An evaluation of contracts between managed care organizations and community mental health and substance abuse treatment and prevention agencies

68 Pages·1997·3 MB·English

by  Rosenbaum, Sara

Volume One:
tsttliitintia*AhummtiKfantglffnefttlS&Vfces/•riminirtrrlSnn An Evaluation ofContracts
Between Managed Care
Organizations and Community
Mental Health and Substance
Abuse Treatment and
PreventionAgencies
Producedtorthe
SubstanceAbuseandMentalHealth
ServicesAdministration
ISAMHSA)
An Evaluation of Contracts
Between
Managed Care Organizations and
Community Mental Health and
Substance Abuse Treatment and
Prevention Agencies
SaraRosenbaum,J.D.
KarenSilver,M.P.H.
ElizabethWehr,J.D.
TheCenterforHealthPolicyResearch
TheGeorgeWashingtonUniversity
August1997
PreparedfortheSubstanceAbuseandMentalHealthServicesAdministration(SAMHSA)
1
Contents
f£r,
Acknowledgments v
ExecutiveSummary. .Vll
Introduction ^
BackgroundandOverview 3
StudyMethodsandFindings 7
ContractProvisions 7
1.IdentifyingContractsbyTypeofMCO,ElementsofGroupSponsor
Agreement,orTypeofGroupSponsor. 7
2.ClassesofServicesCoveredbyContracts 9
3.TheDutytoTreatPatientsandAcceptPatientReferrals 10
4.PriorAuthorizationofCoveredServices 1
5.AccessStandardsandTreatmentTimeLines 12
6.Referralsto,andRelationshipsWith,OtherProviders 12
7.MedicalNecessityandEmergencyDefinitions 13
8.EnrolleeEncounterDataandEligibilityVerification 14
9.QualityManagementSystems I5
10.CapitationAgreements I5
11.Fee-for-ServiceAgreements I6
12.CoordinationofBenefits I7
13.TermandTermination 17
14.GagClauses 19
Contents 111
15.AntidelegationClauses 19
16.IndemnificationClauses 20
InformalInterviewswithMH/SAProviders 20
ConclusionandRecommendations 23
AppendixA:Methodology 27
AppendixD: ^ibles 31
EvaluationofContractsBetweenMCOsandCommunityMH/SATreatmentandPreventionAgencies
Acknowledgments
Wewishtoacknowledgethefollowingpersonsfortheirsupportandguidance:Dr.Eric
Goplerud,Dr.MadyChalk,andDr.JeffBuckoftheSubstanceAbuseandMentalHealth
ServicesAdministration,-RachelBlockandstaffoftheHealthCareFinancingAdminis-
tration;Dr.SuzanneGelber;EllenWeber,J.D.,oftheLegalActionCenter,-DonHeveyof
theMentalHealthCorporationofAmerica,Inc.;CharlesRayoftheNationalCommu-
nityMentalHealthCareCouncil;JackGustafsonoftheNationalAssociationofState
AlcoholandDrugAbuseDirectors;Dr.RobertGloveroftheNationalAssociationof
StateMentalHealthProgramDirectors;Dr.H.G.WhittingtonofWilliamMercer,Inc.;
LeslieScallet,J.D.,ofLewin/VHF;andJeffreyKushneroftheDepartmentofHuman
ResourcesinOregon.ThisstudywasconductedfortheSubstanceAbuseandMental
HealthServicesAdministrationunderHRSAContractNo.240-94-0038.
Acknowledgments v
Executive Summary
Thisstudyisadescriptive,point-in-timeexaminationofthestructureandcontentofpro-
vidernetworkagreementsbetweenmanagedcareorganizations(MCOs)andcommunity
mentalhealthandsubstanceabuse(MH/SA)treatmentandpreventionagencies.Thisis
notastudyofthequalityofmanagedcaresystems;rather,itisanassessmentofprovider
contracts(oneofthebasiclegalinstrumentsonwhichthemanagedcaresystemrests)to
identifythemeaningoftheseinstrumentsforMH/SAserviceproviders,grouppurchasers,
MCOs,individualconsumersandtheirfamilies,andpublicpolicymakers.
BackgroundandOverview thedistributionofclinicalandfinancialrisk.
