Managed behavioral health care and supply-side economics. 1998 Carl Taube Lecture

BACKGROUND: Within the past decade, the mental health care system in the United States has undergone a significant transformation in terms of delivery, financing and work force configuration. Contracting between managed care organizations (MCOs) and providers has become increasingly prevalent, paralleling the trend in health care in general. These managed care carve-outs in behavioral health depend on networks of providers who agree to capitated rates or discounted fees for service for those patients covered by the carve-out contracts. Moreover, the carve-outs use a broader array of mental health providers than is typically found in traditional indemnity plans, encourage time-limited versus long-term treatments and favor providers who are engaged in outpatient care. This phenomenal growth in managed behavioral health care over the past decade includes the rapid growth and quick consolidation of mental health MCOs. The period 1992-1998 shows steady and substantial annual increases in the number of enrollees in mental health MCOs, the figure more than doubling from 78.1 million people in 1992 to a projected 156.6 million in 1998, or 70% of insured lives. Moreover, these vast numbers of enrollees are becoming increasingly consolidated into a smaller number of firms. In 1997, 12 companies controlled nearly 85% of the managed behavioral health care market, with 60% of the market held by the three largest firms. STUDY AIMS: This article reviews empirical data and draws policy implications from the literature on managed behavioral health care in the United States. Starting with spending and spending trend estimates that show the average annual growth rate of mental health expenditures to be lower than that of health care expenditures in general over the past decade, the author examines utilization and price factors that may account for managed-care-induced cost reductions in behavioral health care, with special attention to hospital use patterns, fee discounting and the supply and earnings patterns of various types of mental health provider. In addition, data on staffing ratios and provider mixes of health maintenance organizations and mental health MCOs are reviewed as they reveal at least part of the dynamics of reconfiguration of the mental health work force in this era of managed care. CONCLUSIONS: As measured by changes in utilization and price, widespread application of "classic" managed care techniques such as preadmission review (gatekeeping), concurrent review, case management, standardized clinical guidelines and protocols, volume purchase of services and fee discounting appears to have led to significant cost reductions for providers of both impatient and outpatient mental health services. However, amidst a complex flux of market variables such as risk shifting, changing financial incentives and intensity of competition, not all of the reduction or slowdown in spending can be clearly and purely attributed to managed care. The data on the ongoing reconfiguration of the mental health work force are clearer in their implications: with an oversupply of all types of mental health providers, managed care has significant potential to increase the incidence of provider substitutions and spur the growth of integrated group practices. IMPLICATIONS FOR FURTHER RESEARCH: The current body of empirical and policy literature in mental health economics suggests several salient areas of follow-up. Is the proportionately greater impact of managed care on the annual growth rate of mental health care spending a temporary phenomenon or does it signal an enduring difference in the rates of increase between behavioral health care and health care in general? Beyond industry downsizing, what are the substitutions among mental health providers that are going on, and will go on, to produce cost-effective practices? What are the new financial or risk-sharing arrangements between providers and MCOs that will produce appropriate and high-quality mental health services?     

How does risk sharing between employers and a managed behavioral health organization affect mental health care?

OBJECTIVE: To study the ways in which allocating the risk for behavioral health care expenses between employers and a managed behavioral health organization affects costs and the use of services. DATA SOURCES: Claims from 87 plans that cover mental health and substance abuse services covering over one million member years in 1996/1997. STUDY DESIGN: Multi-part regression models for health care cost are used. Dependent variables are health care costs decomposed into access to any care, costs per user, any inpatient use, costs per outpatient user, and costs per inpatient user. The study compares full-risk plans, in which the managed care organization provides managed care services and acts as the insurer by assuming the risk for claims costs, with contracts in which the managed care organization only manages care (for a fixed administrative fee) and the employer retains the risk for claims. PRINCIPAL FINDINGS: Full-risk plans are not statistically significantly different from non-risk plans in terms of any mental health specialty use or hospitalization rates, but costs per user are significantly lower, in particular for inpatients. CONCLUSIONS: Risk contracts do not affect initial access to mental health specialty care or hospitalization rates, but patients in risk contracts have lower costs, either because of lower intensity of care or because they are treated by less expensive providers.     

An economic and clinical rationale for changing utilization review practices for outpatient psychotherapy

The growth of managed care has led to greater cost consciousness in the financing and delivery of mental health and substnace abuse services. The authors examine whether pressures to reduce the costs associated with mental health and substance abuse treatment have led to the overapplication of a popular managed care strategy, utilization review (UR), to the management of outpatient psychotherpay benefits. Several arguments are presented highlighting why changing outpatient psychotherapy UR practices would be in the best economic and clinical interests of all involved parties, including payers, managed care organizatios, (MCOs), mental health consumers, and providers. A number of alternatives to the aggressive management of outpatient psychotherapy benefits are outlined and discussed. The views expressed in this article are those of the authors and do not necessarily represent the positions of their organizations.     

