Implementation Of New Mexico’s ‘No Behavioral Health Cost Sharing’ Law: A Qualitative Study

Abstract

Out-of-pocket spending is a long-standing challenge for privately insured people. New Mexico passed the first US law prohibiting private insurers from applying cost sharing to behavioral health treatment, effective January 1, 2022. We examined the perceptions of key informants, including clinicians, insurers, and state officials, about implementing the No Behavioral Health Cost Sharing law to explore how it might affect downstream outcomes such as spending and access. The law was viewed favorably and implemented without much difficulty. Clinicians noted widespread positive impacts, particularly for those needing intensive treatment. However, they worried about workforce capacity and the exclusion of people covered under self-insured employer plans, which are exempt from state regulation under the Employee Retirement Income Security Act (ERISA) of 1974. Insurers found the law to be in alignment with their organizational goals, but they expressed concern about the administrative burden caused by increased reviews of claims, and some were monitoring for unintended consequences (for example, waste and fraud) that could lead to increased premiums. Engagement strategies were needed to inform eligible members and facilitate enrollment in eligible plans. The law provides a potential model for states to improve access to behavioral health care, but impacts may be limited by factors such as workforce, awareness, and federal ERISA constraints.

Coverage of mental health and substance use disorders has been an enduring challenge for privately insured consumers. Federal and state laws have made incremental progress toward improving the comprehensiveness of coverage, most notably through the 2008 Mental Health Parity and Addiction Equity Act, which requires plans covering behavioral health (mental health and substance use disorder) services do so in a mannerequivalent to medical and surgical health. Although the Mental Health Parity and Addiction Equity Act improved coverage and reduced some out-of-pocket spending, utilization remained relatively consistent.^1–5 One explanation for the limited effects on utilization may be remaining out-of-pocket expenses, which continue to be a substantial challenge for privately insured people, particularly those with serious mental illness.^6–8

New Mexico passed a “No Behavioral Health Cost Sharing” law, effective January 1, 2022. This first-in-the-nation law directly prohibits all out-of-pocket cost sharing for eligible privately insured patients seeking behavioral health treatment.^9,10 It eliminates cost sharing for behavioral health services and medications rendered at any in-network setting, excluding emergency departments and urgent care, among fully insured plans subject to New Mexico Office of Superintendent of Insurance regulation.^9,10 The Office of Superintendent of Insurance cannot require self-insured plans to remove cost sharing because of provisions of the federal Employee Retirement Income Security Act (ERISA) of 1974.^11,12 An estimated 330,000 (16 percent of state residents) were eligible for the No Behavioral Health Cost Sharing law in 2021, increasing to 480,000 (23 percent of state residents) in 2022 (see online appendix 1).¹³

This study examined early implementation of the No Behavioral Health Cost Sharing law to understand how different actors in the market responded to the law’s provisions, potentially having downstream impacts on outcomes for consumers, insurers, and the behavioral health workforce.

Study Data And Methods

DATA COLLECTION

We conducted thirty-minute semistructured qualitative key-informant interviews over Zoom or by telephone. Interview subjects included clinicians, insurance leaders, and state officials. Participants were recruited with the assistance of state officials and snowball sampling. We operationalized the updated Consolidated Framework for Implementation Research,¹⁴ a framework commonly used to examine health policy implementation.

The interview guide was piloted and refined (appendix 2).¹³ Interviews were conducted during February and March 2022—the first two months of the law’s implementation. Interviews were led by the study lead (Samantha Harris), an experienced qualitative methods researcher. The authors had limited previous encounters with the Office of Superintendent of Insurance and the law’s sponsor, and they met other key informants for the first time on interviewing. Interviews were recorded and transcribed, and they continued until no new themes emerged. This study followed the Standards for Reporting Qualitative Research guidelines and received an exemption from the Johns Hopkins University Institutional Review Board.

