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By Mark Moran
Managed care organizations hold all the cards when contracting with community mental health and substance abuse centers.
That contractual power, hidden from public scrutiny in the "fine print," lends the managed care organization overwhelming leverage over the delivery of care, according to an unreleased federal government study obtained by Psychiatric News.
An analysis by the Substance Abuse and Mental Health Services Administration (SAMHSA) of 50 public and private contracts between managed care organizations and community mental health and substance abuse centers showed that the terms of a contract can dramatically restrict the range of services and the types of providers accessible to patients--regardless of what the buyer may think is being purchased.
Moreover, the contracts can be terminated "at will," giving the managed care organization considerable leverage over the delivery of care, while also imposing significant financial pressure on providers through a variety of provisions, according to the study conducted for SAMHSA by Sara Rosenbaum, J.D., and colleagues at George Washington University's Center for Health Policy Research.
At press time in early January, a spokesperson at SAMHSA told Psychiatric News that the study is undergoing a process of internal review for factual accuracy and will likely be released in February.
However, Mike Faenza, president and CEO of the Mental Health America (NMHA), told Psychiatric News that he believes release of the study may be held up because it is "such an indictment of the process of privatization of public mental health systems."
Faenza said, "I have not seen anything that so concretely and consistently lays out how the privatization of public mental health systems is a huge experiment, and that the early results are shaky."
Faenza discussed the findings of the study at APA's Board of Trustees meeting in December and urged APA to join NMHA in lobbying for the full range of services for the most severely mentally ill children and adults in the public system.
"Everyone with a stake in good services for people with mental disorders needs to be concerned about the rush to managed mental health in the public sector," Faenza said in an interview with Psychiatric News.
In particular, the results of the study should be a "wake-up call for the Health Care Financing Administration and SAMHSA on how they use their resources," he said.
The study breaks ground in understanding how managed care is affecting the delivery of services in the public sector because it is the first to look in a detailed way at the actual terms of contracts between MCO's and providers.
The limited nature of and wide variation in the services covered by contracts was one of the most striking findings in the study.
Rosenbaum and colleagues emphasize in the study that there is often great discrepancy between the actual terms of contracts and what purchasers--including state agencies--may think they are buying.
"While community mental health centers and substance abuse treatment and prevention centers frequently offer a wide array of services for patients and community residents, managed care plans in fact purchase a very limited range of services under their participation agreement with providers," Rosenbaum and colleagues say. "To the extent that state agencies anticipate that their premiums will purchase comprehensive mental illness or addictive disorders treatment services in the community, these expectations may not be reflected in the limited range of treatment services purchased by plans."
The process of contracting is invisible, Rosenbaum and colleagues note.
"This invisibility can shield from public view contractual provisions that might be considered less than desirable for any number of reasons were they made public," they note. "Only as policymakers learn more about structure and content of the cascade of contracts that together form the 'virtual' managed health care systems in operating today can they determine whether the new health care market should in fact be subject to a certain degree of government regulation."
That view was echoed by Faenza.
"What has historically been public and exposed to investigation in terms of funding for vulnerable populations has become much less open to public scrutiny," he said.
The study found that managed care contracts could adversely affect the delivery of care in community mental health and substance abuse centers in the following areas:
Rosenbaum and colleagues also found that contracts generally contain other provisions that impose significant financial risk on providers. These include third-party liability recovery provisions, payment terms that do not ensure timely payment, and post-termination treatment obligations that may make a provider liable for continuing to furnish care even where a contract is terminated for nonpayment.
"We conclude that community mental health and substance abuse treatment and prevention providers need to increase their bargaining power with plans both through extensive training in the structure of contracts and through the formation of provider networks," Rosenbaum and her colleagues state. "We also believe that the potential gap between services purchased by Medicaid agencies from plans and plans' contracts with providers merit further study. To the extent that ambiguities in state purchasing agreements permit plans to engage in 'pinpoint' purchasing of less than comprehensive care, agencies need to either strengthen the terms of their own agreements or else continue to pay for certain types of mental health and substance abuse treatment and prevention services outside of the scope of these managed care agreements."
(Psychiatric News, January 17, 1997)