Dual diagnosis care for severe and persistent disorders. A comparison of three methods

People with severe and persistent mental illnesses frequently suffer from addictive disorders as well. Managed care plans and at-risk providers who care for people with these conditions must understand, authorize, and provide evidence-based and cost-effective care. The authors of this article evaluated three specialized interventions for treating people with co-occurring severe mental illness and substance abuse. Treatment of both disorders was found to be essential. In addition, a behavioral skills training was found to improve outcomes and reduce total healthcare costs when compared with intensive case management and 12-Step recovery interventions. Supplemental supportive services further increase the overall value of care. Implications for managed care and at-risk providers are discussed.     

Substance abuse treatment provider views of "culture": implications for behavioral health care in rural settings

Mandates for culturally competent substance abuse and mental health services call for behavioral health providers to recognize and engage cultural issues. These efforts to incorporate culture typically focus on client culture, but provider views of culture can also influence the provision of services. Analysis of 42 semistructured interviews with behavioral health providers suggests that culture is considered by many to be an obstacle to help seeking and treatment of substance-abusing youth. Although some providers do not highlight cultural issues, others conceptualize culture in terms of (a) generalized Hispanic cultural attributes, (b) male-dominant gender roles, and (c) the culture of poverty. Recommendations for provider training on cultural issues focus on ways they might critically consider their ideas about culture.     

Tobacco Use Among African-American Youth Receiving Behavioral Healthcare Services

African-American youth with behavioral health problems may be particularly vulnerable to tobacco use and dependence; however, little is known about overall prevalence and factors associated with tobacco use in this population. The present study compared rates of tobacco use for African-Americans (aged 13–17) receiving behavioral healthcare services to state and national prevalence rates. In addition, we examined whether tobacco use prevalence was related to treatment characteristics and services rendered. Retrospective chart reviews were conducted at an urban, public behavioral healthcare agency for youth admitted in 2009. Tobacco use rates among African-Americans receiving behavioral healthcare services were similar to, and in some cases, higher than statewide and national prevalence rates. While tobacco users were more likely to be enrolled in a substance abuse program than in a mental health program, only 2 of 55 youth reporting tobacco use had received documented tobacco cessation treatment. Future work should focus on implementing tobacco cessation prevention and treatment for these youth.     

The impact of managed behavorial healthcare on the costs of psychiatric and chemical dependency treatment

As Congress debates the Health Security Act, a key issue centers on whether and how to include mental health and substance abuse benefits and how to contain costs if and when these benefits are paid at parity with general healthcare. Previous studies estimating the average annual cost of providing behavioral healthcare services have shown considerable divergence, depending on the nature of the defined population and the inclusion of various benefit categories, out-of-pocket expense and administrative costs. Experience from 14 members of the American Managed Behavioral Healthcare Association (AMBHA) is used to define the key features of managed behavioral healthcare, and to demonstrate that a properly managed behavioral healthcare benefit can be significantly less costly than the current reform debate would admit. AMBHA companies (which have many years of experience and presently manage the cost and quality of care for over 65 million people in the United States) [See Table 3, page 28], have shown that a specialty managed care approach can achieve not only significant savings to healthcare providers, payers and society, but also improve quality and access to care. Traditional attempts at reducing mental illness benefit coverage costs have entailed limitations on the availability or access to care. These approaches, however, ignored the larger implications to society of untreated mental illness and chemical dependency. When traditional coverages have offered more extensive benefits, they have primarily favored inpatient treatment, thus increasing costs by overemphasizing care of patients at expensive inpatient settings. AMBHA's proposed principles of healthcare reform and recommended benefit packages for behavioral healthcare can be found on page 80 of this magazine.     

Integration of behavioral health services in a primary care clinic serving rural Appalachia: reflections on a clinical experience

In the past few decades, there has been a move toward integrating behavioral health and medical services. This can be particularly beneficial for rural residents, as integration can increase access to mental healthcare in areas where there are shortages of mental health providers. Southern Appalachia is characterized by isolated areas that have shortages of both mental health and medical providers. This article discusses the experiences of a clinical psychology doctoral student integrating behavioral health services in a primary care clinic within rural Southern Appalachia. The role of the behavioral health consultant is described, including representative services and development and implementation of a clinic-wide depression protocol. Additionally, barriers to integration and recommendations for future training and practice are provided.     

