Milliman Report Release


Study Reveals Individuals with Behavioral Health Conditions in Addition to Physical Conditions Drive High Total Healthcare Costs; Small Portion Spent on Behavioral Treatment, Vast Majority Spent on Physical Treatment

— 5.7% of entire study population—high-cost patients with both conditions—accounted for 44% of all healthcare spending.
— 50% of all patients with behavioral conditions had less than $68 of total annual spending for behavioral treatment.
— Study provides a baseline for estimating impact of COVID-19 on behavioral healthcare.

WASHINGTON – August 13, 2020 – Individuals with behavioral health conditions in addition to physical health conditions drive high total healthcare costs, yet among these patients, spending for behavioral health treatment is a small portion of total healthcare spending, while the vast majority of spending is for physical treatment. These are among the findings of a new analysis of claims data for 21 million commercially insured individuals conducted by Milliman, Inc. The study was commissioned by The Path Forward for Mental Health and Substance Use and funded by the Mental Health Treatment and Research Institute LLC, a tax-exempt subsidiary of The Bowman Family Foundation.

The report—How do individuals with behavioral health conditions contribute to physical and total healthcare spending?—identifies the prevalence of patients with behavioral health conditions (mental health conditions and substance use disorders) within the total patient population and among the highest-cost patients; the contribution of individuals with these behavioral health conditions to total healthcare costs; and the levels of spending on physical (medical/surgical) and behavioral health treatment.

“What the claims data in this report reveals is astonishing,” stated Henry Harbin, MD, adviser to The Path Forward partners, former CEO of Magellan Health. “Half of behavioral patients had very little to no spending on behavioral treatment—less than $68 per year—and another 25% had very limited spending on behavioral treatment—between $68 and $502 per year. This is despite having been diagnosed or treated by a healthcare professional for a behavioral illness. This is a tragedy. And now we know this population accounts for more than half of our total healthcare spending. Tremendous savings and improved outcomes are achievable if these individuals who deserve care are identified early and provided with prompt evidence-based behavioral treatment.”

The report focuses on individuals who have received behavioral health diagnoses and/or behavioral-specific treatment, including services or prescriptions for behavioral health drugs. These individuals are referred to as the BH Group.

Key findings include:

1. Of the 21 million study population, the most expensive 10% of patients (High-cost Group; 2.1 million individuals) accounted for 70% of annual total healthcare costs.

  • Annual total healthcare costs per High-cost Group patient averaged $41,631—21 times more than the $1,965 for each patient in the remaining 90% of the total population.

2. Of the 2.1 million individuals in the High-cost Group, 57% (1.2 million individuals) were also in the BH Group (High-cost Behavioral Subgroup).

  • The High-cost Behavioral Subgroup—5.7% of the total population—accounted for 44% of the annual total healthcare costs of the total 21 million study population.
  • 50% of individuals in the High-cost Behavioral Subgroup had less than $95 per year of total spending for behavioral health treatment (i.e., inpatient and outpatient hospital/facility and professional services coded as behavioral treatment, and prescription psychotropic drugs).

3. Of the 21 million study population, 27% were in the BH Group.

  • The BH Group accounted for 56.5% of annual total healthcare costs for the entire population.
  • Average annual costs for the BH Group for physical (medical/surgical) treatment were 2.8 - 6.2 times higher (depending on the behavioral health condition) than such costs for individuals with no behavioral health condition.
  • 50% of individuals in the BH Group had less than $68 of total annual costs for behavioral health treatment; the next 25% ranged from $68 to $502 of such spending.
  • 4.4% of total annual healthcare costs for the entire study population were for behavioral health treatment.

“This latest study shows, yet again, the urgency for early identification and treatment for mental illness and substance use disorders by expanding the evidence-based Collaborative Care Model,” said American Psychiatric Association CEO and Medical Director Saul Levin, MD, MPA. “We simply cannot ignore the connection between mental health and physical health, which is now echoed by leaders, physicians, health providers, patients, and the public, and demonstrated by the COVID-19 pandemic. The costs to human lives and health care systems are too high.”

Impact of COVID-19 on behavioral health conditions

Numerous mental health organizations and agencies are reporting an upsurge in mental health and substance use disorders since the onset of the COVID-19 pandemic. Nearly half of U.S. adult respondents (45%) to a Kaiser Family Foundation poll reported their mental health has been negatively impacted due to concerns over the coronavirus. Texts to the Substance Abuse and Mental Health Administration’s hotline for people experiencing emotional distress from natural or human-caused disasters increased more than 1,000 percent in April 2020, compared with April 2019.

