H Berryman Edwards, MD, FAPA

ASK DR. DENIAL

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!