One of the most important drivers of increased health care spending in the United States is the government-created divide between users and payers. Simply put, government mandates, subsidies, tax preferences and regulations have largely separated health care users from payers. That separation has created huge incentives for individuals to over-consume health care services while reducing the incentives to control costs.
A legislative proposal this year to fund a state youth mental health services program (Senate Bill 128) would worsen this divide, eliminating incentives to lower costs and likely pushing up insurance premiums.
Background
The state Department of Health and Human Services administers a program called Families and Systems Together (FAST) Forward. It bundles clinical and functional mental health services in a single package of comprehensive services to Granite Staters between the ages of 5-21 who have emotional or behavioral disorders.
The program is run on behalf of the state by two care management entities. Medicaid covers the costs for almost all FAST Forward enrollees.
About 20% of FAST Forward enrollees have private health insurance, which, according to the Department of Health and Human Services (DHHS), does not cover the full complement of wrap-around services. Of that 20%, 75-80% qualify for Medicaid because of the severity of their needs and are switched to Medicaid to cover FAST Forward services, according to DHHS. That leaves a relative handful of young people in the program who don’t qualify for Medicaid.
So far, private insurers have not covered the entirety of FAST Forward services, though many of the clinical services would be covered if billed individually, insurers say.
According to insurers, the problem is solvable through negotiations. They say that the two care management entities are out-of-network, so have no relationship with insurers, and have not reached out to negotiate coverage.
Sabrina Dunlap, senior director of government affairs for Anthem Blue Cross/Blue Shield testified in a February Senate Health and Human Services Committee hearing that building relationships would be the first step in getting the privately insured patients coverage.
“That is a DHHS program administered by DHHS through two care management entities… Neither of those care management entities are in network as far as I know with any commercial carriers,” Dunlap said. “They’re not in-network with Anthem. And so you had two entities administering a program that commercial carriers had nothing to do with and really no knowledge of and no engagement by DHHS. And then we were being told that we were a drain on the program somehow.”
Legislators seeking coverage for the small portion of privately insured patients had considered mandating that insurers cover the program. But an insurance mandate would still leave some people uncovered, as a mandate would not apply to self-insured employers.
A new tax and a new bureaucracy
Instead of a mandate, lawmakers have proposed taxing private insurers to pay for the services, and creating a new bureaucracy to administer the assessment.
Senate Bill 128 would levy an “assessment” (tax) on health insurers, health maintenance organizations, third party administrators and health services corporations. It would establish a private non-profit organization called the New Hampshire Children’s Behavioral Health Association to set, collect and administer the assessment. Though a private non-profit group, it would function as a government bureaucracy set up solely to administer this one assessment. It would fund its operations by tacking an administrative fee onto the assessment.
This would be like using a hammer to fix a hole in a sweater. The issue isn’t that insurers refuse to cover mental health services. It’s that the FAST Forward program bundles clinical treatments (typically covered) with non-clinical services (sometimes not covered), and insurers are given no say in negotiating coverage or costs.
In testimony before the Senate Health and Human Services Committee in February, lobbyists for Harvard Pilgrim Health Care and Anthem Blue Cross/Blue Shield testified that they do in fact cover many of the clinical services offered in the program. But the program also includes what are called “functional” services that often are not covered. Those might include work on skills that help a person function in the outside world, but which are not classified as clinical mental health services.
State Insurance Commissioner D.J. Bettencourt testified that “it is incredibly difficult to pull those services apart into their individual components.”
A blank check
SB 128 attempts to settle this dispute over coverage by listing the services insurers would have to cover through the assessment. But instead of defining specific services, it simply lists the broad categories of wrap-around services provided by FAST Forward, and states that covered services shall not be limited to those listed.
Thus, SB 128 hands FAST Forward a blank check, then forces insurers to pay the portion of the bill they’re handed or face fines.
“One of the issues we see with the bill is that there’s not specificity and it just refers generally to program costs, and it’s not defined just exactly what those program costs are,” Michelle Heaton, director of the life and health division at the state Department of Insurance, told the Senate Health and Human Services Committee during the February 10 hearing.
News reports have put the cost of the small number of uncovered FAST Forward participants at $2 million a year. But DHHS testified that the cost was between $1 million-$1.9 million a year over the last five years. That seems low enough for insurer-provider negotiations to work out.
Were the provisions of SB 128 to apply, however, there would be no check on future costs. As noted by state Department of Insurance staff, no one really knows how much SB 128 would actually cost insurers going forward because there’s been no thorough analysis of what services would be covered and what that coverage would cost. If costs are significantly larger than the rough estimates, insurers would have a strong incentive to recover them through higher premiums.
If the regulatory scheme in SB 128 becomes law, neither the state nor the care management entities have any incentive to negotiate for lower prices or to limit services to those clinically proven to work. Insurers will have to pay whatever bill they’re given. The bureaucracy that would collect the assessments is even empowered to fine and sue insurers who don’t pay.
Conclusion
SB 128 is premised on the belief that every component of the FAST Forward program is both essential and cost-effective for every individual who enrolls. Private insurers have publicly stated that they cover most of the services but might not cover others and would like to negotiate with providers to solve this coverage gap. That’s reasonable. The state, which covers most of the cost of the program, should also want someone looking at costs and effectiveness.
Instead, SB 128 would give DHHS and the care management entities total control over all services offered, create a new quasi-state bureaucracy to bill insurers, and allow the quasi-state entity to punish insurers who don’t comply. In sum, it tries to solve a small but important insurance coverage issue through force and intimidation, rather than good-faith negotiation. In so doing, it severs the relationship between users and payers, which would create additional upward pressure on both costs and premiums.
Download this policy brief here: Childrens Behavioral Health Assoc Policy Brief.