This Web site is a component of the SAMHSA Health Information Network

This Site Mental Health at HHS All Mental Health

About the Program Evidence-Based Practices Related Topics Featured Publications In The News Related Links Community Support Homepage  CMHS Programs:   Go to... Children's Campaign Community Support Emergency Services Financing HIV/AIDS Homelessness Managing Anxiety Mental Health Statistics Protection & Advocacy Special Programs State Planning Traumatic Events Suicide Prevention Programs Homepage  CMHS Activities:   Go to... 15+ School Violence Stigma Suicide Prevention Surgeon General

printer friendly page e-mail this page bookmark this page shopping cart  current or new account

This Web site is a component of the SAMHSA Health Information Network.

Community Support

Regulating Managed Mental Health Care
A Policy Analysis and Discussion
of the Role of Evaluation

Within the managed care sector, mental health services have their own special history and, increasingly, their own organizational forms. This background information provides useful context for discussing the regulatory methods under development in this area.

Mental Health Services in Managed Care
Mental health care is "a relatively new addition to HMOs" (DeLeon, VandenBos, and Bulatao, 1991, p. 21). Prior to the 1960s, almost no prepaid health plans provided any mental health care. Slowly, this coverage then began to be offered as an optional rider of interest to selected purchasing groups. By the late 1960s, newer HMOs aiming at greater comprehensiveness, such as Harvard Community Health Plan, adopted it as a basic benefit for all subscribers. In 1973, the federal HMO Act also made it a requirement for federally qualified status that plans had to satisfy basic standards for outpatient mental health care and crisis intervention, as well as alcohol and substance abuse services, although the nature and extent of such coverage never were very specific.

Even as mental health insurance benefits have become more widely available in the U.S., conspicuous inequality remains in the depth of coverage for mental illnesses compared to other medical conditions (Rochefort, 1993). The former tends to be restricted by various means, including special length-of-service limits, lower maximum annual and/or lifetime spending, and limited payments per visit. A parity movement to equalize mental health and general medical insurance coverage has gained strength in recent years, culminating in a number of state legislative efforts and proposals before the U.S. Congress. So far, however, the pattern of inequality is substantially unaltered. Managed care organizations typically fall into line with this longstanding industry trend, embracing mental health coverage distinctions for their enrollees too.

In the 1990s, MCOs are providing mental health care in a variety of organizational formats. One method is to integrate mental health services into the MCO as part of the larger benefit plan. As Sederer and Bennet (1996) explain, "In all carve-ins, general health care and mental health services are provided to insured individuals by an identified practice group or network under the same administrative management. Referral capacity to specialty providers (e.g., mental health) is built into ('carved-in') the service, benefits and utilization management of the HMO or IPA" (p. 293).

Alternatively, mental health services are "carved out" to another organizational entity. This entity, known as a managed behavioral health care plan (MBHC), may perform different levels of contracted functions. It can be used specifically for utilization review and case management services for the payer. Or, it can be used for broader risk-based contracting in which the MBHC agrees to assume "some of the claims risk for a population and is responsible for providing and managing the services" (Frank, McGuire, and Newhouse, 1995, p. 51). Growth of MBHCs has been described as "the most striking development in the financing and organization of mental health services in the past five years" (Frank, McGuire, and Newhouse, 1995, p. 51). Approximately one-half of all privately and publicly insured Americans now receive their mental health insurance coverage through some form of managed behavioral health care carve-out, with the rise of risk-based contracting being especially marked (National Health Policy Forum, 1995). An immediate advantage under some of these contracts is that arbitrary mental health coverage limits have been lifted as unnecessary, given the pervasive utilization controls operated by MBHCs. Whether undertreatment may occur nonetheless due to the structure of carve-out financial incentives remains an issue, however.

