overlapping strategies, including low reimbursement rates, failure to contract with available providers, grossly inaccurate provider directories, financially burdensome practices that drive providers out-of-network, and delays and denials of medically necessary care, plans limit access to behavioral health care at enormous cost to American families and communities.

Plans’ violations of the Federal Parity Act are now well-documented, with recent reports to Congress from the U.S. Departments of Labor, Health and Human Services, and Treasury (the “tri-agencies”) finding violations of the law’s requirements outrageously commonplace. These violations result in individuals and families not being able to find urgently needed care and, if they do find care, often not having medically necessary services covered. These barriers result in delays to care that drive up preventable costs, in families taking on huge debts to pay for care themselves, and many people simply going without the care they need. To address this crisis, the tri-agencies proposed revised parity rules last summer to better hold plans accountable to follow the law.

These proposed rules tie back to the original purpose of the Federal Parity Act – ensuring equitable access to behavioral health care. Under the proposed rules, plans would be required to collect and analyze data on how their practices (such as reimbursement rates, credentialing procedures, medical necessity determinations, and network composition) impact access. When plans’ practices have the effect of restricting access to behavioral health care in an inequitable way as compared to physical health, plans would have to take steps to address these disparities.

Importantly, utilization review would still be allowed, and inappropriate care could still be denied.

Perhaps not surprisingly, while professing to support parity, plans have strongly objected to the proposed rules. In buttressing their opposition, plans have pointed to “many” comments opposing the rule, but failed to mention that the overwhelming majority of comments (well over 95% of the more than 9,500 comments) strongly support these needed rules. And, the main national coalition of mental health and addiction organizations, the Mental Health Liaison Group, urges finalization of the proposed rules to provide long-overdue, and urgently needed, accountability for plans.

Plans have also made unsupported claims about the effect of the rules on behavioral health technology and innovation. We know that innovation is critical to improving our nation’s mental health and that technological solutions, including app-based telemedicine and diagnostic and treatment tools, must be part of the solution to our ongoing crisis.

In fact, the failure of plans to scale up investments – and pay appropriate reimbursement rates – for groundbreaking solutions is a significant barrier to innovation. By requiring plans to collect and analyze data on how their practices artificially limit access to care and then take “reasonable steps” to address inequitable access, the rules will increase investments in behavioral health treatment. Given the widely recognized shortage of network providers (though, again, below-market reimbursement rates and onerous paperwork push providers out of network), two of the reasonable steps that plans will likely take to increase access are to invest in 1) tech-enabled telehealth care and 2) behavioral health technologies.

Currently, commercial plan expenditures for behavioral health care are in the neighborhood of 5-8% of their total health care expenditures. While pandemic-related increases in demand have boosted spending in recent years, McKinsey nonetheless estimates that the total disease burden associated with behavioral health conditions is 15%, or approximately double the percentage plans currently spend on behavioral health care. Thus, to address the true burden of these conditions, insurers must increase investments in behavioral health. A significant portion of these investments will directly benefit telehealth and other behavioral health technologies.

In addition to spurring new investments to increase access to behavioral health care, the proposed parity rules will improve health outcomes and reduce other medical costs. But don’t just take our word for it. Research firms, like Milliman and Moody’s Investors Service, concur. Milliman’s research has found that individuals with behavioral health conditions have, depending on their diagnosis, between 2.8 and 6.2 times higher physical health care costs than individuals without those conditions. Moody’s found that individuals with behavioral health needs had very high annual health care costs ($12,272) that were driven by comorbid physical health conditions. Yet only 7.9% of the services these individuals received was for behavioral health treatment (under $1,000 annually). To drive down overall health care costs and increase profitability, Moody’s recommends that insurers increase investments in behavioral health.

Unfortunately, despite this robust evidence, plans continue to oppose change because limiting increases in behavioral health reimbursement boosts short-term profitability. In addition, many insurers still artificially separate their physical and behavioral health lines of business, making it very difficult for plans to realize cost savings from behavioral health investments (or to ensure parity compliance).

While health plans are wedded to the status quo, the American people are clamoring for change. Sixty-four percent of voters said that health insurance companies denying needed mental health services is a major problem contributing to the mental health crisis. This is not surprising given the ongoing behavioral health crisis, and the fact that 18 percent of insured adults reported that their private health plan had denied care in the past year.

Improving Americans’ health and well-being requires insurers to do their part in improving access to behavioral health treatment. It’s time that insurance companies stop resisting parity and start investing in behavioral health and equitable access to care.