One of Maryland's largest insurers is directing mental health therapists to cut the volume of patient services or risk losing fees, raising the widely debated issue of profits vs. treatment in the insurance industry.
Officials of Mid Atlantic Medical Services Inc. say they want to eliminate only "medically unnecessary care." But leading Maryland mental health groups say such financial pressure amounts to "threats" that could undermine care of Mid Atlantic's 1.3 million subscribers.
Mid Atlantic's actions and vehement responses from mental health professionals underscore an intensifying debate in the medical community, Congress and state legislatures about the growing power of insurance companies to control mental and physical health care. Today most Marylanders are enrolled in health maintenance organizations or other kinds of managed-care plans.
A series of letters sent by Mid Atlantic to psychiatrists, psychologists and social workers provides a rare inside look at an evolving conflict in managed care: reconciling the obligation to provide good care with the need to control costs.
The letters, obtained by The Sun, warn therapists that the company might withhold up to 40 percent of their fees or cancel their contracts if they don't do a better job controlling the costs of the care they provide.
In an angry response, the Maryland Psychiatric Society urged Mid Atlantic in a letter Feb. 10 to "stop making these threats." The society "unalterably opposes any attempt to coerce physicians into giving potentially substandard care," the group said.
Mid-Atlantic officials insist they're trying to assure quality care and have received fewer than 10 complaints of the kind made by the psychiatric society.
Unlike other insurers that "strictly ration" services, Mid-Atlantic has made a "significant attempt not to intrude in the patient-therapist relationship," the company asserted in a letter to the 1,600 psychiatrists, psychologists and social workers who treat its subscribers.
Subscribers, who have not received these letters, apparently are unaware of the company's attempts to rein in its mental health spending. Officials of the state Insurance Administration, which regulates insurers, couldn't recall any calls or letters from the public.
Mid Atlantic, a publicly held company and the state's largest operator of HMOs, is based in Rockville and serves subscribers in Maryland, Virginia, Washington, D.C., Delaware and West Virginia. Most are in Maryland, but company officials would not provide a specific number for the state nor say how many currently receive mental health treatment.
The company insures workers of some major private and public employers, including Bell Atlantic Corp., the Hecht Co. and the state and federal governments.
Managed care companies are making profound changes in the health care system, from shorter hospital stays to greater reliance on medication in treating mental illness. While many changes appear beneficial, medical professionals fear that insurers are exerting an unhealthy influence over their decisionmaking.
"I think what's happening with [Mid Atlantic] is basically a harbinger of things to come," said Dr. Neil E. Warres of the state psychiatric society, "which is basically a lot of medical care is controlled by companies interested in making profits from care of patients."
The success of Mid Atlantic and other managed care companies -- as insurers increasingly call themselves -- depends on their skill at managing the quantity, quality and price of services. One key technique used by Mid Atlantic and other companies is to put doctors and others who treat patients at financial risk by linking their incomes to their ability to restrain costs.
The company began to step up financial pressure on therapists last summer. In five letters from Aug. 9, 1994, to Jan. 23, Mid Atlantic warned that the company's mental health budget was running a deficit because of a "significant increase in utilization" -- the volume of services provided to patients.
Mid Atlantic complains that therapists are prescribing many more counseling sessions and admitting more people to the hospital than they were in 1993. The letters strongly suggest that doctors and therapists, who work on contracts that pay them for each service, are deliberately taking advantage of the company.
Mid Atlantic indicated it was suspicious because the volume of services shot up early in 1994, after the company lifted limits on hospitalization and outpatient services for mental health patients. Clinical social workers were seeing patients 50 percent more often than they had been, the company said in a letter Aug. 9.
Dr. Mark D. Groban, assistant medical director of Mid Atlantic and author of the letters, said in the Aug. 9 note that "it is unlikely that our members suddenly became 'sicker' just at the time the mental health benefit was made more generous."
But therapists say that if services did increase, the reason may be that patients needed more services than they were entitled to under the previous benefit plan. They say the company is trying to profit, not the professionals who deliver care.
In fact, Mid Atlantic was under strong pressure from Wall Street in 1994 to boost profitability by holding down medical spending. The company succeeded, despite the mental health overspending described in the letters. It squeezed down the percentage of premiums spent on medical care, cutting 1993's rate by 5.6 percentage points to 80.8 percent last year. That performance helped push 1994 profits to $54.5 million, a 120 percent increase over 1993.
