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

12/31/2004

Descriptive findings on FEHB plans’ parity implementation were obtained using data for two time periods (pre- and post-parity) from the Parity Reporting Requirement (PRR), which was completed by all FEHB plans that remained in the FEHB Program continuously from 1999 to 2002.37 Findings on FEHB plans’ benefit design changes in response to the parity policy were obtained by abstracting from FEHB plan brochures on the Office of Personnel Management (OPM) website for two time periods, pre- and post-parity.

FEHB Plan Compliance

All FEHB plans complied with the requirement to implement MH/SA parity and no plan dropped out of the FEHB Program in response to the parity policy, as revealed by examination of the FEHB plan brochures.

FEHB Plan Changes in the Post-parity Period

Nominal Benefits38

The majority of plans changed their MH/SA nominal benefits in the post-parity period to reflect an enhancement of the MH/SA benefit consistent with the FEHB parity policy. Eighty-four percent (118) of the plans made changes in the amount, scope, or duration of MH benefits and 73% (103 plans) made such changes for SA benefits, while 75% (106 plans) changed deductible, copayment or coinsurance limits on MH benefits, and 64% (90 plans) changed the same for SA benefits. While 50% (71) of the plans changed deductible, copayment and coinsurance limits on general medical benefits, there is no indication that these changes were a result of the FEHB parity policy. Finally, 12% (17 plans) added MH/SA benefits to comply with the parity policy

Effective Benefits

FEHB plans in a nationwide fee-for-service association39

Of the 60 plans in a nationwide fee-for-service association (FFSA), 35% (21 plans) had carved out in pre-parity 2000; 31% (19 plans) were newly carved out in post-parity 2001; and 67% (40 plans) had already carved out prior to the parity implementation. Of the plans that decided to carve out in 2001, 84% (16 plans) said that they did so in direct response to the parity policy

Other FEHB Plans40

In pre-parity 2000, 52% (81) of the plans had carved out; 14% (22 plans) were newly carved out in 2001, and 66% (103 plans) were already carved out at the time of the parity implementation. 45% (10 plans) of those that decided to carve out in 2001 and 2% (2 plans) of those that had previously carved out said that their decision was a direct response to parity.

Other Aspects of FEHB Plan Structure and Process

There were no clear effects of the parity policy on the use of risk-based contracts with carve-out vendors, but there were clear differences between the FFSA and the other FEHB plans in the type of contracts used. In both the pre- and post-parity periods, the majority of FFSA plans (81.8%) used administrative-services-only contracts with vendors, while the majority of other FEHB plans (72.2%) used full-risk contracts.

Most plans reported no effect of the parity policy on provider networks or the use of financial incentives with institutional or individual providers in 2001. By 2003, however, more plans reported expanding provider networks and increasing the use of financial incentives.

Most plans reported no effect of the parity policy on the use of primary care provider (PCP) gatekeeping, prior authorization, concurrent review, retrospective review, or the use of disease management programs to control MH/SA utilization. While many plans required the submission of treatment plans in the pre-parity period, many more plans required it in the post-parity period. Some plans also reported an increase from pre- to post-parity in the use of closed or preferred provider panels.

A majority of plans (68%) reported no increase in administrative costs in 2001 related to the implementation of the parity policy. None of the plans expressed concerns about administrative cost increases. 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.

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.

Likelihood of Carving Out in Response to the Parity Policy

Comparing the pre-parity 1999 and 2000 period with the post-parity 2001 and 2002 period FEHB plans were more likely to enter into managed care arrangements through a contract with a carve-out vendor than were a matched set of plans from the Medstat MarketScan® data base that did not face a parity policy for MH/SA benefits.

FEHB Network Providers’ Experience Implementing Parity

Focus groups held with FEHB network providers revealed that the FEHB plan providers--even those identified as “high volume FEHB plan providers”--had little awareness of the parity policy implementation and very limited understanding of the parity benefit for Federal employees. They were not always able to identify the Federal employees in their caseloads and were confused about the policy itself. Those few respondents who seemed to understand the policy could not recall any patient or client who expressed an awareness of the benefit change. Providers often confused the policy with State parity laws and tended to focus more on managed care (i.e., effective benefits) than on parity (i.e., nominal benefits). All FEHB plans sent their FEHB in-network providers routine communications informing them of the new FEHB MH/SA parity benefit.

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