CHAPTER 2: LITERATURE REVIEW

A history of the growth of U.S. managed care medical plans and mental health plans

Tremendous economic forces have driven the growth of the managed care health plan movement in the U. S. over the last dozen years, and within this the growth of managed care mental health plans. From a minor share of the health plan market twelve years ago, managed care has emerged as the predominant share, now covering 85% of plan participants (Bachrah, 1995a; Schwartz, 1997).

Mental health care plans are normally situated either inside medical care plans or in separate negotiated managed care mental health organization plans (often called "carve-out plans"). Managed care changes in health plans generally have included the plans' mental health care components.

This chapter treats overall health care first, setting the stage for effects which then spread to mental health care. The losses this study explores reflect needs which have grown severe in the shadow of managed care's expansion. If we can understand where managed care mental health and its "unintended side consequences" have come from, we increase our chances to anticipate the human interests which designs may need to satisfy and what plan design synthesis might emerge next.

Managed care health plans and the rising cost of health care

Annual health care costs, as a percentage of gross national product, have more than doubled over the last three decades, from 7% of GNP in 1965 to 13% in 1992 and 14% reported in 1997. This surge brought the percentage of Gross National Product (GNP) for health care in the United States to a level greater than in any other country (Beigel & Shore, 1996, p. 221; Borenstein, 1996; Fuller, 1995; Schieber, Poulier & Greenwald, 1992; Schuster, 1993; Tuttman, 1997).

Zimet (1997) reports that when he reviewed his newspaper clipping file on health care issues, articles written in the late 1980s and early 1990s, he found that "both the New York Times and Wall Street Journal frequently reported on the yearly health-insurance increases ranging from 20 percent to 35 percent, with mental health costs rising even more steeply" (p. 18). Alperin and Phillips (1997) record that "this explosion in costs caught the attention of chief executive officers and managers, since the end result, if the trend were not stopped, would be bankruptcy, job loss, loss of revenue for inventories, recession, and elimination of health benefits" (pp. 22-23). As the 1980s went on, parties to the health care delivery system desperately looked for ways to moderate the rising double-digit (and sometimes even triple-digit) employer health plan cost inflation. In this environment, thoroughgoing cost-containing care management in medical and mental health grew within a few years to become the almost exclusive norm of health care delivery in the U.S.

Under indemnity health care, in the decades before managed care, covered consumers went to their own choices of licensed doctors, hospitals, testing facilities and simply sent the insurance company the bill. Weiss (1998) notes that in 1988 this indemnity health insurance market provided 72.6 percent of group health care. In the 1990s, by mid-decade, indemnity insurance had dropped to about one third; and by 1998, in a William M. Mercer Inc. study of 3,915 U.S. employers with 10 or more employees, it [indemnity insurance coverage] had dropped to 15%. Managed care controlled all the rest (Bachrach, 1995a; Bell, 1998; Weiss, 1998).

Health care systems in transition

In the early 1980s, Preferred Provider Organizations (PPOs) came into use. Because of the significant discounts being offered to the health plans by each PPO's chosen providers, as part of the PPO agreement, this method significantly reduced treatment costs. Each time consumers needed health services, they could choose any PPO panel provider, or (at a higher co-pay and/or lower reimbursement percentage) any other licensed provider. A PPO-indemnity combination plan favored the discounted/PPO plan by charging lower co-pays. The combination design helped to hold down plan renewal increases significantly for a few years. But, in spite of PPO savings on treatment costs, medical cost inflation continued. While PPOs kept the medical per-visit charges down, they had less effect on containing the total number of visits consumers had with their medical providers. While PPO’s generally offered the option to go to non-network providers, at that time HMOs did not allow consumers access to medical providers not on the HMO provider list.

This closed system in HMO medical plans had the virtue of holding down costs somewhat more, because it limited the number of visits as well as cost per visit. Because the premiums for HMOs were lower, more and more people chose, or had to choose, HMOs. This had unanticipated negative side effects. Consumers, especially old ones, often came into the HMO with established relationships with their physicians. Often these patient-preferred physicians were not in the HMO. Struggles over this problem became chronic. Employees and their unions increasingly asked for some equitable way that patients could be treated by non-network physicians, even offering in some circumstances to make larger co-pays. Plan members gave considerable and increasing resistance to total managed care provider control of care. (Ancy, 1997; see also Nauert, 1997, p. 14).

However, to increase client/patient choice would necessitate sophisticated claims-tracking computer equipment and software brought together with management information system (MIS) teamwork, to be able to store and manage the much wider system of medical provider contracting and claims data. By 1988 such computer equipment and systems were beginning to be used. With computer hardware and software capacity expanding rapidly, the stage was now set for plans to begin allowing consumers to have more choices (Fleischacker, 1992).