ANALYSIS

Interview transcripts were coded using ATLAS.ti 22. We employed a hybrid coding approach;¹⁵ an initial codebook of a priori themes included high-level topical codes. Additional codes were created inductively.We refined the codebook until we reached agreement on codes and corresponding definitions. Transcripts were double-coded until intercoder agreement was established. The coding team met weekly throughout the coding process to resolve coding discrepancies. The resulting output was analyzed and distilled into key themes.

LIMITATIONS

We acknowledge some limitations. Self-reported perceptions and behaviors are subject to social desirability bias. The perspectives of insurance leaders interviewed might not be reflective of the insurance industry as a whole. In addition, interviews were conducted early during the law’s implementation; results do not reflect how the law may have evolved during its later implementation.

Study Results

Our key-informant sample (N = 30) consisted of fourteen state or local officials, five insurance leaders, five behavioral health clinicians, and five primary care clinicians (appendix 3).¹³ We interviewed representatives of both large and small insurance carriers, including Blue Cross and Blue Shield of New Mexico, True Health New Mexico, and New Mexico Medical Insurance Pool. Our thematic analysis resulted in six key themes, presented below; corresponding Consolidated Framework for Implementation Research domains, constructs, and supportive quotes are in appendix 4.¹³

PERCEPTIONS OF THE POPULATIONS MOST AFFECTED

Clinicians were enthusiastic about the “groundbreaking” (participant ID-10, a behavioral health provider) initiative and thought the No Behavioral Health Cost Sharing law was “a huge saving grace” (ID-6, a behavioral health provider) for eligible patients and families falling within a coverage gap with income too high to qualify for Medicaid, yet unable to afford high private plan copays. Clinicians and leaders from a carrier with prior experience removing cost sharing for behavioral health predicted that the law would have the greatest impact on patients and families with conditions requiring intensive treatment (that is, serious mental illness, autism, and substance use disorder), those managing comorbidities, and those apprehensive about seeking care for the first time.

One behavioral health provider (ID-6) said that weekly copays can be “devastating to a family’s budget.” Another behavioral health provider (ID-10) described a patient’s continuing treatment because of the No Behavioral Health Cost Sharing law, concluding that the law is “life-changing” and that “you can save someone’s life with eliminating costs for health care.” Others described impacts on patients with autism and their families, with one saying that before the law took effect, “70% of families could not access [applied behavior analysis therapy] because of the cost,” and the law “allowed those people with state-regulated plans to access care very freely without concern, which is just a gift” (ID-8, a behavioral health provider). Another respondent predicted that the law would improve access, relating that “nobody could afford going to residential treatment for thirty days if it was out of pocket,” although coverage limits continued to be a barrier (ID-9, a behavioral health provider).

An insurer (ID-4) noted local evidence from their plan’s prior removal of cost sharing: “It just became so much easier to get people to even consider trying behavioral health when you took the money piece out of the way.” They remarked that it was especially helpful for those considering seeking behavioral health care for the first time who could not afford care or were apprehensive about costs: “It was like night and day. It was so easy to just kind of plant that seed and encourage people, because they had nothing to lose financially.”

Participants believed that the law would also benefit people losing Medicaid coverage, as its implementation coincided with the end of the COVID-19 public health emergency (“Medicaid unwinding”),¹⁶ at which time up to 100,000 people in the state would potentially lose Medicaid coverage.¹⁷ Some were concerned about ensuring educational efforts “so that we can help some of those individuals get on the exchange” and enroll in No Behavioral Health Cost Sharing law–eligible individual Marketplace plans (ID-7, a behavioral health provider). A primary care clinician (ID-15) thought that the law could also serve as a safety net for people losing Medicaid coverage: “If your life is a little disorganized, it’s real easy to lose Medicaid and to have no resources.”

WORKFORCE CHALLENGES

Clinicians overall were enthusiastic about the No Behavioral Health Cost Sharing law, commonly viewing it as an “obvious low bar in terms of what is good to do” (ID-12, a primary care provider). However, enthusiasm was lessened by systemic problems that may lead consumers to still experience poor access. A primary care clinician (ID-11) described an “extreme shortage” of specialty behavioral health clinicians and ongoing waitlists of between three and six months: “It’s great that they’re not going to be charged for this service, but then the problem is there’s not individuals around to provide the service. And that’s been an issue over the last thirty-plus years I’ve been here.” Similarly, another primary care clinician (ID-13) said, “Bottom line is, I think this is absolutely a step in the right direction, provided that folks are mindful that you can lower the cost, but if the services aren’t there, whoops! Who cares?”

