Author: KWILLIAMS
Last saved by: Pennsylvania State University
Company: American Medical Association

CMS Rep. 6 - I-00 -- page

REPORT OF THE COUNCIL ON MEDICAL SERVICE

CMS Report 6 - I-00

Subject: | Mental Health "Carve-Outs"
Presented by: | Joseph M. Heyman, MD, Chair
Referred to: | Reference Committee G
| (Patricia G. Klein, MD, Chair)

At the 1999 Interim Meeting, the House of Delegates adopted Substitute Resolution 715.  The third resolved clause of Resolution 715 (I-99) requested that “since responsibility for utilization review and pre-certification for mental health is carved out in many plans, the Board of Trustees is requested to ask the Council on Medical Service to revisit these and other issues of mental health carve-outs.”  In addition to the requested revisitation of the mental health carve-out issue, Substitute Resolution 715 (I-99) established policy that the AMA petition insurance companies to treat patients with psychiatric illness no differently than they treat any other patients with respect to utilization review and pre-certification policies, and to afford the same degree of authority to psychiatrists as they afford to all other physicians (Policy H-345.982, AMA Policy Database).
The Council on Medical Service has addressed the issue of mental health carve-outs in two previous reports to the House of Delegates.  CMS Report 7 (A-95) presented an informational summary of mental health carve-outs.  CMS Report 2 (A-96) evaluated evidence available at the time as to the merits of carved out versus integrated mental health plan benefits, and recommended the adoption of the principles contained in Policy H-285.956 that should apply to any managed care plan that provides mental health benefits.  The following report provides an update on the use, structure, and effectiveness of mental health carve-out programs.

USE AND STRUCTURE OF MENTAL HEALTH CARVE-OUT PROGRAMS

Nearly 177 million people were enrolled in managed behavioral healthcare organizations (MBHOs) in 1999, according to information provided by the American Managed Behavioral Healthcare Association (AMBHA), the trade organization for MBHOs.  Accordingly, of the estimated 244 million Americans with health insurance coverage, approximately 72% have some type of managed behavioral health care.  Not all MBHOs are the result of carve-out arrangements, however, which are characterized by separate financing and delivery systems.  For example, mental health services may be financially integrated with medical services, or “carved-in,” but administered through a MBHO.  On the other hand, third-party payers may carve out mental health services by contracting with an MBHO to administer or provide for all mental health services, while providing medical care on a fee-for-service basis.  Similarly, employers may create a carve-out arrangement by contracting with an HMO for medical services and an MBHO for mental health services.  Increasingly, carve-outs are achieved by contracting with MBHOs on an administrative services only (ASO) basis, where the payer assumes the financial risk and the MBHO has an incentive to maintain low administrative costs.  Under ASO contracts, the MBHO receives a set administrative fee per enrollee, as well as fees to cover the claims based on the actual utilization of mental health services.

The benefit structures of carve-out programs vary considerably.  Some programs certify specific numbers of outpatient visits or other specific services, such as emergency assessments, pending the outcome of telephone interviews of enrollees by mental health providers.  Others allow enrollees more liberal access to physicians of their choice, including a choice between in-network and out-of-network practitioners, with higher co-payments and deductible structures assessed to the latter.  Not all carve-out programs impose a cap on the number of visits permitted, but successive visits may trigger a higher level of co-payment.  For example, the first five visits may have no co-payment, while the sixth through twentieth may have a $20 co-payment, and any visits beyond twenty could have a $50 co-payment.

As previously indicated, some MBHO benefit structures require patients to access mental health services by telephone, in which case their calls are typically answered by non-physician mental health providers, such as masters-degreed psychologists.  These health care providers ask patients sufficient information to assess the urgency and extent of need for mental health services.  Based on such interviews, which can contain highly personal patient information, the providers make referrals to contracted mental health professionals.  Once treatment has begun, case managers, who typically are licensed mental health professionals, may be employed by MBHOs to review clinical updates of each patient’s care to determine the need for treatment that would be in addition to the amount specified during original certification.