In 1987-88, I was a member of a consulting team, one of three in the country that we know of, which designed a kind of "open" HMO health plan which allowed plan participants to go to any of three categories of licensed service provider, called point-of-service triple option (POSTO) plans. Our design work was under the auspices of a grant from the Robert Wood Johnson Foundation. Open HMOs allowed the employee to choose a health care provider at the time he or she actually needed medical treatment (referred to as choosing at the "point of service," or POS). The plan participant could choose medical providers under three different options within this kind of health plan (thus a Point of Service Triple Option, or POSTO). The participant could choose from (1) the health plan's HMO provider panel, (2) the plan's PPO provider panel, or (3) the plan's indemnity ("any licensed, willing provider") component, which would allow the plan participant to go to any licensed provider.

By far the country's most widely known design initiative among the first three POSTOs designed was the Allied-Signal Corporation plan. Fleischacker (1992) describes the Allied Signal health plan crisis of that time: Allied was "facing a projected 73% increase in health care costs in the following three years" (p. 46). By collaboration among management, labor, and health plan to develop a plan design that all could accept and support, they were able to negotiate plan benefit design changes with the health plan which brought that 73 percentage premium increase down to less than 10 percent.

Since 1988, a movement has emerged favoring point of service (POS) HMO health plans, in the desire to give the consumer more choice of provider by allowing plan participants, for an extra fee, to choose providers outside the HMO (DeRosa, 1997; Dunne, 1997; Nauert, 1997; Reynes, 1996. POS health plan enrollments have grown from zero in 1987 to over 20% of the U. S. health care market (DeRosa, 1997; Dunne, 1997).

In two 1996 reports (Hagland, 1996; Reynes, 1996), the American Association of Health Plans reports that over 80% of HMOs offer a POS product to the public. DeRosa (1997) notes that the prestigious business-sector roundtable Conference Board predicts that POS health plans will grow faster than any other model. POS user loyalty is also high. By the time of Fleischacker's study in 1992, "95% of employers with POS [health] plans would recommend them to others" (p. 48). DeRosa (1997) predicts that because of the combination of cost-effectiveness and wider freedom, the POS may become the near future's primary kind of health plan.

Managed care mental health plans

So far this chapter has focused on the evolution of medical plan design in general. Outpatient mental health care also became caught up in the sweep of managed care into the medical benefits of health plans.

As medical costs rose quickly in the 1980s, each section of the health care budget was reviewed to see if design change could save money. Employers and health plans looked at the mental health component of the health plans and identified inpatient psychiatric and substance abuse services as the most important candidates for cost-containment and reform, particularly because inpatient treatment costs accounted for most psychological treatment cost (Borenstein, 1996; Sauber, 1997). (Later, as these reforms shifted more mental health consumers to outpatient care, controlling outpatient mental health costs through managed care would become a greater focus) (Borenstein, 1996).

Residential treatment cost savings

In mental health care, managed care administrators successfully made quick inroads through their ability to produce significant cost savings by reducing inpatient psychotherapy days and the costs of care for those days. Particularly through identifying and contracting with alternative residential arrangments as options to full inpatient hospitalization, managed care saved the health plans significant amounts of money. One can argue that patients were, on the whole, served. The managed care systems made sense in that it is often not necessary to use full hospital inpatient mental health services. By exploring and then using an array of alternative residential mental health environments, managed care systems were able to simultaneously lower costs significantly while increasing the potential appropriateness of milieu to the specific patient's residential mental health needs.

Significant cost savings through inpatient service reform combined with increasing the quality assurance measure of appropriateness of treatment environment, and both improvements on rather short order, strongly encouraged the use of managed care mental health work. The increase in market stimulated market competition for the increased volume of potential business.

Employee Assistance Program (EAP) philosophy enters full outpatient psychotherapy care

The scrutiny and case management applied to normal outpatient therapy might have been more limited had it not been for the short-term treatment orientation that was brought into managed care mental health from the Employee Assistance Program (EAP) movement. We can understand better the thinking of managed care mental health management today if we study the priorities of EAPs which have emerged in recent decades. In the 1960s and 1970s, employers became increasingly aware of the negative impact of employees' personal problems on productivity. Some responded by implementing employee assistance programs (EAPs), which originated in earlier employer-sponsored worker-assistance programs for alcoholism. Those early programs had identified employees in need of mental health or substance abuse services and offered brief crisis intervention and community referral services. Sauber (1997) suggests that employers benefit from the cost savings associated with maintaining a healthier work force (p. 3).

Unlike most other mental health professionals, EAP service providers were oriented to crisis intervention and very short-term treatment: diagnosis, brief treatment, and referrals to community resources. Many employers began to allow their EAP administration companies, where they had been successful, to bid for and take over management of the organizations' overall managed care mental health programs. They insisted that the companies' health plans allow this transfer of responsibility to take place by various means. Because the EAP treatment stance requires much lower treatment costs, and thus could support much lower premium costs, employers and health plans began more commonly to look to EAPs for the development of their overall mental health plan design (Parker, personal conversation, February 12, 1998), ignoring that EAP plans had not been providing mental health services equivalent to the plans they replaced.

Since EAPs have been crisis-intervention and short-term focused, it should come as no surprise that they have usually assumed that short-term interventions would suffice. Parker (1998) recalls that discussions of long-term therapy were not even a focus in plan design and costing dialogue, given the short-term orientations of almost all involved in the benefit design discussions.

