The generic term managed care refers to various administrative and financial arrangements to regulate the site, cost, and utilization of health services. As health care costs began to escalate in the early 1960s, insurance companies, purchasers, and consumers became increasingly concerned, and different delivery models were developed with the intention of controlling costs and increasing efficiency. More than 160 million people in the United States are now covered by some form of managed care, with numbers continuing to grow.
In the United States, the most notable forms are health maintenance organizations (HMOs) and preferred provider organizations (PPOs). HMOs are “Health care systems that finance and deliver comprehensive health care services. Services are provided to an enrolled group of people for a prepaid fixed sum of money.” PPOs are “Companies that organize their own network of providers to deliver services and establish fees… The PPO arranges for services to be provided, but does not provide the services” (Tuttle & Woods, 1997, pp. 127-128). In the last decade, versions of the HMO model have predominated and largely incorporated the PPO model.
Within HMOs, there are also important distinctions, including for-profit versus not-for profit, staff/group model versus network model, and single specialty (e.g., psychiatry) versus comprehensive (e.g., full medical) services. Independent studies repeatedly show that top ratings for quality and patient satisfaction go to nonprofit, staff-model organizations (in which providers are salaried employees within a comprehensive system rather than private practitioners being paid piecemeal to see individual patients). Most mental health care is provided by separate (“carve-out”) companies, however, as Sanchez and Turner (2003) note, although there are considerable pressures for mental health services to be part of integrated (“carve-in”) comprehensive programs.
Cutting across different delivery systems, ideally there are eight characteristics common to psychotherapy and behavioral health services under managed care: (1) specific problem solving, (2) rapid response and early intervention, (3) clear definition of patient and therapist responsibilities, (4) flexible use of time, (5) interdisciplinary cooperation, (6) multiple formats and modalities, (7) intermittent treatment or a “family practitioner” model, and (8) a strong orientation toward results and accountability (Hoyt, 2000). Important nuances for diverse cultural, ethnic, and socioeconomic groups must also be considered.
The espoused meta-goals of managed care are (1) increased access, with universal access being the ideal, (2) increased effectiveness and an emphasis on accurate outcomes assessment and doing what works, and (3) benefits preservation and maintaining coverage for treatments having clinical/medical necessity.
So far, however, efforts toward cost containment have been primary. Managed mental health care (sometimes called managed behavioral health care) has been through several generations since the early1960s, each adding different ways to control costs. Total cost is the product of the per-session price times the number of sessions. Managed care has developed various mechanisms to hold down both. Primary mechanisms to reduce utilization include (1) requiring pretreatment authorization or certification, (2) carefully limiting the range of diagnoses and treatments that will be covered, (3) designing benefit plans to encourage use of efficient providers, and (4) requiring patients to make copayments to share costs. Primary mechanisms to control the price per session include (1) setting a limited payment for a defined group of beneficiaries, (2) offering lower fee-for-service payments to providers, (3) presetting the payment for certain diagnostic groups, (4) reviewing claims, and (5) extending insurance coverage to supposedly equally (or at least adequately) effective treatment alternatives (e.g., groups instead of one-to-one meetings, medications instead of counseling). Different managed care organizations use different combinations of these methods, and clinicians and patients need to know the different rules as they wend their way through what is sometimes formidable paperwork.
Kaiser Permanente Health Plan, which continues to receive high ratings for quality and satisfaction, was the first large not-for-profit staff-model HMO. Kaiser was also the first, beginning in the late 1950s, to include mental health coverage as part of its comprehensive benefits package (Cummings, 2002). Until then, it was feared that including psychotherapy would drastically increase costs. Research showed, however, just the opposite, that providing focused psychiatric services actually helped to control and reduce overall costs. This finding, which is called the medical utilization offset phenomenon, has been replicated in various settings numerous times. Many patient visits to medical doctors do not involve any “objective” findings, and other seemingly “medical” problems, such as diabetes, asthma, and headaches, often have a large psychosocial component (e.g., emotional stress, interpersonal conflict, and noncompliance with medical regimens). One of the results of research demonstrating the positive impact of focused psychological intervention on medical utilization has been the development of health psychology and the breaking down of the false dichotomy of mind-body dualism in favor of movement toward the integration of primary care and behavioral health care. The provision of mental health services in the context of general medical/surgical practice highlights the importance of interdisciplinary collaboration, including the training of health psychologists in the areas of medicine and psychopharmacology as well as the training of physicians and nurses to be able to detect and accurately diagnose psychiatric conditions such as depression, anxiety disorders, and alcohol and substance abuse.
