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Practice Directorate Update

Russ Newman, Ph.D., J.D.

During the recent APA Convention in Chicago, I had the opportunity to speak personally with hundreds of practitioners about their experiences with the changing health care system. Without question, the growing emphasis on cost containment, managed care and corporate profits continues to take its toll on psychologists and their patients.

Many practitioners expressed considerable frustration about having their control over clinical decision making increasingly usurped by payers and managers of care who focus on cost at the expense of quality. Some psychologists observed that managed care continues to gain an expanded share of the health care market, and that inappropriate cost containment practices continue to flourish. Clearly, this is not the environment that any of us expected to face when we trained to provide quality psychological services to those who need our help!

In pursuing the challenging task of helping return clinical decision making to the hands of psychologists and eliminating inappropriate cost containment, we in the APA Practice Directorate believe there are no "silver bullets" or quick fixes. However, we have witnessed and actively participated in a number of significant recent developments that have the potential to restore psychologists' capacity for decision making and to stimulate the necessary emphasis on quality health care.

Precedent-setting court decisions, new laws enacted at both the federal and state levels, evolving trends in the health care marketplace and a changing public sentiment collectively appear to be moving us, albeit slowly, in a positive direction. I would like to share some important highlights of these developments with you.

The courts are finally beginning to realize that existing limits on managed care activity are inadequate. Just last month, the US District Court of New Jersey ordered to litigation the lawsuit brought by the New Jersey Psychological Association and seven individual plaintiffs against MCC Behavioral Care. The plaintiffs allege that MCC terminated providers who refused to make treatment decisions based on the company's cost-cutting objectives. This lawsuit, for which the directorate has provided substantial strategic and financial support, fundamentally challenges the way in which managed care companies attempt to control clinical decision making. Previously, courts had been generally unwilling to allow this type of challenge.

Importantly, the federal judge in New Jersey explicitly recognized that managed care companies "exist to provide health care to the public." This characterization contrasts directly with the common managed care company defense against taking responsibility for treatment outcomes, i.e., that the company simply manages the benefit for the third party payor and does not control treatment.

Other important recent court decisions include: a holding that a managed care company medical director who conducts utilization review is making a "medical decision," not a benefits decision; a finding that a provider must be granted a "fair procedure" before a managed care company can remove the provider from a network; and the legal recognition that an HMO's financial incentive arrangements can adversely affect providers' treatment decision.

The courts are not alone in starting to address the serious problems in the current health care system. Despite its generally deregulatory approach, Congress has begun exercising its oversight role to help curb the undue focus on cost in the health care industry. The 105th Congress is building on the groundwork laid with the 1996 federal law prohibiting "drive-thru-deliveries," the first congressional effort to legislate against the negative results of managed care.

APA, in coalition with other health care professions, has won significant victories in Congress this year with respect to patient and provider protections in Medicare and Medicaid. Laws are now on the books that prohibit provider gag clauses, require plans to offer a point of service option assuring patient access to out-of-network providers, establish grievance and due process protections for denial of care decisions, mandate access to specialists, place restrictions on financial incentives for providers to deny or restrict care, require that consumers be given health plan information, and prohibit discrimination against any "class" of providers such as psychologists.

Meanwhile, congressional debate is slated to begin soon on a number of proposals to deal with private sector managed health plans. Designed to extend the federal laws just mentioned to private health plans, the various legislative proposals also would, if enacted, help ensure that treatment decisions are made by providers rather than payers, administrators or managers. The private sector provisions to be considered by Congress also include elimination of the ERISA loophole that allows health care and managed care companies to escape liability for their negligence. APA testified in support of this proposal in October during hearings in the House of Representatives.

The recent flurry of legislative activity at the state level undoubtedly is providing a catalyst for the growing momentum on Capitol Hill. In each of the last two years, state legislatures have considered more than 1,000 proposals to regulate managed care and the health care system. More than 100 such state laws have been enacted so far in 1997, twice the number of last year. In states such as New Jersey and Texas, the laws are quite comprehensive and begin a trend away from piecemeal legislation to respond to the current health care system crisis.

In addition to legislative and legal developments, the public outcry concerning the health care system has grown loud and clear. An August 1997 poll by Louis Harris and Associates found that 54 percent of Americans believe that the trend toward managed care is harmful for them, an increase from 34 percent a year earlier. Another recent Harris poll asked people to rate 12 industries according to how good a job they were doing for the consumer. Health insurance and managed care companies were ranked at the bottom, above only the tobacco industry.

Public opinion polls conducted in conjunction with APA's public education campaign reveal that 70 percent of the public considers it "very important" to have access to mental health care, but only half that percentage believes that Americans have adequate access to mental health care. In addition, the Census Bureau recently released figures showing that the number of uninsured Americans grew to 41.7 million in 1996, 1.1 million more than in 1995. This contributes to the public's growing awareness that the health care system is"broken" and needs comprehensive changes.

Media coverage also seems to reflect the public's growing displeasure with managed care and the evolving healthcare system. A recent analysis of 600 citations in newspapers, magazines and transcripts of TV news found five unfavorable stories for every favorable one.

Media criticism of managed care and the changing healthcare system, a rising tide of federal and state legislation, and a growing number of lawsuits are starting to force some changes in the health care marketplace. Large employers and business coalitions - such as in the Minneapolis/St. Paul area, a cradle of managed care in this country - are turning away from large HMOs and instead contracting directly with provider groups. A national survey by Business and Health magazine showed that 40 percent of hospitals surveyed had direct contracts from employers or coalitions.

Further, many HMOs are relaxing their restrictions on access to specialty care in order to enhance their competitiveness; and health care companies are providing more information to consumers about how the health professionals affiliated with them are paid and how decisions about approving or denying care are made.

Taken together, developments in the legislative, legal, public and marketplace arenas indicate that the healthcare system is finally beginning to move in the right direction. The pendulum that had swung too far toward cost is shifting back toward increased attention to quality. Maintaining this positive trend to the point that practitioners and our patients experience significant relief will be no quick and easy task. Yet, staff in the Practice Directorate, the Committee for the Advancement of Professional Practice (CAPP) and the Board of Professional Affairs continue to believe that efforts to "fix" what is currently "broken" in the health care system can and will pay off.

Virtually every activity undertaken by the Practice Directorate is targeted toward the current problems in the health care system. We are, of course, seeking to identify new opportunities to advocate for professional psychology. Despite the high cost of its broad-based agenda and due to heavy market pressure on practitioners' incomes, CAPP voted not to recommend any increase in the APA special assessment for 1998.

The Practice Directorate does not have all the answers to the current problems in the healthcare system. However, we do believe that we have built a solid infrastructure to support the broad range of activities, strategies and interventions necessary to bring about badly needed change. This infrastructure will enable current efforts for incremental change to evolve into comprehensive reform as public pressure grows in support of such change.

No matter what the activity or strategy, organized psychology relies heavily on its grassroots foundation of psychologists throughout the country in order to be successful. Not only do we in the Practice Directorate need your help fighting for psychology's's future, but we also very much need your perspective and experience as practicing psychologists having to withstand the changing health care system on a daily basis. I invite your comments about how we can work together to help find solutions to current and anticipated problems in the health care system. Please write or fax (202) 336-5797 your thoughts and suggestions to me at the APA Practice Directorate


Jeff McKee
Saturday, April 25, 1998