Chapter 4

Outpatient Psychotherapy Plan Design, Managed Care, and a Point of Service Triple Option

CHAPTER 4: POINT OF SERVICE TRIPLE OPTION MANAGED CARE OUTPATIENT MENTAL HEALTH PLAN DESIGN

Until now, little has been done to use Point Of Service (POS) plan design in managed care outpatient mental health. This study explores whether or not and if so how a POSTO can be a material agent in ameliorating any of the "Four Losses" to covered outpatient therapy explored in Chapter 2.

At this stage in the exposition, it is important to note some possible improvements POSTO might offer.

Improving on Loss 1: Fundamentally, POSTO mental health plan design would allow the consumer plan participant to choose among any and all properly licensed psychotherapists for covered treatment.

This would be under the terms of one of three modes of covered work and levels of co-payment (therapist-in-HMO, therapist-in-contracted-PPO, therapist without ongoing affiliation with the plan). This subject includes conditions of therapy, anticipated treatment durations, peer and quality review, etc. The outpatient therapist would contract ahealth system administration and would decide on which of the three levels the therapist would offer covered outpatient therapy service through the health plan.

The health system administration the therapist contracts with could take any of methods of administrating the agreement made: third-party system, provider-association-run system, health plan system, or other).

The consumer who chooses a therapist who is contracted with the health plan’s HMO panel pays the lowest out-of-pocket consumer cost. The consumer who chooses a therapist from among the affiliated PPO plan's much larger (hopefully ubiquitous) panel of therapists pays a higher co-pay. (Draft calculations suggest this could be, within limits, near a 50%-50% share. Interestingly enough, this 50%-50% outpatient therapist cost-sharing level between health plan and consumer was by far the most common arrangement in effect in group health plans before managed care. Finally, choosing among "any other licensed provider" (one who is not affiliated with either the HMO or the contracted PPO) costs the consumer the most in the form of a still smaller co-payment from the health plan.

The three optional co-payment options use draft formulae which are intended to keep the health plan's costs relatively cost-neutral, regardless of consumer’s choice of therapist. See Chapter 5.

Improving on Loss 2: A POSTO managed care mental health plan would allow any willing, licensed and otherwise qualified outpatient psychotherapist to sign on with the POSTO mental health plan for reimbursement. This could be according to one of three agreements. In the first option agreement, the clinician would have to be selected by the mental health plan as a provider at its HMO core. (It is anticipated that the HMO would retain only a small group of outpatient therapists for this purpose.) In the second option agreement, the clinician would be asked to discount his/her fees by about 25-30% and agree to reasonable administrative processes. Case management would, to the degree practical, be centered in a collaboratively negotiated peer review process, along with administrative case care. The third option agreement would be one for therapists who don't want to be included in a panel. They will bill the health plan by claim form. At first, plan administration will need to confirm license and liability insurance status and provide for necessary processes like billing protocols and verification. (Each of these three systems would be expected to continually study how to decrease paperwork and phone calls for all involved.)

Improving on Loss 3: The POSTO would stimulate consumer informed orientation to choice of potential therapists through online, print, and phone assistance to provide backgrounds, licensing, geographical area, etc. Since good "fit" between consumer and therapist is deemed so important, the parties would study methods for improving the environment in which plan participants can make intelligent and informed choices. Once consumer and therapist do select each other and settle into their therapeutic task together, they can explore their experience and fashion expectations about time and direction together under the aegis of collaborative peer review, in conjunction with budget studies and planning. All parties will need to assume a reasonable cost-neutrality in any plan changes. The health plan will have to use plan design to stay within current premium constraints.

Improving on Loss 4: Under managed care, consumers and therapists have largely lost the right to determine the duration of the psychotherapy. First, short-term treatment advocates are found in surprising proportions in managed care mental health plan businesses. The health plan often controls visits tightly through pro-active case managers. Therapists and clients may or may not be listened to. Further, even if consumer and therapist want to do therapy together after covered visits are ended, many plans prohibit therapists from treating or advising those consumers/clients who have come to the therapist originally as eligible for the health plan outpatient psychotherapy visit payments. Plans often require that consumer and clinician completely cease their therapy work once the plan's visits are stopped. The case for allowing continued professional work together is strong. Under the right contractual circumstances, therapists and health-plan-started-consumers again would be able to continue treatment on a self-paid basis after health plan-paid benefits are ended, if the parties choose to continue to work.

Because remediation is such a potentially expensive proposition, the job probably needs to be separated into two developmental stages, in sequence.

Stage 1 : Losses 1 and 2 can be reasonably resolved using POSTO design. Loss 3 can be significantly eased. Loss 4 work could be begun with collaborative study by the stakeholder groups of a collaboratively developed number of subjects. (One example could be actuarial and pricing assumptions about length of treatment. A second could be collaborative dialogue among the parties on actuarial assumptions about increasing "peer" review.) These would be done in conjunction with the health plan. This could bring about calculations for consideration of the parties about a limited set of outpatient mental health plan provision changes to seek a number of ways to remediate some of the loss.

Stage 2 : The POSTO design emerging in this report does not appear capable of significantly remediating Loss 4 on its own. In all likelihood, Loss 4 can be addressed more effectively after the matter is given significant study in the area of medical care cost offset. Medical care cost offset occurs when a person’s illnesses are improved (and medical care costs are lessened) in response to mental health treatments used in ways complementary to medical care healing. (See Appendix 2.)

