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Negotiating a contract with a managed care organization is often a test of wills between providers looking out for the best interests of themselves and their patients and companies in search of the best deal.
The key to coming out on top is to remember that almost everything in the contract is negotiable, according to panelists in a workshop at APA's 1998 annual meeting in Toronto last month.
Particularly important to psychiatrists, said Deborah Cross, M.D., a member of APA's Consortium on Organized Systems, is to review all contracts with an eye toward ethics and be careful not to sign any contract that compromises their ethics code.
"We can't let managed care organizations [MCOs] have medical doctors doing the dirty work for them," emphasized Cross.
Fortunately, she pointed out, managed-care and patient-protection legislation in many states has made gag clauses and other unsavory managed care practices illegal. (Gag clauses prohibit participating doctors from discussing with patients treatment options not covered by their plans.) Nonetheless, there are still subtle and not-so-subtle forces at work that can undermine the traditional doctor-patient relationship and border on the unethical.
While physicians do have a responsibility to serve as one of the guardians of society's limited health care resources, Cross observed, there is an inherent conflict between being the custodian of those resources and the services they represent and being the patient's advocate. Physicians cannot serve two masters at once.
APA and the AMA, she continued, hold the position that care-allocation decisions-that is, determining which services are covered in a plan and which are not-should not be made by treating physicians but by plan administrators. To best serve patients, physicians cannot always operate within a plan's constraints and thus should not be in a position where a conflict of interest could develop.
Another problem is the definition of "medical necessity." "This is often in the eye of the beholder," said Cross. She noted that the APA Assembly had tried unsuccessfully to come up with a definition (Psychiatric News, July 3). The term, she said, is really a business, not a medical, term. The point isn't whether some aspect of care is "medically necessary" but whether the patient will benefit from it.
"Even if treatment is discouraged at a high level of the plan," she said, "our duty is to recommend a treatment if it will help the patient."
MCOs have commonly offered financial incentives to physicians that have the effect of encouraging them to limit care. Physicians, she noted, are put in an unethical position when bonuses are awarded on the basis of care not given through such practices as denying care to patients, not referring patients to other specialists, or limiting prescriptions. Moreover, physicians are well aware that they may be dropped from MCO panels if they order "too many" tests, write "too many" prescriptions, or spend "too much" time with patients.
A newer financial conflict, however, is presented by capitation rates (that is, the amount an MCO pays per covered life to a participating physician or network) that are unrealistically low. Sometimes it is the MCOs that seek to sign up physicians or networks at the lowest possible cost; other times physicians or networks underbid each other to win coveted contracts.
"It is unethical for a physician to accept a contract offering a rate below which the physician can provide a reasonable standard of care. If you are being placed in a position that you will be in financial jeopardy unless you deny care, you need to reconsider signing that contract," said Cross.
Nancy Halleck, J.D., assistant counsel for the New York State Education Department and a former MCO attorney, noted that not all MCOs are complying with current legislation affecting their operation. Thus, she advised the psychiatrists in the audience, "you need to be educated about the laws in your state before you review a contract."
Arizona, California, Colorado, Maryland, New Jersey, New York, Ohio, Texas, and Vermont are among the states that have passed legislation impacting on managed care and protecting patients' rights.
Considering legislation or amendments to existing legislation are Pennsylvania, Massachusetts, Indiana, Tennessee, Delaware, Oregon, Kansas, Georgia, and the federal government.
To give an idea of the issues addressed by such legislation, Halleck discussed the laws in New York and Texas. New York's law, for example, spells out the procedure for filing a grievance against an MCO, the time limits within which appeals for denied care must be heard, and the procedure for dropping providers from panels. The law also prohibits gag rules and indemnification or "hold harmless" clauses (in the event of a lawsuit, these clauses force the practitioner to assume liability rather than the MCO) and stipulates that only "clinical peer reviewers" can deny care.
Jay Zucker, J.D., of the Office of Counsel in the New York State Office of Mental Health, told workshop participants how they can strengthen their bargaining position with MCOs and negotiate contracts favorable to psychiatrists and their patients.
"An individual M.D. doesn't have a lot of bargaining power," he said, "but you can enhance your bargaining power" by being aware of a few simple facts. Many MCOs, he said, have contracts with employers requiring a minimum number of practitioners in various medical specialties. Thus, they may need the provider more than the provider needs them.
Moreover, HMOs are "voluntary enrollment businesses. Having a lot of patients in your practice enhances your bargaining power. You might also want to become a member of a group practice, since many MCOs want to contract with large groups."
Although it seems obvious, the most important step in reviewing a contract is to read it carefully and have a lawyer review it. He noted that the New York State Psychiatric Association offers free contract review to its members and advised audience members to check with their respective DBs to see what services and information they might offer. Other good sources of information on state regulations are state departments of insurance and state medical societies.
Many contracts are simply boilerplate documents that may have been adapted to reflect specific state law or to be used in certain types of facilities, Zucker said. Providers might be given the wrong contract or find that their state law is not reflected in the contract at all.
"If you sign that contract, it can later be voided by the MCO," he said, "or when a problem develops, you might find that the contract is not enforceable."
Zucker also discussed a list of questions that psychiatrists should ask themselves when reviewing an MCO contract.
"MCOs want to save money," he said. "You can enlighten them on how to keep people healthy rather than deny care."-C.F.B.