Increased Demand, Restrictions and Less Pay: Is This the Future of Psychiatry?

January 1, 2003
Volume 20, Issue 1

Physicians are seeing more patients, but obtaining less reimbursement. Recent graduates of medical school finish residency with increasing debt-to-income ratios. What can doctors expect in this changing environment?

Behavioral health care facilities are beginning to see an increase in private sector reimbursement, especially from the previously tight-fisted managed care industry, but public programs are continuing to reduce payments and squeeze providers. At the same time, lower government subsidies for medical training have produced a crop of new physicians who are staggering under debt loads as big as home mortgages. Meanwhile, public awareness of the benefits of behavioral health care has increased in the wake of the tragic events of Sept. 11, 2001.

These are among the views expressed by a panel of experts looking at the trends that are impacting the delivery of behavioral health care in the United States.

"A lot of managed care companies [that] had cut rates in the past are now actually providing increases because of the dearth of inpatient beds and the need to have providers for their members," Mark J. Covall, executive director of the National Association of Psychiatric Health Systems, told Psychiatric Times. "The inpatient business is starting to turn around. Our members are seeing increases in reimbursement, although the reductions in payments over the last decade were so substantial that it will take some time to get back to a reasonable and appropriate level."

Recovery will be slowed by the opposite trend on the part of government programs like Medicare and Medicaid, which now account for 58 cents of every behavioral health care dollar. Charles Ray, president of the National Council for Community Behavioral Healthcare, told PT, "The myth that the private sector pays an inordinate burden for health is just that--a myth. In 31 years in the field, I've never seen such a difficult environment."

"Medicare inpatient psychiatric services have traditionally been paid on a cost basis with certain caps," Covall said. "In the Balanced Budget Act of 1997, [the U.S.] Congress substantially reduced those payments, and we're still really under some tough payment restrictions in Medicare. Last year, Congress enacted legislation to move reimbursement to a prospective payment system, but we now expect the implementation of that to be delayed until the beginning of 2004. Depending on how it is finalized, it could build in a more predictable payment system for our members. Right now, it's a question mark. We're under a lot of pressure right now."

Covall added that budgets for state programs are being squeezed. "Many states have looked at cutting Medicaid expenditures because of rising costs. With the kinds of deficits that many states are experiencing, a lot of tough decisions are being made, which causes real concern on the provider side. Medicaid has always been a critical payment source for services to kids, as well as residential treatment centers and community-based programs."

Carl Eisdorfer, Ph.D., M.D., chair of the department of psychiatry at the University of Miami, told PT, "States are very actively getting involved in trying to manage care, including managed mental health care. There is a trend to limit the pharmacopoeia by staying with older, less expensive drugs. The pharmaceutical industry is trying to demonstrate that the new drugs ultimately reduce the overall cost of care, but the trend is to try to control the economics of care by negotiating rates down or limiting medications."

While managed care is willing to pay more for inpatient services, outpatient services are still getting short shrift, according to Covall. "It's not the same dynamics. We're faced with a number of clinicians who are unwilling to take managed care business. There's a growing reluctance to take rates that are below what it costs to deliver services."

Ray agreed saying, "Many community-based providers may have turnover rates of as much as 20% to 30%, emphasizing the fact that most Americans who receive any form of behavioral health treatment receive it from their primary health care provider. Primary care physicians now account for 65% of all the psychotropic prescriptions that are written in this country. For the patient, that means there is a risk they will be poorly diagnosed or misdiagnosed."

"There is a trend toward increasing the use of primary care for the initial front lines," noted Robert I. Field, Ph.D., J.D. Field is the director of the Health Policy Program at the University of the Sciences in Philadelphia. "The idea is to encourage family practitioners and internists and pediatricians to screen for depression. A large percentage of patients who are on [selective serotonin reuptake inhibitors] are being treated by primary care physicians," he told PT, noting that last May the U.S. Preventive Services Task Force recommended routine screening of all patients for depression.

Eisdorfer called that effort "a move from carving out to carving in. They're trying to move mental health into the primary care arena by providing screening and evaluation tools to primary care providers. The [U.S. Department of Veterans Affairs] has done that very successfully, and the Robert Wood Johnson Foundation has been dealing with a version of this. The reason is there are very significant economics that pay out on the health care side: Early evaluation of depression and then management by a psychiatrist is quite cost effective."

