There was a major change in Medicare policy in July of 2008 when  the Congress passed the Medicare Improvements for Patients and Providers Act of 2008 (H.R. 6331) establishing parity between mental health and medical coverage.  This was followed in September by The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 prohibiting all private US health insurance companies’ group health plans offering mental health coverage from imposing any greater limit on co-pays, co-insurance, numbers of visits, and/or number of hospital days due to mental health conditions. The legislation, years in the making,  was brought by Sen. Paul Wellstone (D-MN) and many others to enact mental health parity at the federal level and compliments the Medicare parity law.  The law does not require employers to provide benefits for mental health and substance abuse services, but it does require employers with 50 or more employees that choose to provide mental health and substance abuse benefits to provide those benefits on the same level as they provide for traditional medical and hospital benefits. The Wellstone-Domenici legislation rode in as the vehicle bill for the TARP legislation when Senate leaders went looking for an established bill waiting in the wings to circumvent the cost and time of creating a bill from scratch.

The Medicare Improvements legislation ends the 50% (62.5 percent of 80 percent of the approved amount) co-insurance for outpatient psychotherapy and services furnished by non-physician mental health professionals.  It puts mental health services on equal footing with other outpatient health services requiring only a 20% co-payment.

The arguments for parity of mental health and other medical services were many.  For one, it seemed to make the assumption that major mental illnesses such as schizophrenia, bipolar disorder, depression, were not biological or brain-based illness on par with medical issues such as heart disease, stroke, or cancer.   Secondly, it was discriminatory towards seniors and younger mental health Medicare recipients with disability for major mental illness.  Thirdly, it shifted the cost of less expensive and routine outpatient care to the utilization of much more expensive inpatient or institutional care instead of outpatient services. Finally, it is argued that it led seniors and people with disabilities dependent on Medicare to simply forgo needed mental health treatment.

The argument against parity is that it will open the flood gates to mental health services and will be too costly in terms of both Medicare as well as private insurers resulting in increased premiums to business, families, and individuals.  It is unclear if there is truth to this argument.  In 1990, 3 percent of Medicare spending went to mental health care, with a high percentage of spending going not toward seniors, but persons with disabilities under the age of 65. Theyounger group with disabilities make up about 10% of the Medicare population, but account for likely over 40 percentof the Medicare mental health dollar.

The new Medicare parity changes will be fully implemented gradually over the next four years, and that precludes future changes to Medicare as we now know it.  Until then, it is helpful to seniors utilizing mental health care or anticipate utilization of services, such as a family dealing with a patient with Alzheimer’s disease, to know what your Medicare mental health benefit provides.

Most simply thought there is standard Medicare.   Medicare Part A is often thought of as hospital insurance and helps cover inpatient care, skilled nursing facility, hospice care and home health care.  Medicare B, which is at additional monthly premium cost, is referred to as medical insurance and helps cover doctor’s fees, outpatient services, and some aspects of preventive care.  Individuals may also elect to add from a private health insurer a Medicare secondary insurance or gap-filler that may offer expanded coverage benefits and reduce co-pay costs. Medicare D helps cover the cost of prescription medications lowering prescription drug costs.Finally there is Medicare C, also known as Medicare + Choice, Advantage Medicare or managed Medicare.  These are managed Medicare programs administered by private health care companies that in general integrate Medicare A, B, often D, and eliminate need for secondary insurance.  This is to be provided for either no increase or reduced cost and by law is required to the same minimal coverage as traditional Medicare.  The hope is that these would provide a simplified integrated Medicare product offering efficient, well managed, and evidenced based care.

But be a careful consumer when it comes to these programs.  While these programs can be a cost saving and good value for many Medicare beneficiaries, keep in mind that Medicare C programs are riskcontracts in that the insurer carrier is paid a set amount per covered life.  This means the insurer may lose money if it overspendsor  profit if spending is curtailed.  Many utilize a separate mental health benefit management company, creating some confusion as to who is providing the coverage.   These may have distinct criteria for inpatient hospitalization that may have more restrictive interpretations of need of service when compared to traditional Medicare services. For example, some Medicare C programs deny payment for psychiatric hospitalization if the patient does not meet criteria for involuntary hospitalization, such as overt suicidal or homicidal intent.  This interpretation is more severe than traditional Medicare and often not applicable, for example, to a patient with advanced Alzheimer’s disease with severe behavioral issues.  In general, choice of mental health provider, choice of hospital, and restrictions around medications are more limited and tightly controlled when compared to traditional Medicare in order to produce healthcare dollar savings.  The Medicare consumer, especially when it comes to utilization of mental health services, should be aware that there is a significant difference plan to plan.

If participating in a Medicare C program or if you have a private Medicare secondary gap-filler policy, ask your insurer about benefits, mental health provider panels, and area hospitals that participate.

Medicare.gov is an excellent resource in explaining Medicare, differences in programs, as well as your mental health benefit.

Michael A. Keys, MD

Dr. Keys is a geriatric psychiatrist, Director of the Senior Health Program at the Lindner Center of HOPE, Mason, Ohio and Adjunct Associate Clinical Professor of Psychiatry at the University of Cincinnati College of Medicine.