ALIGNMENT WITH INDUSTRY GOALS

Although the insurance industry might be expected to oppose the No Behavioral Health Cost Sharing law, most New Mexico industry respondents generally said that the law either was consistent with their mission or built on existing policies in use.¹⁸ An insurer (ID-3) said that implementing the law “gets to be very easy because it just aligns with all of the other goals of the organization.” Another insurer (ID-1) described the law as compatible with their organization and said that they “didn’t have to go as far as the others did,” given their prior removal of some behavioral health cost sharing. In contrast, another insurer (ID-2) noted that although “it’s important that we’re making a difference in the lives of the members,” and that addressing mental health and substance use disorders is “critical,” they were highly concerned about unintended consequences and felt that it was “still challenging to effectively administer and operationalize the statute.”

UNINTENDED CONSEQUENCES

Although insurers found the No Behavioral Health Cost Sharing law to be in alignment with their organizations’ values of ensuring access to appropriate care, some expressed concerns about increasing costs for other services or increasing premiums to offset costs incurred from expanded coverage.

One insurer (ID-1) said: “A lot of arguments that the carriers promulgated[were], ‘Well, look, you can do this. You’re going to squeeze the balloon here, you’re just going to incur greater cost here.’ Which is true. That’s how it works. For any dollar spent, if you switch the benefit design, it’s going to switch to somewhere else.” Switching costs in the benefit design could be a policy trade-off, but the insurer posited that plans should “be intentional” and “understand where you’re squeezing the balloon and where you want to put more cost share on the member, because it’s going to happen” (ID-1).

Insurers also expressed concerns about raising premiums to offset potential costs from waste and fraud related to inappropriate treatment. Some speculated that patients might seek more treatment than necessary or in inappropriate venues or that clinicians might render inappropriate care at no cost share and that ultimately, “the folks that end up picking up the tab” are going to be the commercially insured population because those costs would be “built into premium” (ID-2). Another warned that “you have to be careful” about potential waste and fraud, saying, “I want access, but it can’t be just wide open because then there will be those players that will take advantage of that” (ID-4).

A final insurer concern was ensuring that the No Behavioral Health Cost Sharing law was applied consistently. One insurer said that there would be a “wide range in the carriers here, in terms of their interpretation of what $0 cost share is” (ID-1). However, another insurer felt that the Office of Superintendent of Insurance was “really willing to hear some of the challenges” of implementation and “looking for ways to provide clear guidance to health plans so that we can operationalize this consistently across the markets and across the plans” (ID-2). The Office of Superintendent of Insurance is monitoring No Behavioral Health Cost Sharing law compliance, noting that its philosophy is “not to issue a regulation that just restates the statute,” but to issue “bulletin[s] as guidance to the statute” (ID-27, a state official). The Office of Superintendent of Insurance noted no rate increases at the start of implementation, and the responding official was “curious to see what [insurers] put in the rates this year” (ID-27).

ADMINISTRATIVE BURDEN

▸. ERISA EXCLUSIONS:

Participants noted two main implementation barriers. First was confusion about plan eligibility because of ERISA exclusions. An official from the Office of Superintendent of Insurance (ID-26) recounted, “There certainly was a lot of excitement from the advocate community and behavioral health providers,” but “some of that enthusiasm has been dampened” by the realization that some private insurance plans are excluded because of ERISA. The Office of Superintendent of Insurance also reported receiving several complaints from insured people frustrated to learn that they were ineligible.

