MENTAL HEALTH: Parity Law Creates New Business for Health Plans

      Set to take effect this month, a new state law requiring health plans to provide mental health benefits equal to other medical coverage has insurers rushing to grab a share of the enlarged pool of potential patients, the Wall Street Journal reports. Anticipating an increase in demand for services, plans are preparing to strengthen relationships with providers and consumers. "We've been ready for this and preparing for this quite awhile," Jerry Vaccaro, vice president and corporate medical director for PacifiCare Behavioral Health, Inc., said. The plan, which provides mental health services to about 2.2 million California residents, will add 100 mental health specialists to its network of 5,200 psychiatrists, psychologists and counselors. The majority of additional providers will specialize in areas specifically covered by the new law, including autism and eating disorders. Other traditional health plans, such as Blue Cross of California and Kaiser Permanente, also intend to compete for additional business by adding mental health professionals to their existing networks. According to Blue Cross spokesperson Michael Chee, "We are in compliance with the letter of the law, and we are continually focusing on enhancing the network with the specialty services that we may be lacking." Kaiser Permanente, the state's largest HMO, expects a 10%-15% increase in outpatient mental health visits and plans to hire 250 mental health professionals to meet the burgeoning demand.

Increasing Premiums?
      Although insurers and business groups opposed the parity law, fearing that the measure would significantly raise premiums, those concerns are "unfounded," the Wall Street Journal reports. Kaiser said it will raise premiums by an average of less than 1.5%, while PacifiCare indicated that its premiums would increase between 1%-5%. Still, experts did not predict the massive boon for health plans. "[W]e had no idea where (parity) would play out from a business point of view," Dr. William Goldman, senior vice president for behavioral health sciences at United Behavioral HealthCare, said, adding that the mental health benefits business remains on the brink of "breaking wide open." He also stressed the importance of successfully implementing the landmark parity law, which could serve as a model for other states across the country. Goldman said, "This is a very big thing that has to be done ... very, very well. This is going to be a fishbowl ... It's terribly important. When California does something, it really does presage what's going to happen in the rest of the country" (Benson, 7/19).