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DataWatch

Behavioral Health Care
DATAWATCH

Medicare Advantage And Commercial Prices For Mental Health Services

Affiliations
  1. Daria Pelech ([email protected]) is a principal analyst in the Health, Retirement, and Long-Term Analysis Division, Congressional Budget Office, in Washington, D.C.
  2. Tamara Hayford is a principal analyst in the Health, Retirement, and Long-Term Analysis Division, Congressional Budget Office.
PUBLISHED:Free Accesshttps://doi.org/10.1377/hlthaff.2018.05226

Abstract

In 2014, insurers paid an average of 13–14 percent less for in-network mental health services in their commercial and Medicare Advantage plans than fee-for-service Medicare paid for identical services—despite paying up to 12 percent more than Medicare when the same services were provided by other physician specialties. However, patients went out of network more frequently for mental health services than for comparison services, which increased their average cost-sharing payments.

TOPICS

The prices insurers pay to providers for mental health services affect policy because they affect patient cost sharing (copayments, coinsurance, and deductibles) and access to care. Recent research using commercial insurance claims found that in-network mental health providers were paid less than other specialties for office visits and that mental health services were more likely to occur out of network than other services were.1,2 We expanded those findings using claims data from the Health Care Cost Institute. We found that nationally, average in-network prices for two categories of common mental health services in commercial and Medicare Advantage (MA) plans were 13–14 percent less than estimated fee-for-service (FFS) Medicare rates for identical services (exhibit 1). In-network mental health providers were also paid less than other physician specialties were for evaluation and management services. Lower in-network prices for mental health services did not reduce average cost sharing for patients, however, partly because patients obtained a large proportion of their mental health services out of network.

Exhibit 1 Average in-network prices for mental health and other physician specialty services, relative to fee-for-service Medicare prices, 2014

Exhibit 1
SOURCE Authors’ analysis of data from the Health Care Cost Institute. NOTES Ratios are private insurers’ average in-network prices paid for mental health and other physician specialty services, relative to estimated Medicare fee-for-service prices for the same service. Psychotherapy services and evaluation and management (E&M) services are described in exhibit 2. Mental health providers include psychologists, psychiatrists, and social workers. “Comparison services” are the same E&M services provided by other physician specialties including family practice, internal medicine, cardiology, dermatology, and orthopedics. Within each service category, observations are weighted by the frequency with which services occurred in commercial plans. Standard deviations for individual services are shown in appendix exhibits 9 and 10 (see note 6 in text).

Policy makers have promoted access to mental health services by passing laws requiring parity between those services and other medical services. Recent legislative efforts have promoted equity in cost sharing and coverage limits and expanded the types of plans that are required to offer mental health care benefits.3

However, parity’s promise may remain unfulfilled if patients cannot access in-network providers. Mental health providers have historically been less likely to accept insurance compared to other specialties, which could increase patients’ out-of-pocket mental health costs.4 Mental health providers might not contract with insurers if they view payments as too low, especially if out-of-network payments are higher. Parity legislation could exacerbate access issues if the demand for mental health services increased without an accompanying increase in provider supply.5 Our analysis suggests that although insurers are complying with cost-sharing regulations, network participation among mental health providers is still low—which increases patients’ cost sharing.

Study Data And Methods

To describe prices for mental health services, we used 2014 data from the Health Care Cost Institute, which include commercial insurance and MA claims from Aetna, Humana, and UnitedHealthcare. (The data also include claims paid by affiliated subsidiaries when insurers have subcontracted coverage for certain services to those affiliates.) The data include information about thirty-nine million beneficiaries from all fifty states and the District of Columbia.

From the data, we selected seven of the ten services (identified by Current Procedural Terminology [CPT] codes) delivered most frequently by mental health providers—including psychologists, psychiatrists, and social workers—across all settings in either commercial or MA plans (exhibit 2). Among those seven services were four that were primarily delivered by mental health providers (psychotherapy visits and psychiatric diagnostic evaluations) and three evaluation and management services provided by both mental health providers and other specialties. The seven services accounted for 77 percent of the services provided by mental health providers in the commercial sample and 53 percent in the MA sample. We then limited the sample to services for which prices could readily be compared to prices in FFS Medicare, including services provided in physicians’ offices, inpatient and outpatient hospital departments, emergency departments, and ambulatory surgical centers. (See online appendix exhibits 1–5 for details of service and sample selection.)6

Exhibit 2 Distribution of services delivered by mental health providers included in the analysis

