Carveouts: Specialization or Discrimination?

Psychiatric TimesPsychiatric Times Vol 18 No 6
Volume 18
Issue 6

Carveout programs for behavioral health care are becoming more common. Who do they benefit3/4the patient, the doctor or the insurance company?

Managed behavioral health care organizations (MBHOs) -- the so-called carveout programs for managing psychiatric benefits in managed care -- have taken an increasingly large share of the health care market during the last eight years but are coming under fire from physicians who believe patients with mental illness are victims of discrimination.

In 2000, the number of Americans covered under carveout plans jumped 13.4% to 169.1 million, up from 149.1 million in 1999. In 1993, carveouts accounted for only 70.4 million members.

Last year also saw official resolutions from both the American Medical Association and the American Psychiatric Association raising the issue of discrimination in carveouts and calling on the industry to take steps to ensure that mentally ill patients are not stigmatized.

"It is discriminatory in the sense that the mentally ill get treated differently [from] every other patient in medicine," Lawrence B. Lurie, M.D., chair of the APA's managed care committee, told Psychiatric Times. "When the day comes that there's no more stigma for the mentally ill, there shouldn't be a separate program for mental illness."

Lurie added, "We fought very hard in California to get parity for patients. Now we're fighting to get parity with other physicians -- the same Relative Value Schedule. This is discrimination. If a psychiatrist isn't being treated like other physicians, that's a professional problem that needs to be addressed."

"Mental health is just like cardiac health, lung health or any other branch: It's a medical problem," Herman I. Abromowitz, M.D., a member of the AMA's board of trustees, told PT. "We realize the practicality -- that many patients are covered under these programs -- but we tried to set up standards of principles that we hope managed care companies will follow."

Carveout programs initially were designed to bring a measure of expertise to the provision of health care benefits for mental illness. Working either as subcontractors to benefit plan companies or directly contracting with employers in some cases, mental and behavioral health organizations structure programs specifically for employees and their dependents who require specialized care.

"In terms of the care that you get, the carveout company can get you better care, because you've got people whose only job is to deliver behavioral health care," Pamela Greenberg, executive director of the American Managed Behavioral Healthcare Association (AMBHA), told PT. "We have the expertise. The individual is getting better care because of that, and because it is separate from the HMO." The AMBHA represents 10 major carveout companies that provide benefits, in aggregate, for more than 65% of the individuals covered by MBHOs.

Greenberg denied that her industry is discriminatory. "A lot of people want to go to a specialized cancer treatment clinic. Are you going to argue that the cancer patient is discriminated against? In many cases, the separate is separate because it's better and more specialized."

In the early days of carveouts, the medical profession watched them with a wary -- if trusting -- eye. The 1998 APA Handbook for the Development of Public Managed Care Systems said, "For programs with some managed care experience or expertise, a fully or partially carved-out approach, managed by specialty experts, may be the optimal first approach." But, it added, "For areas with experienced and mature provider systems, addressing all needs through a single health plan may provide better integrated care, including the often overlooked linkages between specialty and primary care."

More recently, that acceptance has been on the wane. Physicians are concerned about the difficulty of coordinating care for a patient with both physical and mental illness who is covered under two different health plans.

Roland Sturm, Ph.D., a senior economist at the Santa Monica, Calif.-based think tank RAND, agreed that coordination can be a problem. He explained to PT, "That might be a bad thing. If employers split their health benefits, the doctor has to deal with different companies. That can be a drag. The split between benefits can be problematic, not just for the psychiatrist, but also for the primary care physician."

"You'll get approval for one initial visit, and then maybe they'll authorize one or two more," Lurie said. "You have to ask for more authorizations. It takes time to do that. Limited authorizations is one problem. Or they'll authorize one visit and then only medication visits after that, or send the patient to see a psychologist for follow-up. With that split kind of treatment, it's hard to know who's responsible. It's not a good practice of treatment."

Barry F. Chaitin, M.D., co-chair of the department of psychiatry and human behavior at University of California at Irvine, told PT, "Many psychiatrists feel that the system is so onerous they won't participate," leading to shortages of psychiatrists to care for patients in carveout programs.

In addition, some physicians believe that singling out psychiatric patients may circumvent laws requiring parity in insurance plans for physical and mental illness.

Last May, the APA assembly adopted a report that found, "This practice reinforces the stigmatization of psychiatric illness, isolates psychiatrists and other mental health practitioners from the medical care systems, and promotes 'cost shifting' at the expense of quality patient care."

"The other issue," Lurie said, "is that you have two different companies, and they may each say that the other is responsible for payment of services. So you get into a jurisdictional fight. It will usually get solved, but it may take years."

