Economic Assessment of Providing Mental Health Services in Rural Health Clinics

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1 Economic Assessment of Providing Mental Health Services in Rural Health Clinics Fred C. Eilrich Assistant State Extension Specialist Cheryl F. St. Clair Associate State Extension Specialist Gerald A. Doeksen Regents Professor and Extension Economist National Center for Rural Health Works Oklahoma State University Oklahoma Cooperative Extension Service 513 Ag Hall Stillwater, OK Phone: Fax: Website: Funded by Federal Office of Rural Health Policy, DHHS, and Health Resources and Services Administration September 2010

2 Economic Assessment of Providing Mental Health Services in Rural Health Clinics There are many challenges to providing adequate behavioral health services, particularly in the rural areas. Controlling for other characteristics that affect access to care, rural children are 20 percent less likely to have a mental health visit than urban children [1]. The shortage of behavioral health professionals in rural areas has been well documented [2]. Limited funding and lack of behavioral health professionals have long been two barriers having a significant impact in rural areas. Similar to physical health services, adequate funding for behavioral health services in rural areas is constrained due to higher rates of uninsured and increased proportion of patients lacking the capacity to pay for services. Research in 2008 suggests rural residents may be at greater risk of forgoing behavioral health care due to cost [3]. Most rural behavioral health facilities depend on federal grants and state pass-thru funds that are shrinking or being eliminated during the current weakened economic conditions. Largely, funding issues can only be resolved through policy changes. Behavioral health services are divided into three focus areas; mental health, substance abuse and domestic violence. Frequently the proper treatment involves more than one of these areas. Often the occurrence of substance abuse or domestic violence is a symptom of mental health illness. Co-morbidity disorders are recognized beyond just behavioral health. Many studies have documented the correlation between physical health problems and behavioral health problems. Individuals with serious physical health problems often have co-morbid behavioral health problems, and nearly half of those with any mental disorder meet the criteria for two or more disorders, with severity strongly linked to co-morbidity [4]. While Community Mental Health Centers continue to provide services to a broad range of people, changes in funding as well as deinstitutionalization have directed their primary focus to 1

3 patients from priority populations including adults with seriously mental illness (SMI) and severely emotionally disturbed (SED) children. These changes have resulted in fewer services available, particularly for rural residents with limited financial means that do not fall into these categories. There is renewed interest in the integration of mental health and primary care services, particularly in rural areas [5]. Integration with Rural Health Clinics (RHCs) is one option to expand mental health services in rural areas. Some RHCs are currently offering mental health services, but relative few. Issues, barriers and challenges were outlined in a recent study from information gained through interviews of some these RHCs [6]. The objective of this study is to investigate the potential of increasing the amount of mental health services delivered in Rural Health Clinics (RHC). More specifically, this report will: 1. Estimate average wages of rural mental health providers 2. Identify major sources and rates of reimbursements 3. Estimate the number of annual visits required to fully support the salaries of appropriate specialty mental health providers. Mental Health Professional Wages There is significant variation in wages among states and between specific occupations which dramatically impacts the number of visits required to support individual mental health professionals. In addition to wage differences among states, there is also variation among occupations depending on level of specialized training, certifications and specific industries. Median annual wage for psychologist was $66,040 in May The middle 50 percent earned between $50,210 and $85,270. The lowest 10 percent earned less than $39,270 and the highest 10 percent earned more than $109,470. For licensed clinical social workers, the median annual wage was $38,200 with the middle 50 percent earning between $30,480 and $49,840. The lowest 10 percent earned less than $29,940 with the highest 10 percent earning more than 2