Changes in managed care activity in outpatient substance abuse treatment organizations, 1995–2000

Using nationally representative data from 1995 and 2000, this study examines trends in managed care penetration and activity among outpatient drug treatment organizations in the United States. Further, it investigates how managed care activity varies across different types of treatment providers and for public and private managed care programs. Overall, managed care activity has increased, with a greater proportion of units having managed care arrangements and a larger percentage of clients covered by managed care. In general, public managed care activity has increased and private managed care activity has decreased. Treatment providers report that they have fewer managed care arrangements, which may reflect consolidation in the managed behavioral care sector. Finally, growth in managed care among outpatient substance abuse treatment units affiliated with hospitals and mental health centers may signal a preference for providers that can effectively link substance abuse treatment with medical and social service provision, or, alternatively, that linkages with such organizations may provide the size necessary to assume the risks associated with managed care contracts.     

Physical health burdens of women with trauma histories and co-occurring substance abuse and mental disorders

This article documents the physical health burdens of participants in a large, federally funded cross-site study of specialized services for women with histories of trauma (physical or sexual abuse) and co-occurring substance abuse and mental health disorders. Nearly half of the 2729 women in the study (48%) reported serious physical illnesses that frequently limited their daily life activities or required them to use special equipment. Nearly half (46%) rated their health status as only fair or poor. Given the prevalence of physical illnesses in this population, behavioral service providers should discuss with clients their overall health and how it might hinder their participation in treatment for trauma, substance abuse, and mental illness, and policymakers should consider this need when designing behavioral health requirements, setting reimbursement rates, and allocating funds.The interpretations and conclusions contained in this publication do not necessarily represent the position of the WCDVS Coordinating Center, participating study sites, participating consumer/survivor/recovering persons, or the Substance Abuse and Mental Health Services Administration and its 3 centers (Center for Substance Abuse Treatment, Center for Mental Health Services, and Center for Substance Abuse Prevention).     

Workplace health promotion and utilization of health services

This article reports findings from a workplace substance abuse prevention program designed to investigate best practices. The study sought to assess the effects of the worksite wellness program and employee assistance program (EAP) on healthcare utilization and costs, identify predictors of outpatient costs and visits, and assess the effect of the intervention on health attitudes, behaviors, and behavioral health-related costs and visits. Results indicated that visits to the EAP increased as did overall healthcare visits, that utilization of healthcare services and costs were higher in the population receiving substance abuse prevention intervention, and that employees in the substance abuse prevention intervention reported lower heavy drinking and binge drinking. Data suggest that substance abuse prevention may result in higher healthcare costs and utilization in the short term, but a reduction in health risk behaviors such as heavy drinking may result in lower healthcare costs and utilization in the long term.     

A multi-site study of medicaid-funded managed care versus fee-for-service plans' effects on mental health service utilization of children with severe emotional disturbance

Although Medicaid-funded managed care arrangements are commonly used in the delivery of mental health and substance abuse services to low-income children and youth, little is known about the effectiveness of such efforts. This article examines differences in mental health services utilization between children and youth with severe emotional disturbance covered by Medicaid-funded managed care behavioral health plans and those covered by fee-for-service plans. Data are from a federally funded multi-site study. In multivariate analyses controlling for child and caregiver demographic and clinical factors, enrollment in a managed care behavioral health plan was associated with lower inpatient/residential, psychiatric medication, and nontraditional services utilization. No difference was found in outpatient services utilization. Medicaid-funded managed care behavioral health plans appear to reduce use of some types of mental health services, but it is important to address the question of whether low-income children's enrollment in such programs deprives them of needed services.     

Privatizing public mental health and substance abuse services: issues, opportunities, and challenges

Much like the medical care system, delivery systems for mental health and substance abuse services are being transformed rapidly by managed care. Public sector systems are now facing challenges to transfer service delivery responsibilities to private managed behavioral health care organizations as a way of containing treatment costs and realizing operational efficiencies. These privatization efforts entail a range of quality management issues that are specific to mental health and substance abuse problems, treatments, and clients.     

Under Construction: One State's Approach to Creating Health Homes for Individuals with Serious Mental Illness

Changes to the health care market associated with the Patient Protection and Affordable Care Act (ACA) are creating both need and opportunity for states, health plans, and providers to improve quality, outcomes, and satisfaction through better integration of traditionally separate health care delivery systems. Applications of the term “integrated care” vary widely and include, but are not limited to, the integration of care for Medicare-Medicaid dually enrolled beneficiaries, the integration of mental health and substance abuse (also known as behavioral health), and the integration of mental health and substance abuse with medical care, most commonly primary care. In this article, integrated care refers to well-coordinated physical health and behavioral health care. Medicaid Health Homes are emerging as a promising practice, with sixteen states having adopted the Health Home model through approved State Plan Amendments. This article describes one state''s journey towards establishing Health Homes with a behavioral health focus. We discuss a partnership model between the relevant state organizations, the contracted providers, and the behavioral health managed care organization responsible for many of the supportive administrative functions. We highlight successes and operational challenges and offer recommendations for future Health Home development efforts.     