Parker (personal conversation, February 12, 1998) saw that managed care mental health administration, growing rapidly, buttressed by its success in lowering residential therapy costs, brought in senior managers and case managers with EAP backgrounds, philosophies, and designs to help lower the costs in outpatient mental health care. More and more organizations used short-term therapy/crisis intervention practices and orientations, assumptions, and models of the EAP as the low-cost foundation for changes in their own full mental health plans. Annual premium reviews found many premiums stabilizing or lowering significantly (primarily due to the cost changes in the residential treatment component of psychotherapy). In this process, many former or expanded EAP organizations became full-treatment specialized managed care mental health plans -- strong competition for existing, traditional mental health benefits.

Miller's "first generation" plans

I. J. Miller (1996) believes that to understand how managed care mental health plans developed and how they impacted basic costs, it is important to consider three successive design developments, or "generations." In his "first generation" category he describes:

The outpatient mental health benefits that my health care consulting team collaboratively designed and negotiated at the end of the 1980s allowed the consumer (the plan participant) to choose between the existing indemnity benefit (which allowed treatment with any licensed outpatient mental health provider) and a second benefit option for which the consumer could be charged lower co-payments but be subject to more utilization controls; providers would be paid less. This maintenance of the old benefit while adding an optional new choice made the cost-controlling changes much more palatable to the labor side of the collective bargaining table and their constituents, the consumers. Our plan design had success in helping clients keep their renewal costs down. Evidently, however, our successful experiences were the exception. As Bronoskowski (1993) assessed the situation, on the whole this first generation didn't reduce costs enough to stay competitive -- and thus a move toward a second generation of plans began.

Miller's "second generation" plans

The second generation of managed care mental health, as it appears to Miller (1996), was tougher on the participant's benefit. The second generation:

The second generation of managed care mental health became the preponderant approach, so that now the mental health field (in only a dozen years of change and with plans now primarily of the second generation type) has transformed into an almost unitary managed care mental health field (Schamess, 1996). The extent of the transformation is indicated by Schwartz’s (1997) report that now "eighty five percent of companies with more than one thousand employees use a behavioral managed-care company to manage the mental health benefit." (p. 115; see also Hymowitz & Pollock, 1995).

The coming of "carve-out" managed care mental health organizations

Managed care mental health plans more and more commonly "carved out" the mental health benefit program from the main health plan, running the mental health program separately, managed by a separate company. In Geller's (1996) words:

At the time this metamorphosis was developing, the health plan cost financial crisis was deepening even more. Many employers were looking for every strong cost-containment method they could find.

Miller's "third generation" plans

Miller (1996) characterized "third generation plans" as those which increased the transfer of risk, through carveouts and capitation. First, many mental health plans have been "carved out" of their main health plans and placed for operation with managed care mental health organizations. Second, managed care organizations have increasingly sought to transfer the risks of excess treatment cost, and therefore financial loss, from the managed care plan itself to the clinician. This has been done by provider compensation-limiting formulae. Capitation pays the clinician a flat fee per month per plan participant, not for each treatment. This moves from the health company to the therapist more of the risk of participant use which is above what has been estimated.

Because such risk transfer can give therapists a motivation to limit services, it can also be seen as transfering some risk to consumers.

Two realities

In one view of reality, those operating managed care mental health advisory and administration organizations have spoken excitedly about the potential of doing more therapeutic good with less cost. Employers sincerely appreciate the apparent cost savings. Ceniceros (1995) writes that a "growing number of employers are finding out how managed mental health and substance abuse program carve-outs can help reduce benefit costs while increasing the level of assistance available to employees" (p. 2). Optimistically, Trugerman (1996) writes how it "is actually possible to manage 'care' and reduce costs and increase access to behavioral health services" (p. 261). Some health care analysts claim there have been significant innovation and apparent treatment cost savings in these recent years in managed care mental health.

Unfortunately, in a second view of reality, significant patterns of consumer and clinician "loss" appear as well, following from the imposition of managed care methods on outpatient mental health treatment coverage. The next section explores the past dozen years of professional literature in psychiatry, psychology, social work, and business as they describe four categories of loss which have emerged in outpatient mental health care.

Four losses

Ironically, just as accolades had been increasing about psychotherapy’s capacity to heal, just as Dyckman (1997) raised the tribute to psychotherapy that "(n)ever has the evidence been stronger that psychotherapy 'works'" (p. 329; see also Smith, Glass, & Miller, 1980). Just at that moment in history, significant new limits of managed care decision-making controls for psychotherapy came into almost exclusive use by managed care organizations. The problem is shown in I. J. Miller’s review of 48 research studies of psychotherapy in managed care. Miller (1996) states:

Because of this change, Sauber (1997) finds that the public is "now faced with...a mass exodus by private practitioners out of the profession" (p. xiv). Phillips (1997) says, in his chapter "Preparing Ourselves as Behavioral Health Clinicians for the Twenty-First Century," the "very foundation of our training, core knowledge, skills, and livelihood [is] being tremendously challenged (p. 13)."

