Evaluation of Parity in the Federal Employees Health Benefits (FEHB) Program: Final Report. Findings

12/31/2004

How was the FEHB Parity Policy Implemented?

All of the FEHB plans complied with the parity policy, most incurred no added administrative costs, and none reported major problems with implementation. The policy change enhanced MH/SA benefits for FEHB Program enrollees. Table 1 shows the key research questions regarding how the parity policy was implemented and the corresponding findings.

Table 1. Parity Implementation Key Research Questions and Findings

Research Question Findings
Did all FEHB plans comply with the parity policy? All FEHB plans complied with the parity policy.
How did the FEHB parity policy affect MH/SA benefit design and management? Most plans enhanced their MH/SA benefits consistent with the FEHB parity policy; plans were more likely to enter into managed care carve-out arrangements.
How did the FEHB parity policy affect the benefit design and management for general medical care? There was no evidence of general medical care benefit or management changes resulting from the parity policy.
Did FEHB plans incur additional expenses in implementing the parity policy? Two-thirds of the plans incurred no added administrative costs in implementing the parity policy; the majority of plans experienced some increased benefit costs.
How did providers experience the FEHB parity policy? FEHB plan providers had little awareness of the parity policy and very limited understanding of the parity benefit.

FEHB Plans Complied with the Parity Policy

All FEHB plans complied with the parity policy. No plan left the FEHB Program to avoid implementing the policy, and plans enhanced their MH/SA nominal benefits as required by the policy change.

Most Plans Enhanced their MH/SA Benefits and were More Likely to Carve-out

The majority of plans enhanced their MH/SA benefits in the post-parity period consistent with the FEHB parity policy. Eighty-four percent of the plans made changes in the amount, scope, or duration of mental health benefits and 73% made such changes for substance abuse benefits. Deductible, copayment or coinsurance limits on mental health benefits were changed by 75% of the plans, and by 64% of the plans for substance abuse benefits.

With the introduction of the parity policy, FEHB plans were more likely to enter into managed care carve-out arrangements with specialty behavioral health care organizations than were comparable non-FEHB plans. However, most other hypothesized changes (e.g., increased gate-keeping at the primary care provider level, reduced provider networks, concurrent or retrospective review, use of disease management programs for MH/SA care, and increased financial risk sharing) occurred less frequently than had been anticipated. While many plans required the submission of treatment plans prior to the parity policy, many more plans required it after the parity policy was implemented.

Finally, while all plans complied with the parity policy for services offered by in-network providers, no plan extended parity to care delivered by out-of-network providers.

General Medical Care was Unaffected by the Parity Policy

While half of the plans changed deductible, copayment and coinsurance limits on general medical benefits, there is no indication that these changes resulted from the FEHB parity policy.

Most Plans Incurred No Added Administrative Costs in Implementing Parity While Benefit Costs Increased for Some Plans

Two-thirds of the FEHB plans reported incurring no added administrative costs in implementing the FEHB parity policy and no plan expressed concerns about any cost increases they did incur. Forty-two percent of the plans reported increased benefit costs only in the immediate post-parity period (2001), and an additional 20% of plans reported these costs increased in both 2001 and 2003.

Providers Had Little Awareness of FEHB Parity

Based on focus groups in three regions of the country, the evaluation found that FEHB plan providers had little awareness of the FEHB parity policy. They also had very limited understanding of the parity benefit itself, often confusing the FEHB parity policy with their State parity laws.

What was the Impact of the Parity Policy on Access, Utilization and Cost?

Overall, the impact of the parity policy on MH/SA service access and utilization, spending, and quality was modest. Utilization and spending results for mental health services alone were not substantially different from those results for MH/SA services combined, nor were utilization and spending results for adults and children significantly different from one another. Table 2 shows the key research questions on the impact of the parity policy on MH/SA access, utilization, spending, and quality and the corresponding findings.

Parity Impact Key Research Questions and Findings

Research Question Findings
How did the parity policy affect access to and utilization of MH/SA care? How did these changes compare to secular trends? Access to and utilization of MH/SA services for both adults and children increased consistent with secular trends. For substance abuse services alone, after accounting for secular trends, there was a small but consistent increase in access and utilization across plans.
How did the parity policy affect cost of MH/SA care to the beneficiary and OPM? How did these changes compare to secular trends? Total costs for MH/SA care increased in line with secular trends for both adults and children. In most (but not all) plans, beneficiary out-of-pocket costs declined and no plan’s child beneficiaries experienced cost increases when secular trends were taken into account.
Was quality of care affected by the parity policy? The parity policy had little or no effect on the quality of care for adults with major depressive disorder or substance abuse disorder.

Utilization of MH/SA Care Increased on Par with Secular Trends  

Both adult and child FEHB beneficiaries in all nine plans were more likely to use MH/SA services after parity was implemented, but at a rate consistent with secular trends. (The same was true for mental health services alone.) Thus, the increased utilization of MH/SA care was unlikely a direct result of the parity policy. The parity policy was not associated with changes in inpatient utilization, however, in eight of nine plans.

Access to substance abuse services increased slightly but significantly in all nine plans, but the increase was significant in only four of these plans after accounting for secular trends. Substance abuse services utilization was extremely low, however, both prior to and after the implementation of the parity policy, less than 1% in nearly all plans.

Total Spending on MH/SA Care Increased on Par with Secular Trends and Out-of-Pocket Spending Generally Declined

Overall, FEHB plan total spending increases experienced by the majority of plans generally reflected secular trends in spending on MH/SA care for both adults and children. The FEHB parity policy afforded beneficiaries some improvement in insurance protection in that beneficiaries in five of the nine plans experienced significant decreases in out-of-pocket spending, while no plan’s child beneficiaries experienced an increase in out-of-pocket spending greater than the secular trend.

When secular trends were taken into account, total spending on MH/SA care actually declined in seven of the nine plans, though this decline was significant in only four of the plans. For the two other plans, the spending increases were not significant.

For six of the nine plans, out-of-pocket costs to beneficiaries using MH/SA services declined--even though most plans experienced little or no significant change in use of these services. While three plans experienced significant out-of-pocket spending increases, these increases were in line with secular trends. Patterns of total spending on mental health services alone were nearly identical to those for MH/SA services combined.

Per user total spending on substance abuse care trended upward after the introduction of parity in seven of nine plans, but was significant in only one plan. (Of the two plans experiencing spending decreases, only one was significant). When secular trends were taken into account, total spending on substance abuse care was a mixed picture of spending increases and decreases, but only one plan experienced a significant spending change, i.e., reduced spending of $288 per user of substance abuse care.

Across all plans, the parity policy was associated with a substantial increase in total spending on medications for MH/SA disorders. While per user medication spending ranged from $266 to $519 prior to the FEHB parity policy, in 2002 it increased to a range of $377 to $632.  

Quality of Care Improved Slightly or was Unaffected by the Parity Policy

Quality of MH/SA care for two tracer conditions--major depressive disorder and substance use disorders--was slightly improved or unaffected by the parity policy.

Measures of quality for substance abuse treatment in adults included rates of utilization, identification of individuals with substance use disorders, and engagement in treatment. Except for a small increase in rates of identification, there was no evidence of significant quality change associated with the FEHB parity policy.

Measures of quality for treating major depressive disorder in adults either did not change or improved only slightly with introduction of FEHB parity in all but one of the FEHB plans studied. Quality improvement was more notable in the use of medication than for psychotherapy in the treatment of MDD.

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