“While the Milliman report did not study the effect of COVID-19 on mental health, its analysis of 2017 claims data provides a baseline for estimating the potential subsequent impact of the pandemic on the treatment of behavioral conditions and medical spending,” said Andy Keller, PhD, President and CEO, Meadows Mental Health Policy Institute.

Keller continued, “The Meadows Mental Health Policy Institute, a Path Forward partner has modeled in an April 2020 report the likely impacts of COVID-19 and the annual baseline rate of death from suicide and overdose—which was already at 120,000 Americans. We conclude that incremental ‘deaths of despair’ could exceed lives lost because of the virus. The Well Being Trust replicated these findings, referring to increased risks of suicide and overdose and COVID-related increases in mental illness as the ‘epidemic within the coronavirus pandemic’. Given that American health systems were failing to meet these needs pre-pandemic, it is imperative that we muster the resolve to revamp delivery systems top to bottom.”

Recommended action steps

To address the current deficiencies in behavioral healthcare, provide equity and reduce total healthcare costs, The Path Forward recommends specific steps employers, health insurers, and providers can take to ensure implementation of five key reforms. These include increased access to affordable and effective in-network specialty behavioral providers; early detection of behavioral conditions and tracking of clinical outcomes; use of “Collaborative Care” (as defined in the CoCM reimbursement codes) in primary care settings; expanded access to tele-behavioral health services; and parity law compliance.

“The Milliman report data underscores in stark terms the broad impact of the public crisis in behavioral health which has been exacerbated by COVID-19,” said Michael Thompson, President and CEO, National Alliance of Healthcare Purchaser Coalitions. “People with both behavioral health and medical conditions contribute significantly to the high cost of healthcare and these same people have been inequitably underserved by the healthcare status quo for years. The Path Forward is tackling these issues through a market-driven approach to improve behavioral healthcare, achieve health equity, and reduce costs. A new report issued in August 2020 models how collaborative care and medication assisted treatment would significantly reduce suicide and drug overdose deaths.”

The following co-issuers of this press release are among America’s leading business coalitions, healthcare organizations, public policy organizations and advocacy groups that support The Path Forward’s recommendations to address this crisis:
  • American Psychological Association
  • Baylor Scott & White Health
  • Columbia University Department of Psychiatry
  • DFW Business Group on Health
  • Florida Alliance for Healthcare Value
  • HR Policy Association/American Health Policy Institute
  • Houston Business Coalition on Health
  • Kansas Business Group on Health
  • The Kennedy Forum
  • Mental Health Association of Maryland
  • MidAtlantic Business Group on Health
  • Massachusetts General Hospital Department of Psychiatry
  • Minnesota Health Action Group
  • National Action Alliance for Suicide Prevention
  • National Alliance on Mental Illness
  • National Association for Behavioral Healthcare
  • National Association of Addiction Treatment Providers
  • National Council for Behavioral Health
  • One Mind/One Mind at Work
  • Parity Enforcement Coalition
  • Pacific Business Group on Health
  • Shatterproof

About the Report

The report was developed by Milliman, Inc., an independent actuarial and research institution. Milliman researchers analyzed 2017 claims data for 21 million individuals with 12 months of eligibility for commercial medical and prescription drug coverage, aged 2 through 64, from all 50 states and District of Columbia, across all care settings.

A copy of the complete report may be accessed here. Additional comments by behavioral healthcare experts, employer coalitions, leading public policy organizations and advocacy groups to the report’s findings and The Path Forward’s recommendations may be accessed here.

About The Path Forward for Mental Health and Substance Use

The Path Forward is a first-of-its kind private sector initiative to drive market-based improvements in behavioral health treatment and healthcare equity for all Americans. The Path Forward recommends implementation of five evidence-based reforms to improve access to effective, affordable and timely behavioral health treatment, and reduce total healthcare costs. A key element of this multi-stakeholder initiative is the creation of Regional Employer Stakeholder Engagement Teams (RESET) in eight key regions (CA, FL, KS, MD/DC/VA, MN, NY/NJ/CT, TN and TX) to leverage the influence of business coalitions, and their employer and other purchaser members.

The Path Forward’s partners are the National Alliance of Healthcare Purchaser Coalitions, Meadows Mental Health Policy Institute, American Psychiatric Association Foundation Center for Workplace Mental Health, American Psychiatric Association, and The Bowman Family Foundation.