We can learn from the recent literature about some key losses which two key stakeholder groups -- consumers and psychotherapists -- report they are experiencing under managed care.

Inadvertent consequences of applying managed care to outpatient mental health care

It appears from the literature that managed care has inadvertently caused significant suffering and sense of loss among large numbers of people, strongly among outpatient mental health consumers and clinical service providers.

Dana, Conner and Allen's (1996) words follow a theme common in the literature, being concerned that managed care "strategies for cost-containment pose grave threats to quality of care in mental health services and the over-all effectiveness of medical health services" (p. 1417; see also Goleman, 1996, p. C9; Kuhl, 1994; I. J. Miller, 1996; Stern, 1993).

These senses of loss appear to be consequences of the strict controls developed which have contributed to the financial and organizational success of managed care. Schamess (1996):

It would be one thing if the literature showed isolated instances of frustration under managed care. After all, new systems have detractors, especially when people have something to lose. It is another matter when that frustration has become so widespread.

In 1994, Tucker and Lubin's national survey of psychologists, 718 responding, showed this overall experience:

Table 1A

Data from therapist assessment of managed care

Tucker and Lubin national study

Percentage

Authors Murphy, DeBernardo, and Shoemaker (1998) confirm practitioner psychologists' dissatisfaction and underscore its depths in their survey of doctoral level, experienced, well-established independent practitioners. They also found that "psychologists of different theoretical orientations, practice settings, and geographic regions did not differ in their perceptions of the extent of ethical difficulties that managed care presented" (p. 47). Ethical problems noted included dealing with loss of control of treatment decisions, managed care orders for inappropriate treatment, premature termination of treatment, and compromise of patient confidentiality.

Murphy et al. note that "clinicians may be caught in the dilemma of perceiving the need for services that have been limited or denied under utilization review while remaining responsible for a patient's care" (p. 50).

Among the common experiences Murphy et al. report are the following:

Table 1B

Data from therapist assessment of managed care

Tucker and Lubin national study

Percent

Many recent articles document growing clinician and consumer/patient sorrow, frustration, and anger at the closing and closed marketplaces. (For examples, see Alvarez, 1998; Ancy, 1997; Bohart, O'Hara, & Leitner, 1998; Bachrach, 1995a; Bachrach, 1995b; Backlar, 1996; Biegel & Shore, 1996; Bloom, 1997; Borenstein, 1996; Clay, 1998; Cummings, 1995; Dana, et al., 1996; Dunne, 1997; Dyckman, 1997; Fuller, 1995; Geller, 1996; Goleman, 1996; Jackson, 1996; Kuhl, 1994; I. S. Miller, 1996; Murphy, et al., 1998; Nauert, 1997; Olsen, 1995; Patterson, 1993; Reynes, 1996; Schamess, 1996; Schwartz, 1997; Shapiro, 1995; Shera, 1996; Slay & Glazer, 1995; Sleek, 1998; Spitz, 1997; Stone, 1995; Tuttman, 1997; Worthington, 1996; Zimet, 1997)

Below, I explore four categories of clinician and consumer loss which I found repeatedly in my recent reading about plans of managed care mental health.

Loss 1. Consumers have lost the right to choose their own clinicians for outpatient mental health treatment

As noted earlier in this writing, ten to fifteen years ago, before managed care mental health became the predominant form of health plan in the U.S., consumers of outpatient psychotherapy could select their own clinicians. Now, as Bachrach (1996b) says, health plans are radically "limiting patients' choice of providers to those within [the health plan's own] defined service network..."(p. 243; see also Ancy, 1997; Dana et al., 1996; Dunne, 1997; Fuller, 1995; Geller, 1996; Gross, 1997; Miller, 1996; Murphy, et al., 1998; Nauer, 1997; Patterson, 1993; Redfearn, 1995; Savitz, 1995; Schamess, 1996; Slay & Glazer, 1995; Stone, 1995; Trugerman, 1996; Tuttman, 1997).

The 1997 "Guidelines for the Provision of Humanistic Psychosocial Services" Task Force report states: "[f]or us the issue is ultimately one of freedom of choice for consumers, who must be allowed to choose the psychotherapy modality which best fits their needs" (p. 68). As their report states, "client 'agency' and its facilitation is the ultimate 'engine' which drives therapy" (p. 91; See also Bohart & Tallman, 1996 and Bohart et al. 1998). (The term "agency" is sometimes used to express the person's re-empowerment to make decisions appropriate to the growing, autonomous adult.)

The importance of a good "fit" between clinician and client is identified by Bohart et al. (1998) as the strongest single predictor of success in the therapeutic treatment experience. Because good "fit" between consumer and clinician appears so important to the success of psychotherapy, clinicians and consumers/patients together needed to be encouraged to carefully choose each other and their approaches to treatment (a manner which could be encouraged by Point of Service choice -- to be considered later).