One weighty force underlying this contracting trend is the nationwide movement to place Medicaid enrollees into managed care. According to a recent survey by the Bazelon Center for Mental Health Law (1996), the majority of states already have approved federal waivers for moving their Medicaid populations into managed care arrangements or are developing waiver initiatives to do so. In many cases, states are choosing to write contracts with private HMOs, PPOs, and MBHCs to accept Medicaid-funded enrollees. Significantly, no state so far has chosen an organizational approach applying statewide that fully integrates mental health services and general health care into a single plan. Instead, the following actions are seen:

1.  A total carve-out, in which mental health and physical health care are set up in separate organizations.
2.  A partial carve-out, in which basic mental health and physical health care are handled by a single organization, but separate managed care plans service patients with serious mental disorders or children with mental problems. Or, patients whose needs exceed a basic level of care are the responsibility of the state's public mental health system.
3.  A mental health-specific waiver, in which states contract with managed care organizations for providing mental health services only to the Medicaid population.

"Outplacing" of Medicaid recipients in these ways has proven appealing to state authorities for many reasons, including cost-savings, the special expertise of private MCOs in areas like utilization management and information systems, and the ability of MCOs to sidestep many rigid state requirements governing civil service employment, procurement, and other practices (National Health Policy Forum, 1995, pp. 4-5). Additionally, a basic affinity exists between the population-based orientation of state Medicaid programs and managed care. "By its very nature, managed care entails an emphasis on oversight of the covered services provided to a defined enrolled population," observe the authors of a National Health Policy Forum (1995) report. "Projecting the needs of this population and targeting the resources to meet them are essential to an MCO's fiscal viability" (p. 4).

First, broad regulatory provisions—on matters ranging from required disclosure of covered services, to gag rules, to grievance procedures, to state agency monitoring—implicitly encompass mental health consumers as part of a larger MCO membership.

Second, certain other general managed care regulatory provisions already discussed, while not focusing on persons with mental illness, have more than average relevance for them. This is because of the distinctive nature of mental health treatment patterns coupled with managed mental health control strategies (Glassman, 1996). For example, many MCOs exercise their tightest limits over participating providers in regard to mental health care, so legal limits on selective contracting carry disproportionate significance for mental health practitioners and their patients. New rules affecting allowable reimbursement for emergency room use are also pivotal to persons who experience psychiatric crises. Similarly, certain kinds of disclosure requirements for MCOs, such as the specific list of drugs that will be included in a formulary, take on special importance in view of the rising frequency of pharmaceutical intervention for psychiatric conditions.

Third, some regulatory measures have delineated mental health care as one of a number of performance concerns to be addressed by MCOs (Dallek, Jimenez, and Schwartz, 1995). For example, several states include mental health care on the list of basic health care services to be provided by an MCO. Likewise, quality assurance requirements may specify the MCO to supply information for the operation of mental health services, among other specialties.

Fourth, and most targeted of all, regulatory attempts are also being made to devise detailed protections and remedies for the special risks faced by MCO mental health consumers and providers. We turn now to chief approaches of this type and the circumstances advancing them forward, as seen in a number of vanguard statutes already passed or proposed. The pervasive impulse to regulate managed care today, spreading contagiously around the country, promises that these are unlikely to remain isolated legislative developments.

Vermont
One of the earliest, and strongest, control measures over managed mental health care was passed by Vermont in 1994. In other states, regulation of managed care has centered primarily on general medical services, or it began with a general-medical focus leading subsequently to mental health issues. By contrast, Vermont's review system for managed care is limited so far to mental health, with health care consumer advocates hoping to broaden regulatory activities from this base (Sneyd, November 25, 1995).

Momentum for Vermont's legislation came from a growing number of complaints by users of mental health services and their families about denials of mental health treatment. According to reports from the head of Vermont's Association for Mental Health, there was also "a massive number of practitioners in Vermont who [had] grievances with Biodyne," a local managed care firm handling about 140,000 subscribers (Libertoff, 1996; Hemingway, December 17, 1995). Well-publicized were details of a few very poignant cases, such as the stories of two teen-age girls who attempted suicide after Biodyne insisted on cutting back services over objections of the girls' therapists (Hemingway, December 17, 1995). Speaking before the state's House Health and Welfare Committee, the mother of another young woman related how treatment disputes with this same company had worsened her daughter's emotional condition, converting "a crisis" into "a chronic problem" (Hemingway, May 13, 1994). According to observers, such testimony appeared to be crucial in moving legislators to enact the new review requirements (Libertoff, 1996). At the same time, Biodyne did little to aid the industry's public image, with the revelation of its use of pressure tactics against complaining providers and its seeming incomprehension of the growing sentiment for managed care controls. At one point a spokesperson for the company stated, "What's the point of adding cost to what's supposed to be a cost-containment program?" (Hemingway, May 13, 1994).

