To estimate the actuarial value of the MH benefit packages described in one survey, the Hay Group used its Mental Health Benefit Value Comparison (MHBVC) model. The National Institute of Mental Health (NIMH), the Congressional Research Service, and firms in the private sector have used this model.
The values of the MH benefit packages described in this report are estimates of health plan expenditures, including the health plan's administrative costs per adult for a typical population of insured employees and their dependents. To compute the actuarial values of a benefit package, the MHBVC model relies on distributions of actual health care claims data for several types of services (such as inpatient and outpatient mental health and substance abuse treatment). For HMO, POS, PPO, and indemnity plans, the MHBVC model determines how much the health plan would pay for each patient in a distribution, based on the services covered by the plan and the plan's service limits and cost-sharing requirements. The model includes assumptions about administrative costs, level of utilization management in each plan, and consumer responses to changes in out-of-pocket costs. The model then calculates a weighted average across consumers.
Using this information from the MHBVC, the Hay group separately identified the following: HMO, POS, PPO, indemnity plans-typical benefit packages at or near the 25th percentile ("less generous" benefit packages), the 50th percentile ("median" benefit packages), and the 75th percentile ("more generous" benefit packages) of the distribution of actuarial values.
The charts below compare values from this survey for you to see:
Table 1: Typical PPO Benefit Packages
|
Less Generous |
Median |
More Generous |
Inpatient day limit |
28 |
30 |
30 |
Inpatient coinsurance (paid by patient) |
In-network |
10% |
0 |
0 |
Out-of-network |
30% |
20% |
20% |
Outpatient visit limit |
20 |
30 |
30 |
Outpatient coinsurance |
In-network |
50% |
50% |
10% |
Out-of-network |
70% |
70% |
30% |
| Actuarial value3 |
$65 |
$80 |
$80 |
Notes:
1. Less generous = typical plan at the 25th percentile of the distribution of actuarial values within plan type.
More generous = typical plan at the 75th percentile of the distribution of actuarial values within plan type.
2. All copayments were converted to coinsurance rates.
3. Actuarial values are in 1998 dollars and represent the annual premium for a single adult employee.
Source:
The Hay Group’s MHBVC model and 1998 survey of employers. Based on 381 PPOs.
PPOs
For PPOs, the major difference between more and less generous MH benefit packages is in outpatient coverage (Table 1). The less generous PPO benefit package pays half the cost of up to 20 outpatient visits in-network but only 30 percent of the cost for out-of-network visits. The median PPO benefit package pays the same coinsurance rate for outpatient care as does the less generous package, but for more visits. The more generous PPO benefit package pays for 90 percent of the cost of up to 30 visits in-network and 70 percent of the cost for out-of-network visits. The less generous PPO benefit package also requires some cost sharing for inpatient care and covers slightly fewer days than the other PPO benefit packages.
Table 2: Typical HMO Benefit Packages
|
Less generous1 |
Median |
More generous |
Inpatient day limit |
30 |
30 |
30 |
Inpatient coinsurance (paid by patient)2 |
0 |
0 |
0 |
Outpatient visit limit |
30 |
30 |
30 |
Outpatient coinsurance |
50% |
20% |
10% |
Actuarial value3 |
$41 |
$51 |
$58 |
Notes:
1. Less generous = typical plan at the 25th percentile of the distribution of actuarial values within plan type.
More generous = typical plan at the 75th percentile of the distribution of actuarial values within plan type.
2. All copayments were converted to coinsurance rates.
3. Actuarial values are in 1998 dollars and represent the annual premium for a single adult employee.
Source:
The Hay Group’s MHBVC model and 1998 survey of employers. Based on 259 HMOs.
HMOs
The only difference among the three HMO benefit packages in Table 2 is in
outpatient cost sharing, which typically takes the form of copayments (fixed dollar amounts). The Hay Group model converts copayments into effective coinsurance rates (see Appendix A). The effective coinsurance rates in the typical HMO packages examined here range from 50 percent for the less generous package to 90 percent for the more generous package. All three HMO benefit packages cover 30 outpatient MH visits and pay for the entire cost of 30 days of inpatient care.
