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Chapter 1
What Is “Managed Care”?
Managed care is a term that elicits a variety of reactions from health care professionals. Some practitioners feel anxious, confused, or bewildered as they try to provide traditional care to clients while coping with a maze of acronyms, undecipherable insurance jargon and procedures, and unclear or distasteful “business” concepts that have invaded clinical practice. Others feel resentment or even anger at managed care firms-resentment toward systems that seem to constantly question their clinical judgement and autonomy, and anger toward perceived threats to their professional livelihood. Many clinicians who have fought hard for increased access to counseling and therapy services for consumers are angered by what they see as managed care’s roadblocks to individuals and families receiving such care. They point to waiting lists, “gatekeepers” (who may not be clinicians), and excessive paperwork as obstacles to treatment imposed by managed care systems in an effort to restrict or deny services.
Other groups are concerned about managed care as well. Employee assistance professionals, accustomed to directing clients to particular treatment modalities and providers, are now confronted with relinquishing that role to others when managed care systems are involved. Hospital-based treatment staffs face declining admissions, reduced lengths of treatment stays, and radical restructuring of traditional programs due to the influence of managed care. Graduate students in the counseling professions wonder whether or not their education is preparing them for the actual practice environment of the coming decade. Many students and clinicians even question if “private practice” as it has been historically defined will survive in the future. They wonder how and if their “practices” will interface with managed care systems. What new strategies, skills, and innovations will they need to employ to be successful in the era of managed care?
Meanwhile these concerns and questions take place in the larger health care environment in the 1990s–one in which insurance behemoths are purchasing their own specialty managed care/employer services companies; where unions initiate work stoppages over employer benefit issues; where the federal government is experimenting with managed care systems for its CHAMPUS members, while policymakers debate greater federal involvement in controlling health care costs; where consumers are turning to HMOs and other managed health care alternatives as the cost of traditional health insurance products escalate. Rather than wish for a return to simpler times when counseling and treatment services were purchased on a “fee-for-service” basis and client choice reigned supreme, counseling professionals and others are being challenged to learn about managed care systems and how their influence on practice will increase in the years to come. By doing so they will be better prepared to prosper in changing times while fulfilling traditional roles of service delivery and client advocacy.
ESSENTIAL FACTS
Managed care, or, as it applies more specifically to our discussions, Managed Behavioral Care, is a term applied to a variety of strategies, systems, and mechanisms that have as their objectives the monitoring and control of the utilization of mental health and substance abuse services while maintaining satisfactory levels of quality of care. MBC has as its focus the marshalling and coordinating of the appropriate clinical and financial resources necessary for each client’s care. Essentially, managed care clients’ needs are matched to appropriate treatment resources, and then the delivery and outcome of these resources are monitored. Managed care developed a significant presence in the 1970s and made important impacts in the mental health and substance abuse treatment fields in the 1980s. MBC will revolutionize America’s mental health care delivery system during the 1990s.
There are three basic facts about managed care today:
1. Managed care is here to stay! It will not go away. Its impact on treatment patterns and reimbursement systems will only increase in years to come. Managed care has already made impressive in-roads into the health care market and it continues to grow. According to industry publications, enrollment in America’s 540 HMOs grew in membership to about 49 million Americans in 1993, an increase of over 10 percent from the prior year. Almost one in five Americans are enrolled in an HMO, easily double that number are involved in some sort of employer-sponsored managed care product. HMOs were headquartered in every state except Alaska, West Virginia, Vermont, and Wyoming. A large majority of employers offer HMOs as a part of their health care benefit menu–an attractive option to many Americans. These numbers do not include the millions of consumers who are involved in other types of managed care systems, either through their employers or through insurance carriers. Nor do they reflect the several million Medicaid and other public sector consumers who are increasingly moved through managed health care systems.
Some have advocated for Federal intervention in health care in such ways that would eliminate managed care, HMO, and insurance companies in favor of a government-run health care system financed through taxes, not insurance premiums. The spectacular failure of President Clinton’s health care reform legislation and the subsequent 1994 election results, together with the continued embrace of managed health care by the private and public sectors, seems to have dimmed the hopes of those who favor greater governmental administration of the health care industry. Clearly, consumers will receive care, and practitioners will continue to deliver care through managed care systems in ever increasing proportions. Managed care structures, including HMOs, are the rule not the exception.
2. Understanding managed care systems, philosophies, and dynamics is essential for successful clinical practice in the future. Today more than half of America’s physicians conduct at least part of their practices in association with HMOs. Still others are associated with Preferred Practice Organizations (PPOs). Clearly, managed care systems have exerted tremendous influences on physicians during the last decade, and their influence will extend deeper into the allied health professions in the 1990s. Successful counseling professionals, agencies, and facilities will be those whose practice patterns and programmatic offerings are most attractive to managed care systems.
3. Managed care is not the problem in health care today. It is a response to the problem confronting consumers, providers, and purchasers alike: rising health care costs, especially that segment of costs associated with the mental health/substance abuse treatment field. To many employers this “grey area” of health care seems particularly in need of “management.”
The nation spent over $884 billion or about $3,300 per person for health care in 1993 or about 13.9 percent of the Gross Domestic Product. One of the fastest growing segments of costs have been mental health and substance abuse treatment services. Employers and employees through private health insurance plans bore the largest share of these costs, while taxpayers absorbed the next largest portion of the national health care bill through Medicare, Medicaid, and other government-administered programs. Table 1-1 delineates this information further, while Figures 1-1 and 1-2 deal with 1991 data.
Because about one third of health care costs are paid by taxpayers, the rise in costs has helped to maintain the deficit in Federal spending and to place increasing burdens on state governments as well. One of the themes of President Clinton’s ill-fated 1994 effort at health care system reform was that health care costs were driving government spending faster than the growth of the economy. Rather than wait for federally mandated reforms, numerous state governments have initiated waivers from regulations concerning Medicaid funds and are introducing managed care systems to the public sector at a rapid pace. Table 1-2 details federal and state/local government health care spending trends.
BACKGROUND: DEVELOPMENTS THAT SET THE STAGE FOR MANAGED BEHAVIORAL CARE SYSTEMS
Introduction of Prepaid Health Care
Three historical developments helped shape today’s application of managed care to the psychiatric and substance abuse treatment fields. First was the gradual development of prepaid health care coverages. The most prominent feature of these systems was that the consumer paid one monthly fee and then received all health care services from selected providers at little or no cost.
TABLE 1-1. National Health Expenditures as a Percent of Gross Domestic Product, Selected Years
Year | % of GDP |
1960 | 5.3% |
1965 | 5.9% |
1970 | 7.4% |
1975 | 8.4% |
1980 | 9.2% |
1985 | 10.5% |
1986 | 10.7% |
1987 | 10.9% |
1988 | 11.1% |
1989 | 11.5% |
1990 | 12.2% |
1991 | 13.2% |
1992 | 13.6% |
1993 | 13.9% |
Source: Letsch, S.W. et al. Health Care Financing Review, Winter 1992, Vol. 14, Number 2, and HHS News Release: National Health Expenditures for 1993. Nov. 22, 1994.
Even though the first rudimentary examples of prepaid health care coverage came in the first decade of this century, the major breakthrough for Health Maintenance Organizations (H...
