Table Of Content

Volume One: tsttliitintia*AhummtiKfantglffnefttlS&Vfces/•riminirtrrlSnn An Evaluation ofContracts Between Managed Care Organizations and Community Mental Health and Substance Abuse Treatment and PreventionAgencies Producedtorthe SubstanceAbuseandMentalHealth ServicesAdministration ISAMHSA) An Evaluation of Contracts Between Managed Care Organizations and Community Mental Health and Substance Abuse Treatment and Prevention Agencies SaraRosenbaum,J.D. KarenSilver,M.P.H. ElizabethWehr,J.D. TheCenterforHealthPolicyResearch TheGeorgeWashingtonUniversity August1997 PreparedfortheSubstanceAbuseandMentalHealthServicesAdministration(SAMHSA) 1 Contents f£r, Acknowledgments v ExecutiveSummary. .Vll Introduction ^ BackgroundandOverview 3 StudyMethodsandFindings 7 ContractProvisions 7 1.IdentifyingContractsbyTypeofMCO,ElementsofGroupSponsor Agreement,orTypeofGroupSponsor. 7 2.ClassesofServicesCoveredbyContracts 9 3.TheDutytoTreatPatientsandAcceptPatientReferrals 10 4.PriorAuthorizationofCoveredServices 1 5.AccessStandardsandTreatmentTimeLines 12 6.Referralsto,andRelationshipsWith,OtherProviders 12 7.MedicalNecessityandEmergencyDefinitions 13 8.EnrolleeEncounterDataandEligibilityVerification 14 9.QualityManagementSystems I5 10.CapitationAgreements I5 11.Fee-for-ServiceAgreements I6 12.CoordinationofBenefits I7 13.TermandTermination 17 14.GagClauses 19 Contents 111 15.AntidelegationClauses 19 16.IndemnificationClauses 20 InformalInterviewswithMH/SAProviders 20 ConclusionandRecommendations 23 AppendixA:Methodology 27 AppendixD: ^ibles 31 EvaluationofContractsBetweenMCOsandCommunityMH/SATreatmentandPreventionAgencies Acknowledgments Wewishtoacknowledgethefollowingpersonsfortheirsupportandguidance:Dr.Eric Goplerud,Dr.MadyChalk,andDr.JeffBuckoftheSubstanceAbuseandMentalHealth ServicesAdministration,-RachelBlockandstaffoftheHealthCareFinancingAdminis- tration;Dr.SuzanneGelber;EllenWeber,J.D.,oftheLegalActionCenter,-DonHeveyof theMentalHealthCorporationofAmerica,Inc.;CharlesRayoftheNationalCommu- nityMentalHealthCareCouncil;JackGustafsonoftheNationalAssociationofState AlcoholandDrugAbuseDirectors;Dr.RobertGloveroftheNationalAssociationof StateMentalHealthProgramDirectors;Dr.H.G.WhittingtonofWilliamMercer,Inc.; LeslieScallet,J.D.,ofLewin/VHF;andJeffreyKushneroftheDepartmentofHuman ResourcesinOregon.ThisstudywasconductedfortheSubstanceAbuseandMental HealthServicesAdministrationunderHRSAContractNo.240-94-0038. Acknowledgments v Executive Summary Thisstudyisadescriptive,point-in-timeexaminationofthestructureandcontentofpro- vidernetworkagreementsbetweenmanagedcareorganizations(MCOs)andcommunity mentalhealthandsubstanceabuse(MH/SA)treatmentandpreventionagencies.Thisis notastudyofthequalityofmanagedcaresystems;rather,itisanassessmentofprovider contracts(oneofthebasiclegalinstrumentsonwhichthemanagedcaresystemrests)to identifythemeaningoftheseinstrumentsforMH/SAserviceproviders,grouppurchasers, MCOs,individualconsumersandtheirfamilies,andpublicpolicymakers. BackgroundandOverview thedistributionofclinicalandfinancialrisk. Undertherulesofcontractinterpretation,the TheAmericanhealthcaresystemisundergo- clearertheagreement,themoreenforceableits