Undertherulesofcontractinterpretation,the
TheAmericanhealthcaresystemisundergo- clearertheagreement,themoreenforceableits
ingdramaticchangethatisnotyetwellunder- terms.Liabilityforambiguitylieswiththe
stood.Thelegalheartofthistransformationis drafterofthecontract.Inahealthcaresystem
thewebofcontractsamongthemajorstake- governedbyprinciplesofmarketlaw,itis
holders:grouppurchasers,MCOplans,and essentialforthedrafter(inthiscasetheman-
healthcareproviders.Theseagreementscreate agedcareorganization)toretainasmuchdis-
legallyenforceablerightsandduties,govern cretionaspossibleoverthetermsoftheagree-
theflowofbillionsofdollarsinannualhealth menttoprotectitsinterestsandthoseofits
spending,andaffectthecareofmillionsof client(thegrouppurchaser).Thismeansnego-
MH/SAserviceconsumers.Itiscriticalthat tiatingcontractsthatgivethecompanythe
publicpolicymakers,grouppurchasers,pro- powertoexercisediscretionovertheprovision
viders,andconsumersunderstandwhatser- ofmedicalcareandtheexpenditureofmoney.
vicesthesecontractsprovide,howtheyare
structured,andhowtheyultimatelymay StudyMethodsandFindings
sccthaoohhocsnealhttpdilureeysapvceatoitrhrnotegfsiuehhnslsoepnouaeewtclloceitderfthsiphcescerodaasocrrtomoeyuonpstcttryacreersaovetcaemetcnoemctrsa.eicsbvoAcsoefottuswhcoea;nerrtlcveelaai.n-brccdleeeose;;sulfiriaogamrnnigdeted FrcamooepunrvpntieitrenhtawdicysitfxsMraenoHs(ami/l.aeya.Sns,iAdbcsao,asandgewtdereoneafcncsidtmeeaslos)ertctehcthoaerlttdlohce5uaoc0gntnhetc2odao5uinft0tnrretioadhnmcettaaclsclottmo-
UnitedStates.Allthecontractswereineffect
Contractsareaseriesofrelated,legally atthetimeoftheircollection.Participating
enforceablepromises.Acontractarticulates agencieswereassuredanonymity,andallcon-
therightsandresponsibilitiesofthepartiesto tractswerestrippedofidentifyinginformation
theagreement,theflowoffunds,theassign- beforeanalysisinordertomaintainconfiden-
mentofclinical?ndadministrativeresponsi- tialityofallparties.Wealsoconductedinfor-
bilitiesthroughthehealthcaresystem,and malinterviewswithseveralproviderstolearn
ExecutiveSummary vn
moreabouttheirexperiencesinnegotiating Wealsofoundthattheprovidercontracts
contracts. serveasgeneralnetworkparticipationagree-
ments—notspecifictoaparticularmember
ContractProvisions groupcaredforbytheMCO(e.g.,Medicaid
ET1.ylpeIemdeeonnfttGisfryooifunGgprCSoopunoptnrsSaoprc.otnsMsboayrnaTAyggpreeedeocmfaeMrneCt,cOo,onr- bmeumeipmllbdoenyreeste,whopereakrlsstohonfsplpcarnoo)vv.eirdMeeCdrsOtwhshroomusugeshtsaebrSevtiaactbeelseto
lttttiiyrhhnezaeevseco.dtMtl.sGyvCepewNneiOoentorruhfaomlwfMcelafoyreCs,mroiOimuitntusgpwwnotthaishyosstepisyebnaeslogMetocrHfoetpn/oemotmsSaarsesnaAicncabettalgrgetwweeaaadtniosscnciiaawiedrtnhseseaeen-lttefinhtfaeiytr- cMdtptiahohCfreeeiOtcyscisopcin.nrinootptvtraTiautahdcirsieotnssrnsissgd;asenlouglhgersogstpeweoeeesncmgivtoefrsetinorcttmu,hspmeatteafhsmnrepMoobgCtnmeehsOnratoetshrrgesiairscnrooeurnepMparktsotCogvuetiOornodteeehsrroepasfer.l-
financialriskforservicesorwasinstead 2. ClassesofServicesCoveredbyContracts.