Mid Atlantic pays therapists a fee for each service. For an hour of individual therapy, the maximum the company will pay is $87 to $95 for psychiatrists, about $80 for psychologists and $60 to $65 for clinical social workers, Dr. Groban said.
But the company withholds part of the fees in a risk-sharing arrangement. If Mid Atlantic's budget goals for mental health services are met, the 1,600 therapists it contracts with receive the withheld funds, and they also may share in a "savings pool" at the company's discretion.
Before 1994 the company regularly returned withheld funds every few months. But for the first part of 1994, the company paid back just 50 percent, according to Dr. Groban's first letter, because of the increase in "utilization."
Dr. Groban turned up the pressure the next month. "Although some patients require more intensive care than others, a segment of our Panel [of therapists] is regularly seeing patients far in excess of the average for their specialty," he said.
"Such laxity of patient care is not consistent with the goals of our program and may result in dismissal from [Mid Atlantic's] Mental Health Panel. Please review your practice pattern to make sure that care is medically appropriate," Dr. Groban said.
By November, Dr. Groban was warning that Mid Atlantic would increase the percentage of funds it withholds "should utilization trends not improve." The company has been withholding 20 percent of outpatient fees and 10 percent of inpatient fees, but he reminded therapists that their agreement with Mid Atlantic permits it to hold back as much as 40 percent of what it pays for outpatient services and 20 percent for inpatient care.
The withholding applies only to the company's share of the therapist's fee. Subscribers pay a varying percentage.
On Jan. 23 Dr. Groban wrote that despite a 15 percent increase in its mental health budget, spending was exceeding "budgeted amounts" -- which company officials will not spell out -- and the company had decided not to return the latest withheld funds.
He exhorted therapists to do better. "If each of us attempts to deliver quality, efficient care, we should be able to avoid an increase in withhold as well as resume our prior pattern of 100 percent of return of withhold on a quarterly basis."
Although Dr. Groban said in an interview that he sees these letters as educational, many therapists reacted angrily. The reason Dr. Groban hasn't received complaints, these therapists say, is that many in their ranks fear retaliation from insurers that can terminate their contracts, including Mid Atlantic.
"Part of what these documents say is we may limit the size of the panel, we may fire you," said Dr. Warres of the psychiatric society. "Attempts are being made to penalize physicians for providing care. Obviously, at times care provided may be unnecessary, but who decides?"
The standard set by Mid Atlantic, "medically necessary" care, could mean one thing for one patient and another for other patients, observes Paul C. Berman, professional affairs officer of the Maryland Psychological Association. But he says managed care companies often look for the cheapest solution.
"Is medical necessity just considered to be treating the acute crisis?" Dr. Berman asked. "Or is medical necessity really treating the problems that have led to the acute crisis, that if not dealt with will lead to continuing acute crises and in addition lead to tremendous stress, difficulty in marriage, difficulty in parenting?"
"Patients have no idea about the tremendous pressures that are being placed on providers to limit treatment," said Dr. Berman, who practices in Owings Mills.
"It's a whole ethical battle," complained Eileen Dewey, head of the Maryland Society of Clinical Social Workers' insurance committee and a social worker in Columbia. A patient "says to you he'd like to be seen more often," but the insurance company is encouraging the therapist to limit spending. "What do you do?"
Yet other therapists, like Dr. David Irwin, a Gaithersburg psychiatrist, weren't upset by the letters.
"I think perhaps in an ideal world where there were no limitations on the amount of health care finances, or resources available, there would be no need to do any utilization review or to place any limits or restrictions on the number of visits to psychiatrists or psychologists or social workers," Dr. Irwin said. "But the fact is ddTC that's not the reality of the situation. There is a limitation of the dollars available to provide care for patients and it has to be used wisely and with careful consideration for the necessity of the treatment."
Dr. Groban, who practiced psychiatry in the Washington area before joining Mid Atlantic in the 1980s, says the company doesn't retaliate against complainers and runs a therapist-friendly mental health program. "We've had very few providers ever leave the plan," he said.
He said the letters aren't a directive to therapists to "cut back on your treatment," although the letters repeatedly urge the 1,600-memberpanel to watch the amount of services provided on average to patients.
"What I've said instead is revise your individual practice patterns to make sure the patients are treated according to their medical needs," he said. "I think what we're talking throughout here, throughout all these letters, is that in essence we're looking for high quality mental health care."