Privacy Issues in Mental Health and Substance Abuse Treatment: Information Sharing Between Providers and Managed Care Organizations: Final Report. D. Utilization Review Process

01/17/2003

The most common purpose for MCOs to collect personal information on clients is for utilization review. This is a process where the MCO determines the client's need, the medical necessity of the request, and the appropriate level of care. Utilization review processes vary from company to company, but generally consist of a request from the client for an initial authorization and then subsequent requests from the provider for additional authorizations. During the initial request, the client generally speaks to a care manager, who discusses the nature of the problem and the symptoms, and makes a referral to a provider for the lowest level of care deemed appropriate (Edwards, 1997).

Once the initial authorization is exhausted, the provider will request subsequent authorizations. MCOs vary considerably in the types of information requested during these authorizations. The MCO care manager might ask the provider to share information on the patient's history, diagnosis, symptoms, treatment plan and progress, and may attempt to determine the patient's level of functioning by asking about danger to self and others, or ability to return to work (Lazarus and Sharfstein, 2000). The frequency of the authorizations also varies from company to company; some will require re-authorizations every two to three visits, while others may approve up to ten outpatient sessions at a time (Hennessy and Green-Hennessy, 1997).

The literature suggests that the resources required for intensive utilization management can exceed the cost savings from managing the care. The administrative costs in managed care are significant: managed care is fifty percent more expensive to administer than fee-for service (Meyeroff and Meyeroff, 1999). In a 1998 study of the utilization review process at United Behavioral Health, Koike and colleagues found that utilization management was used on over fifty percent of cases, and included activities beyond simply approving care, including telephone assessments, discharge reviews, discharge follow-ups, and closing summaries (Koike et al., 2000).

Privacy issues may become less of a concern if MCOs voluntarily choose to limit the amount of personal health information they collect. Several providers and behavioral health care firms mentioned in our interviews that they have observed a trend toward MCOs requesting less detailed information within the last few years. MCOs expected to recover the costs incurred in these processes through reduced utilization. However, there is some evidence that review processes may not result in a significant decrease in utilization, particularly for outpatient care. Hennessy and Green-Hennessy noted that, in a nationally representative study of individuals undergoing outpatient behavioral health treatment, 72% had seven or fewer sessions, and 85% had fourteen or fewer sessions (1997). This was the same for both fee-for-service and managed care, indicating that most patients voluntarily terminated treatment after a small number of sessions and that MCO efforts to limit utilization do not appear to have had a significant effect. Another study examining individuals covered by United Behavioral Health who had terminated outpatient mental health treatment found that only 5% of persons surveyed indicated that their treatment was discontinued due to a denial of care from the MBHO; and only 3% of the participants' providers had noted the denial as the cause of the discontinuation in the medical file. The majority of patients and their providers indicated that treatment was discontinued because treatment goals were met or because the patient voluntarily discontinued treatment (Cuffel et al., 2000). Since the utilization review process can be very expensive, and may not result in significant decreases in utilization, MCOs may begin to change their administrative processes to be more cost-effective, and curtail intensive management of outpatient behavioral health care.

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