Hoge's (1996a) admonition in an American Psychiatric Association Resource Document was that in "order to achieve the best fit between patient and psychiatrist and to maximize patients' trust of their psychiatrists, it is necessary to preserve patient choice" (p. 395). The patient's choices to enter therapy, to choose a clinician, to collaborate on treatment methods, and to work together so that a strong therapeutic bond and process develops are at the heart of the therapeutic experience and the person's growing autonomy. The consumer (client/patient) needs to seek out an appropriate therapist with whom the consumer experiences a good "fit."

Gross (1997) notes that the problem of managed care radically limiting the patient's choice of therapist is compounded by the fact that "most people cannot afford the expense of self-paid [psychotherapeutic] care" (p. 501). For most people, if their health insurance does not significantly contribute to the cost of their outpatient psychotherapy, they are unlikely to provide it for themselves. This problem also affects a therapist whom the patient might otherwise choose; if the patient's health plan does not reimburse out-of-network outpatient psychotherapy, and if the client feels he/she cannot afford to self-pay, the therapist probably can't afford to see the consumer either.

A further critical reason why consumer (patient/client) choice is so important emerges from acknowledgement of the U.S.'s multi-cultural character. Moffic and Kinzie (1996) describe a shift going on:

from a generic-type psychiatry (i.e., assuming that humans the world over are no different and will react to given stressors in life in the same manner) to one recognizing that cultural beliefs, mores, peer pressure, family expectations, and other ingredients operate in unique combinations in various cultures and ethnic groups....[to] impact treatment modalities and outcomes. (p. 581; also see p. 587)

Reviewing a list of studies on psychotherapy in the multi-cultural setting, Sue (1998) notes, "One of the most frequently cited problems in delivering mental health services to ethnic minority groups is the cultural and linguistic mismatches that occur between clients and providers" (p. 441). He also notes that, in a study he and colleagues conducted, ethnic matching of client and clinician led to significantly lower dropout rates, which can lead to better treatment success (p. 441; also see Abe-Kim & Takeuchi, 1996).

Looking at the whole subject of consumer choice, Miller (1996) says:

A fundamental problem with managed care is that health care, and particularly mental health care, decisions are personal. Outside parties do not make these decisions well. For the most part, psychological distress is subjective and internal. Attempts by managed care to make these personal decisions are so expensive that they are damaging to the mental health care delivery system. (p. 359)

In Dana et al.'s (1996) worry, managed care seems to represent "an arrangement between employers or government with insurors, leaving consumers of care without free choice to identify what provider services to purchase" (p. 1411; see also Shore, 1996).

The Miller study (1996) speaks for a substantial point of view in the literature: "Effective cost-containment alternatives must return mental health care decisions to the consumer" (p. 359).

Loss 2. Outpatient mental health clinicians have lost access to many prospective consumers' health plans (no covered reimbursement anticipated for that consumer's treatment)

Geller (1996) describes how what managed care people sometimes call "cost control through the proper management of care" came to provide services, among other things, "only by previously designated qualified practitioners" (p. 226) as a means of controlling costs. Tuttman (1997) reports on the common event of a managed care organization (MCO) "selecting and evaluating therapists to be employed on the basis of their willingness to provide more limited and less costly treatment" (p. 5).

Phelps, Eisman, and Kohout's (1998) report, on their study of 15,918 psychologists responding to an APA survey, identified "exclusion of psychologists from managed care panels" as a "key concern about managed care" (p. 6).

Further, even if the mental health clinician gets onto the outpatient psychotherapy panels of health plans, the clinician is likely to face difficult contractual issues which have risen over recent years. Higuchi and Coscia (1998) report that in dealing with outpatient psychotherapy clinicians, "some of the more common problematic contractual terms embraced by MCOs (managed care organizations) include the no-cause termination, 'gag' or 'no disparagement' provisions, and covenants not to compete" (p. 1).

Although the no-cause termination can be useful to each side as a simple method to end a not-presently-fruitful relationship, Higuchi and Coscia report further that "practitioners contend MCOs can use such a provision to retaliate against those providers who contest or appeal the termination of their patients' care" (p. 1).

"Gag" or "no disparagement" provisions in contracts bar discussion by the therapist of the MCO or its practices, potentially prohibiting the therapist from discussing clinician/MCO differences or alternative treatment options with their clients. Covenants not to compete may prohibit the clinician from practicing therapy in the future with patients seen in the past in conjunction with their MCO managed care mental health plan. "MCOs use of certain provisions in their standard contracts with providers can place onerous constraints on practitioners and hinder the provider-patient relationship" (p. 1).

Loss 3. Loss of right by consumer and clinician to choose their way of doing therapy during their covered outpatient mental health treatment process

In 1980, before the boom of managed care mental health care and its general short-term therapy focus, a meta-analysis of 475 controlled studies of psychotherapy by Smith, Glass, and Miller (1980) concluded that psychotherapy is a highly effective form of healing. In spite of managed care's predilection for short-term care, there are many reasonably documented successful forms of psychotherapy, including psychoanalytic, Rogerian, cognitive, humanistic/existential/transpersonal, Gestalt, somatic, short term, long term, etc.