ingdramaticchangethatisnotyetwellunder- terms.Liabilityforambiguitylieswiththe stood.Thelegalheartofthistransformationis drafterofthecontract.Inahealthcaresystem thewebofcontractsamongthemajorstake- governedbyprinciplesofmarketlaw,itis holders:grouppurchasers,MCOplans,and essentialforthedrafter(inthiscasetheman- healthcareproviders.Theseagreementscreate agedcareorganization)toretainasmuchdis- legallyenforceablerightsandduties,govern cretionaspossibleoverthetermsoftheagree- theflowofbillionsofdollarsinannualhealth menttoprotectitsinterestsandthoseofits spending,andaffectthecareofmillionsof client(thegrouppurchaser).Thismeansnego- MH/SAserviceconsumers.Itiscriticalthat tiatingcontractsthatgivethecompanythe publicpolicymakers,grouppurchasers,pro- powertoexercisediscretionovertheprovision viders,andconsumersunderstandwhatser- ofmedicalcareandtheexpenditureofmoney. vicesthesecontractsprovide,howtheyare structured,andhowtheyultimatelymay StudyMethodsandFindings sccthaoohhocsnealhttpdilureeysapvceatoitrhrnotegfsiuehhnslsoepnouaeewtclloceitderfthsiphcescerodaasocrrtomoeyuonpstcttryacreersaovetcaemetcnoemctrsa.eicsbvoAcsoefottuswhcoea;nerrtlcveelaai.n-brccdleeeose;;sulfiriaogamrnnigdeted FrcamooepunrvpntieitrenhtawdicysitfxsMraenoHs(ami/l.aeya.Sns,iAdbcsao,asandgewtdereoneafcncsidtmeeaslos)ertctehcthoaerlttdlohce5uaoc0gntnhetc2odao5uinft0tnrretioadhnmcettaaclsclottmo- UnitedStates.Allthecontractswereineffect Contractsareaseriesofrelated,legally atthetimeoftheircollection.Participating enforceablepromises.Acontractarticulates agencieswereassuredanonymity,andallcon- therightsandresponsibilitiesofthepartiesto tractswerestrippedofidentifyinginformation theagreement,theflowoffunds,theassign- beforeanalysisinordertomaintainconfiden- mentofclinical?ndadministrativeresponsi- tialityofallparties.Wealsoconductedinfor- bilitiesthroughthehealthcaresystem,and malinterviewswithseveralproviderstolearn ExecutiveSummary vn moreabouttheirexperiencesinnegotiating Wealsofoundthattheprovidercontracts contracts. serveasgeneralnetworkparticipationagree- ments—notspecifictoaparticularmember ContractProvisions groupcaredforbytheMCO(e.g.,Medicaid ET1.ylpeIemdeeonnfttGisfryooifunGgprCSoopunoptnrsSaoprc.otnsMsboayrnaTAyggpreeedeocmfaeMrneCt,cOo,onr- bmeumeipmllbdoenyreeste,whopereakrlsstohonfsplpcarnoo)vv.eirdMeeCdrsOtwhshroomusugeshtsaebrSevtiaactbeelseto lttttiiyrhhnezaeevseco.dtMtl.sGyvCepewNneiOoentorruhfaomlwfMcelafoyreCs,mroiOimuitntusgpwwnotthaishyosstepisyebnaeslogMetocrHfoetpn/oemotmsSaarsesnaAicncabettalgrgetwweeaaadtniosscnciiaawiedrtnhseseaeen-lttefinhtfaeiytr- cMdtptiahohCfreeeiOtcyscisopcin.nrinootptvtraTiautahdcirsieotnssrnsissgd;asenlouglhgersogstpeweoeeesncmgivtoefrsetinorcttmu,hspmeatteafhsmnrepMoobgCtnmeehsOnratoetshrrgesiairscnrooeurnepMparktsotCogvuetiOornodteeehsrroepasfer.l- financialriskforservicesorwasinstead 2. ClassesofServicesCoveredbyContracts. administeringaself-insuredplanforagroup Contractstypicallycoverbothmentalhealth sponsor,whichretainedrisk.Determining andsubstanceabusetreatmentservices.The corporatestructureandriskcontractingwould basicprovideragreementscoveralimited