Professional News
Psychiatrists Lay Out Concerns To Managed Care Leaders
Psychiatric News
Volume 36 Number 1 page 2-20

The leaders of five of the largest managed care carveout companies listened attentively but made no promises as 20 psychiatrists and mental health professionals explained the problems clinicians have delivering quality care under rules and constraints the firms have imposed on the health care system.

The November 30 forum was mandated by the terms of a settlement of a class-action antitrust suit filed in 1998 against the companies by several therapists and professional organizations representing them (Psychiatric News, June 16, 2000; March 19 and August 6, 1999). The therapists, two of whom were psychiatrists, had patients whose mental health care was managed by one of the mental health carveout companies named in the suit.

The suit, Russell Holstein et al. v. Magellan Behavioral Health Inc. et al., alleged that the firms, whose numbers were gradually reduced to five through a wave of mergers, were direct competitors who violated federal antitrust law by conspiring to fix fees and reimbursement levels and otherwise engage in restraint of trade.

The suit was settled in May before it went to trial with an agreement that representatives of the plaintiffs and top management of the managed care organizations (MCOs) would meet in a "forum" that would allow the psychiatrists and other clinicians to lay out their complaints about the way the companies manage patient care and deal with the psychiatrists and mental health professionals on provider panels.

The defendants were not required under the controversial settlement agreement to pay any damages or admit any wrongdoing. It contained no reference to the price-fixing and reimbursement-fixing charges, but did mandate that the MCOs would convene a six-hour forum in New York with the plaintiffs and other clinicians whose topics would be limited to "changes in the provider-credentialing process and suggestions regarding administrative processes for payment of claims."

At the forum, the plaintiffs were hoping that friendly—or forceful—persuasion would work where the legal route did not.

Psychiatrists attending the meeting were Norman Clemens, Harold Eist, Richard Epstein, Lawrence Kline, Lawrence Sack, and Edward Stephens (all M.D.s). None were officially representing APA. Three psychologists and four social workers also participated, as did an attorney for the National Association of Social Workers, and Joseph Sahid, the New York attorney who filed the suit on behalf of the plaintiffs.

The carveout companies in attendance, all of which were represented by a high-level official and an attorney, were Magellan, CIGNA, MHN (Managed Health Network), ValueOptions, and United Behavioral Health.


Clemens, who is APA’s Area 4 trustee, characterized the forum’s atmosphere as "surreal," since the managed care representatives sat silently throughout almost the entire session while the practitioners described the problems they have with these companies and suggestions for improving the situation. The companies noted that they were barred from engaging in discussions with the psychiatrists and others by antitrust prohibitions.

The clinicians’ remarks were "free ranging and covered many deeply felt concerns about the effects of managed care on patients, practitioners, and the mental health care system," Clemens said. "Despite the directness and candor of the practitioners’ remarks, the discussion remained professional and respectful."

Among the troubling topics the clinicians raised were "provider profiling" that allows managed care firms to select "managed care—friendly" practitioners, Clemens noted, and the insufficient number of child and adolescent mental health specialists included in provider networks.


Concern over the use of medical necessity criteria developed by consultants rather than professional organizations was also raised, as were the persistent problems of late payments and the all-too-frequent response that claims have been lost.

The psychiatrists and other practitioners also explained the problems they have that arise from poor communications with the carveouts about contractual issues, long waits to get a telephone response to questions, and "inadequate data systems within MCOs that make it hard for one MCO to know what other contacts with professionals have been doing or to integrate authorizations with claims data," Clemens pointed out.

Other issues on the forum agenda were confidentiality concerns, telephone calls being answered by people with unknown professional qualifications, network credentialing issues and termination criteria, and "invasion of the dyadic relationship between the practitioner and the patient or client," he noted.

The basis for the clinicians’ presentations was a statement of principles that they believe should guide relations between practitioners and mental health carveout firms. Representatives of the National Association of Social Workers who attended the forum developed the statement.

Kline noted that toward the end of the forum Sahid told participants that if the MCOs failed to implement the suggestions the practitioners made for remedying managed care problems by February, the practitioners would interpret this as a rejection of their suggestions. This turned out to be the forum’s only discordant note, with attorney Kevin McDonald, who represented CIGNA, insisting that "the deadline was not fair," Kline said.

The only time the MCO representatives responded to the long list of clinician complaints was at the end of the meeting. Each company’s delegate indicated a desire to improve relations with the practitioners, though none offered specific initiatives or made promises about upcoming changes.

Eist, a former APA president, told Psychiatric News that "as an inveterate optimist," he came away from the forum feeling "hopeful." He added, however, that the results of the meeting will not be known before sometime this month, which would show that the companies are taking seriously the February deadline given by Sahid.

He noted that the terms of the agreement do require the companies to halt their practice of "firing psychiatrists [in their networks] without cause, which is not only a guild issue but a patient care issue, and to completely end the use of gag clauses in contracts."

Eist also emphasized that the practitioners "fully intend to continue with litigation" if the carveout firms refuse to change the way they deal with clinicians and patients. —K.H. ▪

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