With a relatively small number of regulatory changes, Vermont's law, entitled "An Act to Assure Fair and Effective Mental Health Utilization Review" [Public Act No. 185], is meant both to standardize managed mental health care practices in the state and to create significant patient protections.

First, it compels all mental health review agents to be licensed by the Commissioner of the Banking, Insurance, and Securities Department. (The law indicates a measure of greater flexibility should be used in how the utilization review function internal to HMOs is regulated. The method is still to be determined.) Adopted rules under the law require licensing applications to include such information as: the number of enrollees for which a review agent is responsible; organizational structure; disclosure of past regulatory and legal actions against the applicant; type, qualifications, and compensation of review personnel; and all written documents disclosing mandated consumer information (Vermont Regulation 95-2).

Second, it forbids managed care payment agreements which provide the review agent with "an incentive or contingent fee arrangement based on the reduction of mental health services, reduction of length of stay, reduction of treatment, or treatment setting selected."

Third, it tightens policies and procedures to ensure confidentiality of individual mental health records. Some pertinent regulations here include: limiting the collection of information from providers only to what is directly relevant to diagnosis and proposed treatment of a subscriber; listing all persons who will have access to medical records; obtaining written consent from subscribers for service reviews; and careful record-keeping on all disclosures of information to parties other than the review agent (Vermont Regulation 95-2).

Fourth, it sets out a number of guidelines an MCO must adhere to in its utilization review process, including, for example, disclosure of review criteria and methods, the credentials of reviewing professionals, standards for professional-level oversight, and the steps that must be followed in denials of care.

Fifth, it gives patients unhappy with a denial of care, and dissatisfied with the outcome of internal appeal processes, the right to appeal the decision to "an independent panel of mental health professionals." As determined in subsequent regulatory rule-making, the panel is a seven-member body appointed by the Commissioner which must include at least one psychiatrist, a psychologist, a mental health social worker, a psychiatric nurse, a mental health counselor, and a drug and alcohol counselor (Vermont Regulation 95-2).

Rhode Island
Rhode Island is the site of one of the most significant regulatory actions to date against a managed mental health care organization. Reacting to complaints from the state Office of Mental Health Advocate, mental health consumer groups, and professional associations, the Department of Health in 1995 initiated a random review of cases from the files of United Behavioral Systems (UBS) (Freyer, June 11, 1995). UBS is the mental health utilization agent for United Health Plans of New England, an insurer with 210,000 members in Rhode Island and southeastern Massachusetts. Using powers granted to it under the state's 1993 utilization review law, the department next issued a fifteen-page finding of deficiencies against UBS and recommended revocation of the company's registration to operate in Rhode Island (Rhode Island Department of Health, 1995; see, also, Freyer, June 11, 1995). In specific, the report charged that UBS was guilty of:

• denying medically necessary care, making decisions about treatment without collecting adequate information, and violating its own criteria for refusing care;
• giving nonphysicians the authority to deny care, contrary to management policy and state statute;
• making treatment decisions in the absence of input from treatment providers;
• writing contracts with its medical director and executive director based on performance goals for limiting patient care;
• failing to give patients a full appeals process;
• subcontracting to a local company for utilization review services when that company was not registered with the state, as required;
• filing improper and inadequate reports with the Department of Health.

Rhode Island's "Rules and Regulations for the Utilization of Health Care Services" obligate "that the review agency establish a quality assurance program structured to monitor and evaluate the implementation of its administrative and operational policies." In view of the many administrative and operational problems identified, the department concluded that UBS had no meaningful quality assurance mechanism.