4 $62,760. Finally, the median wages are unavailable for psychiatric nurse practitioners. They are grouped with registered nurses. Average median annual wage for registered nurses was $63,750. In 2009, the middle 50 percent of registered nurses earned between $52,520 and $77,970. The lowest 10 percent earned less than $43,970 with the highest 10 percent earning more than $93,700. The 2009 hourly and annual wages from the Bureau of Labor Statistics (BLS) [7] are presented in Table 1 for psychologist, licensed social worker and registered nurse. Reimbursements to RHCs require additional education and certification requirements for providers. Psychologists must be doctoral-level and clinical social workers must be masterslevel. Psychiatric nurse practitioners also require a master s degree. BLS median wages include all levels for each occupation. For example, median wages are unavailable for psychiatric nurse practitioners. They are grouped with registered nurses but earn a relative higher wage. Similarly, doctoral-level psychologists typically demand higher wages than master s level psychologists. Therefore the 75 percent quartile or wages from the top 25 percent were used to represent average salaries. The top half of Table 1 illustrates the states with the highest and lowest 75 percent quartile wages for each of the three mental health professionals. For example, the annual wage for psychologist varied from $53,010 in Mississippi to $104,900 in New Jersey, while the social workers in New Jersey had the highest 75 percent quartile wage ($71,980). The national 75 percent quartile wages along with wages from a sample of states are shown in the bottom half of Table 1. Average Fee Collections To explore the successful expansion of mental health services in RHCs, the feasibility must be examined. There are challenges to providing both mental health and physical health 3

5 Table 1 Annual Wages (2009) for Mental Health Professionals for Selected States 1 State Pay Period Psychologist Rank Social Worker Rank Registered Nurse Rank New Jersey New Jersey California Mississippi W. Virginia Iowa Hourly $ Annual $104,900 1 Hourly $ Annual $71,980 1 Hourly $ Annual $100,080 1 Hourly $ Annual $53, Hourly $ Annual $33, Hourly $ Annual $59, National Hourly $41.00 $23.96 $37.49 Annual $85,270 $49,840 $77,970 Kentucky Hourly $ $ $ Annual $62, $43, $65, Oklahoma Hourly $ $ $ Annual $59, $44, $61, Ohio Hourly $ $ $ Annual $95,950 5 $43, $67, Pennsylvania Hourly $ $ $35,15 24 Annual $80, $44, $73, Nevada Hourly $ $ $ Annual $83, $59,200 6 $83, Virginia Hourly $ $ $ Annual $80, $56, $73, Wages presented represent the 75 percent quartile or top 25 percent for each occupation Source: U.S. Department of Labor, Bureau of Labor Statistics 4

6 services in the rural area: sparser populations, higher number of uninsured, less private insurance patients, greater proportion of elderly with low Medicare and Medicaid reimbursements and shortage of health professionals. Current data indicate a significant need for mental health professionals. In a 2008 report by the National Institute of Mental Health, the estimated percent of Americans ages eighteen and older that suffered from a diagnosable mental disorder in a given year was 26.2 or approximately one in four adults [8]. The prevalence of these individuals relative to the locations of RHCs requires further research. However, the first consideration is the potential for the fees collected for services to support the wages of additional mental health professionals. The situation is going to be different for every RHC and is going to vary from state to state. Primarily, the differences will be with the population demographics, the payor mix, the state Medicaid contracts and existing nearby mental health alternatives. An average fee schedule for a RHC is going to be impacted considerably by the patient payor mix. Collecting payment from the uninsured can be difficult. If any amount is collected, it will often be less and most often delayed. The high co-payments and deductibles for Medicare make it difficult for many beneficiaries to pay their total portion. The contracts among private insurance providers vary significantly. Furthermore, there is a varied mix of evaluation and management codes and no standard description of the coding mix compared to billing. Finally, the availability of relative fee collection data at even the national level is sparse. For purposes of this study, information was collected from mental health professionals and several assumptions were made to construct a fee schedule for a generic RHC. Due to significant differences in state programs, Medicare and Medicaid beneficiaries were grouped together and the allowable fee was assumed the same. Given an average payor 5