Supporters of The Path Forward’s recommendations share their thoughts on the new Milliman study findings:

Timothy J. Bartl
CEO – HR Policy Association
“Providing access to quality, affordable healthcare to employees and their dependents is a top priority for Chief HR Officers of large employers. This illuminating report, commissioned by The Path Forward, will help these employers better understand that relatively few individuals who have mental health or substance use disorders are getting the treatment they may need for their overall well-being. Further, this report provides valuable information for employers as these untreated individuals are having a major impact on overall healthcare spending. The Association and its health care think tank, the American Health Policy Institute, support The Path Forward’s action-oriented recommendations which will be key to addressing these serious health challenges.”

Patrick J. Kennedy, Former US Representative
Mental Health Advocate – The Kennedy Forum
“The longer we separate mental health from physical health, the longer we will suffer the personal, societal, and fiscal consequences of a broken healthcare system. This new data from Milliman must drive urgent action toward integration efforts. There is no health without mental health.”

Arthur C. Evans, Jr., PhD
CEO – American Psychological Association
“These numbers speak to the overwhelming need for a range of behavioral health services, including preventive care. If we focus more on intervening with individuals when they first begin showing signs of a behavioral health condition, even before they have a behavioral health diagnosis, we can improve health outcomes, as well as minimize the need for and cost of care later.”

Shawn Griffin, MD
President and CEO – URAC
“The Milliman report findings reinforce what I saw during my decades as a primary care physician, analytics expert, and population health leader – that mental health and substance use disorder conditions have a multiplier effect on other diagnoses, resulting in higher costs and poorer outcomes. The Path Forward’s five-pronged approach provides a robust plan for employers and purchasers to serve some of our most vulnerable groups and achieve the often elusive magic combination of better care at a lower cost. URAC appreciates the opportunity we have had, most recently with our new Measurement-Based Care designation and our unique Mental Health Parity accreditation, to support the employer and payer groups building a more equitable future of care.”

Jürgen Unützer, MD, MPH, MA
Professor and Chair – Psychiatry & Behavioral Sciences, University of Washington
Director – Garvey Institute for Brain Health Solutions, UW Medicine
“This is one of the most comprehensive studies yet that shows the tremendous cost of mental health and addiction problems not only to families and loved ones, but to employers, governments, and others who pay for our healthcare. The Path Forward for Mental Health and Substance Use outlines clear strategies that can help us save and improve millions of lives while saving millions of dollars in excess healthcare costs.”

Karen van Caulil, PhD
President and CEO – Florida Alliance for Healthcare Value
“The Milliman study findings reveal the extensive impact of the US mental health crisis and should serve as an immediate call to action to improve access to needed care. Now is the time for key stakeholders to unite and implement the five fundamental reforms outlined by The Path Forward.”

Colleen Carr
Director – National Action Alliance for Suicide Prevention
“Without mental health we will never have full health. While our country has invested in addressing physical health conditions, mental health conditions have been largely ignored and this must change. This report highlights the fact that there were substantial unmet needs in addressing behavioral health conditions even before COVID-19. Now, as a result of the pandemic, we are seeing an increase in negative mental health outcomes and likely an increase in the need for behavioral healthcare—a key focus of the Action Alliance’s Mental Health & Suicide Prevention National Response to COVID-19. There are effective strategies we can implement now to make the necessary changes that we know are critical to the overall health of all Americans.”

Tom Insel
Chair – Steinberg Institute
Former Director – National Institute of Mental Health (2002-2015)
“Mental healthcare has long been separate and unequal in America, the neglected stepchild of our health care system. This new report demonstrates the cost of our lack of investment in mental health. That cost is staggering, mostly as a driver of overall healthcare. We simply will not curb costs or improve outcomes for health without investing in mental health.”

Chris Skisak
Executive Director – Houston Business Coalition on Health
“The new Milliman findings corroborate the conclusions I had reached a decade earlier when I was working in the private payer sector conducting high cost claims analysis for large commercial payers, we cannot wait and lose another decade of time and untold numbers of lives.”

Maurizio Fava, MD
Psychiatrist-In-Chief – Department of Psychiatry, Massachusetts General Hospital
“Providers throughout the country know that the data in the Milliman report reflect the reality 'on the ground' – vast numbers of patients with behavioral and mental health conditions do not have access to the behavioral treatments that they need and deserve. Health equity demands that the evidence-based reforms set forth by The Path Forward be implemented nationwide.”