The Office of Superintendent of Insurance issued a guide to aid clinicians in determining eligibility,¹² saying: “We advised the providers numerous times to confirm eligibility with the carrier” (ID-27). Clinicians, however, felt that this process increased administrative burden. One behavioral health leader said that it was “pretty troublesome to figure out” plan eligibility (ID-6). Another clinician noted that “anytime anything new is introduced,” there is increased administrative burden, but they felt that implementation was “smooth sailing” after a few months (ID-10). One carrier took a novel approach and indicated patient eligibility on the back of its insurance cards, which clinicians found helpful.

The Office of Superintendent of Insurance hoped that there would be positive spillover to self-insured plans in the future, although none had adopted provisions similar to those in the No Behavioral Health Cost Sharing law at the time of our study. The Office of Superintendent of Insurance said that people with self-insured plans “should really be talking” to their employers, telling them that the law “will probably improve attendance, reduce absenteeism, and reduce more costs” (ID-27).

▸. IMPLEMENTING IN PRIMARY CARE:

Another key barrier was determining coverage in primary care: The law applies if a behavioral health diagnosis was a primary or secondary reason for the visit.¹⁰ One insurer (ID-1) noted that telling their claims system “what counts as a behavioral health service is a massive thing” and that there are times where it is “challenging to understand if thereshould be a $0 cost share or not.” Another described increased administrative burden because of their organization’s increased review of claims to make coverage decisions (“pending” claims) (ID-2). They noted that their organization would be doing internal monitoring to measure the impact of the law and potential misuse of services, saying, “We have to acknowledge that. And if there’s an increase in fraud, waste, and abuse, is that an unintended consequence of the legislation?” (ID-2).

The Office of Superintendent of Insurance incorporated input from insurers and issued a bulletin about how to operationalize the statute regarding the order of diagnoses, clarifying that primary care claims with behavioral health conditions as the first or second diagnosis code were eligible and encouraging carrier discretion.¹⁰ Still, some insurers were “really pushing” for the law to apply only when behavioral health was the primary reason for a visit (ID-4). One insurer explained, “As with any sort of legislation, it’s not until it’s implemented that you go, ‘This probably should have been a little more specific,’” because they “had a knee replacement come through where depression was the second diagnosis. And when you ran it through the claims, it was going to say zero-dollar cost share” (ID-4). Another insurer wondered, “Are we going to get to a point where—I don’t know, pick a number—90% of all primary care visits are going to be no cost share because there’s always going to be a behavioral health diagnosis in second position?” (ID-2). Yet another suggested that states could address this challenge by being “very prescriptive and detailed around what your definitions of behavioral health services are” in statute, which they felt would limit regulatory agency interpretation and limit “carriers’ free range to avoid the obligation” (ID-1).

ENGAGEMENT AND COMMUNICATION

Participants said that clinician and consumer education is critical to ensuring that patients enroll in No Behavioral Health Cost Sharing law–eligible plans. At the time of our study, information about the law for clinicians and patients was limited. One clinician explained, “If the public doesn’t know about it, it becomes an irrelevant piece of legislation. And it’s unfortunate because the benefits are just not going to be experienced because nobody knows about it and nobody knows how to help people get it” (ID-7). To improve the law’s reach, they suggested training enrollment counselors at federally qualified health centers to help people select eligible plans.

The Office of Superintendent of Insurance recommended that states considering similar laws provide “resources for agencies to create some sort of system where providers or patients can check to see if their plan is self-insured or not” (ID-28, a state official). The office created a consumer-facing FAQ resource, although communicating about this or any law with ERISA exclusions was challenging, given the inherent complexity that limits consumers’ awareness of whether they are enrolled in self-funded plans. The office also noted that carriers were encouraged to notify in-network clinicians and eligible patients of eligibility. States implementing similar legislation might consider requiring, instead of recommending, such notifications. The main implementation “pain” from the Office of Superintendent of Insurance’s perspective was that “people got the impression that it applied to everybody, and then it’s hard to roll that back.” Ideally, the initial press should have said “this law will affect about 350,000” or “some” New Mexicans (ID-27).

