Managing in a Managed Care World

August 1, 2003

Low reimbursement rates. Administrative hassles. Inflexible treatment options. This article details these and many other pressing concerns regarding psychiatrists and their role in managed care systems.

Low reimbursement rates. Administrative hassles. Inflexible treatment options. Psychiatrists have had to contend with managed care since the early 1990s and the system does not appear to be heading for a change anytime soon, despite recent headlines announcing the bankruptcy of Magellan Health Services Inc. and the U.S. Supreme Court's decision to uphold Kentucky's "any willing provider" law.

Frustrations with the current system persist, and psychiatrists who are able to do so have been voting with their feet. In the process, they are creating their own changes to the system.

In states such as New Jersey, there simply are not enough psychiatrists, especially child psychiatrists, willing to participate in networks, George F. Wilson, M.D., said in an interview with Psychiatric Times. Wilson is chair of psychiatry at Princeton HealthCare System, where he directs a large inpatient unit and an outpatient program. Consequently, most managed care plans have inadequate networks and patients have a hard time getting appointments.

According to Wilson, this reluctance is largely a result of the low rates paid by health plans and an abundance of patients who can afford to pay out-of-network costs or direct fee-for-service charges.

The D.C.-based Washington Psychiatric Society has found that most doctors either are fee-for-service only or stay on one panel as a hedge. The best insurance right now is Medicare. "They give us the least hassle and pay in a timely manner," James F. Dee, M.D., Pharm.D., the society's past president, told PT.

Like other psychiatrists in certain parts of the country, Dee has found that business has not been hurt since he opted out of managed care. "I'm still turning away five or six patients a day here," Dee stated.

Others said no from the start.

"I have never signed up with them," Nancy T. Block, M.D., past president of the New Jersey Psychiatric Association, said of private health plans. Block does take Medicare patients, but only as a non-participating provider, so that the patient has most of the contact with the program.

"You do just as well and deal with less paperwork," Block explained to PT. Opting out does have consequences, however. If a managed behavioral health care organization does not have asufficient network, odds are that a person in crisis will not be able to see a psychiatrist unless the patient can afford to pay out of their own pocket. That then becomes an access issue.

"Unwittingly, as a component of the care episode keeps getting redefined for lack of resources, intended or not, over time you begin to redefine what the average treatment input is," Irvin (Sam) Muszynski, director of the American Psychiatric Association's Office of Health Care Systems & Financing, told PT. "And you just hope that the floor doesn't become the ceiling."

According to Block, there exists a philosophical disconnect between psychiatry as a service profession and the bottom-line orientation of managed care companies, which abide by the rules that regulate them but consider anything they can legally get away with as fair game.

"Our entire system is being undermined," Block said. Patients do not get enough physician time, and physicians are unable to focus on any given patient's care. As a result, patients become disgruntled, and a disgruntled patient is far more likely to sue a treating physician, whether or not the physician has made a mistake.

A continuing frustration for psychiatrists is being limited to a medication management role. When a patient is approved for one visit a month for 15 minutes, that is simply not enough to provide needed care. "We all believe there are a number of patients who will do much better if the psychiatrist can do the psychotherapy as well as the medication management. But there is almost no company now who will approve that kind of united treatment," stated Wilson.

Talk therapy has become the domain of a separate network of therapists who are usually master's level clinicians. With the low rates that psychiatrists are paid for their 15-minute med checks, "it is difficult to maintain communication between the practitioners," Wilson explained.

The result is a two-tiered system. On the one hand are patients who can afford to pay up-front or have a point-of-service plan. On the other hand are middle-income employees who can only afford an HMO plan and the split-treatment process.

Network Concerns

A survey conducted in June 2001 by the Washington Psychiatric Society found that, out of 50 psychiatrists listed by the local BlueCross/BlueShield plan, only 17 were accepting new patients. Six psychiatrists listed were no longer providers, and at least 10 listings were wrong numbers.

The society is now looking at the results of its second survey, and managed care companies are paying attention. "They tend to talk to us because they know we're watching," said Dee.

During the first survey, BlueCross/BlueShield had contracted with ValueOptions. Since then, it has switched to Magellan, which keeps its own list of providers. While results of the second survey are still being compiled, Magellan's list seems to be accurate, according to Dee. The practitioners listed are still accepting patients. However, the time it takes to get into the office can range from two weeks to two months--a long time to wait for someone in crisis.

BlueCross/BlueShield also keeps a provider list, and that has not been updated since the first survey, said Dee. For instance, he is listed as working in an office where he has not been for eight years. The new survey also turned up several wrong numbers.

"This is what we found last time and nothing has been changed," Dee said. "There must be some advantage to not doing that, and the only thing that comes to my mind is that it dissuades service."