7 mix of 30 percent private pay/insured, 55 percent Medicare/Medicaid and 15 percent uninsured (based on estimates from RHCs and the National Association of Rural Health Clinics), Table 2 presents an average fee schedule for 4 different co-pay scenarios. It was assumed that the private pay/insured paid 100 percent of a $90.00 per visit rate and for conservative purposes it was assumed no collections from the uninsured. Again, the absence of data required a broad assumption as to the average session rate for a private pay session. Initial complex visits will be billed at a higher rate than follow-ups and the session rate could vary significantly depending on whether it was a 30 minute or 50 minute session. Mental health services provided by physicians, physician assistants, nurse practitioners, doctoral-level psychologist and clinical social workers are covered as part of the RHC benefit and are reimbursed under the cost-based per-visit rate paid to RHCs. However, for outpatient services provided on/or before December 31, 2009, Medicare imposed a 62.5 percent payment limitation for services rendered in connection with mental, psychoneurotic and personality disorders regardless of provider setting. Medicare beneficiaries were responsible for the remaining 37.5 percent as well as the co-insurance and any unmet deductible. Charges for initial diagnostic services were not subject to this limitation. The Medicare Improvements for Patients and Providers Act of 2008 established a schedule to phase out Medicare s outpatient payment limitation by The estimates provided in Table 2 were based on the current Medicare payment limitation (68.75 percent). Assuming $77.57 as cost-based encounter rate and a 20 percent co-insurance, the Medicare reimbursement would be $42.66 ($77.57*.6875*.80). Reimbursement rate would be decreased by any amount of unmet deductible. Given the identified payor mix (30% private, 55% Medicare/Medicaid and 15% uninsured), average persession (visit) collections were estimated for 4 different co-pay collection scenarios. Again, it 6

8 Table 2 Per Session Fee Collections by Payor Mix for Different Co-Pay Collection Scenarios Private Pay/ Insured Medicare/ Uninsured Average Medicaid 1 Fee Payor Mix 2 30% 55% 15% Allowable Rate 3 $90.00 $77.57 NA 4 Provider Reimbursement 5 $72.00 $42.66 $0.00 Co-Pay Collection Scenarios 100% $18.00 $34.91 NA 4 75% $26.18 NA 4 50% $17.46 NA 4 25% $8.43 NA 4 Total Fees Collected 100% $90.00 $77.57 NA 4 $ % $68.84 NA 4 $ % $60.12 NA 4 $ % $51.39 NA 4 $ Due to Medicaid program differences state to state, reimbursements assumed same as Medicare 2 Based on estimates from RHCs and the National Association of Rural Health Clinics 3 Based on estimates from Rural Health Clinics 4 Not Applicable, assumed no collections from uninsured 5 Based on 80% for private insurance and 80% of current Medicare payment limitation (68.75%) 7

9 was assumed that there were no collections from the uninsured. The average collected fee per visit ranges from $55.26 to $69.66 depending on the rate of collected co-pay from Medicare/Medicaid beneficiaries Estimated Visits to Support Salary Costs The average collected fees per visit were then used to estimate the total number of visits required to support the salaries of a psychologist, licensed clinical social worker and psychiatric nurse practitioner. The total salaries were estimated using the national salaries from Table 1 including 30 percent benefits. The total visits required given each of the four co-pay scenarios are presented in Table 3. For example, 1,591 annual visits would be required to support a fulltime (FTE) psychologist, 930 visits for a FTE licensed social worker and 1,455 visits for a FTE psychiatric nurse practitioner with the estimated $69.66 collected fee per visit. If the average copay collections decreased to 50 percent, the number of annual visits required for a FTE psychologist would increase to 1,845. It should be noted that any uninsured collections will increase the average fee collected which will decrease the number of required visits. The required visits per week and per day are also given in Table 3. The total consult time for each visit and the amount of time required for documentation will impact the number of possible visits that can be managed per day. Mental health visits can range from 30 to 50 minutes depending on the professional and the individual diagnosis. Documentation times were reported as much as 40 percent of total time to less than 20 percent. The use of electronic medical records was reported to significantly reduce the time spent on paper work. The results of this study are very basic estimates as the lack of specific data required several generalizations and assumptions. However, they suggest that even under the most conservative scenarios, there is potential for the fees collected to support the salaries of additional mental health professionals. 8

10 Table3 Estimated Visits to Support Salary Costs for Selected Mental Health Professionals at Rural Health Clinics 1 Psychologist Licensed Clinical Social Worker Psychiatric Nurse Practitioner Salary 2 $85,270 $49,840 $77,970 Benefits (30%) $25,581 $14,952 $23,391 TOTAL $110,851 $64,792 $101,361 Required Visits 3 100% Co-Pay Collected a 1, ,455 75% Co-Pay Collected b 1, ,563 50% Co-Pay Collected c 1,845 1,079 1,687 25% Co-Pay Collected d 2,006 1,172 1,834 Required Visits/Week 4 100% Co-Pay Collected a % Co-Pay Collected b % Co-Pay Collected c % Co-Pay Collected d Required Visits/Day 5 100% Co-Pay Collected a % Co-Pay Collected b % Co-Pay Collected c % Co-Pay Collected d Visits estimated with no collections from uninsured patients. Any uninsured collections will decrease the number of visits required. 2 Based on National 75 percent quartile salaries, median salary for Registered Nurse was used to represent Nurse practitioner. 3 Based on average fees collected per visit. 4 Based on 48 work weeks per year. 5 Based on 5-day work week. a Based on $66.66 average fee collected from Table 2. b Based on $64.86 average fee collected from Table 2. c Based on $60.07 average fee collected from Table 2. d Based on $55.26 average fee collected from Table 2. 9