I advocate conducting a post-dissertation research exploration of proper quantification of offset effect medical sector by medical sector, and then totaling the anticipated savings all together. I hypothesize that what will be found will be that the estimated savings would not only pay for the outpatient mental health visits but also contribute significant after-treatment-cost savings back to the health plan.

Below is a further summary of how a group health plan's prototype open system, outpatient managed care mental health plan works - in this case below a point-of-service triple option providing the covered outpatient mental health services for an organization.

The organization I think of in this exercise is a large Northern California public jurisdiction, using a Federally Qualified HMO as the starting point for the triple option.

Within plan benefits, the plan participant chooses each time he or she decides to seek covered outpatient mental health treatment (at the "point" of that "service") among eligible clinical providers available, with the choice of clinicians and clinical services delivered by way of one of the following three options:

The base point for the point-of-service triple option plan is the already well-developed HMO or other managed care mental health company's commonly used current (relatively) closed-panel low cost outpatient mental health plan design. This probably includes full and pro-active utilization review and pro-active management of treatment duration. This most often includes management influence on therapeutic approaches used among panel clinicians. This design assumes a relatively small number of clinical providers in the eligible panel in the geographic areas covered.

Perhaps there is a "small" co-pay for treatment visits. (And perhaps the patient payment is less <or is eligible for more visits annually> if he/she chooses group treatment (some analysts carry this idea as basically two group visits per one eligible single-person visit.)

(The calculations probably would use a unit of measure like costs of clinical care and administration on a "per member per month" <"pmpm"> basis, to assist in comparisons across the three optional modes.

Here in section #2 is a significantly larger (PPO) panel available for patients to choose therapists for treatment. To help moderate costs, clinical providers have significantly discounted their treatment costs per visit and, where applicable, per residential stay. Clinicians are probably listed in an eligible provider list provided at enrollment and over time to eligible employees (perhaps by web site profile, printed publication, phone intake, etc.) which interested employees can use to do therapist reputation and therapy quality checks with local friends, colleagues, and other clinicians. This part of the plan (section #2) would have a more circumscribed but still pro-active utilization review and management process carried on. If possible, this would be carried on by a carefully devised professional peer review process.

To seek mental health benefits from these (section #2) providers would involve a significantly higher employee co-pay (perhaps near 50%). The patient payment share needs to be about the same as (or better than) section #1 patient plan use costs.

A plan participant can go to any licensed mental health provider not available through contracted-with panels provided in plan options #1 and #2.

(Recent history note: In indemnity medical plans 10-20 years ago, health plan mental health benefit formulas most often paid 50% of treatment costs, often to a maximum of $25 insurance company payment per mental health visit. Active case management generally concentrated on a small number of particularly long and costly cases.)

Plan payment for this third option would probably be a like amount to that provided under options 1 and 2. But the net amount the consumer pays will be probably significantly higher than 50%. Since each visit does not have a significant provider discount to lower the net hourly rate due to the therapist from the client, the third option (indemnity) benefit would reimburse the consumer perhaps as low as 25-30% of the hourly charge. While this offers some financial reimbursement for treatment costs, it would be a minority share of cost rather than a majority share. (In fact, subjectively, the option 3 amount to be given to the plan participant as reimbursement for therapy hour costs is such a size that it constitutes more of an "minority-of-costs incentive to seek treatment" rather than a full "benefit".) This makes it much more important that the network for the second option be large and commonly used.

If the four losses are widespread and serious, then what design process and change might help? In the three-hour focus group session, the first hour discussed the four losses. The second hour discussed POSTO, focusing discussion on design characteristics which might help. The POSTO design draft discussed in the second hour stimulated preparation for the third and last hour. This last hour formed an "image" (Banathy, 1996) of what might characterize foundations for an ameliorative, healing outpatient psychotherapy plan design. This "image" of foundations could form the basis for further discussion and planning by others.

Since at least some employees are in treatment but now not covered or paid for at all, there might be some additional costs to the newly developed plan. These would come from a one-time integration of these people and their treatment patterns into a covered status over the course of the first year or so.

Since another cost factor would be the additional administration expense of operating a triple option, that additional cost can be estimated. Actually, one reviewer so far has thought costs after system-integration would be near zero.

Some increase in use could come from additional interest in the plan by enrollees and greater room for professional judgment about length of treatment within the contractual maximum.

Some reductions in cost could come from use of group therapy in lieu of individual therapy.

Overall, plan and actuarial design will need to set the treatment reimbursement levels, the anticipated usage levels and reserves for some potential increases or changes in usage patterns, and fine tuning utilization review and quality assurance guidelines all to aim to provide very high quality clinical services while bringing in outpatient mental health plan costs at or below the cost of Sector 1 treatment cost.

(To review, Option #1 can pay most of each patient treatment cost because the system costs are already minimized by pre-agreed-upon reimbursement rates and conditions; option #2 pays a significantly lower part of each patient treatment cost because this part of the system costs somewhat more – higher therapist hour costs, although significantly discounted by PPO contract; more administration; potentially more hours of treatment; potentially more optimized peer review. Option #3, below, must pay out the least, as patients will have to pay most of the cost of their treatment each visit. These therapists would be charging their regular fees, with no discounts. This will be likely to cost the most per hour. The health plan POSTO would still make a co-payment to the costs, but the therapist would be giving no discount. Also, in each movement out from the most restrictive HMO panel of therapists, the assumption is that appropriate case management of length and type of treatment would developed, followed by actuarial work estimating impact.)

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