Managed care, especially within the for-profit and carve-out sector, has generated much controversy and criticism. By definition, managed care involves someone other than the particular clinician and client managing or regulating the type and length of services to be provided and paid for. Although some (especially not-for-profit) companies have made significant achievements (including some attention toward prevention and early detection and treatment), numerous complaints have been made, some with documentation, that some patients have been denied needed and covered services. In addition to possible undertreatment and patient abandonment, other concerns involve the continuing likelihood and autonomy of health care professionals, issues of provider competence, dual relationships and potential conflicts of interest, confidentiality and privacy, the balancing of responsibilities toward individuals and the larger society, and conflicts between managed care and various models of psychotherapy. Problems remain of what to do (and how to pay for it) regarding patients with chronic conditions, including those with persistent and debilitating mental illness and severe personality disorders. The various issues, physical and mental, presented by an aging population are also a continuing and growing concern.
The ethical, clinically appropriate, and fiscally viable realization of the principles and promises of managed care are continuing challenges. It will be important that those who care to manage must manage to care—about people and profits. The alternative will be “mangled care,” not “managed care.”
- Aronson, J. (1997). The dictionary of managed behavioral health care. Washington, DC: Brunner/Mazel.
- Chiles, J., Lambert, M. J., & Hatch, A. L. (1999). The impact of psychosocial interventions on medical cost offset: A meta-analytic review. Clinical Psychology: Science and Practice, 6, 204—220.
- Cummings, N. A. (2002). The founding of the Kaiser Permanente Mental Health System: How the first comprehensive psychotherapy benefit was written. In The collected papers of Nicholas A. Cummings: Vol. 2. The entrepreneur in psychology (pp. 1-18). Phoenix, AZ: Zeig, Tucker & Theisen.
- Cummings, N. A., Cummings, J. L., & Johnson, J. N. (Eds.). (1997). Behavioral health in primary care: A guide for clinical integration. Madison, CT: Psychosocial Press.
- Cummings, N. A., & Follette, W T (1968). Psychiatric services and medical utilization in a prepaid health plan setting: Part 2. Medical Care, 6, 31-41.
- Cummings, N. A., O’Donohue, W, Hayes, S. C, & Follette, V. (Eds.). (2001). Integrated behavioral healthcare: Positioning mental health practice with medical/surgical practice. San Diego, CA: Academic.
- Dea, R. A. (2000). The integration of primary care and behavioral healthcare in Northern California Kaiser Permanente. Psychiatric Quarterly, 71, 17-29.
- Follette, W. T, & Cummings, N. A. (1967). Psychiatric services and medical utilization in a prepaid health plan setting: Part 1. Medical Care, 5, 25-35.
- Hersch, L. (1995). Adapting to health care reform and managed care: Three strategies for survival and growth. Professional Psychology: Research and Practice, 26, 16-26.
- Hoyt, M. F. (1995). Brief therapy and managed care: Readings for contemporary practice. San Francisco: Jossey-Bass.
- Hoyt, M. F (2000). Some stories are better than others: Doing what works in brief therapy and managed care. Philadelphia: Brunner/Mazel.
- Miller, I. J. (1996). Managed care is harmful to outpatient mental health services: A call for accountability. Professional Psychology: Research and Practice, 27, 349-363.
- Mumford, E., Schlesinger, H., Glass, G., Patrick, C, & Cuerdon, R. (1984). A new look at evidence about reduced cost of medical utilization following mental-health treatment. American Journal of Psychiatry, 141, 11451158.
- Sanchez, L. M., & Turner, S. M. (2003). Practicing psychology in the era of managed care: Implications for practice and training. American Psychologist, 58, 116-129.
- Simon, R. (2001). Psychotherapy soothsayer: Nick Cummings foretells your future. Psychotherapy Networker, 25(4), 34-39, 62.
- Sturm, R., & Wells, K. B. (1995). How can care for depression become more cost-effective? Journal of the American Medical Association, 273, 51-58.
- Tuttle, G. McC, & Woods, D. R. (1997). The managed care answer book for mental health professionals. Bristol, PA: Brunner/Mazel.
- VandenBos, G. R., Cummings, N. A., & DeLeon, P. H. (1992). A century of psychotherapy: Economic and environmental influences. In D. K. Freedheim (Ed.), History of psychotherapy: A century of change (pp. 65-102). Washington, DC: American Psychological Association.
- Weitz, R. D. (Ed.). (2000). Psycho-economics: Managed care in mental health in the new millennium. New York: Haworth.
Back to Health Psychology.