Proponents of the carve-out approach cite the availability of a greater array of specialized services for the entire spectrum of behavioral disorders, sophisticated quality assessment and improvement systems, the ability to generate more accurate utilization and outcome data by more precise coding of mental health and chemical dependency treatment services.  Proponents of carve-outs, including payers that favor their use, contend that integrated managed care plans are unable to sufficiently manage resources for patients with serious or chronic mental disorders.

Proponents of integrated programs, on the other hand, claim that many patients with behavioral disorders have related medical problems that are improperly diagnosed by professionals whose training is exclusively in the mental health field.  Other concerns expressed regarding carve-out plans include fragmentation and discontinuity of care for such interrelated medical and psychiatric disorders, reduction in the role of primary care physicians in treating behavioral problems, reduction in the ability of primary care physicians to refer to psychiatric specialists of their choice, and a potential incentive to transfer or “dump” patients with medical and psychiatric co-morbidities into the carve-out plan.

Proponents of integrated programs further claim that integrated financing and delivery of mental and medical services allows for underlying behavioral causes of medical conditions to be properly diagnosed and treated as such, thus off-setting the costs of related medical care.  They contend that carve-outs duplicate administrative costs and diminish the ability to off-set costs among general medical and psychiatric services.

As with integrated managed care organizations, mental health carve-out programs aim to reduce hospital costs by providing more treatment in outpatient settings.  Unlike integrated managed care systems, MBHOs typically manage costs using concurrent review for all services, both inpatient and outpatient.  Although parity in the payment of mental health services compared with other medical services is not explicitly linked to the operational separation of mental health services from such other services, carve-outs are linked to the principle of parity because they are established primarily to control costs of mental health services.  The managed behavioral health industry experienced a period of rapid growth in the late 1980s and early 1990s, in response to payer demands to control costs in the provision of mental health services.  Mental health carve-out programs also may be providing a mechanism for employers to meet the requirements of the Mental Health Parity Act of 1996 (P.L. 104-204), which prohibited plans from setting annual or lifetime dollar limits on a person’s mental health care that are lower than the limits for general medical and surgical services.  The Mental Health Parity Act expires on September 30, 2001, and during Congressional testimony in May 2000 on reauthorization of the law, the General Accounting Office (GAO) estimated that violation of the law is widespread, although most employers have complied.  In its survey of 863 employers in 26 states, the GAO found that while most employers were achieving parity in terms of dollar limits on services, most newly compliant employers became so by making their plans more restrictive in the number of hospital days or outpatient visits.

EFFECTIVENESS OF MENTAL HEALTH CARVE-OUT PROGRAMS

A review of the literature suggests that mental health carve-out programs can significantly reduce the cost of providing mental health benefits.  Some studies of utilization in carve-outs indicate that such programs increase the rate of outpatient service use.  The cost reductions are attributed to decreasing the number of outpatient visits, as well as the frequency and duration of inpatient stays.  The Council notes that evidence is lacking, however, to assess the clinical outcome of the shift in how mental health services are delivered.

In CMS Report 2 (A-96), the Council reported that the performance record for integrated versus separate or carve-out management of behavioral health care was inconclusive, which was a view shared by the American Psychiatric Association (APA).  Quality indicators remain scarce and inconclusive at this time, but more information on quality of care is being collected.  At the time this report was written, the APA was considering whether to formally oppose carve-outs of psychiatric care.  The APA weighed the matter with an appropriately high level of deliberation.  In its consideration of the relative merits of integrated versus carved-out programs, the APA noted that under either system, budget allocations for mental health services can be inadequate for achieving the desired quality of care.

The GAO released a study in September 1999 of mental health carve-outs in Medicaid managed care programs in four states: Massachusetts, Iowa, Colorado and Washington.  In all four states, beneficiaries had no choice of health plan as each state limited coverage to a single prepaid mental health plan.  In order to compensate for limitation to a single plan, the states were required by HCFA to allow beneficiaries to choose their own physicians (or other health care professionals) from within the plan’s network, and sometimes from outside the network.  The states required plans to determine “appropriate levels of services” using a broad definition of medical necessity, with prior authorization of outpatient care generally reduced or eliminated.  Compared with their prior fee-for-service programs, the states generally expanded the coverage under the carve-outs and reduced the use of inpatient services. 