A public hearing was scheduled in which the department's allegations and UBS's defenses both would be heard as part of administrative disposition of the case. However, one day before the public hearing was to take place, the Department of Health and United Health Plans signed a settlement (Emery, July 12, 1995). The terms of that agreement made the insurer liable for up to $100,000 in fines and expenses. The company consented to fire the executive director and medical director of UBS.

Shortly after this episode, in September, 1995, the Department of Health did hold a public hearing seeking general guidance with its regulation of managed mental health care (Freyer, September 14, 1995). About one hundred persons crowded the meeting room; more than thirty persons came forward to speak. Exhibit 4 reprints one story reported at length in the Providence Journal-Bulletin that was among many that night depicting consumer dissatisfaction under managed care.

Legislation was passed in August, 1995, to create a Special Legislative Commission in Rhode Island to undertake "the study of managed care plans and managed care techniques and their impact on patients' abilities to access appropriate and timely medical/mental health care, to make choices regarding coverage and choice of health care providers. The Commission shall also study the state's role in providing necessary protections to ensure fairness for patients and providers under managed care" [House-5160 Substitute B]. The commission's charge directed it to look both at medical and mental health care. Its nineteen members was to include representation from the House and Senate, the Department of Health, the Rhode Island Medical Society, the managed care sector, business, consumer groups, as well as medical and social work professionals.

Exhibit 4
One Rhode Islander's Public Testimony Against Managed Mental Health Care

...Carolyn Brooks is what last night's hearing on managed care and mental health was all about, and her story won applause.

"I knew I was experiencing symptoms and I needed help," she said, describing a time a year ago when she had suicidal feelings. "I called the 800 number at United Health Plans. They wanted to know all the symptoms and circumstances." In the end, she said, she saw a social worker, but was denied sessions with a psychologist and was eventually was cut off from care.

A year later, Brooks was out of work and so distraught that she once couldn't remember her street name when calling the police with a noise complaint. At her annual physical, she "fell apart" and it was only through the intervention of her doctor that she was able to see a psychologist, she said. Even so, she has been cut off again, and the psychologist is providing the care for free.

"If I was successful in committing suicide," Brooks said, "who would have known that I was denied care?...We've paid into the system. We're supposed to receive services. It should be criminal if they don't provide them."

Excerpted from: Felice J. Freyer, "Speakers: Managed Care Victimizes Many Patients with Mental Illnesses," Providence Journal-Bulletin, September 14, 1995, p. B-1.

Barely had the commission commenced work, when the state witnessed another important development. In December, the Department of Health determined Rhode Island Blue Cross/Blue Shield to be unacceptably "managing" mental health services under a Classic Blue Plan advertised as something other than a managed care plan (Freyer, December 8, 1995). Although the company admitted stepping up mental health reviews when utilization increased during the first quarter of 1995, it maintained it was not managing plan benefits, only assessing the "medical necessity" of care. Nonetheless, agreement was reached to halt the reviews. The issue was just one of several raised by department regulators as part of their annual review of Green Spring Health Services, a specialty mental health MCO based in Maryland that was hired by BC/BS. By this time, the state's public struggles over managed mental health care were attracting national atention. During the same month, CBS Evening News visited to feature managed care in Rhode Island as the subject of two segments of its "Eye on America" series (NASW/RI, 1996).

By winter of 1996, the Rhode Island General Assembly was reviewing "reams of legislation" on managed care that resulted from the work of the commission, plus submissions from the Department of Health and a private legislative task force of professional, consumer, and advocacy groups (Freyer, March 11, 1996). Bills were broad and narrow in scope, and concerned with diverse aspects of managed care. For example, one bill [House-8462, Senate-2575] concentrated on prohibiting dissemination of information from insurance companies and other MCOs to medical information bureaus. Similar to credit bureaus, the latter are private companies that may operate on a local, national, or, even, international basis to centralize the collection of individual-level medical data. A second bill [House-8272] dealt more precisely with mental health and substance abuse treatment, seeking to establish both a minimum benefit of $2,000 for outpatient services and a proscription against benefits management until the first $1,000 had been used. The Providence Journal-Bulletin characterized the surge of legislative activity as a "backlash" against managed mental health care in the state (Freyer, March 11, 1996).