haverequiredustobreachconfidentialityby rangeofbenefitsandservices.Almostnocon- queryingtheparties.Itisimportanttonote tractscoveredthecomprehensiverangeofser- thatwecouldfindnothinginthestructureof vicesthatMH/SAagenciesarecapableof thesecontractsinvolvingunknowncorpora- offering.TheanalysissuggeststhatMCOs tionstosignificantlydistinguishthemfrom tendtobuyfromcommunityMH/SAagencies "known"contracts. onlyspecificinterventionsfurnishedonlyby Cporovveirdaegre,ductoisetssvhaarryinagm,oanngdgcrerotuapinpunrecthwasoerrks; ctehirstaiisnbceactaeugsoeritehseofagprreoveimdeenrts.sPMrCesOusmanbelgyo,ti- MmaCnOagseambulsetobpeeraabtlieontoasntdruecsttuarbeliasnherfefaiscioenn-t, aitteedwiinthscgorpoe.upMopruerocvhears,ertshaerseetrvhiecmesselMvCesOslim- purchasefromcommunity-basedorganiza- aabnldyccoonndsiitsitoennsttnheattwaoprpklyp,aritnilcairpgaetrioMnCtOesrm,sto tions(CBOs)tendtobetraditionalformsof tensofthousandsofprovidersinthenetwork. caanrdeo(ue.tgp.,atpiseyncthisautbrisctasnecreviacebsu,seouttrpeaattiemnetntcasreer,- Basiccoveragerulesandtreatmentobligations, btpqeurenaorelvmfiiitsatyinocadnlssastuuersrreelamsa,nitcnereaditsaitknoo-dnsuhtctialhlraeiiuznstageitsimp,orinoncvgorioesorvifdioipnensawa,ytamainenodnndtof vspctiisorcoyneenctasahr!tloasmlcd,eotenglssitiuscvcstoehesvrr.eevadrisLceb"pesybsssuycntctrhhdehialdaateentdnmr"toiiinsgoatehuls-tetqpdaubanahetdreitfaePeulnhrrtt.nhoDMif.psHrtho/hefedSesAb-y atsopnodbnemsoosdtriawnfdihacorasdteiizomende,omfbrceeogrnastrrdaalcepstrstoovefirdmtehsreamgriergolhuitpkely mpnreoovrfeeersstiihnoacnnlaulod.nePedracelsvieannibctaailsoinsctsacfeofrnvtmirecaemcsbtweseerrrevoircaelh.meaoSlsittmh- ssterrviek.inIgnldyeseidm,iloaurriannatlhyesiirsbfasoiucndprtohveiscioonntsr.acts itlhaerrlya,pyc,asceommamnuangietmyetnrteastemrveinctesf,orifno-rhmoemre AnEvaluationofContractsBetweenMCOsandCommunityMH/SATreatmentandPreventionAgencies patientsofinstitutions,andsubstanceabuse Requirementsforpriorauthorizationofser- residentialtreatmentwererarelypurchasedas vicesappeartoapplytobothemergencyand partofthebasiccontract.Noneoftheprovider nonemergencyservicesinabouthalfofthe agreementsaddressedissuesofculturalcom- contracts.Theotherhalfspecificallyexempt petenceonthepartoftheproviderortheavail- emergencyMH/SAtreatmentfromotherwise abilityoftranslationservices. applicablepriorauthorizationrequirements. Inthosecontracts,providersarerequiredto Contractsfrequentlypurchasetheservices seekMCOapprovalofanemergencyservice ofindividualhealthprofessionalsdirectly, within24to48hoursofadmission. insteadofpurchasingcarefromtheMH/SA agencyitself.Inthesecontracts,theMH/SA 5.AccessStandardsandTreatmentTime agencyisnotapartytotheagreementandhas Lines.Themajorityofthecontractsreviewed neitheraservicenorafinancialrelationship didnotcontaintreatmenttimelinesasacon- withtheMCO.Thispracticehassignificant tractualduty.Eighty-twopercentweresilent financialandorganizationalimplicationsfor ontheissueoftimelinesofcare.Supplemen- communityMH/SAagenciesthatpreviously taryprovidermanuals,whicharenotformally receivedall-inclusiveclinicratesforservices attachedtothecontract,maycoveraccess