Consumer and clinician have experienced erosion of the range of alternative methods of treatment from which they may choose. Tuttman's fear (1997) is that "the empowerment of provider-administrators to determine treatment availability can undermine the treatment bond...The importance of the client-therapist bond must be enhanced rather than minimized since it contributes to favorable therapeutic effects" (p. 3). Also, he describes what he sees as the

These potential problems gains significant weight as we reflect on the conviction Bohart, O'Hara, and Leitner (1998) express that the therapeutic alliance between therapist and client is the most important factor in therapeutic outcome, a result they find consistent across psychotherapies. (Also see Lambert, 1992; Task Force, 1997).

In a survey of 442 independent practitioners, Murphy et al. (1998) found that

'loss of control over making treatment decisions' was one of two variables that strongly contributed to concern about quality of care...A very substantial majority of respondents (84%) reported that managed care companies have control over aspects of patient care and treatment that they as clinicians should control. Only 5% did not report experiencing such intrusion. (p. 46; also see McFarland & George, 1995)

Role of short-term treatment methods

Since short-term treatment is emphasized in most managed care organizations (Murphy et al., 1998; Tuttman, 1997), it is important to consider effective and appropriate foci for its use. In discussing Stern (1993), D. G. Phillips (1997) points out that short-term therapy's "early developers were very conservative in selecting appropriate candidates for it" (pp. 181-182).

Alperin writes that

while many psycho-dynamic practitioners believe that short-term psychotherapy is effective for certain patients, very few believe it is appropriate for the entire clinical population, as some managed care companies suggest. After all, its innovators (e.g., Davenloo, 1978; Mann, 1973; Marmor, 1979; Sifneos, 1978) never intended it to be a universal mode of treatment. (pp. 189-190)

Sauber (1997) tells us that, "traditionally, many patients have been viewed as unsuitable for short-term therapy" (p. 5). Knowledge about short-term therapy as a technique is growing, but its effectiveness is only partially known, particularly in comparative relationship to the treatment effects of a variety of major psychotherapy traditions and in relationship to many forms of mental health need (Beigel & Shore, 1996; Charous & Carter, 1996; Dana, et al., 1996; Kuhl, 1994; I. J. Miller, 1996; Miller & Luft, 1997; Schwartz, 1997; Tuttman, 1997).

The most unambiguous results for managed care show that, in managed care mental health systems, using short-term therapy as a base, outpatient treatment costs have often been reduced to a significant degree (Sturm, 1998).

Geller (1996) and others believe that it is of vital importance for the outpatient mental health process to be allowed to reach down to the root causes of psychiatric problems, a process they consider imperative for long-term healing. Schwartz (1997) puts the broader outpatient mental health treatment need this way:

A means to change fundamental object relations learned deeply and repeatedly at early stages of development is required for symptoms to diminish [for the long term] and psychological growth to occur. This is accomplished by creating an environment in which there is space for patients to reenact their histories, and time to experience, explore, and work through maladaptive patterns. (p. 120)

As Alperin (1997) sees the approach's emergence in the history of treatment,

it was Freud's discovery of the concept of resistance that moved psychoanalysis beyond symptoms to the treatment of character. The publication of Wilhelm Reich's book Character Analysis (1933) heralded a transition from an analysis of symptoms to an analysis of character that continues to be of central concern to psycho-dynamically oriented practitioners. (p. 188)

Alperin (1997) contrasts the short-term therapy direction of managed care to the psychoanalytic approach:

contrary to this long-established concern with character pathology and its treatment, managed care tends to ignore character by virtue of its focus only on the eradication of symptoms....This totally goes against Freud's belief that assessing behavior and symptomatology purely on the basis of overt conduct and conscious motive constituted a superficial understanding of human behavior, and that not until the unconscious motive for behavior was discovered could a person be properly understood. (p. 188)

Sauber (1997) describes how

by focusing primarily on symptoms, case conceptualization and treatment technology in the managed care environment favor a reductionistic biomedical model of treatment over a biopsychosocial formulation. The [reductionistic] formulation is incomplete and fails to identify the multidetermined context in which patients' presenting symptoms are often imbedded. (p. 5)

During the 1970s, in state after state, non-physician therapists gained the right to bill for payment from clients' health plans; but it was unforeseen that once managed care became dominant, the exhortation to follow the DSM manual to bill by mental problem category for outpatient therapy treatment would increasingly take control (Alperin & Phillips, 1997; Bittker, 1992; Mayhugh, 1996; Newman, 1998, p. 25; O'Hara, 1996, p. 46).

This managed care focus on symptoms, then, puts large numbers of outpatient psychotherapists from a wide range of therapeutic methods "in the position of having to offer a treatment that they believe not to be the most effective or in the best interests of the patient" (D. G. Phillips, 1997, p. 182).

Many psychotherapists report experiencing a double bind in fiduciary relationship where they must serve a client and managed care company, and where following the direction of the managed care company would cause them to betray their client. (D. G. Phillips, 1997; also see Stern, 1993).