The major product of the Assembly's deliberations was a bill signed into law by the governor on July 2 which will take effect at the start of the new year. Entitled the "Health Care Accessibility and Quality Assurance Act" [House 8172 Substitute A], the law addresses the regulation of managed care generally, incorporating expressed concerns about mental health care into an overarching framework of new public controls. Its main provisions include expanded requirements for standardized information disclosure on: coverage provisions, benefits, and limitations; appeals processes; rights to confidentiality; prior authorization and other review requirements; capitation and other risk-sharing arrangements with providers; and access to emergency care. For qualified status, health plan certification by the Department of Health is necessary under the law, with the costs of certification to be borne by applicants. Consistent with recent action in a number of other states, the law bans provider financial incentives to reduce care and so-called "gag rules" limiting communications about a health plan between provider and patient. In addition, subscribers must be informed of a plan's expenses and service activities in a number of identified areas, including mental health care and substance abuse services. Of key interest to the mental health community are plan mandates to publish comprehensive lists of participating providers by specialty and to make known the internal policies under which enrollees will be directed to particular providers. Commented the director of the Department of Health: "What we're doing is trying to use the regulatory process to protect people by giving them very clear information about what they're purchasing and looking at how effectively various organizations are delivering on what they said they would do" (Freyer, July 3, 1996).

In January, 1994, more than 100 consumers and psychiatrists joined together to publicly score Massachusetts Blue Cross for "false advertising" of the mental health benefits available under its managed care program (Bass, January 25, 1994). According to members of the group, screening procedures by the insurer made it highly problematic in practice to access the outpatient visits provided for under the plan. Former enrollees of Bay State Health Plan, a local PPO taken over by Blue Cross, also complained about the dropping of many mental health providers from the network when Blue Cross assumed control.

Nine months later, in November, the state Attorney General's office indicated that it was looking into the possibility of MCOs illegally imposing barriers to mental health care (Bass, November 16, 1994). On the status of managed care regulation in Massachusetts, one staff attorney said: "We are concerned about making sure there are sufficient protections in our current statutes. Laws that were written 15 years ago may not fit the mental health world of today." Hoping to allay such worries, a local HMO executive countered that there were "more than enough consumer protections in place" for mental health consumers. Still, numerous objections were surfacing from MCO members who were being required, under some plans, to seek approvals for psychotherapy by calling an out-of-state 800 number and supplying detailed private information justifying treatment. Charges were made that, due to over-vigorous use of such procedures, managed care companies were guilty of breaking a state law mandating a minimum outpatient benefit of $500 for all Massachusetts residents.

Later that same month, when a group of mental health consumers and professionals filed a class-action suit against Blue Cross for "false and deceptive advertising, violating state laws mandating coverage, breach of contract, and interfering with the doctor-patient relationship," the insurer responded by threatening to terminate its relationship with any affiliated provider who participated in the suit or spoke out against Blue Cross (Bass, November 29, 1994). Another bill around this same time, submitted by a group of psychologists, proposed expanding consumer freedom-of-choice by giving open access to therapists in or out of a plan's network; it also would have barred insurers from conditioning psychological treatment upon receipt of sensitive personal information from subscribers.

In March, 1995, the Attorney General's office announced it was now investigating violations of patient confidentiality by managed care organizations (Bass, March 11, 1995). The action was prompted, in part, by newspaper reports of mental health providers at Harvard Community Health Plan, one of the area's largest HMOs, putting detailed psychiatric notes into computerized medical records accessible to hundreds of physicians and staff members (Bass, March 7, 1995).

Another front-page feature on problems of managed care appeared in December, 1995 (Bass, December 20, 1995). It dealt with health plans reportedly retaliating against local providers who discussed with patients the restrictions being placed on their access to services and benefits. Highlighted in the article was the plight of mental health providers under such "gag orders." By this point, a bill outlawing the contract clauses was receiving active consideration by state legislators.

