The Untapped Cost-Saving Power Of Mental Health Care Parity

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The Untapped Cost-Saving Power Of Mental Health Care Parity

Written by Lois Onyeajam and Karen Lin

The Mental Health Parity and Addiction Equity Act (MHPAEA) was passed in 2008 and mandates insurance coverage for mental health conditions on par with physical health conditions. While this act is a significant step toward equitable healthcare, it also presents an opportunity for payers to reduce cost, increase value, and improve patient outcomes. This article explores how the correlation between mental health and chronic disease provides a great incentive for payers to adhere to the MHPAEA.

The Correlation Between Mental Health and Chronic Disease

Research consistently shows a strong link between mental health conditions and chronic diseases such as diabetes, heart disease, and chronic pain. According to RTI Health Solutions,

50.6% of people with mental disorders also have a chronic medical condition1. According to the United Kingdom’s Mental Health Foundation, those who report symptoms of depression also report experiencing two to three times2 as many chronic physical conditions3 as the general population. These comorbidities often make diagnosis of mental health disorders more difficult. For example, according to the John Hopkins University School of Public Health, only 25-50% of diabetics with depression are diagnosed even though Americans with diabetes are two to three times more likely4 to develop depression than Americans without diabetes.

The inability to accurately capture this intersection of needs and provide the needed care in the right settings, unencumbered by additional hurdles on the mental health care navigation side, can lead to increased utilization of services and higher overall health plan spending without a positive impact on value and outcomes. By self complying with MHPAEA, payers can address this misalignment of costs with the value and outcomes realized.

When mental health conditions are left untreated, they contribute to a significant portion of health plan expenditures. This is in part because proactively treating mental health issues can reduce emergency room visits and hospital admissions. With about 140 million emergency room visits in the United States in 20215 leading to a total cost of more $76.3 billion6), employer sponsored plans and health plans have a financial incentive to increase the amount of care their members received in the right setting, which is admittedly almost never an emergency room unless there is truly an emergency. Just like for primary care needs, supporting access to and utilization of crisis lines, around the clock mental health service providers and clinics can play a role in helping members with mental health conditions receive appropriate care, much like nurse lines and 24 hour primary care options for physical health conditions.

Similarly, ensuring the building of a robust behavioral health network and support services can also help steer members with mental health conditions to the right care, before a critical incident occurs.

Integration of physical and behavioral health can help support referrals across physical and behavioral health, helping members better manage their conditions and comorbidities. It can also help support member adherence to medications. Integrated physical and behavioral health can also make it easier for health plans to improve their performance on several HEDIS measures. For example, the measures on follow-up after hospitalization for mental illness (FUH) and depression screening (DSF-E). The whole person care, that this can lead to for members, can improve Quality Rating System (QRS) member experience scores for health plans. Additionally, providers could benefit from reduced readmissions that might be an outcome of better care coordination.

In the very competitive Medicare Advantage (MA) ecosystem, the parity of physical and mental health benefits can make a difference to the astute shopper and provide more ammunition to insurance agents trying to match plans to the needs of their clients. This can thereby help health plans differentiate themselves, particularly in competitive markets.

The savings and possible increase in value and outcomes that can arise from implementing MHPAEA would lead to gains for health plan shareholders and for the public at large. Almost 50% of healthcare costs in the United States7 is paid for by federal or state governments, so taxpayers can indirectly realize some of those gains as they simultaneously benefit from receiving better care.

The utilization of technology enabled tools like Emotivo can provide insights into provider performance. Providers could identify how they are performing at building relationships with their patients and health plans, ascertain which members need support with provider selection and other needs. Strong patient-provider relationships lead to better health outcomes, higher patient satisfaction, and lower healthcare costs. This alignment on treatments and problems that arise as a consequence of good patient-provider relationships reduces no-shows and early dropout rates from behavioral health treatment. Information like this can help health plans support their members in navigating physician selection as they are also beneficiaries of the better health outcomes, higher patient satisfaction, and lower healthcare costs that can arise from better patient-provider relationships. It can also help health plans identify if there are factors that impact the patient-provider relationship that can be addressed through other services.

Learn more about how Emotivo Health rapport score can help you improve your Consumer Assessment of Healthcare Providers and Systems (CAHPS) scores, reduce cost, and improve your patients and members outcomes.

Lois Onyeajam has over a decade of experience working in managed care, accountable care, and supporting business process organizations. She has managed projects around implementing new plan requirements, conducted improvement efforts around building operational effectiveness, and led projects around engaging specific populations of members to improve access to and utilization of preventative services. Her primary interest is in using technology to support healthcare delivery to older adults as it relates to physical and behavioral health. This is with the aim of enabling payers to realize better value for dollars spent, and helping patients to optimize their wellness for as long as possible. Lois is a 2024-2025 Harvard Medical School HealthTech Fellow.

Karen Lin has a record of launching b2b and consumer products in various startups and public companies. She has built systems for health systems to measure patient safety culture, identify risk triggers, and benchmark quality across their organizations. As a woman in software roles for many years, she has gotten used to being the only woman in the room and advocating for those not present. Her current focus is to make health equity actionable through technology, starting with mental health treatment.


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2 Naylor, C., Parsonage, M., McDaid, D., Knapp, M., Fossy, M., & Galea, A. (2012). Long-term conditions and mental health – The cost of co-morbidities. London: The King’s Fund, & Centre for Mental Health.

3 Raj, D., Stansfeld, S., Weich, S., Stewart, R., McBride, O., Brugha, T., … & Papp, M. (2016). Chapter 13: Comorbidity in mental and physical illness. In S. McManus, P. Bebbington, R. Jenkins, & T. Brugha (Eds.), Mental health and wellbeing in England: Adult Psychiatric Morbidity Survey 2014. Leeds: NHS Digital.

4 Roy T, Lloyd CE. Epidemiology of depression and diabetes: a systematic review. J Affect Disord 2012;142(suppl):S8–21. PubMed doi:10.1016/S0165-0327(12)70004-6

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