Distribution of services (%)
Type of service and CPT codeService descriptionCommercial insuranceMedicare AdvantageFFS Medicare
Psychotherapy
 9083445-minute psychotherapy visit411318
 9083760-minute psychotherapy visit14612
 90791Psychiatric diagnostic evaluation427
 9083230-minute psychotherapy visit1310
Evaluation and management
 99213Established patient office visit, moderate complexity10125
 99214Established patient office visit, intermediate or high complexity6117
 99232Subsequent hospital care163
All services775362

SOURCE Authors’ analysis of data for 2014 from the Health Care Cost Institute and of physician claims for 2014 from a 5 percent sample of fee-for-service (FFS) Medicare beneficiaries. NOTES Services were selected for analysis from the ten services provided most frequently by mental health providers (defined in the notes to exhibit 1) in either the Medicare Advantage or commercially insured population in the data from the Health Care Cost Institute. CPT is Current Procedural Terminology.

We calculated private insurance prices for each claim-line observation by summing insurers’ payments and patients’ cost sharing. We also analyzed patients’ cost sharing separately. We estimated FFS Medicare prices (including beneficiaries’ cost sharing) for each service based on the Medicare Physician Fee Schedule, including Medicare’s adjustments for provider specialty and geographic variation.7 We then calculated private-to-FFS price ratios for each observation to compare private insurance prices to FFS Medicare prices. FFS prices are a useful benchmark because they are administratively set: They vary with the relative costs of providing services across specialties and geographic areas, but not with insurer or provider bargaining power. FFS prices are particularly relevant for describing services that are overwhelmingly delivered by mental health providers and therefore have no natural comparison services in commercial claims.

To simplify comparisons, we grouped services into three categories: psychotherapy services (CPT codes 90834, 90837, 90791, and 90832), evaluation and management services delivered by mental health providers (CPT codes 99213, 99214, and 99232), and the same evaluation and management services provided by any non–mental health physician specialties, including family practice, internal medicine, cardiology, dermatology, and orthopedics (also CPT codes 99213, 99214, and 99232). We refer to the first two categories together as “mental health services” and the last category as “comparison services.” To compare prices for a consistent mix of services, we weighted services by their frequency in the commercial insurance sample.

This analysis had several limitations. First, the data were from 2014, which was the most recent year of data available to us. Second, although the prior literature commonly used claims data, claims data do not capture additional payments to physicians, such as insurers’ quality bonuses or patients’ balance-billing amounts. Third, observations would not appear in the data if insurers did not process a claim—either because patients paid entirely out of pocket or because insurers subcontracted with unaffiliated subsidiaries. Finally, we could not determine whether out-of-network mental health service use was driven by insurers having narrow networks, providers not accepting insurance, or both.

Study Results

Private insurers’ in-network prices for mental health services were lower than estimated FFS prices and prices for comparison services provided by other physician specialties. In both MA and commercial plans, insurers paid mental health providers 13–14 percent less, on average, than FFS Medicare prices for both categories of mental health services (exhibit 1). In contrast, insurers paid 12 percent more in network than FFS Medicare for comparison services in commercial plans. In Medicare Advantage, insurers paid only 4 percent less than FFS prices for comparison services. (Prices in Medicare Advantage may be below those in FFS Medicare because statutory restrictions limiting out-of-network prices in Medicare Advantage may also have reduced negotiated in-network prices.)8

Out of network, insurers paid much more in commercial plans than FFS Medicare did for mental health services. For instance, they paid 43 percent more than FFS Medicare did for mental health evaluation and management services, similar to out-of-network prices paid to other physician specialties (exhibit 3). Strikingly, commercial insurers paid 53 percent more than FFS Medicare did for out-of-network psychotherapy services, compared to 14 percent less than FFS Medicare when in network (exhibit 1).

Exhibit 3 Average out-of-network prices for mental health and other physician specialty services, relative to fee-for-service Medicare prices, 2014

Exhibit 3
SOURCE Authors’ analysis of data from the Health Care Cost Institute. NOTES Ratios are private insurers’ average out-of-network prices paid for mental health and other physician specialty services, relative to estimated Medicare fee-for-service prices for the same service. Psychotherapy services and evaluation and management (E&M) services are described in exhibit 2. Mental health providers include psychologists, psychiatrists, and social workers. “Comparison services” are the same E&M services provided by other physician specialties (see exhibit 1 notes). Within each service category, observations are weighted by the frequency with which services occurred in commercial plans. Standard deviations for individual services are shown in appendix exhibits 9 and 10 (see note 6 in text).