11 Additional Considerations These results are the first step to determining the feasibility of more RHCs becoming a viable option for providing mental health services in the rural areas. The next steps would be to estimate the number of visits that could be generated within a particular RHC medical service area and determine the availability of mental health providers. Need for Services The prevalence of individuals that need or will seek mental health services in a particular RHC can be impacted in several ways. Data from a University of North Carolina study suggested that although prevalence of mental illness tends to be quite similar across the country, service use varies widely among subgroups of persons with mental illness [9]. Some individuals will have higher levels of need and generate more visits. In addition to the estimated 26.2 percent of adults with a diagnosable disorder, many children require mental health services. The number of generated visits could vary significantly between adults and children. The type of recommended treatment can also vary. Some treatments can be delivered through group counseling programs in which RHCs are unable to offer. Finally, some individuals will not seek treatment or participate in all of the recommended visits, and then there are the no shows which many times are significant. Workforce Issues When surveyed, workforce shortage was always one of the first challenges mentioned by mental health professionals. The potential number of visits is inconsequential if there are insufficient providers to administer treatment. Shortages are more severe in some areas than others and the extent varies among different providers. A study profiling Washington State s need for mental health services found geographic and economic disparities across the state. 10

12 Shortage of providers with prescriptive authority was most pronounced in the low-income rural counties of the state and there was much less non-prescriber shortage across the state than prescriber shortage [Ibid]. The use of telepsychiatry continues to increase and could substitute for provider shortages in some areas. Many assumptions were made to estimate the number of visits required to support the wages of the specified mental health professionals. Although the results suggest the potential feasibility of adding or increasing behavioral health services in RHCs, further research is required to acquire a more accurate assessment. This preliminary investigation significantly simplified a complex situation. Defining a generic RHC is extremely difficult. There are different program models, considerable funding differences between States as well as population demographic variation among medical service areas. Local data specific to the particular RHC should be analyzed. Finally, this study estimated the number of visits required to support the wages of select mental health providers. The three selected providers represented a range of mental health wages but additional providers could be considered. 11

13 References 1 U.S. Department of Health and Human Services (1999), Mental Health: A Report of the Surgeon General, Rockville, MD: U.S. DHHS, SAMSHA, NIH, NIMH. 2 Lambert, D., Ziller, E.C., Lenardson, J.D., Rural Children Don t Receive the Mental Health Care They Need, Research and Policy Brief, Muskie School of Public Service, Maine Rural Health Research Center, January Ziller, E.C., Anderson, N., Coburn, A., Rural Adults Face Parity Problems and Other Barriers to Appropriate Mental Health Care, Research and Policy Brief, Muskie School of Public Service, Maine Rural Health Research Center, November Kessler, R., Chiu, W., Demler, O., Walters, E., Prevalence, Severity, and Co morbidity of Twelve-Month DSM-IV Disorders in the National Co morbidity Survey Replication, Archives of General Psychiatry, 2005, 62(6): Gale, J.A., Lambert, D., Mental Health Care in Rural Communities: The Once and Future Role of Primary Care, North Carolina Medical Journal, 2006, 67(1): Gale, J.A., Shaw, B., Hartley, D., The Provision of Mental Health Services by Rural Health Clinics, Maine Rural Health Research Center, May U.S. Department of Labor, Bureau of Labor Statistics 2009 Wage and Salary Estimates by Area and Occupation, 8 National Institute of Mental Health, The Numbers Count: Mental Disorders in America, Bethesda MD, Morrissey, J.P., Thomas, K.C., Ellis, A.R., Konrad, T.R., Geographic Disparities in Washington State s Mental Health Workforce, The Cecil G. Sheps Center for Health Services Research, University of North Carolina, August