Association for Public Policy Analysis & Management

Objective: The goal of the federal Mental Health Parity and Addiction Equity Act, implemented in 2010, is to eliminate differences in financial requirements and treatment limits between behavioral health and general medical care.  The law requires that out-of-network benefits for mental health and substance use services be equivalent to out-of-network benefits for other medical services.  Our objective was to examine the effect of federal parity on out-of-network addiction services use and spending.

Methods: We used administrative health care claims from Truven Health Analytics Marketscan commercial claims and encounters database.  The study sample included 12-month continuously enrolled individuals ages 18-64 with any addiction service use between 2007 and 2012 (N=525,620).  For each month of the study, we calculated four outcomes: 1) proportion of individuals who used an out-of-network addiction service; 2) average number of out-of-network outpatient addiction treatment services among addiction service users; 3) average total addiction treatment spending among out-of-network addiction service users; and 4) average total out-of-pocket among out-of-network addiction service users. We used interrupted time series analysis accounting for serial autocorrelation to model the effect of federal parity on outcomes.  Models included a parity indicator, a linear time trend, a calendar month indicator, and an interaction term calculated by multiplying the parity and time variables.

Findings: Federal parity was associated with increased probability of using out-of-network addiction services, increased average number of out-of-network outpatient addiction visits and increased average total spending on out-of-network addiction services among out-of-network addiction service users.  In the first year of federal parity implementation (2010), we found 8.7% and 4.3% increases in out-of-network inpatient and outpatient addiction service use over what would have been expected in the absence of parity.  Federal parity increased the rate of total out-of-network inpatient and outpatient addiction spending by $49.81 per user per month and $24.80 per user per month, respectively.   Federal parity had no effect on out-of-pocket spending on out-of-network addiction services.

Conclusions: In the debate leading up to federal parity, there was concern that requiring equal coverage for out-of-network services would lead to increases in out-of-network use, reducing insurers' ability to manage utilization.  Study findings  suggest that inclusion of the out-of-network benefit in the federal parity law achieved its intended goal of improving access to SUD services outside of health plans’ physician networks with minimal overall impact on total spending.  In 2010, the average expenditure per private health insurance enrollee in the US was $4,506.  While federal parity was associated with small increases in total spending per out-of-network addiction service user, relatively few individuals use such services and the rate of spending increase - $25 per month among the subset of individuals who used out-of-network outpatient addiction services - was minimal relative to total per-enrollee expenditures.