Consistent with federal regulations that limit out-of-network prices in Medicare Advantage, out-of-network prices for nearly all MA services were very close to FFS Medicare prices (exhibit 3). The exception was psychotherapy services, for which MA prices were 5 percent higher, on average, than FFS Medicare prices. This difference was driven by social workers, for whom FFS Medicare reduces payments by 25 percent. Insurers did not seem to universally apply that reduction and paid out-of-network social workers an average of 11–20 percent more than FFS Medicare did. (Prices by CPT code and specialty are summarized in appendix exhibits 11–14.)6

Lower insurer prices for in-network mental health services did not translate into lower patient cost sharing in either commercial or MA plans. Average in-network cost sharing in commercial plans was about $7 less for both categories of mental health services than for comparison services ($28.15 and $27.24 versus $34.61 per visit) (exhibit 4). However, average overall cost sharing was similar across categories in commercial plans (exhibit 4) for two reasons. First, out-of-network service use by patients with commercial insurance was more than six times more common for mental health services than for other services (exhibit 5). Second, out-of-network cost sharing was more than twice as high as in-network cost sharing for all commercial services (exhibit 4). Additionally, some patients with commercial insurance had limited out-of-network coverage. For instance, patients paid the entire cost for about one-third of out-of-network mental health visits (data not shown).

Exhibit 4 Average cost sharing paid by patients with commercial insurance, by network status, 2014

Exhibit 4
SOURCE Authors’ analysis of data from the Health Care Cost Institute. NOTES Cost sharing includes patient copayments, coinsurance, and deductibles but might not include amounts “balance billed” by the physician (additional amounts collected directly from the patient by out-of-network physicians whose charges exceed the insurer’s payment rate). Psychotherapy services and evaluation and management (E&M) services are described in exhibit 2. Mental health providers include psychologists, psychiatrists, and social workers. “Comparison services” are the same E&M services provided by other physician specialties (see exhibit 1 notes). Within each service category, cost-sharing amounts are weighted by the frequency with which services occurred in commercial plans. Standard deviations for individual services are shown in appendix exhibits 9 and 10 (see note 6 in text).

Exhibit 5 Percent of services received out of network in commercial and Medicare Advantage plans, 2014

Exhibit 5
SOURCE Authors’ analysis of data from the Health Care Cost Institute. NOTES Psychotherapy services and evaluation and management (E&M) services are described in exhibit 2. Mental health providers include psychologists, psychiatrists, and social workers. “Comparison services” are the same E&M services provided by other physician specialties (see exhibit 1 notes). Within each service category, observations are weighted by the frequency with which each service occurred in commercial plans.

In Medicare Advantage, patients also paid more for mental health services than for comparison services (exhibit 6). Unlike in the commercially insured sample, however, that price difference was chiefly driven by higher in-network cost sharing for mental health services. Specifically, MA patients paid an average of about $9 more for mental health services than for comparison services in network, whereas they paid less than $4.50 more, on average, out of network.9

Exhibit 6 Average cost sharing paid by patients in Medicare Advantage plans, by network status, 2014

Exhibit 6
SOURCE Authors’ analysis of data from the Health Care Cost Institute. NOTES Cost sharing is explained in the notes to exhibit 4. Psychotherapy services and evaluation and management (E&M) services are described in exhibit 2. Mental health providers include psychologists, psychiatrists, and social workers. “Comparison services” are the same E&M services provided by other physician specialties (see exhibit 1 notes). Within each service category, cost-sharing amounts are weighted by the frequency with which services occurred in commercial plans. Standard deviations for individual services are shown in appendix exhibits 9 and 10 (see note 6 in text).