Last December at the interim meeting of the AMA House of Delegates, a report similar to the APA's was presented, leading to the adoption of a strongly worded resolution.

The AMA resolution was unequivocal. It included a preamble that began, "The AMA is opposed to mental health carveouts." It concluded, "RESOLVED, That our American Medical Association work to encourage payors to eliminate mental health and chemical dependency carveouts so that benefits for mental health and chemical dependency are managed and administered like other health care services." Between the preamble and resolution, it listed several principles that managed care providers should follow to protect patients in carveout programs and for accrediting bodies to use as a guide for evaluating carveout programs.

Among the principles advocated by the AMA were:

  • Carveout programs should adequately provide for the appropriate diagnosis, evaluation and treatment of medical comorbidities.
  • Where a cap on the number of mental health visits is imposed by a health plan, recertification for additional visits should be granted upon request by the treating psychiatrist, or other health care professional, without additional personal information from the patient.
  • Third-party payers using mental health carveout programs should contract with MBHOs that have met the standards of recognized private sector accrediting bodies.
  • Private sector accrediting bodies collecting quality assessment data of MBHOs should widely disseminate such information to the public.
  • MBHOs should provide health plan enrollees with clear and easily understandable information on how to access the organization's mental health services.
  • Removal of any barriers from their intake procedures that interfere with timely communication and collaboration between attending physicians and psychiatrists.

In addition, it called on AMA leadership to work closely with relevant specialty societies to develop strategies for corrective actions to eliminate discriminatory mental health policies in health plans.

Sturm believes that physicians are using the claim of discrimination to conceal other motives for opposing carveout programs. "Once someone says it's the principle and not the money, you know what it's about," he explained.

"Carveouts have been successful in containing costs, and the doctors don't like it. The one bad thing you can say about them is that the benefits usually are very limited. In order to manage benefits, you need a managed care company. The combination of managed care and carveouts has been good. It's increased access to care. More people are getting into the system. In intermediate services, like substance abuse, there are more services being provided. The follow-up rates are better. Under fee-for-service, the follow-up rate was maybe 50% or 60%. Under carveouts, for example, the follow-up rate for detox is in the high 70s. That's a crude indicator of quality," Sturm says.

But, he conceded, "Some carveouts do a terrible job. It's hard to get authorizations, but that's a flaw of specific companies, not carveouts as a group. Some of them seem to have a lack of psychiatrists in their network. The time to the first appointment may be longer than desirable. But it's not because the carveouts try to prevent patients from getting care, but because there are no doctors. Here I don't have any strong national data, just anecdotal data, but it's of concern to the carveouts."

Greenberg explained that authorization policies often reflect the wishes of the employers who use MBHOs. "It could go down to the contract level. One company may have a number of different policies, depending on its contracts and what the purchasers are asking for. People forget the role of purchasers in this. We go in with a menu of options for the purchaser, and then they choose. It is typical that there would be approval automatically for a certain amount of visits, and then periodic approval needed thereafter. Those types of policies or procedures were put in place to try to create an accountable system. That hearkens back to the whole reason we've got managed behavioral health care. In the old days, it was unaccountable and costs were escalating. We created accountability."

Charles G. Ray, president and chief executive officer of the National Council for Community Behavioral Health Care, pointed out to PT that, despite the efforts of managed care, health costs continue to rise faster than other segments of the economy. "The health care price index is going up two to three times as fast as the Consumer Price Index," he pointed out. "It's the benefits that are being compressed."

"We agree that there are many situations right now where the benefits are less," Greenberg acknowledged. "We support having parity. That was the No. 1 issue for our members, to have the federal government pass the mental health parity law. We're in a working coalition with both the APA and the AMA. We're all in agreement there."

So far, though, none of the parties are talking about the issues relating to carveouts directly. "Not yet," Greenberg said when asked if AMBHA has heard from AMA or APA about their resolutions. "We do have medical directors of managed care companies on our committee," added Lurie. "We do discuss the issues with them, but we don't go and meet with the industry itself or the CEOs." Abromowitz said that the AMA has not engaged directly in a dialogue, but "I'm sure it's going on in many areas of the country."

"Carveouts are here in full force," said Greenberg. "It's better to work with us than to make a statement that carveouts are bad and then just leave. That doesn't do anybody any good. This is something we believe is important and that we want to work on. For some providers who have an opposition to carveouts, their opposition is really to managed care. Their end goal is to go back to a fee-for-service environment. It's a masquerade for trying to go back to the old-style system, which wasn't accountable."

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