In January, 1996, Massachusetts became the first state in the nation to outlaw gag rules in health insurance contracts (Bass, January 23, 1996). Reflecting the long months of agitation on a second issue, the same bill established protections on patient confidentiality in mental health care. To existing provisions in Massachusetts law [Chap. 176B, Section 4A, Paragraph C] that set minimum mental health insurance benefits for state residents at $500 over a twelve-month period, Section 7 of House Bill No. 5347 now added:

No medical service corporation shall require consent to the disclosure of information other than the patient name, diagnosis and date and type of service as a condition to receiving services mandated by this paragraph. As used in this section, the term diagnosis shall mean a condition sufficient to meet diagnostic criteria specified within the most recent edition of the Diagnostic and Statistical Manual of Mental Disorders published by the American Psychiatric Association.

In other words, the new regulation sharply curtails the ability of MCOs to manage the utilization of outpatient mental health benefits until a patient passes the $500 annual threshold. Finally, the law prohibits medical service corporations from collecting any information arising from communications between a patient and psychotherapist without prior written consent from the patient.

Connecticut
A "Managed Care Bill of Rights" outlines key reform principles that have been advanced for public discussion in Connecticut. Formulated by the Connecticut Citizens Action Group (1996), the 10-point statement advocates "ensuring access to high quality, affordable health care, with choice of provider, through a publicly accountable system." Within the legislature, the main bill of the 1996 session concerning managed care [SB 455] would have imposed public information requirements on managed care companies and insurers and would have shielded provider-patient discussions of treatment options, including experimental treatments. The bill also proposed creating a task force to study consumer satisfaction issues under managed care.

A second bill [SB 464], sponsored by the Connecticut Coalition for Children with Mental Health Needs, spoke more directly to managed mental health care practices. To guard against "quick fix" approaches to children's mental health problems, the bill defined criteria MCOs must apply in assessing the medical necessity for behavioral services to this population. These include behaviors and symptoms listed as signs of disorder in the American Psychiatric Association's Diagnostic and Statistical Manual of Mental Disorders-IV. Further detailed in the bill were components of essential treatment for children and youths, as follows:

1.  social and medical services that insure the patient's safety and protection,
2.  preventative services designed to avoid future medically necessary services, and
3.  services for chronic, long-term disorders that cause functional impairment of the patient.

Finally, the bill explicitly would have disallowed that any pre-established time limits by the MCO be used to terminate treatment of a child or youth with behavioral health care needs. Having been reported out of the Public Health Committee, the children's managed care act died on the legislative calendar without going to the House floor (Steele, 1996). State mental health advocates plan to revive it in the next session, however. More general legislation to regulate managed care had a similar fate this year in Connecticut, save for specific provisions requiring insurers to allow 48-hour hospital stays to new mothers and prohibiting denial of coverage to a woman who had had breast cancer more than five years earlier (Rabinowitz, May 10, 1996).

APA Model Legislation
The American Psychiatric Association took an early interest in managed care, setting up a national hotline for questions and complaints in the early 1990s. Reportedly, thousands of calls have since been received. In addition, the association has developed draft managed care regulatory legislation (1991) for discussion by its membership, as well as a resource document on "Regulatory Guidelines For Protecting the Interests of Psychiatric Patients in Emerging Health Care Systems" (1995).

The earlier document encompasses myriad concerns related to the interests of psychiatric patients. Its main recommendation advises that "All non-hospital affiliated entities performing utilization review or managed care are to be regulated through a certification/registration process under the state Secretary of Health and the Commissioner of Insurance" (APA, 1991, p. 1). Other provisions call for the familiar actions of disclosure of managed care review criteria and methods; prohibition of financial incentives for providers to cut back on care; and full compliance with state and federal confidentiality laws. Under the act, patients would have the right to a grievance with the state regulatory authority, and an option for appeal to the judicial system. Specific to mental health care, another requirement mandates "that there be nondiscriminatory utilization review of treatment for all illnesses, without regard to whether an illness is classified as medical/physical or mental" (APA, 1991, p. 7). The draft bill states, too, that treatment denials must not be made without the approval of "a physician trained and experienced in the relevant specialty or subspecialty" (APA, 1991, p. 6).