administeringaself-insuredplanforagroup Contractstypicallycoverbothmentalhealth
sponsor,whichretainedrisk.Determining andsubstanceabusetreatmentservices.The
corporatestructureandriskcontractingwould basicprovideragreementscoveralimited
haverequiredustobreachconfidentialityby rangeofbenefitsandservices.Almostnocon-
queryingtheparties.Itisimportanttonote tractscoveredthecomprehensiverangeofser-
thatwecouldfindnothinginthestructureof vicesthatMH/SAagenciesarecapableof
thesecontractsinvolvingunknowncorpora- offering.TheanalysissuggeststhatMCOs
tionstosignificantlydistinguishthemfrom tendtobuyfromcommunityMH/SAagencies
"known"contracts. onlyspecificinterventionsfurnishedonlyby
Cporovveirdaegre,ductoisetssvhaarryinagm,oanngdgcrerotuapinpunrecthwasoerrks; ctehirstaiisnbceactaeugsoeritehseofagprreoveimdeenrts.sPMrCesOusmanbelgyo,ti-
MmaCnOagseambulsetobpeeraabtlieontoasntdruecsttuarbeliasnherfefaiscioenn-t, aitteedwiinthscgorpoe.upMopruerocvhears,ertshaerseetrvhiecmesselMvCesOslim-
purchasefromcommunity-basedorganiza-
aabnldyccoonndsiitsitoennsttnheattwaoprpklyp,aritnilcairpgaetrioMnCtOesrm,sto tions(CBOs)tendtobetraditionalformsof
tensofthousandsofprovidersinthenetwork. caanrdeo(ue.tgp.,atpiseyncthisautbrisctasnecreviacebsu,seouttrpeaattiemnetntcasreer,-
Basiccoveragerulesandtreatmentobligations,
btpqeurenaorelvmfiiitsatyinocadnlssastuuersrreelamsa,nitcnereaditsaitknoo-dnsuhtctialhlraeiiuznstageitsimp,orinoncvgorioesorvifdioipnensawa,ytamainenodnndtof vspctiisorcoyneenctasahr!tloasmlcd,eotenglssitiuscvcstoehesvrr.eevadrisLceb"pesybsssuycntctrhhdehialdaateentdnmr"toiiinsgoatehuls-tetqpdaubanahetdreitfaePeulnhrrtt.nhoDMif.psHrtho/hefedSesAb-y
atsopnodbnemsoosdtriawnfdihacorasdteiizomende,omfbrceeogrnastrrdaalcepstrstoovefirdmtehsreamgriergolhuitpkely mpnreoovrfeeersstiihnoacnnlaulod.nePedracelsvieannibctaailsoinsctsacfeofrnvtmirecaemcsbtweseerrrevoircaelh.meaoSlsittmh-
ssterrviek.inIgnldyeseidm,iloaurriannatlhyesiirsbfasoiucndprtohveiscioonntsr.acts itlhaerrlya,pyc,asceommamnuangietmyetnrteastemrveinctesf,orifno-rhmoemre
AnEvaluationofContractsBetweenMCOsandCommunityMH/SATreatmentandPreventionAgencies
patientsofinstitutions,andsubstanceabuse Requirementsforpriorauthorizationofser-
residentialtreatmentwererarelypurchasedas vicesappeartoapplytobothemergencyand
partofthebasiccontract.Noneoftheprovider nonemergencyservicesinabouthalfofthe
agreementsaddressedissuesofculturalcom- contracts.Theotherhalfspecificallyexempt
petenceonthepartoftheproviderortheavail- emergencyMH/SAtreatmentfromotherwise
abilityoftranslationservices. applicablepriorauthorizationrequirements.
Inthosecontracts,providersarerequiredto
Contractsfrequentlypurchasetheservices seekMCOapprovalofanemergencyservice
ofindividualhealthprofessionalsdirectly, within24to48hoursofadmission.
insteadofpurchasingcarefromtheMH/SA
agencyitself.Inthesecontracts,theMH/SA 5.AccessStandardsandTreatmentTime
agencyisnotapartytotheagreementandhas Lines.Themajorityofthecontractsreviewed
neitheraservicenorafinancialrelationship didnotcontaintreatmenttimelinesasacon-
withtheMCO.Thispracticehassignificant tractualduty.Eighty-twopercentweresilent
financialandorganizationalimplicationsfor ontheissueoftimelinesofcare.Supplemen-
communityMH/SAagenciesthatpreviously taryprovidermanuals,whicharenotformally
receivedall-inclusiveclinicratesforservices attachedtothecontract,maycoveraccess
furnishedbytheirentiresalariedstaff. standards.Thesemanualswouldbeless
legallyenforceablethancontractualagree-
3. TheDutytoTreatPatientsandAccept ments.Intheeightcontractsthatexplicitly
PatientReferrals.Allthecontractsimposedon establishedtreatmenttimelines,noconsis-
providersthedutytotreatpatientsreferredto tentpatternscouldbediscernedintherange
thembytheMCO.Rarelydidcontractspermit oftimelinesspecified.