Daniel H. Gillison, Jr.
CEO – National Alliance on Mental Illness
“The recent Milliman report findings heighten our concern about a potential mental health epidemic as a result of the COVID-19 pandemic. The report finds that behavioral health only makes up a small percentage of overall health costs. Increased access to behavioral health interventions can decrease overall health care costs by getting people appropriate care before they are in crisis. We need significant investment in mental health care to increase access and drive down overall health care costs for everyone.”

Shawn Coughlin
President and CEO – National Association of Behavioral Healthcare
“This study confirms what our members have known for too long – we still have not achieved parity with behavioral healthcare and physical healthcare services in the United States. And until we have it, we will continue to see healthcare costs rise in medical-surgical settings.”

John Miller
Executive Director – MidAtlantic Business Group on Health
“The current crisis in behavioral health is tragic for human reasons, and as this study makes clear, for financial reasons as well. The Path Forward provides a road map to address this challenge, and all employers should rally behind it.”

Paul Gionfriddo
President and CEO – Mental Health America
“These results are consistent with data collected by MHA’s screening program, which indicates that people with chronic physical health conditions are more likely to screen positive for a mental health condition and 43% indicate that they have not received mental health treatment or support. We need to identify mental health conditions in all health settings, such as primary care and hospitals, and ensure effective follow up behavioral health treatment and supports, including peer support.”

Garen Staglin
Chairman – One Mind and One Mind at Work
“Our members are supporting more than 6 million employees globally who are now experiencing 40%+ higher levels of anxiety and depression in the midst of the COVID-19 pandemic. The Milliman study and importantly The Path Forward reform initiatives provide a much needed roadmap to provide critical resources to address this 'second wave' of the pandemic. The data in the study shows significant economic consequences but nothing compared to what we will experience it we allow the status quo to prevail.”

Chuck Ingoglia
President and CEO – National Council for Behavioral Health
“This important new research provides more evidence of the need to increase our investment in treatment and services for those with mental illness or substance use disorders. We have an opportunity—and a responsibility—to help those who are profoundly underserved, and this investment will reduce overall healthcare spending by providing treatment and services before a condition becomes a healthcare crisis.”

Deb Krause
Vice President – Minnesota Health Action Group
"Not only are the findings from the Milliman report startling, but they underscore an ongoing and critical problem with our health care system. Millions of people continue to suffer because they lack timely access to mental health services or because their health benefits don't provide equal coverage for mental health and substance use disorders. This has a devastating impact on overall health and well-being. It is heartbreaking for patients and their families, and it is driving healthcare costs up for everyone."

Gary Mendell
Founder and CEO – Shatterproof
“As we’ve long suspected, chronic lack of attention to substance use disorders and overall mental health needs is leading to higher overall medical costs. This would be tragic if it only meant the loss of dollars to the health system. But the real tragedy is the loss in real human lives to mortality, lost productivity and reduced family and community engagement. I hope this will finally serve as the wake-up call our country needs to reposition the way we invest in health care spending.”

Carol Alter, MD
System Medical Director, Behavioral Health – Baylor Scott & White Health
Senior Fellow – Meadows Mental Health Policy Institute
“Not only are behavioral health conditions common in the population, but this study firmly shows the relationship between the presence of these conditions and exponentially higher expense to care for them. The Path Forward’s work to advance the use of proven, population based interventions, such as measurement-based care and collaborative care, provides a powerful message to employers and purchasers of healthcare that cannot and should not be ignored. Health systems struggle with these patients every day and desperately need to have the resources to utilize these important interventions.”

Linda Raines
CEO – Mental Health Association of Maryland
“This report’s findings should provoke a wake-up call across all of America. We can ill afford to continue to ignore the lack of access to mental health and substance use care for millions of Americans or the devastating human and economic toll that results from our failure to adopt the straightforward and economically sound reforms advanced by The Path Forward. Healthcare costs will rise and more lives will be lost if we fail to act."

John Snook
Executive Director – Treatment Advocacy Center
“This report’s findings finally provide us with a means of quantifying the costs of what the Treatment Advocacy Center has long referred to as ‘revolving door’ mental healthcare. The most seriously ill receive care only when in crisis, with families left to pick up the slack. These results show us just how unsustainably inefficient our failed mental healthcare system has become. We can and must do better, by prioritizing the most seriously ill and providing a full continuum of care.”

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