In Spitz' (1997) words, "clinical practitioners in the field [are] showing ....(i)ntense negative reactions....Rage, despair, feelings of powerlessness, and fear are but a few of the emotions engendered in this process" (p. 28).

Loss 4. Loss by both parties of right to determine duration of covered treatment

When I. J. Miller (1996) reviewed substantial research evidence on duration of treatment, he found "the treatment length that is planned by clients and therapists in unmanaged psychotherapy is important to successful outcomes" (p. 354). The loss by clinician and consumer/client/patient of rights to determine duration of treatment is particularly important in light of reports that length of treatment is quite significant to consumers. Seligman (1998) notes that the November 1995 Consumer Reports study of over 4000 educated therapy clients was perhaps the largest survey of therapy clients ever done. In the study 90% of respondents thought all forms of therapy were helpful but that long-term therapy was particularly useful.

Seligman (1998) states, "effectiveness studies robustly document that the longer the therapy, the more improvement on every outcome variable...." (p. 2). I. J. Miller (1996) reports that extensive reviews of studies showed "overwhelming evidence that benefits [to the client] increase with longer term treatment" (p. 355; also see Gross, 1996; Iglehart, 1996). I. J. Miller (1996) adds that "literature reviews show that longer treatment is associated with greater benefits in the vast majority of cases." The research review had

examined the relationship between length of therapy and improvement in a review of 114 studies that made a within-study comparison of treatment length. Of these studies, 110 showed a positive relationship between length of treatment and improvement; furthermore, in two-thirds of these, the relationship reached statistical significance. (p. 355)

On a related track, Miller (1996) in reviewing studies concluded that "a large portion of the users of long-term mental health services are not discretionary users, [and]...they would be harmed by a managed care policy that would arbitrarily cut them off from treatment" (p. 357). Stern (1993) adds that "the research on psychotherapy outcomes suggests that patients who remain in treatment for a longer duration do so because they do not feel sufficiently improved to stop" (p. 171; also see Bloom, 1997).

Beigel and Shore (1996) report that therapists are increasingly being asked to limit treatment to "improving impaired functioning and secondarily to preventing recurrence [which] deprives patients of the traditional goal which was to treat the underlying disorder, and thus it foregoes fundamental change" (p. 116). Hipp, Atkinson and Pelc (1994) report that in a Colorado survey about managed care mental health plans, sixty four percent of 223 responding psychologists recorded incidents of the discontinuation of outpatient treatment {by the health plan which] they [the therapists] believed should have been continued. The Murphy (1998) survey mentioned above showed that 86% of responding clinicians "reported that their treatment interventions had been affected by managed care [with] most respondents indicat[ing] that to a great extent managed care has led to inappropriate treatment, insufficient treatment, or both" (p. 43).

The last decade's literature reflects a tremendous and still growing acrimony over the managed care take-over of health care taking place in the U. S. Contained within it is this struggle over the emerging shape and effects of plan-covered outpatient psychotherapy treatment.

Over the last thirty years, the percent of U.S. G.N.P. spent for health care each year has more than doubled, presently consuming annually over 15% of our country's G.N.P. for health care spending, a rate of spending higher than for any other nation. For all U.S. health plan stakeholders (consumers/ employees/plan-participants/retirees/unions, employers, health plans, managed care mental health plans, public legislative, administrative, and oversight agencies) this leap, during the 1980’s and early 1990’s has been accompanied by annual health plan premium cost increases often above 20% or even 35% a year, before a pause in rate increases since the national health debate of the early 1990s. Increasingly concerned and even desperate parties developed managed care health plan design to help with the management of limited resources.

Three developments leading to the present

The first development this chapter has described has been the coming into major prominence of managed care mental health plans, supported by the treatment and management perspectives of the Employee Assistance Plan movement. Managed care mental health plans have taken over 80 percent of market share in little over a decade. Less than a dozen major managed care mental health plans control most of this business. (Note that most of them are profit-making organizations.)

A second development is a probably unintended side consequence: a marked and documented deterioration in four important managed care mental health plan services: (1) the increasing consumer loss of choice of psychotherapist clinician, (2) the increasing psychotherapist loss of access to the client's health plan for reimbursement, (3) the increasing loss by both consumer and clinician of the right to determine the nature and direction of the psychotherapy, and (4) the loss by both of the right to determine duration of therapy.

A third development in health plan management had depended on the coming into place of sophisticated computer technology capable of handling significantly wider consumer choice of medical resources. Chapter 4 will describe in detail a system often called point of service (POS) HMO health plans (health plans that allow the consumer to go outside the HMO as well as inside for health care service). They have emerged from 0% use before the required technology came into place to a 20% market share now. 80% of HMOs now offer POS plans to the public. 95 percent of employers with such plans would recommend them to others (Fleischacker, 1992, p. 48). Chapter 4 will offer an innovative plan design approach to the problems in covered outpatient psychotherapy described so far. Over and over, the literature has shown a very strong professional and consumer perception that health-care plans that (a) radically limit therapist choice by plan-covered consumers, (b) limit or exclude therapist reimbursement, and (c) limit the nature and duration of therapy by means which are divisive (divisive of health plan, clinician, and consumer) do have a strong risk of significantly harming the outcome of psychotherapy. It is a risk with major potential impacts for the health plan, the workplace, the home, and, most centrally, for the consumer's individual’s functioning and life.

