'Patient Dumping'-Mentally Ill Get Shortchanged

February 1, 1998

Recent headlines in national newspapers declaring that mentally ill patients are often denied care by psychiatric hospitals merely confirmed what most psychiatrists have known for years. A study published last December, however, created a stir when the authors released what they called "the first national analysis of the factors that promote or constrain economically motivated transfers of patients in relation to competitive pressures, hospital ownership, and managed care practices."

Recent headlines in national newspapers declaring that mentally ill patients are often denied care by psychiatric hospitals merely confirmed what most psychiatrists have known for years. A study published last December, however, created a stir when the authors released what they called "the first national analysis of the factors that promote or constrain economically motivated transfers of patients in relation to competitive pressures, hospital ownership, and managed care practices."

Saying that the spread of managed care, increased competition among hospitals and reduction in the capacity of state-run psychiatric facilities "substantially exacerbated" economically driven "patient dumping," the report, published in Health Services Research, concluded that at least two-thirds of psychiatric hospitals providing inpatient mental health care engage in the practice. Surprisingly, although patient dumping was more prevalent among for-profit hospitals, one-fifth of the nonprofit facilities were also ridding themselves of patients who required costly care or who were uninsured, raising concerns about "the traditional mission" of providing care to "those who most need it."

The implications for patients are dire, according to Robert A. Dowart, M.D., M.P.H., professor of psychiatry at Harvard University Medical School, and chief and chair of the department of psychiatry at Cambridge Hospital. Dowart, one of the study's authors, said that "transfers disrupt the continuity of care and create a situation where patients are more likely to 'fall through the cracks' of the treatment system."

The report came at the same time the U.S. Department of Health and Human Services issued the final rules that will implement the Mental Health Parity Act of 1996. The new law, which was effective Jan. 1, requires health plans to provide the same annual and lifetime spending caps for mental health benefits as they do for medical and surgical benefits.

"The parity law is widely recognized-at least among mental health policy people-as being entirely misguided," said Mark Schlesinger, Ph.D., associate professor of public health at Yale University School of Medicine and coauthor of the study. "All it really does is establish paper coverage requirements as being comparable between mental health and various other kinds of physical ailments. It does nothing to affect the way in which managed care plans administer those benefits. It is very likely to have no real impact on the profitability of particular patients."

The mental health parity law only affects employers with more than 50 employees, and does not require them to provide mental health benefits at equivalent rates of reimbursement, nor are plans without any mental health benefits prohibited. In addition, employers who can demonstrate with claims data that their medical expenses climbed more than 1% are exempt from the law.

For the time being at least, "the prospects for these patients [are] made worse in a public system that is receiving progressively less government support," Dowart said. "That access for the uninsured is severely impaired is no surprise. We need to take notice and do something about the impact of health system changes on some of the most vulnerable patients."

Although previous studies indicated that private hospitals have traditionally transferred patients because of high costs, the recent analysis focused on additional contemporary pressures that increase patient dumping. Cost cutting by managed care, including widespread utilization review by insurance companies, for instance, has reduced hospitals' ability to subsidize care for individuals with little or no coverage out of profits generated from treating insured patients.

Increased competition among growing numbers of private, for-profit hospitals, along with prospective payment systems implemented by Medicare and many corporate insurers, means that hospital management is less likely to tolerate patients who "exceed the benchmarked average costs of care."

After reviewing a composite data set constructed from three national random-sampled surveys of hospitals providing mental health care, community mental health centers (CMHCs) and psychiatrists conducted in 1988 and 1989, the researchers not only concluded that two-thirds of the psychiatric hospitals engaged in economically motivated patient dumping, but that more than a quarter of the CMHCs experienced such transfers "a great deal." Forty percent of the CMHCs reported that every hospital in their service area engaged in some dumping.

Acknowledging that since the data was collected, "hospital markets have become more competitive and state hospital capacity has been further reduced," and that the "breadth and aggressiveness of utilization review as applied to inpatient mental health care" has been dramatic, the authors said that things could actually be worse than they think. "It is quite possible, therefore, that the effects of factors estimated here understate their contemporary influence on hospital behavior."

Responding to a Dec. 10, 1997 New York Times article about the study, Richard J. Davidson, president of the American Hospital Association, and Mark J. Covall, executive director of the National Association of Psychiatric Health Systems, wrote in a letter published by the paper on Dec. 14 that "psychiatric hospitals do more than their share to help people whose coverage is exhausted; as a result their uncompensated cost of care is high."

Decrying the lack of parity in mental health benefits, Davidson and Corvall went on to say that "equal coverage for behavioral disorders would go a long way toward ensuring a more rational distribution of resources and improved access to care."

According to the study, however, private hospitals can increase the burdens on CMHCs and public hospitals because as the initial providers, they often deplete whatever benefits are available before transferring the patient. Meanwhile, "the continued transfer of high-cost patients to public hospitals added to their average cost per patient, reinforcing stereotypes of these facilities as less efficient than their for-profit and private nonprofit counterparts," the authors said.

In some cases, Dorwart told Psychiatric Times, dumping occurs even though benefits are still available. As a result of overly stringent utilization review guidelines, patients are forced into the public health sector because private companies refuse to authorize services.

Marketplace reforms that will decrease the factors that promote patient dumping will most likely come from state regulators, but not very quickly, according to Schlesinger. "At this point, what the states have been focusing on are either consumer protections or provider protections-due process requirements of various kinds-and have not to this point focused on the broader community implications. The state-level regulatory agencies are the institutional structure in which that's likely to happen, but they're not there yet."

Meanwhile, antidumping legislation in most states has failed to improve circumstances for the mentally ill because the laws prohibiting transfers generally apply only to medically unstable patients. Since mentally ill often do not present situations involving "imminent medical risk" under the statutes, dumping continues.

Calling the transfer of patients from private hospitals to public facilities unethical, the researchers said hospitals use dumping as a means of gaming the reimbursement system. "Hospitals paid through prospective payment receive a payment based on the average costs of treating a patient with a particular condition," they reported. "When hospitals dump those patients whose costs of care exceed this average, they are implicitly violating the norms that make prospective payment systems equitable, profiting at the expense of those facilities that are recipients of the transferred patients."

The authors of the study urged policymakers to improve access for the uninsured and underinsured, warning that increased competition and profit-driven decision-making could only worsen the plight of the mentally ill.