furnishedbytheirentiresalariedstaff. standards.Thesemanualswouldbeless legallyenforceablethancontractualagree- 3. TheDutytoTreatPatientsandAccept ments.Intheeightcontractsthatexplicitly PatientReferrals.Allthecontractsimposedon establishedtreatmenttimelines,noconsis- providersthedutytotreatpatientsreferredto tentpatternscouldbediscernedintherange thembytheMCO.Rarelydidcontractspermit oftimelinesspecified. providerstorefusetoacceptaparticular patientintotheirpracticeortodischargea 6. Referralsto,andRelationshipsWith,Other patienthorntheirprogram. Providers.Withtheexceptionoffourcon- tracts,serviceagreementseitherexpresslylim- 4. PriorAuthorizationofCoveredServices. itedreferralstoproviderswithinthenetwork Morethan80percentofthecontractsrequired orweresilentorunclearonthematter.Stan- providerstoobtainpriorauthorizationforone dardinsuranceprincipleswouldexcludefrom ormorecontractservices.Rarelydidacontract reimbursablecoverageanycourt-orderedtreat- specificallyauthorizeprimarycareprovidersto ment,aswellastreatmentorderedbypublic approvecare.Tenpercentofthecontractsgave agencies,suchasschoolsorchildwelfareagen- patients'primarycareprovidersanexplicit cies,becausetheplan'smedicalstafi(or roleinthepriorauthorizationprocess.This contractorsininstanceswheresuchdetermi- findingsuggeststhatMCOstypicallyretain nationsareallowed)hadnotdeterminedthe theprimegatekeepingresponsibility(i.e.,the medicalnecessityofthecare.Onlyafewcon- exerciseofmedicaljudgmentregardingthe tractsexpresslyrequiredproviderstomaintain needforspecialtycare).Thisisconsistent coordinatingarrangementswithotheragen- withtheobligationofMCOstomanage ciesasabasiccontractduty.Theabsenceof care,particularlytheconsumptionofspecialty explicitcoordinationrequirementsappears services. consistentwithMCOs'generalpatternof ExecutiveSummary ix retainingcontroloverserviceandresource tioninthecontractor'squalitymanagement authorization. system. D7.efMineidtiicoansl.NTehcierstsyi-tsyixancdonEtrmaecrtgseenxcpyressly t1r0a.ctCsacpoitnattaiionnedAgcraepietmaetnitosn.paOnylmyenttwoarcroann-ge- linkedcoveragetoadeterminationofmedical mentsforoneormorecoveredservices.Of necessitybytheMCO.Twocontractsspeci- these,oneincludedawithholdarrangement. fiedthattheirmedicalnecessitystandards Noneincludedasharedsavings(i.e.,"upside buildoncurrentlyrecognizedplacementcrite- risk")clause.Thecapitationagreementsthat ria.Virtuallynoneofthecontractsarticulated werepartofthesedocumentsappearedtocre- aseparatemedicalnecessitystandardforchil- atesignificantfinancialriskintheprovider. dcrdcpaoaororecntnonetceetvtneoirrrpcudaa(romneccsonitrttuvtn'ssciraishdante(ecj2ixstrt9upoth)rdnwameegsnacaspmdnosstlaeumolarantymnMdlht'isssesCttw)mtpad.oOrtieeuoegTtdldvdhehidirmttdsemehecbbidarremente'iaatsctjftitaaodhooilkrneeuoei.tnnnntted.eOryrcienimeInoalnsnitftysonisoinaetntgtphlyiary-oene M1(Opat14rorfC.8ormvOtaoiFahn/fseogkiesC5eoe-e0mnBf,)esuoO;nfrpwot-ewtuScsrawreo.errnocvtdAfoirigencanareteccd-ertlfjAaesouugcmrdsrtr-eetseesdnmeevitreimsnsvneehcitwnaclpestreuedsedraid.emnfrdoirswMrtaawionvtittshigthhitnehehsgmhooseMsolfntldCttudshdO.ey ofmedicalnecessitybinding.Thisresultis levelsatanytime. consistentwithanMCO'sbasicdutytothe 