Discussion

This study adds to evidence suggesting that in network, commercial insurers pay mental health providers less than other physician specialties. Our estimates are qualitatively similar to those in other research that used different data and found that psychiatrists were paid less for in-network office visits, compared to other specialties.1,2 We extended those results by showing that commercial insurance prices for mental health services were less than FFS Medicare prices and that patients were exposed to higher cost sharing out of network. This is also the first study to demonstrate that patterns of prices, cost sharing, and out-of-network utilization for mental health services are similar between Medicare Advantage and commercial insurance. Additionally, this study supplements the broader literature showing that commercial insurance prices for most physician services are above FFS Medicare prices8,10,11 and that private insurers pay the lesser of FFS Medicare or commercial prices in their MA plans.12

FFS Medicare payments to mental health providers could be higher because public programs must ensure access for all beneficiaries. However, FFS Medicare also pays less for certain mental health services than for other medical services. For instance, the average price for a forty-five-minute psychotherapy visit was $79.76, whereas the price for an intermediate-intensity office visit was $106.29. (Appendix exhibit 8 summarizes FFS Medicare prices.)6

This study also relates to the literature on mental health parity.3 Although our analysis could not directly evaluate the success of parity regulation, we found that insurers’ benefit designs were generally consistent with parity. However, out-of-pocket spending for mental health care was higher than for other, similar services because out-of-network service use was common. Increasing in-network prices could improve access but could also increase premiums—particularly if improved access attracted enrollees with chronic mental illness, who tend to have higher health care spending.13 The success of parity may ultimately hinge on whether payment rates to mental health providers increase over time, higher payment rates expand provider supply, or insurers can expand access without raising premiums.

ACKNOWLEDGMENTS

The authors thank Lyle Nelson, Ted Agres, and two anonymous reviewers for advice and helpful comments; Ru Ding for programming assistance; and Amanda Frost for technical assistance. This article was not subject to the regular review and editing process of the Congressional Budget Office (CBO). The views expressed here should not be interpreted as those of the CBO.

NOTES

  • 1 Mark TL, Olesiuk W, Ali MM, Sherman LJ, Mutter R, Teich JL. Differential reimbursement of psychiatric services by psychiatrists and other medical providers. Psychiatr Serv. 2018;69(3):281–5. Crossref, MedlineGoogle Scholar
  • 2 Melek SP, Perlman D, Davenport S. Addiction and mental health vs. physical health: analyzing disparities in network use and provider reimbursement rates [Internet]. Seattle (WA): Milliman; 2017 Dec [cited 2018 Dec 4]. Available from: http://www.milliman.com/uploadedFiles/insight/2017/NQTLDisparityAnalysis.pdf Google Scholar
  • 3 Peterson E, Busch S. Achieving mental health and substance use disorder treatment parity: a quarter century of policy making and research. Annu Rev Public Health. 2018;39:421–35. Crossref, MedlineGoogle Scholar
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  • 5 Cunningham PJ. Beyond parity: primary care physicians’ perspectives on access to mental health care. Health Aff (Millwood). 2009;28(3):w490–501. DOI: 10.1377/hlthaff.28.3.w490. Go to the articleGoogle Scholar
  • 6 To access the appendix, click on the Details tab of the article online.
  • 7 Beneficiaries’ cost-sharing responsibility might not reflect out-of-pocket spending because most Medicare beneficiaries have supplemental coverage. Hence, calculated FFS Medicare prices reflect out-of-pocket responsibility rather than actual out-of-pocket payments.
  • 8 Pelech DM. Prices for physicians’ services in Medicare Advantage and commercial plans. Med Care Res Rev. 2018 June 25. [Epub ahead of print]. Crossref, MedlineGoogle Scholar
  • 9 Differences in MA cost sharing could be driven by more generous coverage of primary care. However, prices for non–mental health specialties were higher than those for mental health providers after we excluded general or internal medicine practitioners, as shown in appendix exhibits 13–14 (see note 6).
  • 10 Baker LC, Bundorf MK, Royalty AB, Levin Z. Physician practice competition and prices paid by private insurers for office visits. JAMA. 2014;312(16):1653–62. Crossref, MedlineGoogle Scholar
  • 11 Medicare Payment Advisory Commission. Report to the Congress: Medicare payment policy [Internet]. Washington (DC): MedPAC; 2017 Mar. Chapter 4, Physician and other health professional services; [cited 2018 Dec 4]. p. 118. Available from: http://www.medpac.gov/docs/default-source/reports/mar17_medpac_ch4.pdf Google Scholar
  • 12 Trish E, Ginsburg P, Gascue L, Joyce G. Physician reimbursement in Medicare Advantage compared with traditional Medicare and commercial health insurance. JAMA Intern Med. 2017;177(9):1287–95. Crossref, MedlineGoogle Scholar
  • 13 Frank RG, McGuire TG. Economics and mental health. In: Culyer AJ, Newhouse JP, editors. Handbook of health economics. Vol. 1B. Amsterdam: Elsevier Science; 2000. p. 894–954. Google Scholar
   
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