Framing the study's research questions and hypotheses Stated as research questions

Based on the foregoing, the research questions were:

A. Will a meeting of experts from primary stakeholder groups concerned with the provision of covered outpatient mental health treatment (unions, management, health plans, employers, health consultants, etc.) perceive in common that, from their own spheres of knowledge, these losses actually have taken place?

B. If they believe the losses have taken place, how serious do they think those four losses are to their constituencies?

C. If they believe that serious losses were and are occurring, do they think that a Point-of-Service Triple Option (POSTO) outpatient managed care mental health plan design may have ameliorative effects on the "losses"?

D. If they like the POSTO design, may a POSTO design be offered in the market at a reasonably cost-neutral premium?

E. If all of the answers are yes, are there principles to bear especially in mind, if such a system were to be set up?

To use a focus group of experts for this research, I framed my research questions so that they can be responded to with Likert scale ratings and qualitative focus group transcript study.

In this circumstance, the three-hour focus group acted also, at the same time, as a stakeholder expert dialogue and as a group developing an image of an idealized system.

Considering the POSTO system got the group talking about design. This better prepared them to talk about their own design ideas in the third hour. A study of the feasibility that POSTO plan costs could be held to neutral compared to existing plans completes the techniques used and complements the other ones. (The feasibility study segment is accompanied by a confirming underwriting analysis done pro-bono and as an independent assessment by an senior California underwriter.)

Stated as hypotheses

I hypothesize that the following four specific losses will be reported: a. diminishment of consumers' right to choose outpatient clinician, b. diminishment of clinicians' ability to contract with their consumer/clients' health plans, c. diminishment for both consumers and clinicians of the right to choose the nature of their therapeutic experience together, and, finally, d. loss by the two of ability to influence and choose the duration of covered outpatient psychotherapy. I hypothesize that these losses will be perceived as serious by focus group participants.

If my first main hypothesis is correct, then my second hypothesis is pertinent: that a Point-of-Service Triple Option (POSTO) managed care outpatient mental health benefit design which I have developed and will present is capable, at least in theory, of improving stakeholder satisfaction on at least some of the dimensions of loss. I hypothesize that an expert stakeholder panel will judge that the outpatient mental health POSTO design shows potential for reducing at least the first two losses, as well as providing a certain degree of help on the third of the four losses described.

A further hypothesis is that a POSTO managed care outpatient mental health plan which I describe to the research participants will also provide a useful stimulus for the focus group itself to begin its own idealized system design imaging process.

Limitations and delimitations

Limitations

1. The focus group had five people at the table for the three-hour session. Two more who had promised to be part of the group and who found themselves with last minute exigencies participated in one and 1/2 hour one-to-one interviews. Further focus group (and questionnaire) study would be worthwhile in replicating the first focus group experience and expanding expert evidence and group opinion.

2. I have experienced managed care mental health care for myself and my daughters after family tragedies. I am a consumer of services. I know and talk with many therapists and have been studying with therapists-in-training in my graduate programs in psychology. Some of my biases are that all four mentioned losses have taken place and are serious, that POSTO design may be directly pertinent, that there is advantage in POSTO design for each stakeholder group, that serious study and action ought to take place. Fortunately, I can also adopt some dispassion in matters in which I need to maintained a balanced viewpoint, e. g., mediation, teaching, study, etc.

3. Underwriting was the method used for exploration of the feasibility of cost-neutrality between the POSTO considered in this dissertation and current plans on the market (and the method presented in Chris Alesso’s Appendix 1). Further studies from actuarial, systems, marketing, and new products points of view would be valuable in developing deeper perspective.

4. Rather than review the literature on managed care success, this dissertation focused on four unanticipated losses which have occurred as a result of managed care application to covered outpatient mental health benefits.

Delimitations

1. I limited the study to "covered" lives. By this I meant group health plan participants entitled to outpatient mental health benefits under the group plan.

2. I asked that focus group discussion presume that the talk was about covered participants who work for Northern California public jurisdictions (such as cities). It was in this kind of setting that each of the focus group participants was an expert with over 20 years experience.

3. I further asked that we assume the existing outpatient mental health benefits are held by a Federally Qualified HMO. This meant that covered participants were eligible, at least in theory, to 20 outpatient visits during any given year.

4. Within the expert focus group, some people knew each other from working on four particular Northern California public jurisdiction health plan cases together years ago.

5. The POSTO design response to the four losses in outpatient psychotherapy emerged, during the dissertation development process, from previous reasearch in 1988 designing a POSTO HMO health plan appropriate to a Northern California public jurisdiction. The study was done under the auspices of the Robert Wood Johnson Foundation to design a model HMO health plan for a Northern California public jurisdiction. The plan would allow participants to go outside the HMO for medical treatment, according to contract.

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