Improve mental health by improving how we finance health care

It takes an average of 10 years between symptom onset for mental health conditions to be accurately diagnosed and therefore treated. In addition to general misunderstandings about mental health, the nationwide shortage of mental health providers is one unignorable cause for this devastating delay. But why is there a shortage? Well, the bottom line is … the bottom line.

In simple terms, insurance companies do not pay enough for mental health services. The majority of commercial insurance companies only pay one-half to two-thirds of the cost of care, so many private practitioners cannot cover their own salary and expenses based on the abysmal payments from insurance.

This means that too many Americans don’t have adequate access to mental health care through their health insurance plans. This is largely attributable to low payment scales that limit the number of practitioners able to take insurance, forcing patients to pay cash or out-of-network rates.

To understand why this happens, one must understand the two sets of fees paid by insurance companies. The first, professional fees, are the payment to the doctor for her or his services. These fees include processes (e.g., interviewing, diagnosing, treatment plan) and procedures (e.g., surgery, radiation, catheterization). The second set of fees is hospital charges and facility fees. These are the payments for the use of structures and/or equipment (e.g., inpatient stays, outpatient MRI, radiology).

Money flows to these different aspects of care in a disproportionate manner, causing relatively high payments for facility fees and procedures, with lower payments for processes. Since they don’t usually perform procedures, mental health providers are paid only for professional fees.

Furthermore, mental health providers do not generally refer patients to use the aspects of medicine that generate procedures. Many health care systems would prefer to employ a robust staff of primary care providers and specialists — like neurologists — who generate more procedures, thus generating more revenue. This is an additional loss for mental health providers, who don’t have the ability to underwrite employee salaries from a health system based on referrals.

So why don’t health systems increase mental health professional fees? The answer is frighteningly simple: The people making decisions about how value is set are the same people who reap these high fees.

Specifically, most insurance companies base their payment scales on standards set by Medicare through the Centers for Medicare and Medicaid Services (CMS). In turn, CMS bases Medicare rates on recommendations from the American Medical Association’s Relative Value Scale Update Committee (RUC), largely comprised of surgeons and procedure-based specialties.

The RUC sets a large proportion of the rate based on time reported, and a multiplier for complexity of each case. Thus, it calculates that an hour of procedure time is worth three-to-five times that of a psychiatrist and six-to-ten times that of a psychologist. For some aspects of medicine, that ratio can be staggeringly higher.

While it would be naïve to assume these values are set to cause a mental health workforce shortage intentionally, one must recognize the devastating consequences that the devaluation of mental health services causes for patients and providers alike.

The RUC has a powerful opportunity to help right this situation. By revising how they value mental health services, the RUC can help set a precedent for higher provider reimbursement rates. In turn, CMS can also reform how they reimburse for mental health services, which would set the stage for other insurance companies to follow suit.

Policymakers have an important part to play in helping to reform these archaic financing measures. In ongoing conversations about health care pricing, surprise medical billing, and other topics, our legislators must invest resources that strengthen and grow the mental health workforce.

At the end of the day, people are hurting and need access to care. Reimbursement rates directly impede patients’ ability to get care because mental health providers simply cannot afford to treat them.

Steven Siegel is a professor, Department of Psychiatry and Behavioral Health Sciences, Keck School of Medicine of the University of Southern California, Los Angeles, CA.

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