HOW MANAGED MENTAL HEALTH CARE CUTS COSTS
By Joyce Parker, Ph.D.
The Supreme Court of the United States will soon decide on a case they heard last Wednesday, February 23, 2000, that may change the way health plans provide financial incentives to doctors who cut costs by limiting patients' access to medical tests and specialists. Cynthia Herdrich, an environmental planner in Loveland, Colorado, was 33 years old in 1991 when she went to her Illinois HMO with severe abdominal pain. Her doctor diagnosed a urinary tract infection and sent her home with an antibiotic. She returned to the doctor a week later, still in pain. Her doctor told her she might have an ovarian cyst and recommended an ultrasound. But before Herdrich could have the ultrasound, scheduled for several days later at an HMO network hospital 50 miles from her home, her appendix ruptured and sent a severe peritonitis infection through her body. Treatment required a weeklong stay at a hospital, plus five days of intravenous antibiotics at home.
Her lawyer says that this was not a case of misdiagnosis. "They had hidden incentives that basically say you can receive an annual bonus for not ordering diagnostic tests and not making referrals to specialists. That creates a blatant conflict of interest. And it explains what happened here. At every step, they took the cheap way out."
In my private practice, I have found that individuals who seek psychotherapy are usually not very well informed about how their managed mental health plans reimburse counselors and psychotherapists. The HMO plans for mental health are the most restrictive and usually pay psychotherapists the least for their services. Some plans use a capitated pay structure. What this means is that when the therapist receives a referral they are paid a certain amount of money in one lump sum to see the individual. One plan, for example, pays the therapist $300.00 per referral. The individuals who have this HMO plan are told in their brochures that they have 20 sessions per year for counseling. However, if the psychotherapist allowed the individual to use all sessions allotted for the year, they would be paid $15.00 per session. Few therapists are willing to work for $15.00 per psychotherapy hour. The result is that therapists limit the number of sessions they will see an individual on this plan to 3, 4 or 5 sessions.
Other HMO's use psychotherapists that are salaried by the Independent Practitioners Organization that administers the coverage. So even if the health plan lists numerous therapists, the HMO participants are not allowed to use them. Only participants who sign up for the Preferred Provider Plans, which are more expensive for the participants, can use these provider lists. In general all HMO plans pay their providers less than PPO plans. Therefore, it can be assumed that experienced therapists and therapists with busy practices who are well known in the community will be less likely to agree to participate.
The Preferred Provider Organization (PPO) plans are less restrictive, usually pay therapists the going rate for psychotherapy and provide participants with a long list of providers to choose from. But they, too, find ways to restrict access. One of the most common methods is to require treatment reports from therapists in order that the mental health plan can authorize additional sessions on the basis of "medical necessity". The definition of medical necessity, however, varies greatly from one plan to another. It is even true that different companies who offer the same mental health plan to their employees and the same product from that mental health plan may be treated differently in terms of how many sessions are authorized on the basis of "medical necessity". There are several PPO plans that inform participants in their brochures that they have 20 or 30 sessions per year for psychotherapy. However, those health plans will never authorize all of those sessions. The participant is rarely able to use their full benefit because the managed mental health company rejects additional sessions requested by the treating therapist as no longer "medically necessary".
I am no longer on any HMO plans because of the low fees and ethical ambiguity of restricting sessions for financial reasons rather than treatment needs. I am on a number of PPO lists. I write treatment reports and advocate for my patients all the time. I was probably eliminated from one mental health plan, Value Behavioral Health, because I advocated for a patient who needed additional sessions that the managed mental health company had refused to authorize. Mental Health Plans require all therapists to sign contracts, which allow the company to remove you from their provider list without any explanation and with no recourse or appeal. This is a threat that looms over the therapist's head and can cause a therapist to hesitate about using the appeals system that is supposed to settle disputes about additional authorizations for sessions. If a therapist is removed from a provider list, any other patients being seen by that therapist who have that mental health plan will no longer be reimbursed for seeing that therapist. So when I was removed from Value Behavioral Health, I had to transfer 3 patients that I was seeing on an ongoing basis. The individual who was denied treatment authorizations paid me out of pocket for her therapy. Another individual had an out-of- network benefit that she was able to use, although she had to pay a greater percentage of my fee. The last patient had no out-of-network benefit and reluctantly had to be transferred to another therapist in the middle of her treatment.
These are the hidden difficulties inherent in dealing with managed mental health plans. While they provide access to mental health care at a reasonable cost for many individuals who were not able to afford mental health treatment through old indemnity type insurance, as with health care, they have serious drawbacks in the delivery of care.
The author of this article, and founder of the Therapyinla.com website, Joyce Parker, passed away in 2011. To honor her we are keeping her articles posted at this website.
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