In its "Regulatory Guidelines," the APA (1995) focuses on what it describes as "the problems raised by managed care that require changes in systems" (p. 1). Deeming the principles of psychiatric care to be "at significant risk," the association would expand participation of patients in MCO allocation decisions and strengthen psychiatrists' ability to advance their patients' interests.

The Guidelines restate the overall 1991 recommendation for certification of MCOs, such certification to hinge on the plan giving patients access to utilization review decisionmaking and incorporating psychiatrists' input in organizational policy. The APA stresses disclosure by the MCO of psychiatric treatment limits. To improve patients'choice of psychiatric provider—while promoting the inclusion of these professionals in managed care networks—the guidelines outline several legislative options, from "any-willing-provider" laws, to medical board credentialing of partcipating providers, to state enactments inhibiting disruption of established doctor-patient relationships. Still another proposal, meant to curb unfair insurance limits, is for legislative prohibition of retrospective denials of coverage for a mental health service. The APA argues strongly for outlawing "gag" provisions in the contracts signed by psychiatric providers.

One major segment of the regulatory guidelines takes up the issue of psychiatric involvement in treatment reviews and is worth quoting at some length:

In order to improve the accuracy of review, managed care companies could be required to establish procedures for the accumulation of clinical data for reviewers' determinations. States could specify that reviewers devote sufficient time to reviews to make an accurate determination and that adequate documentation of decisions be made to enable later audit. States may consider a requirement that reviewers be drawn from the list of practicing clinicians. States may also limit the proportion of time and income a psychiatrist could derive from review activity. Legislation could require managed care companies to convey to the treating psychiatrist immediately an explanation of the reasons for denial of coverage, including specific reasons. States may also consider a requirement that the reviewer convey that the denied review concerns insurance coverage only. The treating psychiatrist may feel that the treatment under review should be offered to the patient nonetheless. This latter requirement would protect patients' rights to determine the course of their own care. States may require that an independent tribunal be available to adjudicate disagreements between reviewers and treating psychiatrists. Alternatively, states may require that an allocation board model be developed, drawing on treating psychiatrists who participate in the health care plan to make the allocation decision. (APA, 1995, p. 11)

Other Legislative Activities
Additional legislative initiatives, not so fully developed but confirming the presence of managed mental health care issues on the public legislative agenda, are emerging elsewhere. For example, a bill was recently introduced in Indiana [House Bill 1107] to establish a commission on mental health "to review the issues of third-party coverage for mental illness and mental health benefits and rates under Medicaid." As one particular charge, such a commission would "study and evaluate the funding system for managed care providers of mental health services." In a precautionary vein, a Nebraska bill [Legislative Bill 1257] encouraging the state to provide public psychiatric services through "contractual arrangements with private and public organizations which manage and provide such services" also directed "that public officials who plan and contract for publicly funded psychiatric or psychosocial services have both the clinical-technical and the management backgrounds to understand what services are necessary, what the recipient populations are, and what standards and regulations are necessary to ensure appropriate, cost-effective, and high quality services."

On the federal level, a 1990 law limited, but did not completely eliminate, the cost-containment financial incentives used by HMOs in writing contracts with doctors serving Medicare or Medicaid patients. Regulatory rules under the law, issued in March, 1996, would force public disclosure of the details of such incentive contracts and require that HMOs conduct patient satisfaction surveys among their Medicare and Medicaid enrollees (Pear, July 8, 1996). Other notable managed care bills have been introduced in Congress by the American Medical Association ("The Patient Protection Act") and Senator Paul Wellstone ("The Health Quality and Fairness Act") (Brennan and Berwick, 1996). The issue of managed care controls came up as part of a recent federal legislative resolution for parity insurance coverage between mental health and general health care services [House Concurrent Resolution 98]. That statement cites the need for future legislative "provisions to ensure that services are based on individual need and informed choice, with consumer participation in treatment decisions"; and "financing policies that guide service delivery to the lowest cost settings consistent with appropriate care, including provisions ensuring that any managed care techniques used limit financial conflicts of interest and promote real efficiencies while protecting the patient's right to quality care, access to necessary care, and confidentiality."

Table of Contents | Previous | Next