The most common reason for collecting personal health information is to support utilization review. In this review, an MCO determines the medical necessity of the request and the appropriate level of care. Typically, the client makes the initial request for treatment. The client generally speaks to a care manager at the MCO, who discusses the nature of the problem and the symptoms and makes a referral to a provider for the minimum level of care deemed appropriate (Edwards 1997). Once this initial authorization is exhausted, the provider must request authorization again if the patient continues to need treatment. The process for requesting re-authorizations varies from company to company; some plans conduct reviews by telephone, usually following a prepared set of questions, while others require the provider to fax a treatment request form to the company. The frequency of re-authorizations also varies. Some plans require re-authorization every two to three visits, while others may authorize 10 or more outpatient sessions at a time (Hennessy and Green-Hennessy 1997).
There are also differences in the authorization and re-authorization processes for outpatient versus inpatient treatment requests. There is some indication that MCOs may be moving away from requiring extensive information as part of utilization review for outpatient treatment. A number of recent empirical studies have shown that intensive utilization management of outpatient cases may not be cost-effective for managed care firms. One study found that it is 50 percent more expensive to administer managed care than fee-for-service (Meyeroff and Meyeroff 1999). Another study found that the majority of patients receiving outpatient behavioral health treatment voluntarily terminated treatment after a limited number of sessions (Hennessy and Green-Hennessy 1997). These authors suggested that MCO efforts to manage care do not appear to have had a significant impact on overall outpatient utilization and that MCOs might find that it is not cost-effective to intensively manage all cases.
We pursued this issue in interviews with providers and managed care firms, asking them whether they had observed a trend in MCOs requiring less patient information. Most confirmed that some MCOs seem to be requiring less patient information for utilization review. Magellan has recently introduced a treatment request form that requires only very basic patient information. In addition, several plans we spoke with have instituted interactive voice response (IVR) systems, through which a provider calls an MCO and provides basic patient information—such as demographics, diagnosis, and services requested—into an automated system. The treatment is automatically approved as long as the request meets certain basic parameters. Case managers review a small sample of the cases from the IVR system.
Some plans are also requiring patient information less frequently than in the past. One plan we spoke with has, within the past year, decreased the frequency of their reviews from every 10 sessions to every 20 sessions for psychiatric treatment and from every 20 sessions to every 40 sessions for substance abuse treatment.
One provider believes managed care firms are requesting less information partly in response to provider and patient pressure but also because plans are beginning to find that the costs of hands-on management through authorizations are not worthwhile relative to the cost of treatment because most patients only need short-term treatment. This view is consistent with the experience of one managed care plan we spoke with, which stated that the firm has reduced the amount of patient information it collects because “99 percent of cases are managed fine” without the plan having to manage each one. However, several providers pointed out that not all MCOs have streamlined their requests.