Discussion

Perceptions of the No Behavioral Health Cost Sharing law in New Mexico were favorable, and it was implemented without much difficulty. However, its impacts may be limited by factors such as workforce size and federal regulatory constraints. The lack of specialty behavioral health clinicians and system infrastructure to support patients was a key concern among participants in our qualitative study. Some also noted that assistance navigating insurance enrollment was an unfulfilled need and was important to address to ensure that patients benefit.

The largest impact was anticipated to be on people with complex behavioral health conditions, those deliberating seeking treatment for the first time, those managing comorbidities, and those losing Medicaid coverage. Research shows that a zero premium increases enrollment among low-income populations.¹⁹ Zero behavioral health cost sharing may similarly encourage treatment engagement and enrollment in eligible plans.

Many were disappointed after learning that the No Behavioral Health Cost Sharing law did not apply to all commercial plans because of ERISA. Proponents hoped that entities not required to remove cost sharing (for example, self-insured plans) would adopt the law voluntarily. Still, the affected population is sizable and growing, as the proportion of the state population enrolled in self-insured arrangements fell by 10 percent from 2021 to 2022.²⁰ In addition, as of the time of publication, up to 220,200 New Mexicans have been disenrolled from Medicaid in the eligibility renewal period²¹ and may benefit if they enroll in plans subject to state regulation. To date, the Office of Superintendent of Insurance has estimated that 5,000 beneficiaries lost Medicaid and enrolled into No Behavioral Health Cost Sharing law–eligible plans. New Mexico has the country’s highest Medicaid enrollment rate,²² and New Mexico Medicaid does not require cost sharing for behavioral health treatment.²³ Because of the No Behavioral Health Cost Sharing law, patients receiving behavioral health care through Medicaid could transition to No Behavioral Health Cost Sharing law–eligible plans without incurring a new cost barrier. New Mexico may thus be better poised than other states to accommodate an influx of former Medicaid patients in the treatment system.

Insurers warned that they may raise premiums to offset potential costs, particularly if the law increased inappropriate service use or billing. The Office of Superintendent of Insurance will be monitoring insurer compliance. In addition, Senate Bill 273 was signed into law April 4, 2023,²⁴ addressing access concerns that limited the impact of the No Behavioral Health Cost Sharing law. This more recent state law strengthens Mental Health Parity and Addiction Equity Act enforcement in New Mexico, requiring insurers to increase payments to clinicians to help grow and sustain the behavioral health workforce through network adequacy requirements. Reimbursement rates must be equal for behavioral and physical health services, and comparable to those in neighboring states. In addition, insurers must provide services at the same level of cost sharing, should a patient need out-of-network behavioral health services because of inadequate access to in-network providers.²⁴

The feasibility and impacts of New Mexico’s law have important implications for other states. Maine passed a law removing cost sharing for three visits annually. Colorado, Connecticut, Delaware, and Massachusetts require a minimum of one annual behavioral health exam at zero cost sharing.²⁵ No other states have put forth bills that would remove cost sharing entirely. For states considering similar laws, participants recommended clearly defining behavioral health treatment in statute to limit misinterpretation. States could also create a public-facing system to clarify eligibility, require carriers to communicate advance written notice of benefits changes, invest in public education, and coordinate enrollment into affected plans. Last, states should coordinate effective dates with insurance plan year starts to mitigate rate filing issues and ensure adequate time for implementing a similar law.

Conclusion

Although federal and state laws have made incremental progress toward improving the comprehensiveness of behavioral health coverage, insurance coverage and affordability of care are ongoing challenges for the privately insured. New Mexico is the first state to eliminate the behavioral health cost-sharing barrier in plans under state jurisdiction. Participants in our qualitative study described the No Behavioral Health Cost Sharing law as being implemented without much difficulty, although the state has other behavioral health care system constraints to resolve before its impacts may be fully realized. The reach of the law will be limited by federal constraints under ERISA, although participants hoped that employers would opt to remove cost sharing in self-funded plans. Revising ERISA or passing a federal law similar to the No Behavioral Health Cost Sharing law could improve behavioral health parity nationally.