Economics also drives another trend that Eisdorfer cited: "Targeted case management, that is to say, the notion of identifying those individuals who are most needy based on past experience and developing proactive programs to help them and try to ensure that they will be less likely to need hospitalization."

Consolidation is a major trend in behavioral health care not just among hospitals, where a substantial number of beds have been lost to closures and mergers in the last five years, but also among managed care companies. Many managed care companies are turning to in-house clinical staff to provide behavioral health care.

"We're seeing fewer mental health carveout companies," said Eisdorfer. "Instead, there's a lot of movement toward using staff in effort to reduce the costs. The larger companies like United Healthcare are basically staff operations, which raises the issue of whether you have full-time staff providers as opposed to community-based providers. The overall increase right now of managed health care means, arguably, in the end there will be fewer providers. But the companies may have pushed the trend too far in the direction of less well-trained providers, and there may be a need for more psychiatrists in mental health managed care."

If there is a move back to community-based care, however, the managed care industry may find that it has difficulty in finding clinicians to provide the services. "Some practitioners are saying they will not join a panel, they won't take HMO patients," Ray said. "They say they can charge 70 bucks cash-and-carry, take [credit cards] and not be worried about filing paperwork. More practitioners are going to that. And there are more niches opening up: Internet-based 'counseling' or boutique practitioners."

Until recently, many observers were concerned by the relatively low enrollments in psychiatric residencies. "The pipeline reversed this year," Eisdorfer explained. "It stabilized last year, and this year it went up. Primary care matches went down. Family practice residencies in a lot of places were unfilled this year. A lot of medical students expressed dissatisfaction in working in managed care systems, which is one reason psychiatry numbers went up. There's a group of students that is on the cusp between primary care and psychiatry, and this year most of them moved to psychiatry--and some to internal medicine."

Once trained, however, many of these new clinicians will be forced to look for high-paying positions.

"That may be relatable to the amount of debt that people have when they come out of medical school that becomes due July 1 of the year when they finish their residency," Eisdorfer said. "You have a lot of new psychiatrists with a great deal of debt, and that can't wait. One said to me, 'I have a mortgage on a house I can't live in.' They owe $100,000 and more.

"The risk of a shortage is out there. Right now, medicine is still seen [as an] attractive profession. The word has not yet permeated that you'll come up $150,000 in debt, which will limit your options. It's a systems problem: Part of the system is that medical school is attractive, but it's also expensive. The ratio between investment and payoff is shifting dramatically."

Many observers see a turn to evidence-based medicine as a means of persuading third-party payers of the value of psychiatry. Ray cited the example of the common perception that psychotropic drugs are sufficient treatment for mental illnesses. "People are not looking at the clinical research on outcomes, which show that therapy and medication together are better than psychotropic drugs alone. In the future, we're going to have to show results based on science-based practice, evidence-based care and best practices. In this case, the evidence shows that the best outcomes come with a combination of wraparound services, individualized treatment and good therapy.

"Scientific research does suggest different approaches," he continued. "Cognitive-behavioral therapy and medication yield impressive results. But psychiatrists haven't talked about what a difference treatment makes, because it would gore too many sacred cows."

Field concurred, and pointed out that psychiatry has not done a good job of communicating its message to the public at large and to the third parties. "It is important that the profession communicate to the public that it's often necessary to combine medication with psychotherapy or counseling and that medication alone doesn't obviate the need for therapy or counseling. It may be to drug companies' advantage to acknowledge that medication without follow-up is often inappropriate and, at the least, likely to be much less effective. That's an important message that the profession has to get out: not one or the other. Studies show the combination is more effective than either alone."

"You need to go to the science," Ray added."The whole field is reluctant. It's part of psychiatry's own self-destructive pattern of denial. There are so many differing factions that it has found it difficult to pull together as a discipline. But you have to go to quantifiable and empirical evidence, because that is the only way that payers will respect you. If you want to move reimbursement beyond commodity pricing, you have to show that the service is worth the cost. How can we expect payers to pay what we say is fair exchange of service if we're also not willing to hew to quantified data that will support higher payment rates?"

Meanwhile, demand for mental health care services is on the rise, partly as a result of the terrorist attacks on Sept. 11. While the large numbers of psychological trauma cases have yet to surface, Ray noted that there is a paradox. "One of the unintended consequences is that people understand you don't have to be 'crazy' to have severe and devastating psychological findings."