Ask Dr. Denial

October, 1995

Peter Knoepfler, MD from Bellevue, Washington writes (via e-mail: Good for you, Peter!):

Dear Dr. Denial:

Is the managed care company [MCO] responsible if patients leave treatment because of unreasonable demands for private information?

Dear Peter:

Responsible for what, Peter? For the patient leaving treatment or for what happens to the patient as a result of leaving treatment prematurely? (These days it seems like whenever something bad happens, the responsible party is always somebody ELSE! unless you're a doctor, then it's always your fault!)

Actually as a (very small time) stock holder in one of the largest behavioral MCO's I see the ideal this way: The demands on the potential patient are so offensive that NOBODY SEEKS TREATMENT! All that insurance money goes right in my pocket! Ditto for the capitated group. Just like buying a lot of land and having the government pay you not to grow crops. Now you get paid not to treat patients! What a deal! The obvious alternative is for the patient not to access his insurance benefits, something that has been done for years to avoid even allowing the company know the patient is in treatment.

Ah, but this is the real world, and there are those desperate enough to spoil it for the rest of us by actually accepting treatment. We'll have to work for a living. I think the more interesting question is: Who is responsible for informing the patient of the "unreasonable demands for private information?" Ordinarily I would say the insurance plan, the MCO, or the employer. But did you sign one of those six page provider contracts? If you sold out to the big guys, it's a whole new ball game! Then I'd make a strong case that YOU are responsible! And you might not even know what to tell your patient! (How much do MCO's tell you about what happens to all that information?) And I'll bet the contract stipulates you agree not to treat the patient outside of the plan, i.e. not accessing that insurance money. Again, good news for the stock holder!

Actually, in Dr. Denial's experience as a reviewer, providers are often far too willing to provide unnecessary personal information! Put yourself in my shoes. How can any psychiatrist render a useful opinion about any case without reasonable access to historical information?

December, 1995

Dr. Brooke Thorner doesn't have e-mail yet (shame on you, Dr. Thorner) but commented at a recent CME activity on the lack of consistency in the definition of "medical necessity".

Well, Dr. Thorner, if you'd seen as many cases as I have, you'd know what it is. Actually I think of medical necessity in the insurance context the same way I think of insanity in the judicial context. It's not a medical term. It's an insurance term. And since insurance is a business, it's a business term which means it's likely to be proprietary: It can be defined any way the company wants it to be, but it has to be competitive. While writing this I looked it up in the Blue Cross benefit book that came with my personal policy. It starts out "Those Covered Services which, in the reasonable opinion of the Plan,...[Caps are theirs.] and refers to illness, treatment, standards, and appropriate setting or service. It excludes that which is primarily for convenience. I wonder how many of us compare definitions of medical necessity in determining which plan to purchase.

From the case manager's perspective their may be another parameter: the overall limitation on "mental and nervous" reimbursement. If you're trying to squeeze the most treatment out of a paltry $2000 annual benefit, you are likely to use very different definition than that used in the context of an unlimited annual benefit with a million dollar lifetime cap.

And before you start agitating to strongly for a more liberal definition (or interpretation) of the term, remember that if your practice is ever prepaid or capitated, you will be providing all that "necessary" treatment for nothing!

April, 1996

Those of us who use the APA's professional negligence insurance plan recently received a letter from Alan I Levenson, MD, "Chair and CEO" of the Psychiatrists' Purchasing Group explaining the lengthy questionnaire we returned as part of our application for renewal this year, and warning us if increases in our premiums. In some states the benefit will be reduced as well.

What caught my attention from the perspective of "managed care" was Dr. Levenson's statement to the effect that psychiatrists working on managed care panels may be seeing sicker patients for shorter periods of time with less involvement (The patient may receive psychotherapy services from a non-psychiatrist.), thus incurring greater exposure to risk of malpractice litigation. Although it may not happen this year, the implication is that in the future physicians working under contract to MCO's may pay higher premiums to reflect their greater exposure. But are these not the same physician's who discount their fees in order to have access to larger numbers of referrals. That sounds like a financial squeeze.

Of course the premise may not be true. MCO's try to screen out provider applicants they believe will be risky, and the involvement of case managers as well as other characteristics of MCO's may help to reduce risks.

But what I see happening is a slow shifting of costs back in the direction of the MCO or the health plan. Psychiatrists faced with escalating malpractice premiums will be less inclined to contract with MCO's. The MCO's will either have to pay their providers more or find other ways to keep costs down. Even without shifting liability to the MCO or the health plan the pendulum will swing back in the direction of traditional practice. In the mean time MCO's are making a lot of money from the illusion of cost containment resulting from the lag time in adjusting premiums, but I see this correction by reality testing as a much better solution than legislation and protest from those opposed to managed care on principal. The free market economy works again!

Psychiatrist Patricia Lipscomb, MD writes from Seattle, Washington:

Dear Dr. Denial,

Is it not likely that privacy of medical information will be compromised even more under the highly touted "single payer" system?

Dear Dr. Lipscomb,

Are you sure this letter wasn't intended for the other Dr. Denial, AKA Dr. McDermott. He's the real expert on the single payer idea. I'm no expert on politics, but my fantasy is that what the system looks like will depend on whether it is designed by Democrats or Republicans or H Ross Perot. The Democrats would establish a Federal Department of Confidentiality funded by a psychotherapy tax. The Republicans would pay for only one session in which no information would be collected, but the psychiatrist would be reimbursed for telling the patient to get their act together. Mr. Perot would subcontract the whole thing to the Canadians so we wouldn't have to "reinvent the wheel."

The good news under a single payer system would be the uniformity of whatever policy would be established. The bad news would be that the information might be accessible to an enormous number of people: a great opportunity for "big bother". I believe the information would still be collected in order to "manage" the cases. The extent to which privacy is compromised would depend upon the amount and quality of information transmitted and stored, and the degree to which access is limited. I don't know how this is handled in Canada.

For more information see:

August, 1996

Everything You've Always Wanted to Know about Managed Care Contracting but Were Afraid to Ask:

What's the best way to fight managed care?

  • Don't sign the contract.

What formula should I use to adjust my normal fee for a managed care contract?

  • Increased volume of referrals: Deduct 15%
  • My time completing the application: Add 0.5%
  • My time reviewing the contract: Add 0.5%
  • Fees to attorney to review contract: Add 1.0%
  • My time completing treatment reports: Add 5%
  • My time for telephone reviews: Add 5%
  • My time on hold waiting for telephone reviews: No change. Use this time for completing treatment reports.
  • Losses for providing unapproved services for which I have agreed not to bill: Add 5%
  • Losses for failure to bill according to the contract: Add 1%
  • Increased liability associated with increased pathology: Add 5%
  • Increased liability associated with reduced length of treatment: Add 5%
  • Increased liability associated with loss of control of psychotherapy to a non-physician: Add 5%
  • My insurer doesn't cover me for work performed under contracts with "hold harmless" clauses: Add 5%
  • Purchase extra filing cabinets: Add 5%
  • They never sent me any patients after all: Tough luck!
  • Total (net): Increase your fee by 38%

What formula will the MCO use to determine my fee?

  • Increased volume of referrals: Deduct 15%

How does the managed care company determine what they will pay me?

  • Supply and demand.