Table 3: Typical Point-of-Service Plan Benefit Packages
|
Less generous1 |
Median |
More generous |
Inpatient day limit |
30 |
30 |
60 |
Inpatient coinsurance (paid by patient)2 |
In-network |
20% |
0 |
0 |
Out-of-network |
40% |
20% |
20% |
Outpatient visit limit |
20 |
30 |
30 |
Outpatient coinsurance |
In-network |
10% |
20% |
10% |
Out-of-network |
30% |
40% |
30% |
Actuarial value3 |
$74 |
$88 |
$103 |
Notes:
1. Less generous = typical plan at the 25th percentile of the distribution of actuarial values within plan type.
More generous = typical plan at the 75th percentile of the distribution of actuarial values within plan type.
2. All copayments were converted to coinsurance rates.
3. Actuarial values are in 1998 dollars and represent the annual premium for a single adult employee.
Source:
The Hay Group’s MHBVC model and 1998 survey of employers. Based on 200 point-of-service plans.
POS Plans
POS benefits differ in both inpatient and outpatient coverage (Table 3). The less generous POS benefit package pays 80 percent of inpatient stays up to 30 days in-network and 60 percent of inpatient stays out-of-network. It also pays up to 90 percent of 20 outpatient in-network visits and 70 percent of out-of-network visits. The more generous POS benefit package covers up to 60 days of in-network inpatient care in full, and pays most of the cost of up to 30 visits in-network.
Table 4: Typical Indemnity Plan Benefit Packages
|
Less generous1 |
Median |
More generous |
Inpatient day limit |
30 |
30 |
120 |
Inpatient coinsurance (paid by patient)2 |
20% |
10% |
20% |
Outpatient visit limit |
30 |
30 |
50 |
Outpatient coinsurance |
50% |
20% |
20% |
Lifetime limit |
$25,000 |
no limit |
$100,000 |
Actuarial value3 |
$83 |
$104 |
$127 |
Notes:
1. Less generous = typical plan at the 25th percentile of the distribution of actuarial values within plan type.
More generous = typical plan at the 75th percentile of the distribution of actuarial values within plan type.
2. All co-payments were converted to coinsurance rates.
3. Actuarial values are in 1998 dollars and represent the annual premium for a single adult employee.
Source:
The Hay Group’s MHBVC model and 1998 survey of employers. Based on 139 indemnity plans.
Indemnity Plans
Unlike the PPO, HMO, and POS benefit packages, the median and more generous indemnity packages do not pay all covered charges for inpatient care (Table 4). Indemnity plans tend to use cost sharing to constrain service use because they are less able than the other types of plans to manage care with utilization management techniques.
Also unlike other plan types, some indemnity plans impose maximum dollar limits on benefits. At the time of the Hay Group survey in 1998, not all employers were subject to the Mental Health Parity Act of 1996, so some
benefit packages had maximum dollar benefits limits below those typical for medical/”surgical benefits. 10
Typical indemnity benefits differ in both inpatient and outpatient coverage. The less generous package pays 80 percent of inpatient stays up to 30 days and half the cost of up to 30 outpatient visits. It also limits lifetime benefits to $25,000. The more generous indemnity benefit pays 80 percent of up to 120 days of inpatient care and 80 percent of the cost of up to 50 outpatient visits. It also limits lifetime benefits to $100,000.
Table 5: Covered Intermediate Care Services by Type of Plan
|
PPO (n=1,514) |
HMO (n=1,209) |
POS (n=795) |
Indemnity (n=768) |
Mental health |
Inpatient psychiatric care |
96 |
88 |
95 |
94 |
Nonhospital residential |
52 |
50 |
56 |
51 |
Intensive nonresidential |
63 |
60 |
64 |
65 |
Outpatient therapy |
86 |
84 |
87 |
87 |
Crisis-related services |
49 |
55 |
56 |
33 |
Note:
Excludes plans not covering any MH treatment services.
Source:
Buck et al. (1999). |