With the growth and increasing sophistication of managed care carve-out programs, the National Committee for Quality Assurance (NCQA) established standards for the accreditation of such programs in 1996.  NCQA’s Managed Behavioral Healthcare Organization (MBHO) standards strive to monitor the quality of such programs, in a manner consistent with its broader monitoring of managed care organizations.  In its review of the NCQA standards, the APA supported the alignment of requirements for managed behavioral health care organizations and integrated managed care organizations.  NCQA’s MBHO standards are organized into seven categories, including (1) quality management and improvement; (2) accessibility; availability, referral, and triage; (3) utilization management; (4) credentialing and re-credentialing; (5) members’ rights and responsibilities; (6) preventive behavioral health care services; and (7) clinical evaluation and treatment records.  The most comprehensive of these standards categories is the one pertaining to quality assessment and improvement.  At the time this report was written, 34 plans had received or applied for NCQA accreditation under the MBHO standards.  NCQA launched a web-based health plan report card on accredited managed care organizations early in 2000.  Pending feedback on the report card and increased volume of accredited MBHO plans, NCQA may extend use of the report card to include MBHOs.

AMA POLICY

The AMA has established considerable policy on the provision of mental health services, particularly as such services have been influenced by managed care and related health insurance practices.  For example, long-standing Policies H-185.974 and H-345.992 support parity of coverage for mental illness.  Policy H-285.954[1b/c] states that certain professional decisions critical to high quality patient care should always be the ultimate responsibility of the physician practicing in a health plan, whether in primary care or another specialty, either unilaterally or with consultation from the plan.  Such decisions include, but are not limited to, when and to whom in-plan and out-of-plan physician referral is indicated.  Policy H-285.962 opposes managed care organization (MCO) requirements that a patient determined by his or her physician to be in need of specific treatment, including psychiatric treatment, be interviewed by an unqualified employee of the MCO prior to approval of the treatment.  Policy H-345.982, which was adopted at the 1999 Interim Meeting, calls for insurance companies to treat patients with psychiatric illness no differently than they treat any other patients with respect to utilization review and pre-certification policies, and to afford the same degree of authority to psychiatrists as they afford to all other physicians.  Policy H-285.944 contains principles to guide the development and implementation of disease management programs.

As previously noted, Policy H-285.956 advocates that all managed care plans that provide or arrange for behavioral health care adhere to the following principles, and that any public or private entities that evaluate such plans for purposes of certification or accreditation utilize these principles in conducting their evaluations:

1)	Plans should assist participating primary care physicians to recognize and diagnose the behavioral disorders commonly seen in primary care practice. 

2)	Plans should reimburse qualified participating physicians in primary care and other non-psychiatric physician specialties for the behavioral health services provided to plan enrollees.

3)	Plans should utilize practice guidelines developed by physicians in the appropriate specialties, with local adaptation by plan physicians as appropriate, to identify the clinical circumstances under which treatment by the primary care physician, direct referral to psychiatrists or other addiction medicine physicians, and referral back to the primary care physician for care of behavioral disorders is indicated, and should pay for all physician care provided in conformance with such guidelines.  In the absence of such guidelines, direct referral by the primary care physician to the psychiatrist or other addiction medicine physician should be allowed when deemed necessary by the referring physician.
4)	Plans should foster continuing and timely collaboration and communication between primary care physicians and psychiatrists in the care of patients with medical and psychiatric co-morbidities.

5)	Plans should encourage a disease management approach to care for behavioral health problems.

6)	Participating health professionals should be able to appeal plan-imposed treatment restrictions on behalf of individual enrollees receiving behavioral health services, and should be afforded full due process in any resulting plan attempts at termination or restriction of contractual arrangements.

7)	Plans using case managers and screeners to authorize access to behavioral health benefits should restrict performance of this function to appropriately trained and supervised health professionals who have the relevant and age group specific psychiatric or addiction medicine training, and not to lay individuals, and in order to protect the patient's privacy and confidentiality of patient medical records should elicit only the patient information necessary to confirm the need for behavioral health care.

