Treating Drug Problems Volume 1 (1990) / Chapter Skim
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8 Private Coverage
8 Private Coverage
Pages 273-297
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From page 273... ...
Moreover, most if not all of the premium is treated as a fringe benefit rather than a part of wages or salaries. As a result, health insurance purchases are constrained in ways that purchases of other consumer goods, such as food, cars, or housing, are not.
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From page 274... ...
There are data to respond to this question, but they are less than satisfactory. The first source of information is ostensible coverage, that is, the written details of health insurance policies or comparable health plan benefits.
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From page 275... ...
In 19 states, the law requires private insurance to include drug treatment as a covered service. These statutes are an offshoot of the movement since 1970 to mandate private insurance coverage of alcohol treatment.
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From page 276... ...
In the competitive environment of private health coverage, in which commercial indemnity insurers, thirdparty administrators of self-insured company plans, Blue Cross/Blue Shield carriers, and health maintenance organizations are fighting for market share, mandates that apply only to some of these segments hobble their competitive position in ways that seem inefficient and inequitable. THE LOGIC OF PRIVATE COVERAGE The rationale behind mandating private health insurance coverage of drug treatment parallels the argument for public coverage: even among the privately insured population, there are negative external costs to drug abuse and dependence that may be reduced by drug treatment, and access to treatment is influenced by the price of treatment.
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From page 277... ...
THE EXTENT OF PRIVATE INSURANCE COVERAGE More than 150 million persons are covered by private health insurance coverage, the vast majority as a benefit of their employment (Chollet, 1988; Moyer, 1989~. The focus of this section is the degree to which this coverage extends to drug treatment.
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From page 278... ...
concluded that many if not most Blue plans at that time covered drug treatment under their mental and nervous disorders benefits. The most notable evidence for the relevance of explicit policy provisions to actual coverage is the fact that the growth in private insurance reimbursements reported by treatment providers has occurred in parallel with the growth of explicit coverage.
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From page 279... ...
Of the 31 million, 20.6 million were covered by plans that had an explicit provision for drug treatment or said that as a matter of course they would provide reimbursement for detoxification or rehabilitation charges. For the other 10 million employees of medium-sized and large firms, drug treatment episodes were excluded from their health insurance coverage.
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From page 280... ...
, 90 percent have some health insurance coverage, and 74 percent of those (i.e., 20.6 million) are covered for drug detoxification or rehabilitation procedures.
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From page 281... ...
The common characteristic of all plans was to make no distinctions between drug and alcohol treatment benefits; in addition, their monetary values, as calculated by OPM, were all heavily weighted toward inpatient treatment. In this sense the federal plans seemed more or less to endorse chemical dependency treatment concepts, by and large tending to focus benefits on hospital-based treatment to the exclusion of nonhospital residential programs and, more importantly, to provide only minimal coverage for outpatient services.
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From page 282... ...
Implicit in the rationale for the addition of coverage for drug treatment is that drug treatment may pay for itself, either through improved worker productivity or through a "health cost offset" effect. There has been no rigorous analysis of the productivity-improving effects of chemical dependency drug treatment.
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From page 283... ...
Private health insurance expenditures were $71 per capita in 1970 and $552 per capita in 1987 (Health Insurance Association of America, 1989~. In the wake of these increases has come an ever-intensifying search for ways to reduce the cost of health insurance benefits by private as well as public insurance plans.
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From page 284... ...
This outside figure of $1.4 billion for drug detoxification and rehabilitation is about 1 percent of total private health insurance outlays. Of course, given the incomplete coverage of treatment, individual plans that do have adequate coverage may be expected to spend a proportion higher than this amount.4 The committee reviewed a small number of unpublished actuarial ratings of drug treatment benefits that are typical of the 30-day/30-visit coverage seen around the country.
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From page 285... ...
This finding is a problem for drug treatment because this coverage is in some sense an outgrowth of alcohol treatment coverage, and most of the private tier evolved into chemical dependency programs from an alcohol treatment focus. As the value of more expensive alcohol treatment programs has come into question, insurers have been quick to apply new limitations on coverage for alcohol treatment, largely in the form of aggressive managed care (Health Care Advisory Board, 1988; Korcok, 1988a,b; Malcolm, 1990~.
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From page 286... ...
This strategy is designed to yield savings to the company through several avenues: avoiding state taxes on the premiums paid to commercial and Blue Cross/Blue Shield plans, giving the company control over the interest (liquidity) earned on annual premiums, avoiding payments to a financial intermediary to bear the risk associated with any kind of insurance, and avoiding expensive state mandates for insurance coverage.
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From page 287... ...
Many insurers have in the past failed to recognize such providers as eligible for reimbursement, which may have contributed to excessive utilization of hospital inpatient treatment in the past. As managed care strategies have matured, they have come under increasing scrutiny and criticism from alcohol and drug treatment providers following aggressive moves by managed care companies to cut the costs of treating drug and alcohol abuse.
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From page 288... ...
PRIVATE INSURANCE AND STATE MANDATES The private tier of providers, which is linked to the corporate world of employee assistance programs, originated as and still is primarily an alcohol
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From page 289... ...
A crucial issue with state insurance mandates is that private corporations that self-insure under federal ERISA (Employee Retirement Income Security Act) statutes effectively evade any insurance coverage mandates 5Another 10 states mandated provision of alcoholism coverage, and 9 more states mandated the offer of optional coverage for alcohol treatment.
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From page 290... ...
Most of the state legislatures have virtually mandated only one modality, chemical dependency treatment, and made barely enough provision for a Apical course of outpatient nonmethadone treatment. Of nine state drug abuse mandates that specify minimum days of inpatient coverage, six call for minimum annual coverage of 28 or 30 days; the other three call for minima of 21, 45, and 60 days.7 6 There is a widespread belief among chemical dependency providers that HMO coverage of drug treatment is less extensive in practice than on paper.
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From page 291... ...
Insurance plans thus are often given the option of covering drug treatment in lower cost facilities. A frequent criticism of health insurance plans by nonhospital treatment providers, however, is that many insurers and third-party administrators do not in fact cover treatment in nonhospital facilities, even though these charge for a semiprivate hospital room in 1986 (Health Insurance Association of America, 1989)
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From page 292... ...
Alabama in its alcohol treatment mandate allows a trade-off of inpatient (hospital) care for treatment in a state-licensed, shortterm residential alcohol treatment facility or a three-for-one exchange for outpatient treatment.
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From page 293... ...
The majority of this population, about 140 million individuals, have specifically defined coverage for drug treatment in their health insurance plans. About 48 million others who are privately insured do not have specifically defined coverage for drug treatment, although coverage may occur de facto under general medical or psychiatric provisions.
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From page 294... ...
to trim increasing overall costs. Mandating Drug Treatment Coverage There are legislative mandates in 18 states plus the District of Columbia that require certain categories of employer-supplied group health plans to specifically cover—or offer optional coverage for drug and alcohol treatment.
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From page 295... ...
band of options that are similar in form to the treatment of acute medical conditions. Private insurance, health maintenance organizations, and other health financing plans should cover appropriate, adequate, cost-effective drug treatment and
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From page 296... ...
Employee assistance programs can serve as utilization managers in cases in which their personnel have appropriate training for matching patients to treatment. Hospital utilization should be managed under the same terms as recommended for public coverage (see the section on utilization management in Chapter 7~.
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From page 297... ...
Nonhospital residential and outpatient treatment delivered in state-certified treatment programs should be covered. Coverage limitations, charge schedules, and cost-containment incentives (e.g., copayment schedules)
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