Professional News
Medical Society Battles Carveout Over Managed Care Practices
Psychiatric News
Volume 36 Number 13 page 2-36

The nation’s largest managed behavioral health care carveout is feeling the heat from physicians in New Jersey—and giving it back.

The Medical Society of New Jersey (MSNJ) has charged Magellan Behavioral Health Care with "abusive practices" in its provision of mental health services and has called on the state’s Department of Banking and Insurance and the Department of Health and Human Services to investigate the company.

Physicians in the state told Psychiatric News that the company maintains a "phantom network" of doctors who are listed on the company’s provider panel but who are in fact no longer on the panel or not seeing new patients. Consequently, they said, many patients—especially those coming out of acute or partial hospitalization—are unable to access psychiatric care in the community.

"The most charitable way of putting it is that Magellan is not keeping its provider list up to date," said Marc Rothman, M.D., president of the New Jersey Psychiatric Association (NJPA). "The least charitable way of putting it is that the company is misrepresenting the services it provides."

Charges against the company also include the familiar litany of complaints about managed care: administrative hassles, slow or inadequate reimbursement, and fragmented care for patients. The cumulative effect of the company’s practices, Rothman and other psychiatrists said, is a shortage of psychiatrists willing to work with the company, and this, in turn, has invariably affected patient care. One psychiatrist described the case of a patient who called seven practitioners listed on the company’s provider panel—none of whom was accepting patients—until finding one whose earliest appointment was two months away.

Another psychiatrist told Psychiatric News that the company has also prohibited psychiatrists from using the "evaluation and management" codes for situations in which they are supervising the treatment of patients but not providing psychotherapy.

"It is the policy of Medicare and APA that E&M codes may be used legitimately by psychiatrists," said Nancy Block, M.D., president-elect of the NJPA. "I have used them for a number of my patients who see another mental health professional for psychotherapy while I manage medication and coordinate their overall treatment. This includes reviewing and coordinating treatment by other physicians for complex overlapping conditions."

Block said that the company has repeatedly insisted she use the 908 series psychotherapy codes even when another professional is providing the psychotherapy—a circumstance that can cause administrative delays when two professionals are submitting psychotherapy codes for the same patient.

"I object to being forced to code in a manner that I consider inaccurate because Magellan has arbitrarily decided which codes it will cover," Block said.

Block is not a member of the company’s provider panel, but treats patients who are covered by Magellan, she said.

Eizabeth Rody, M.D., medical director at Magellan’s New Jersey regional service center, said that the company’s computer system is set up to reimburse physicians using the E&M codes for inpatient services and outpatient substance abuse services. The 908 psychotherapy codes are more typically required from psychiatrists because "that captures what they do typically do on an outpatient basis," she said.

But she noted the company does make exceptions on a case-by-case basis for psychiatrists using the E&M codes on an outpatient basis for services other than substance abuse. "It’s a very unusual thing," she said.

To some extent, the complaints reflect well-established gripes with managed care generally. As Rothman observed, "It’s not just Magellan—these complaints are endemic to managed care."

But the dominance of Magellan, which has contracted with most major insurers in the state to oversee mental health care, appears to have focused physicians’ wrath on the company. And the shortage of psychiatrists on Magellan’s panel has affected the practice of general physicians in the state and roused the ire of the state’s medical society.

"After a full year of examining mental health problems in our state, we have concluded that Magellan is taking advantage of vulnerable individuals who are hard pressed to advocate for themselves," said Angelo S. Agro, M.D., president of MSNJ. "Magellan’s built-in barriers are preventing mental health providers from delivering appropriate care. [The company] systematically eliminates customer choice and sacrifices quality and ratchets down care to a minimum level. Magellan is becoming shorthand for an inadequate network, a stranglehold on the market, and bargain-basement care."


Magellan has not been tepid in its response, however, and in a statement released after the allegations were made appeared to hint at legal retaliation.

"The New Jersey Medical Society, in an opportunistic and self-serving move, has misrepresented the way Magellan serves its customers and members," said Jonathan Book, M.D., chief medical officer for Magellan in a statement released by the company. "This is particularly disturbing given the fact that we have been working closely with the society in recent months and believed that we had established a constructive dialogue with the society. . . .Given the inflammatory nature of their sentiments, we are considering all of our options for response."

Book acknowledged in the statement that "availability of psychiatrists has been an issue for the industry" and that the company is taking steps including raising reimbursement rates where appropriate, simplifying the treatment authorization process, and eliminating the need for authorization for certain services.

But Book also said some aspects of the shortage of psychiatrists—especially child and adolescent psychiatrists—might not be amenable to such remedies.

"There are fewer than 200 members of the American Academy of Child and Adolescent Psychiatry in New Jersey and approximately 7,000 child and adolescent psychiatrists practicing in this entire country," he said. "There are simply not enough practitioners to address the demand for these services in our society today."

Magellan was especially vehement in its response to complaints about the company’s provision of follow-up services.

The medical society, in its statement of complaints, had quoted statistics from the state’s report card on HMOs saying that only 26 percent of patients covered by Horizon and 19 percent covered by Aetna (both of which contract with Magellan) had follow-up visits after receiving medication for depression. The statement cited the report card showing that hospitalized patients covered by the two insurance companies only rarely received follow-up care (21 percent for Aetna patients and 25 percent for Horizon).

But Magellan said the society misrepresented the facts. "Magellan’s statistics for following up with patients after a hospitalization for mental illness exceed both the New Jersey average and the standard set by the National Committee for Quality Assurance," said Book. "A recent clinical audit found that all Magellan members had follow-up appointments scheduled prior to discharge from a behavioral health facility."

Book said the society ignores the fact that the vast majority of prescriptions for antidepressants are written by primary care physicians, not psychiatrists, so that follow-up for those patients falls outside Magellan’s scope of responsibility.


Psychiatrists agree that the root of the impasse is the inadequate portion of the health care dollar allotted to mental health. "We don’t have infinite resources, but the resources for mental health are too small to provide the care that is necessary," said Linda Gochfeld, M.D., a past president of the NJPA and the association’s liaison to the state medical society.

In the meantime, the American Medical Association has weighed in with support for the medical society’s position. "We have been working closely with MSNJ on this issue and share its very serious concerns about the adequacy of Magellan’s physician network and other business practices that operate as barriers to needed care for people with mental health problems," said Tim Flaherty, M.D., vice chair of the AMA’s Board of Trustees in the statement released by the medical society. "Unfortunately, these problems are not isolated to New Jersey." ▪

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