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Posted On: Apr. 13, 1997 12:00 AM CST

Employers are not coordinating the payment of behavioral health care effectively and are losing money by paying multiple providers without a well-thought-out plan, a new study found.

The William M. Mercer Inc. study, based on a survey of 175 employers of various sizes, found executives are worried about bearing behavioral health expenses, which include mental health and substance abuse treatment, having concluded that dealing with these costs through carve-outs hasn't saved as much money as once hoped.

"They're spending a lot of different money in a lot of different places, and the way they are seeing costs increase in behavioral health tells us it's not being spent very cost-effectively," said Cristi Cohn, national behavioral health care practice leader in Phoenix for New York-based Mercer.

A typical employer might not know what it is spending on behavioral health because some benefits are paid to mental health professionals using psychiatric benefits and some are treated through employee assistance programs. In other cases, employees may seek help through general practitioners, because their psychiatric benefits have run out or they fear their employers will learn of their treatment.

"There's a lot of spillover into the medical program," Ms. Cohn said. "People are not convinced about the confidentiality of information in these (counseling) programs."

Because these various providers often operate independently, the employer often does not know the components of the cost of behavioral health care, such as where employees seek treatment, only that total costs are rising, she said.

At the same time, employees frequently lack follow-up treatment because providers don't communicate with one another, she said.

The survey found, however, that many employers have begun demanding performance guarantees from behavioral health providers. Two-thirds of midsize or large employers require guarantees on issues such as timely processing, provider credentialing, access to care and employee satisfaction.

Most respondents also have tried limits to control costs. Seventy-two percent of employers set limits on lifetime behavioral health benefits, typically at $50,000, but with some being as high as $2 million.

The survey found employers' annual cost increase for behavioral health for the past three years was 6.2%., compared with a 4.9% annual increase for medical costs. About a third of respondents said behavioral health costs will increase faster than medical costs, while four in 10 expected them to increase at about the same pace. About one-quarter said they would increase slower than medical costs or stay flat.

Copies of the survey are not available to the general public.

PBM for coalition

NEW YORK-An employer coalition has taken its first step toward group health insurance purchasing by offering its members a prescription benefit management program.

The New York Business Group on Health has signed a three-year contract with East Hanover, N.J.-based National Prescription Administrators Inc. Companies that contract with NPA through the coalition can receive discount prescriptions in retail drugstores or a mail-order service, whichever employers select, said Laurel Pickering, the group's managing director.

Although no employer has signed on for the PBM yet, the hiring of NPA is important for the coalition, which has existed about 15 years but has never done any group purchasing (BI, Feb. 3). The new program will encourage small and midsize companies to join the coalition, which had focused its energies on educational activities, she said.

She said the coalition hopes the effort "will be a springboard for other products. we will offer." The next joint purchasing effort likely will be vision benefits, and full health coverage may follow "in a couple of years," she said.

Savings that members can realize through the PBM will vary, she said. The group has negotiated performance guarantees and tiered administrative fees based on enrollment, meaning buyers will save more as the number of users grows.

The New York group obtained the contract with NPA through the Washington-based National Business Coalition on Health, a federation of 103 health care alliances. Several other local coalitions also have obtained PBM coverage through the NBCH.