Managing with Managed Care in Santa Barbara

Adapting to the Elements – Managing with Managed Care

It started quietly enough. Our family was at anchor on a rented boat after a day of terrific sailing. The winds had dropped to a calm and we were playing games and having our usual happy hour on the boat when I noticed that we started shifting around in a circle in response to a freshening, variable breeze. By nightfall, the winds were building, the boat was drifting and I had to get in the water with a dive light to find and reset the anchor that had slipped. My son then took out and dropped a stern anchor. We thought we were secure for the night but by bedtime a couple more weather surprises developed. I decided to keep watch for a while as the winds continued to build and to come more consistently from our stern (the fat, blunt part in the back of the boat). That’s perfect for a sailing when you want to be pushed by the wind – not good if you want to be still at anchor. What’s more, I was looking out ahead at a cove filled with expensive, moored yachts. As the winds built to gale force in the night, I had the disgusting image of our breaking from our stern anchor causing our boat play the role of a bowling ball and the yachts becoming splintering bowling pins. I didn’t sleep at all that night.

Much like that fresh afternoon’s breeze was my entrée into managed care. A longstanding EAP referral source asked that I call an 800 number to find out about joining a panel of providers in order to continue treating the employees of the company he served. The offer was that if I was willing to agree to a contracted (lower) rate and to abide by their simple system for authorization, I could continue treating the employees of my friend’s company but also receive more referrals by being on a limited panel for other employers. This was in the early ’80s and I was still building my practice, the fees were close to my usual and customary so this sounded pretty good to me. As other opportunities for joining panels came along, I signed up for them also. As I was growing in my addiction, I started becoming anxious that new managed care organizations were coming to town and I might not know of them until the panels were closed. I had to make sure I was on all the panels if I wanted to keep a full practice.

I believed I was in pretty good shape until some surprises emerged. First, the rates of reimbursement dropped. Second, the “simple” treatment authorizations became demanding and disrespectful intrusions in my day. Finally, managed care merger mania and panel purchases left me not knowing what panels I was on and what their rules required me to do to get paid. I was getting pretty confused but a couple things I did know – I was making less money and working more hours.

During this rising storm, a couple of friends and I were given an opportunity by a local medical group to create an alternative to the managed behavioral health care organization with whom they were contracting. They were unhappy with the service they were receiving and preferred to work with local providers, just as they had done with all of the other medical specialty services. We envisioned creating an organization that provided administrative services and treated well a collection of providers whose preferred treatment modalities matched the patients’ benefits. Pursuing this image turned into a “black hole” project into which was sucked our energy and money for many months but ended with a contract that has been successful for ten years now. At an APA presentation, I was scolded, “So you decided ‘if you can’t beat ’em, join ’em.'” I thought about our process and how I was not able to get on the panel that served the medical group before and realized my accuser was wrong. I told him, “No, it was more like, ‘If you can’t join ’em, beat ’em.'”

The final ingredient for the perfect storm occurred on January 1, 2001, the date when California’s version of “Mental Health Parity” became law. The state legislature decided that it was not fair for insurance companies to discriminate against patients with mental health problems by setting different benefit structures for mental health care than exist for physical health care. They decided that they would give a mental health parity gift to California. However, they also decided that full parity would be too expensive. They chose for partial parity and partial discrimination, making a list of diagnoses they called “Serious Mental Illness (SMI)” a list complied through a political, not a clinical process.
At the time, I was Chair of the CPA Government Affairs Committee and we were unsuccessful in lobbying against the bill despite utilizing the generous assistance of APA. APA had engaged actuaries that demonstrated that their SMI parity would cost 95% of what full parity would cost and benefit only 5% of the California consumers of mental health.

What I had not anticipated was the fallout from the insurance benefit administrative nightmare that the legislature had caused by this SMI parity law. Imagine the member’s call to the insurance customer service representative inquiring as to their mental health benefits should they choose to see a psychologist for psychotherapy. Before the benefit was straightforward but now the answer needs to be, “After you see the doctor, incur the charge and she gives you a diagnosis, we will tell you what your benefits are.” Because of the complexity of managing such a confused benefit, most of the remaining indemnity plans (the insurance plans that were still paying decent fees and not requiring utilization review) carved out their mental health benefits to managed behavioral health care organizations.

The dominoes began to fall. With more patient referrals coming from managed care organizations, I needed to be more selective in accepting these lower paying cases. I started reviewing my managed care contracts and winnowing out the chaff. The ultimate insult was from private pay cases who on sending in billing to their insurance companies found that I was contracted to treat them for a lesser fee because their insurance company had gained access to some obscure company with whom I had contracted years ago and forgot. I needed to reimburse the patient for “overcharges.” At that point, I got off all the managed care panels, except those required to serve our medical group. Apparently many of my colleagues did the same because now I get calls from working Californians who are unable to find psychologists who are willing to see them under their insurance plans. The calls are scriptable. “I have XYZ insurance. Are you one of their providers?”…”No. I’m sorry. I don’t contract with XYZ.”…”You’re not the first psychologist who has told me that. Do you know any psychologists who do contract with XYZ?”…”No. I’m sorry. I don’t.” This was some legislative gift. I find that the mental health care for the average Californian got worse after January 1, 2001 when our state’s SMI Parity bill became law.

We are taught to adapt or risk extinction so adapt I did. My practice has adjusted. I am back to seeing some managed care patients, now with more privately paying patients and many less indemnity insurance patients. The storm has passed. A calm has returned. Just as with my boat that night – my anchor held and I’m on to other engaging but more enjoyable adventures.