providerstorefusetoacceptaparticular
patientintotheirpracticeortodischargea 6. Referralsto,andRelationshipsWith,Other
patienthorntheirprogram. Providers.Withtheexceptionoffourcon-
tracts,serviceagreementseitherexpresslylim-
4. PriorAuthorizationofCoveredServices. itedreferralstoproviderswithinthenetwork
Morethan80percentofthecontractsrequired orweresilentorunclearonthematter.Stan-
providerstoobtainpriorauthorizationforone dardinsuranceprincipleswouldexcludefrom
ormorecontractservices.Rarelydidacontract reimbursablecoverageanycourt-orderedtreat-
specificallyauthorizeprimarycareprovidersto ment,aswellastreatmentorderedbypublic
approvecare.Tenpercentofthecontractsgave agencies,suchasschoolsorchildwelfareagen-
patients'primarycareprovidersanexplicit cies,becausetheplan'smedicalstafi(or
roleinthepriorauthorizationprocess.This contractorsininstanceswheresuchdetermi-
findingsuggeststhatMCOstypicallyretain nationsareallowed)hadnotdeterminedthe
theprimegatekeepingresponsibility(i.e.,the medicalnecessityofthecare.Onlyafewcon-
exerciseofmedicaljudgmentregardingthe tractsexpresslyrequiredproviderstomaintain
needforspecialtycare).Thisisconsistent coordinatingarrangementswithotheragen-
withtheobligationofMCOstomanage ciesasabasiccontractduty.Theabsenceof
care,particularlytheconsumptionofspecialty explicitcoordinationrequirementsappears
services. consistentwithMCOs'generalpatternof
ExecutiveSummary ix
retainingcontroloverserviceandresource tioninthecontractor'squalitymanagement
authorization. system.
D7.efMineidtiicoansl.NTehcierstsyi-tsyixancdonEtrmaecrtgseenxcpyressly t1r0a.ctCsacpoitnattaiionnedAgcraepietmaetnitosn.paOnylmyenttwoarcroann-ge-
linkedcoveragetoadeterminationofmedical mentsforoneormorecoveredservices.Of
necessitybytheMCO.Twocontractsspeci- these,oneincludedawithholdarrangement.
fiedthattheirmedicalnecessitystandards Noneincludedasharedsavings(i.e.,"upside
buildoncurrentlyrecognizedplacementcrite- risk")clause.Thecapitationagreementsthat
ria.Virtuallynoneofthecontractsarticulated werepartofthesedocumentsappearedtocre-
aseparatemedicalnecessitystandardforchil- atesignificantfinancialriskintheprovider.
dcrdcpaoaororecntnonetceetvtneoirrrpcudaa(romneccsonitrttuvtn'ssciraishdante(ecj2ixstrt9upoth)rdnwameegsnacaspmdnosstlaeumolarantymnMdlht'isssesCttw)mtpad.oOrtieeuoegTtdldvdhehidirmttdsemehecbbidarremente'iaatsctjftitaaodhooilkrneeuoei.tnnnntted.eOryrcienimeInoalnsnitftysonisoinaetntgtphlyiary-oene M1(Opat14rorfC.8ormvOtaoiFahn/fseogkiesC5eoe-e0mnBf,)esuoO;nfrpwot-ewtuScsrawreo.errnocvtdAfoirigencanareteccd-ertlfjAaesouugcmrdsrtr-eetseesdnmeevitreimsnsvneehcitwnaclpestreuedsedraid.emnfrdoirswMrtaawionvtittshigthhitnehehsgmhooseMsolfntldCttudshdO.ey
ofmedicalnecessitybinding.Thisresultis levelsatanytime.
consistentwithanMCO'sbasicdutytothe 12. CoordinationofBenefits.Mostcontracts
grouppurchasertoensurethatcoverageis,in containedcoordination-of-benefitclauses,
fact,necessary. whichobligatetheprovidertobilllegallyliable
8Vd.eermiEfnairncoadltlifeooenr.EdDnaectsaopuointnteeartchcDeeasgtsraaoanwndthdutEiilnliigpziaabyiteliriostn'y, toshqniueradcroepnlatyrrtoaiecnsttbwheaefsoprlteahneb.iolnliunsgftohrecMolCleOc.tioInnpolnalcyed
omnulsytefiughrtnicsohnternaccotusntspeercidfaiteadttohaptlapnrso.viMdoesrts e13q.ualTleyrlmikaelnydtToegrrmainntatbiootnh.prCoovnitdrearcstsanwdere
wereeithersilentorunclearontheissue. MCOsno-causeterminationrights.MCOs
BecauseMCOscannotpayforcareunless weresomewhatmorelikelytobeabletotermi-
pfautrineinsthseda,reitewnarosllceodmamtothneftoirmceonsterravcitcsestoare nMaCteOfowrocualusde.reItanitnhteheevgernotuopfmteemrmbienrast.ioAn,paron-
specifypreserviceeligibilityverification viderthatelectstoterminatetheagreement
requirements.Fifteenofthe50contractscon- couldleavetherelationshipbutwouldloseits
tainedsucharequirement.However,onlyfour accesstotheMCO'spatients.Abouthalfthe
specifiedthattheMCO'seligibilityverifica- contractseitherrequiredatleast3months'
tionserviceswillbeavailableona24-hour- noticebeforeano-causeterminationordid
per-day,7-day-per-weekbasis. notaddressthematter,leavingtheprovider
98.0QpuearlcietnytMofanthaegecomnetnratctSsysrteeqmusi.reMdopraretitchiapna- sliusbhjeedc.tPtooswth-atetremvienratlaitoenrtrrueleastmweonutlodblbiegaetsitoabn-s
AnEvaluationofContractsBetweenMCOsandCommunityMH/SATreatmentandPreventionAgencies
areanimportantsafeguardforenrolledmem- umentspriortonegotiationreportedthat
bersoftheplansothatmemberscanbesafely MCOswouldnotfurnishthem.
