Privacy Issues in Mental Health and Substance Abuse Treatment: Information Sharing Between Providers and Managed Care Organizations: Final Report. C. Privacy Issues under Managed Care

01/17/2003

Third-party requests for information on mental health treatment before paying for services is not a recent phenomenon.  Even under fee-for-service arrangements, insurers generally required mental health providers to disclose the patient’s diagnosis, and sometimes the treatment plan, before reimbursing for these services (Acuff et al. 1999).  However, as mental health and substance abuse treatment costs outpaced even the rising costs of care in general in the 1980s, the pressure to move to a managed care system mounted significantly.  In this new approach to cost containment, MCOs would play a more active role in monitoring and overseeing the delivery of care in order to minimize abuses and attempt to ensure that care was provided in a cost-effective manner. 

Before paying for services, MCOs must ensure that the enrollee is eligible for benefits, that the clinician is an authorized provider, and that services paid for actually took place. MCOs therefore require the enrollee’s identification number, the diagnosis, a description of the services performed and dates of service, the name of the provider, and the amount of charges.  MCOs may also need information to satisfy specific conditions of coverage; for example, if benefits are limited to a certain number of visits each year, the plan will need to know how many times the patient has been seen to date. 

In addition to paying for services, MCOs undertake a variety of other activities that depend on having health information about enrollees receiving treatment.  These activities, described below along with the patient information required for each, include utilization management, quality management, and other care management: 

  • Utilization Management.  In order to contain costs, MCOs may establish criteria for medical necessity with regard to inpatient or outpatient treatment, and criteria for the level of care appropriate to the situation.  MCO staff review the case before payment is authorized to ensure that the proposed treatment meets the criteria.  This review process, known as pre-authorization (Kongstvedt 1996), involves the use of information on the patient’s history, diagnosis, symptoms, treatment, and progress.
  • Quality Management.  The purpose of quality management in managed behavioral health organizations is typically to prevent quality of care concerns from arising, to address these concerns if they do arise, and to respond to complaints regarding specific cases or specific providers (Kongstvedt 1996).  Quality management activities may include audits, in which MCO staff visit the facility at which care is provided to review either a sample of a provider’s charts or specific charts when a concern is raised about a specific case.  MCOs may also evaluate providers by profiling and comparing treatment outcomes practice by practice.
  • Other Care Management.  MCOs may seek to promote quality of care and continuity of care, particularly for those with high service use. Clinically trained case managers may work to direct the patient to the

most appropriate level of care, coordinate care between providers, refer the patient to other community services, and may serve as a contact person for patients between visits to a provider (Kongstvedt 1996).  Such care managers may use detailed information on the patient’s diagnosis and treatment.

Although MCOs vary widely in the extent to which they perform these functions and in their reasons for collecting patient health information, all of the MCOs we spoke with said that they reserve the right to view the full medical record of any member at any time.  Therefore, all mental health and substance abuse treatment information is potentially available to the MCO.

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