The Still-Evolving Story of Managed Care: Crisis Stabilization Versus Real Recovery

In the late 20th century, the moral imperative to manage scarce resources emerged as a relevant issue in domains ranging from the environment to health care. Managed care expanded dramatically in the 1990s after more than a decade of double-digit inflation in health care costs and the failure of the Clinton administration effort to implement national health insurance.

To reduce costs, insurance companies and managed care entities developed access to care criteria for those struggling with mental and substance use disorders (M/SUDs) that limited inpatient and outpatient treatment to crisis stabilization. Criteria such as those developed by InterQual and MCG would end treatment once crisis stabilization was achieved.

With crisis stabilization as the goal, mental health professionals were regularly pressured by utilization reviewers to end treatment once the presenting problem was resolved. Only in retrospect did it become clear that there was a fundamental flaw in this approach, because it conflicted with the generally accepted standards in which clinicians are trained and with the pursuit of real recovery. The Substance Abuse and Mental Health Services Administration has defined recovery as “a process of change through which individuals improve their health and wellness, live a self-directed life, and strive to reach their full potential.”

Crisis stabilization as the treatment goal cut short-term costs but did so at the expense of the long-term needs of patients. Since most Americans stay with an insurance plan for only a few years, managed care and insurance entities lack an incentive to prioritize the long-term best interests of patients. Instead, the incentive for payers is to limit treatment, cut costs, and let the next commercial or government insurer deal with the reality that most patients struggle with problems that are chronic or recurrent. The decision drove recovery-focused practice into the self-pay market, thus increasing health disparities and contributing to the current mental health crisis.

While managed care implemented crisis-focused access to care criteria, the American Society of Addiction Medicine (ASAM) and the American Association of Community Psychiatrists (AACP) independently developed access to care criteria from a recovery-focused clinical perspective. The ASAM criteria for substance use disorders and the Level of Care Utilization System (LOCUS) for Psychiatric and Addiction Services developed by AACP are instruments that consider more than the single dimension of severity/acuity, but also include the impact of co-occurring disorders, motivation for treatment, past treatment response, and the recovery environment, among other dimensions. Multidimensional criteria better assess patients’ needs in pursuit of recovery.

Meanwhile, the legislative landscape changed. The 2008 Mental Health Parity and Addiction Equity Act required that barriers to access treatment for M/SUDs not be substantially more stringent than for medical and surgical treatment. The 2010 Affordable Care Act reinforced mental health parity, included treatment of M/SUDs as part of the essential benefit package, and required disclosure of criteria used to deny care. The 2020 Consolidated Appropriations Act required insurance entities to report progress implementing parity. However, the Department of Labor reported in 2022 that not one of 150 insurance entities surveyed was able to demonstrate achievement of mental health parity.

In 2018, the AMA tied the definition of “medical necessity” to services consistent with “generally accepted standards” (GAS) of medical practice—a definition that APA endorsed. GAS are determined by research evidence, professional society recommendations, practice patterns, and such other sources as the Medicare manual, but not by insurance industry financial considerations. This medical necessity definition became the fulcrum of the landmark federal class action known as Wit v. United Behavioral Health (“UBH Ruling Called an Enormous Victory for Patients, Wake-Up Call to Insurers”). Although UBH insurance contracts explicitly guaranteed access to medically necessary treatment that met GAS, the judge found that UBH substituted crisis stabilization—a goal inconsistent with GAS—when determining medical necessity.

While a three-judge panel of the 9th Circuit Court of Appeals overturned the 2019 verdict, this decision was based on an apparent misunderstanding of the case and did not question the trial judge’s verdict that UBH departed from GAS by limiting treatment to crisis stabilization. Currently, the plaintiffs are seeking review of the panel’s decision by the entire 9th Circuit. The AMA and APA, along with several states and other entities, have filed amicus briefs in support of the plaintiffs.

While the appeals process unfolds, UBH has begun administering health plans that de-link medical necessity from GAS while simultaneously claiming that company guidelines reflect prevailing clinical standards. However, uncontested evidence in Wit showed that UBH clinical guidelines were tainted by UBH financial considerations.

Where does this leave us and what have we learned after 30 years of managed care?

• Given the short period individuals stay with a plan, insurance entities lack incentive to meet patients’ lifetime needs, instead prioritizing revenue.

• Insurance entities often substitute crisis stabilization for the generally accepted goal of recovery.

• Financial considerations may trump clinical considerations when insurance entities determine access to care.

• Fourteen years after mental health parity became law, not one of 150 insurance entities could demonstrate that it achieved parity.

• Unless forbidden by law, insurance entities will rewrite health plans to define medical necessity without reference to generally accepted standards identified by the AMA and APA.

The take-home message is that we as psychiatrists are not simply bystanders. We have an active role to play in defining GAS that can help implement parity, increase access to care, and reduce shameful health disparities. ■

Eric Plakun, M.D., is medical director and CEO of the Austen Riggs Center in Stockbridge, Mass.