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Employers See Problems with Managed Treatment, But Not Convinced About Solutions

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Many large employers are as dissatisfied with managed behavioral healthcare as their employees are, but that doesn't mean they support parity or even lifting lifetime or episode-of-care limits on addiction treatment.

Employers like American Airlines, Eastman Kodak, IBM, General Motors, Delta Air Lines, Pepsico, and AT&T provide relatively generous benefits packages for addiction treatment. Most utilize managed-care firms to control costs, and they see the current system as being cost-effective.

At the same time, however, large employers recognize that treatment quality can suffer under managed care, said Kristen Apgar Reasoner, a behavioral-health researcher and director at the Washington Business Group on Health (WBGH).

For example, while most employers have chosen to use carve-outs to manage care and costs, they recognize the trade-offs in service quality and lack of integration with related health services.

“The employers' experience with lack of accountability under unmanaged care, as well as with the lack of access to care for employees in HMOs, makes them doubt the arguments being made in favor of a return to integrated health care,” according to a 2001 report prepared by WBGH for the federal government detailing the behavioral-health benefits offered by large employers and the implications of current benefit design on parity. “Yet, at the same time they recognize that the opting for a carve-out is often at the expense of care coordination. They also know that their employees continue to receive a significant share of their treatment for mental illnesses and substance abuse through primary care. And, they have increasing concern about the lack of access of available providers within networks, particularly for an increasingly diverse workforce.”

“Both employers and employees are very dissatisfied with what they've got, but they don't want to negotiate with providers directly,” said Apgar, who authored the report. “There's the feeling that they need to improve, but they're not sure of the direction.”

A Striking Lack of Employee Outcry

By and large, employers still see managed care as preferable both to tough limits on benefits — which drive up utilization of other health-care services — and the unlimited benefits system that prevailed through the early 1990s, when utilization of addiction benefits skyrocketed. “Employers saw a lot of costs without a lot of results,” recalled Apgar.

Many large employers have dropped day and visit limits, but lifetime and episode-of-care caps remain in place. And employers have generally not heard the kind of demands from workers that might persuade them to further reform the current system, Apgar said.

“Part of the lack of demand for treatment is that employees don't use their benefits to access treatment: they pay for it themselves because they don't want people to know,” she said. “It will take a lot of time and public awareness to change that.”

On the other hand, Apgar told Join Together, “Employers don't like employees complaining about health care. If they got a lot of complaints about treatment, they would do something about it.”

From an advocacy standpoint, said Apgar, “You need to be be sure that employees know about the benefits available, and then deal with the fact that they don't really want them [because of denial], or don't want employers to know they're using them.”

While efforts like Join Together's Demand Treatment! and the Alliance Project are trying to increase advocacy among people who need addiction treatment, the WBGH — using a grant from the Robert Wood Johnson Foundation — is working to raise employer awareness about the need for comprehensive addiction benefits.

The good news, the WBGH report concluded, is that “the experiences of the large employers provide strong support for economic analyses that predict that parity can be implemented without significant increases in cost. However, their experiences also suggest that the essential matters of access, quality, and effectiveness of care are not resolved solely through benefit design.”

Other Stumbling Blocks: Stigma and Skepticism

Stigma and lingering skepticism about treatment effectiveness present significant stumbling blocks to the reform of existing benefits packages. These barriers are particularly visible in the failure of most employers to come out in favor of legislation that would require insurance plans to cover addictions on par with other diseases.

“In general, employers don't support parity, even though some large companies provide generous benefits,” said Apgar. “They feel they are capable of doing the right thing for their employees without being coerced into it. And parity doesn't get you around the issues of access and quality.”

Accountability is a huge issue for employers, which is why the carve-out model of managed behavioral healthcare has been so popular. Employers believe that contracting with managed-care organizations gives them more control over treatment providers.

“Like the general public, many employers lack awareness and accurate information regarding the nature and impact of substance abuse. Often, too, employers doubt the effectiveness of substance-abuse treatment, despite strong evidence that available treatments … are at least as effective as those for other chronic illnesses,” Apgar wrote in a paper entitled, “Parity for Substance Abuse Benefits: Making the Business Case to Employers.”

“Although benefit limits have been substantially eliminated for mental health, employers are less willing to drop lifetime and episode-of-care limits for substance abuse,” she wrote. “A number continue to believe that limits are needed to deter employees from cycling in and out of short-term hospitalization without completing care.”

In other words, according to Apgar, “Many employers feel that workers will not make serious efforts at recovery if benefit limits are lifted.”

What's especially frustrating for addiction-treatment advocates is that the arguments used successfully to push for mental-health parity — that early and appropriate access to care would be cost-effective and cut employee absences and boost productivity — are virtually identical to those in support of addiction parity. But while employers recognized a business case for mental-health parity, “This has not yet been the case for substance abuse benefits,” wrote Apgar.

“It has become more acceptable to identify yourself as having depression because people know you can get better,” Apgar told Join Together. “I don't think people believe that when it comes to addiction. Our view is that if employers had more confidence in treatment and in employees' ability to manage addiction, it would go hand-in-hand with people [being less] resistant to seeking help.”

Making the Case to Employers

The WBGH's research strongly suggests that employers may be receptive to well-crafted arguments in favor of improved treatment services, even if they are not yet willing to embrace parity. But they need better information about effective treatment models, and to learn that addiction treatment has success rates equal to treatment for other chronic disorders, such as diabetes. Employers also need more information on emerging pharmacological interventions that — as occurred in the mental-health field — build confidence that addiction can be treated successfully, and fight stigma by demonstrating the disease's organic underpinnings.

EAPs also can play a big role in advocating for improved services, especially in light of their heightened stature in the wake of the Sept. 11 attacks. Apgar suggested that brief interventions and screenings, both of which get at addiction early on, when treatment is less costly, may also appeal to employers.

Also, “The large employers continue to look for the development of performance measures they and their employees can use to evaluate the quality and effectiveness of mental health and substance-abuse treatment,” according to the WBGH report. Notes Apgar: “The people we deal with in companies, such as human-resources staff, tend to be more enlightened, but the CFOs and CEOs want to know if it's working.”

The bottom line is that employers still need to be persuaded that offering good benefits is more cost-effective for them than paying the costs of undiagnosed and untreated addiction. Advocates must always bear in mind that employers' primary interest in addiction and recovery is not altruistic, but economic. “The overall goal for the employers is to purchase care that holds health plans accountable for providing effective care that enables their employees and their families to be productive at work, at home, and in school,” the WBGH report noted.

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