8)	Plans assuming risk for behavioral health care should consider "soft" capitation or other risk/reward-sharing mechanisms so as to reduce financial incentives for under-treatment.

9)	Plans should conduct ongoing assessment of patient outcomes and satisfaction, and should utilize findings to both modify and improve plan policies when indicated and improve practitioner performance through educational feedback.

DISCUSSION

As initially expressed in CMS Report 2 (A-96), the Council continues to be concerned with the practice of some mental health carve-out programs that require patients to access mental health services through referring “intake” providers.  Referrals made pursuant to toll-free telephonic intake interviews are potentially insufficient to fully assess the scope of patient needs, particularly for chronically ill patients that have other medical problems.  The Council believes, therefore, that mental health carve-out programs should adequately provide for the appropriate diagnosis, evaluation, and treatment of medical comorbidities.

Furthermore, the Council remains concerned that the nature of intake interviews outside of an established patient-physician relationship may raise serious questions regarding the privacy and confidentiality of patient information.  As previously noted, current AMA policy opposes managed care organization (MCO) requirements that a patient determined by his or her physician to be in need of specific treatment, including psychiatric treatment, be interviewed by an unqualified employee of the MCO prior to approval of the treatment (Policy H-285.962), and supports restricting certification screening to appropriately trained and supervised health professionals who have relevant training, and by supporting a limit on the information gathered to justify the certification of services (Policy H-285.956[7]).  Nonetheless, the Council remains concerned that some patients will be asked to divulge information they would rather not share over the telephone with someone they have never met.  A real possibility exists, therefore, that certification decisions may be based on inaccurate information precisely because of the sensitive nature of the information requested.  Accordingly, in those situations where intake providers certify a specific number of mental health visits, the Council believes re-certification for additional visits should be granted upon request by the treating psychiatrist, or other health care professional, without additional personal information from the patient.

The Council remains optimistic that the National Committee for Quality Assurance has established meaningful standards for the accreditation of MBHOs.  Third-party payers planning to carve-out mental health benefits should be encouraged to contract with MBHOs that have been accredited by NCQA or by other recognized accrediting bodies.  Furthermore, accrediting bodies that collect information on the quality of MBHOs should be encouraged to disseminate such information to the public.

The Council also believes that MBHOs need to work to ensure that health plan enrollees are provided with clear and easily understandable information as to how mental health services can be accessed, and that those MBHOs that utilize mental health carve-out programs remove barriers from their “intake” procedures that may interfere with timely communication and collaboration between attending physicians and psychiatrists.  Finally, the Council believes that the AMA should continue to work with the American Psychiatric Association to monitor the effectiveness of mental health carve-out programs.

RECOMMENDATIONS

Council on Medical Service recommends that the following be adopted and the remainder of this report be filed:

1.	That it is the policy of the AMA that mental health carve-out programs should adequately provide for the appropriate diagnosis, evaluation, and treatment of medical comorbidities. (New HOD Policy)

2.	That it is the policy of the AMA that where a cap on the number of mental health visits is imposed by a health plan, re-certification for additional visits should be granted upon request by the treating psychiatrist, or other health care professional, without additional personal information from the patient. (New HOD Policy)

3.	That the AMA encourage third-party payers using mental health carve-out programs to contract with managed behavioral health care organizations that have met the standards of recognized private sector accrediting bodies. (Directive to Take Action)

4.	That the AMA encourage private sector accrediting bodies collecting quality assessment data of managed behavioral healthcare organizations to widely disseminate such information to the public. (Directive to Take Action)

5.	That the AMA urge managed behavioral health care organizations to provide health plan enrollees with clear and easily understandable information on how to access the organization’s mental health services. (Directive to Take Action)

6.	That the AMA urge managed behavioral health care organizations that implement mental health carve-out programs to remove any barriers from their “intake” procedures that interfere with timely communication and collaboration between attending physicians and psychiatrists. (Directive to Take Action)