transferredtoanothercarearrangement.Ina
substantialminorityofthecontractsreviewed, Fewerthanhalftherespondentsreported
thepost-terminationobligationextended obtainingalegalanalysisbeforesigningan
indefinitely,regardlessofthecauseoftheter- agreement.Onlyoneobtainedanactuarial
minationortheamountoftimeneededto analysis.Halftherespondentsindicatedthat
effectuateapatienttransfer. theyconductedabusinessanalysisofcon-
tractsbeforesigningthem.Theprovidersthat
14. GagClauses.Onlytwocontractscon- didnotobtaineitherbusinessorlegalassis-
tainedwhatcouldbeconstruedas"gag" tancereportedcostasabarrier.Onlyone-quar-
clauses(i.e.,clausesthatappeartoprohibit terofrespondentsweremembersofprovider
providersfromspeakingtopatientsabout networksthatrepresentedtheirinterestsona
coverageandtreatmentdeterminationsmade collectivebasis.
bytheplan).
ConclusionandRecommendations
15.AntidelegationClauses.Manyofthecon-
striaccitasnscounntdaeirnecdonptrroavcitsitoontshethMatCpOrohfirboitmphy- TtrhaicstsebxpeltowreaetonryM,CpOoisnta-nidn-ctoimmemusntuidtyyoMfHco/nS-A
delegatinganyoftheirdutiestoanyother agenciesshowsthatdespitesomedifferences,
memberoftheMH/SAagency'sclinicalstaff. providerserviceagreementsarestrikinglysim-
Whereastheseclausestechnicallyaremeant ilarintheirstructure.Contractsarecarefully
todealwiththelegalandethicalproblems constructedlegalinstrumentsthatMCOs
arisingfromunilateraldecisionsonthepart havecreatedtoestablishandmaintaincontrol
ofproviderstoendtheirrelationshipwith overaccess,benefitutilization,practicepat-
ppartoiheinbtist,intghetyhealussoecoofuladhbeaelctohncsatrreuetdeaamsto MterCnsO,aconndtrcoolstos.veTrhtehecomnotvraecmtesnsteeokftboenreeftiaciina-
providecoveredservicestopatients. riesandfundsthroughoutthenetworkcreated
bytheMCO.Theyshiftfinancialriskfrom
InformalInterviewswithMH/SAAgencies theMCOstotheirnetworkprovidersin
numerousways,includingeligibilityverifica-
During1996wealsoheldinformaldiscus- tionsystemsthatrequireproviderstoabsorb
sionswith12MH/SAagencydirectorsortheir theriskoferroneouseligibilitydetermina-
staffregardingtheirexperiencesinnegotiating tions,paymentprovisionsthatdonotcontain
managedcareprovidercontracts.Mostofthe specifictimelines,coordination-of-benefit
respondentsbelievedthatthecontractingpro- provisionsthatplaceresponsibilityforrecov-
cesshadbeenopentonegotiation.However, eryofliabilitywiththeproviders,andpost-
onlyhalfreportedthattheyhadallcontract- treatmentobligationsandotherprovisions
relatedinformationinhandbeforenegotiating designedtocontroltheflowoffunds.MCOs
thetermsoftheagreements.Themajorityof usethesetechniquestoensurethatthebasic
respondentswhodidnothaveallrelevantdoc- objectiveofthepurchaser—healthcareatthe
—
priceitwants canbeachieved,whileshield-
ExecutiveSummary xi