The mental health system is whatever insurance companies pay for….And some thoughts on the IMD exclusion

The mental health system is whatever insurance companies pay for and they make money by paying for the least they can pay for and still justify it as “quality care.”   The less money they spend the more money they make.

All of that seems common sense I hope but it takes us to some startling places and very uncommon predictions.   All predictions are guesses.   Mine are certainly that.   My profoundest hope is that much that is written below turns out to be foolish and poorly thought out.  Time will tell.

Let’s talk about Medicaid.  

In many states the mental health part of the Medicaid program is run by a managed care program.   There is a profound incentive in the way these contracts are written to treat people with psychiatric medication.   Witness just as the tip of the iceberg the use of psychiatric medication for children.   Psychiatric medication makes money for insurance companies.   A lot of it.   An old friend of mine named Ed Knight was among the first I know to describe how it works.

The expense for medication does not normally come out of the managed care companies pocket.  It normally comes out of the general pharmacy part of the plan.   It is a different pool of money.   The bottom line:  If I am the managed care company responsible for your care and if you have a mental health diagnosis and are treated with psychiatric medication you cost me nothing.   I make money off your “illness.”

Take a look at the rise in the use of psychiatric medication particularly amongst vulnerable populations like children in state custody and then ask yourself why??  Things that make somebody money tend to keep happening and things that make a lot of money tend to happen a lot.

And there is an added benefit.   When the medications make people sick there is normally another part of the company that manages physical illness that makes money off managing the treatment of those diseases.   You make money off the medication,  you make money off the side effects and then when someone’s life falls apart and they end up in jail or homeless it doesn’t cost you anything. 

I don’t know that any of this is brand new.   Some people have talked about it for years.   It just hasn’t been talked about enough and I don’t know that most people know about it.

If the first law of the mental health system is that it is whatever insurance companies pay for the second law is equally important.   Insurance companies in the end pay for what makes them money.

All of this raises another question.   Many people in Congress are fervently hoping that the IMD exclusion will be repealed.   It would allow more federal funds to be spent for psychiatric hospitalization.   But the states would still have to pay their portion and in many states like Tennessee that would come out of the pocket of the managed care company and there the adventure begins.

What happens when a company devoted to making money is confronted with a new expense that would threaten their ability to make money.

I can see several possibilities :

1.  They could accept the loss and just pass the expense on to other customers in terms of rate hikes.  
2.  They could turn to the state and say you need to sweeten the pot and cover the risk you are asking me to assume.  Pass the expense on to the tax payers.
3.  They could say telling me I can pay for something is not the same as telling me I have to and use standards of medical necessity to avoid the expense.
4.  They could do all 3 of the above and probably will.
5.  If inpatient expenses begin to drown them they could try to emphasize the value of psychiatric medication to more and more people.  In a strange way more hospitalization leads to a wider use of medication just to help the profit margin.

This leads to a third law.

If…

The mental health system is what insurance companies pay for….

And if….

Insurance companies pay for what makes money…..

The third law is simple…

Insurance companies when all is said and done will make money regardless of the ultimate cost or risk to you and me.

I don’t know if the IMD exclusion will be repealed or not but I know it is a more complicated question than normally thought of.   Share some of these ideas with your legislators… Before they are called to vote.

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