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How does managed care manage mental health?

In the old days, your doctor made all the decisions about your medical care. Now it seems as though your insurance company is in charge.

The most common managed care models are Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs). HMOs typically provide preventative care, have more restrictions on services and cost less. PPOs give the consumer more control of health care decisions but cost more.

If you are covered under an HMO, you will choose doctors from their network. Your primary care physician must make referrals to all other doctors or specialists. PPO members are not required to choose a primary care physician. Either doctors or the members themselves can choose to see a specialist, even those outside the network.

See chart: Comparison of HMOs and PPOs

Managed care plans can set limits on services, cost of copays and deductibles and in some cases, the choice of medications. But, while people criticize their insurance companies for these cost-cutting restrictions, it is actually the employer providing the health plan that sets the rules. Benefit limits are imposed by the benefits package an employer purchases.

Can my health plan restrict mental health services?
Although health plans have traditionally placed more restrictions on mental health coverage than on medical coverage, the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), which went into effect January 2010, requires many health insurance plans to cover both mental and physical health equally if the plan provides mental health coverage, which it is not required to do.

The law applies to companies with more than 50 employees. Copays and limits on visits or hospital stays must be the same as for physical care.

Health plans may, however, require preapproval for coverage and will approve or deny coverage based on their determination of medical necessity and cost-effectiveness. A health plan might approve only a limited number of hospital days or provide coverage only for a partial-hospitalization program.

While managed care makes drugs affordable to members, many plans use a formulary, a list of drugs covered by a member’s benefit plan. The list results from the insurer comparing drugs’ efficiency, side effects and cost. Formularies can mean that some patients can’t get the drug their doctor thinks is best for them.

Plans say that because drug prices have risen three times faster than the rate of inflation over the last decade, cost-cutting measures are necessary.

How will health care reform change mental health coverage?
Under the new health care reform law, H.R. 3590, the Patient Protection and Affordable Care Act (PPACA), health plans offered through health insurance exchanges will be required to include mental health coverage and at parity with medical/surgical benefits effective in 2014.

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