When a plan does not update its listings, he explained, it represents a breach in contractual obligation. A physician accepts a discounted fee in return for a funnel of patients. But if patients run into a series of wrong numbers or doctors who are no longer accepting new patients, they become discouraged from seeking services.

The society's first survey found that it took patients an average of seven or eight phone calls to get an appointment. "You have to be fairly persistent," Dee said.

In 2001, the New Jersey Medical Society accused Magellan of blocking access to services by running a phantom network and demanded that state regulators investigate the company. "This is an issue that impacts medical care in general," declared Block. "Our colleagues may not be identifying their psychiatrically ill patients in their practice as they ought to, because when they do, they have no place to send them."

Magellan has responded proactively in a number of ways since the controversy made the front pages of major papers, Wilson said. It raised the rates for psychiatrists, decreased the amount of paperwork, began certifying more visits without review and actively sought to expand its network.

But overall, litigation is not the best option, according to Muszynski. It does not appear that anybody has found the right case that would change the day-to-day problems that psychiatrists face with managed care.

Muszynski doubts whether lawsuits can achieve the remedies that psychiatrists seek, such as higher reimbursements, less administrative hassles and confidentiality protections. Building the evidence to prove a lawsuit's allegations is a real challenge. Patient records might not be accessible, and people may be unwilling to come forward to build a case.

The question that a potential plaintiff must ask, Muszynski said, is: "Can you build an evidentiary base to sustain your case and do you have the wherewithal to pursue it?"

A Focus on Resources

The field needs to make a persuasive case to restore resources that have been degraded over time, said Muszynski. It goes to the heart of the problem with managed care, since psychiatrists are not going to get sufficient reimbursement until purchasers are willing to pay more for care.

An alternative avenue for influencing managed care companies that the APA is pursuing is the education of purchasers around the issues of why they want a behavioral health benefit, what their expectations are, and whether their current arrangements for fulfilling the benefit are what they expected.

Ultimately, the APA would like to work toward some kind of purchasing criteria that employers would use. To that end, the APA is working with several business coalitions around the country, according to Muszynski. Producing a document is the intermediate-term goal, but the process of creating it will likely be just as important in terms of developing relationships between purchasers and psychiatrists.

One positive development from the managed care world is that patients have access to partial-hospital care and intensive outpatient treatment. These services are written off against inpatient days, "but nonetheless, before the development of managed care, that benefit rarely existed," said Wilson, who is also chair of the New Jersey Psychiatric Association's managed care committee.

The other benefit is that, for middle-income patients who can get access to a psychiatrist, the out-of-pocket expense is much lower than it was under the indemnity system. Most insurance plans covered only 50% of the fee, versus managed care's lower co-payments for initial outpatient treatment. In some systems, co-payments are as low as $10 to $15.

Despite Magellan's financial troubles, the quality of their management review processes has continued to be reasonable and its New Jersey program has been one of the state's more reasonable groups. "We really haven't experienced the serious deterioration that we feared would happen," stated Wilson.

But not all managed care companies are equal, he added. Some companies are more reasonable and responsive in recognizing the needs of complex patients, and others take a more restrictive view, such as more narrow definitions of dangerousness that justify hospitalization.

None of the managed care companies have preserved adequate benefits for substance abuse rehabilitation. "It's very difficult, even for patients with very severe substance abuse problems, to find payers who are willing to provide the two or three weeks of inpatient rehabilitation that some of these patients need," explained Wilson.

The other emerging managed care issue is the growth of the pharmacy benefit management industry. Psychiatrists see it as an affront to their medical capabilities and as an enormous administrative burden. Those problems go beyond the difficulties in obtaining access to a drug that a psychiatrist considers a first-line of treatment. There are so many formularies that keeping track of what the choices are for any given patient can be a real hassle. "Frankly, it just results in more uncompensated time," declared Muszynski.

Looking Ahead

Wilson predicted that the political pressure to grant parity and to eliminate some of the restrictive benefits packages will actually lead to an increased use of managed care practices in order to control utilization in the absence of additional resources. The behavioral health carveout will most likely be the dominant way of managing those benefits.

As awareness of the prevalence of mental illness continues to grow, Wilson expects that the primary care physician will take on a more active role in the diagnosis and early treatment of many psychiatric illnesses. Psychiatrists will increasingly be used as consultants for complicated cases and will have an obligation to work more closely with primary care physicians to ensure that they have the diagnostic skills, ability to do screening techniques and knowledge of proper medication use.

He believes that the whole approach of working with primary care physicians to enhance the quality of patient care and integrating it with psychiatry requires a different way in which the behavioral health organizations relates to primary care physicians as well as the primary insurer. If insurance companies are wise about utilizing their resources, that is the model they will eventually use.