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

01/17/2003

In the 1980s, health care costs in general began to rise, and mental health and substance abuse costs rose even faster. From 1986 to 1988, spending on all health care rose 13%, but mental health care costs rose 20% and substance abuse care costs rose 32% (Hennessy and Green-Hennessy, 1997). As a result, there was increasing pressure to move from a fee-for-service system to a managed care system, which would seek to contain costs by playing a more active role in monitoring and overseeing the care provided, to minimize abuses and attempt to ensure that the most cost-effective care is being provided. Managed care firms undertake a variety of activities, including determining the most cost-effective level of care appropriate to the situation, profiling physician service use and designing disease management programs for chronically ill clients (McDaniel and Erlen, 1996). All of these activities require the MCOs to collect a great deal of personal health information about clients

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