Medicaid managed care and STDs: missed opportunities to control the epidemic

We examined the extent to which selected Medicaid managed care organizations (MCOs) promoted certain prevention and control services for sexually transmitted diseases (STDs) and the potential influence of health plans and medical groups on the delivery of STD care by primary care providers (PCPs) in seven large U.S. cities. Low-cost clinical services were routinely performed by PCPs, but higher-cost services were less often provided. Lack of organizational priority to promote STD prevention and control is a major barrier even for those MCOs that serve this high-risk, low-income population. Stronger incentives and legally binding provisions in Medicaid contracts are needed to promote adherence to standards of STD care.     

County Workforce,Reimbursement, and Organizational Factors Associated with Behavioral Health Capacity in Health Centers

This study describes on-site behavioral health treatment capacity in health centers in 2007 and examines whether capacity was associated with health center characteristics, county-level behavioral health workforce, and same-day billing restrictions. Cross-sectional data from the 2007 Area Resource File and Uniform Data System were linked with data on Medicaid same-day billing restrictions. Mental health treatment capacity was common; almost four in five health centers provided on-site mental health services. Additional services such as crisis counseling (20 %), treatment from a psychiatrist (29 %), and substance abuse treatment were offered by fewer health centers (51 % provide on-site services and only 20 % employ substance abuse specialists). In multivariate analysis, larger health centers, health centers located in counties with a larger behavioral health workforce per capita, and those located in the West and Northeast were more likely to have behavioral health capacity. Same-day billing restrictions were associated with lower odds of substance use treatment capacity and providing 24 hr crisis counseling services.     

Substance abuse service utilization under managed care: HMOs versus carve-out plans

Managed behavioral health care organizations are increasingly managing Americans' substance abuse by using carve-outs, but little information is available about how this has affected service utilization and costs when compared to HMOs. One employer's claims for substance abuse services delivered under a carve-out arrangement are compared to prior HMO claims information. Under the carve-out arrangement, inpatient and outpatient service utilization are found to decrease, but intermediate service utilization dramatically increases. Costs per unit service decrease for all services. The pattern of changes is different from that seen for mental health services, suggesting that different factors may be applicable to substance abuse services.     

Mind and body primary mental healthcare: new model for integrated services

Primary mental healthcare is different from consultation-liaison psychiatry and behavioral medicine yet has elements of both. This approach calls for complete integration of behavioral health services within the primary care and general medical setting. Primary care providers, rather than mental health specialists, retain direction of patient care. In this model, developed at the Group Health Cooperative of Puget Sound, primary behavioral health clinicians are on site, not on call.     

Managed Care, School Health Programs, and Adolescent Health Services: Opportunities for Health Promotion

ABSTRACT: The rapid expansion of managed care creates opportunities and dilemmas for those involved in school health and adolescent health promotion. Managed care organizations (MCOs), public health agencies, and school and adolescent health providers share certain common goals and priorities including an emphasis on prevention, cost-effectiveness, and quality of care — and a willingness to explore innovative approaches to health promotion and disease prevention. However, MCOs often face conflicting challenges, balancing the goals of cost containment and investment in prevention. In considering support for school health programs, MCOs will be interested in evidence about the effectiveness of services in improving health and/or reducing medical expenditures. Mechanisms for improving prevention efforts within MCOs include quality assurance systems to monitor the performance of health plans, practice guidelines from professional organizations, and the contracting process between payers and health care providers. Development of partnerships between MCOs and schools will be a challenge given competing priorities, variation in managed care arrangements, structural differences between MCOs and schools, and variability in services provided by school health programs     

Health, mental health, substance use, and service utilization among rural and urban incarcerated women.

Incarcerated women commonly report health, mental health, and substance use problems, yet there is limited research on service utilization before incarceration, particularly among women from urban and rural areas. This study includes a stratified random sample of 100 rural and urban incarcerated women to profile the health, mental health, substance use, and service utilization; examine the relationship between the number of self-reported problems and service utilization; and examine self-reported health and mental health problems in prison as associated with preincarceration health-related problems and community service utilization. Study findings suggest that health and mental health problems and substance use do not differ significantly among rural and urban women prisoners. However, there are differences in service utilization -- particularly behavioral health services including mental health and substance abuse services; urban women report more service utilization. In addition, rural women who reported using needed community services before prison also reported fewer health problems in prison. Implications for correctional and community treatment opportunities in rural and urban areas are discussed.