12. CoordinationofBenefits.Mostcontracts grouppurchasertoensurethatcoverageis,in containedcoordination-of-benefitclauses, fact,necessary. whichobligatetheprovidertobilllegallyliable 8Vd.eermiEfnairncoadltlifeooenr.EdDnaectsaopuointnteeartchcDeeasgtsraaoanwndthdutEiilnliigpziaabyiteliriostn'y, toshqniueradcroepnlatyrrtoaiecnsttbwheaefsoprlteahneb.iolnliunsgftohrecMolCleOc.tioInnpolnalcyed omnulsytefiughrtnicsohnternaccotusntspeercidfaiteadttohaptlapnrso.viMdoesrts e13q.ualTleyrlmikaelnydtToegrrmainntatbiootnh.prCoovnitdrearcstsanwdere wereeithersilentorunclearontheissue. MCOsno-causeterminationrights.MCOs BecauseMCOscannotpayforcareunless weresomewhatmorelikelytobeabletotermi- pfautrineinsthseda,reitewnarosllceodmamtothneftoirmceonsterravcitcsestoare nMaCteOfowrocualusde.reItanitnhteheevgernotuopfmteemrmbienrast.ioAn,paron- specifypreserviceeligibilityverification viderthatelectstoterminatetheagreement requirements.Fifteenofthe50contractscon- couldleavetherelationshipbutwouldloseits tainedsucharequirement.However,onlyfour accesstotheMCO'spatients.Abouthalfthe specifiedthattheMCO'seligibilityverifica- contractseitherrequiredatleast3months' tionserviceswillbeavailableona24-hour- noticebeforeano-causeterminationordid per-day,7-day-per-weekbasis. notaddressthematter,leavingtheprovider 98.0QpuearlcietnytMofanthaegecomnetnratctSsysrteeqmusi.reMdopraretitchiapna- sliusbhjeedc.tPtooswth-atetremvienratlaitoenrtrrueleastmweonutlodblbiegaetsitoabn-s AnEvaluationofContractsBetweenMCOsandCommunityMH/SATreatmentandPreventionAgencies areanimportantsafeguardforenrolledmem- umentspriortonegotiationreportedthat bersoftheplansothatmemberscanbesafely MCOswouldnotfurnishthem. transferredtoanothercarearrangement.Ina substantialminorityofthecontractsreviewed, Fewerthanhalftherespondentsreported thepost-terminationobligationextended obtainingalegalanalysisbeforesigningan indefinitely,regardlessofthecauseoftheter- agreement.Onlyoneobtainedanactuarial minationortheamountoftimeneededto analysis.Halftherespondentsindicatedthat effectuateapatienttransfer. theyconductedabusinessanalysisofcon- tractsbeforesigningthem.Theprovidersthat 14. GagClauses.Onlytwocontractscon- didnotobtaineitherbusinessorlegalassis- tainedwhatcouldbeconstruedas"gag" tancereportedcostasabarrier.Onlyone-quar- clauses(i.e.,clausesthatappeartoprohibit terofrespondentsweremembersofprovider providersfromspeakingtopatientsabout networksthatrepresentedtheirinterestsona coverageandtreatmentdeterminationsmade collectivebasis. bytheplan). ConclusionandRecommendations 15.AntidelegationClauses.Manyofthecon- striaccitasnscounntdaeirnecdonptrroavcitsitoontshethMatCpOrohfirboitmphy- TtrhaicstsebxpeltowreaetonryM,CpOoisnta-nidn-ctoimmemusntuidtyyoMfHco/nS-A delegatinganyoftheirdutiestoanyother agenciesshowsthatdespitesomedifferences, memberoftheMH/SAagency'sclinicalstaff. providerserviceagreementsarestrikinglysim- Whereastheseclausestechnicallyaremeant ilarintheirstructure.Contractsarecarefully todealwiththelegalandethicalproblems constructedlegalinstrumentsthatMCOs arisingfromunilateraldecisionsonthepart havecreatedtoestablishandmaintaincontrol ofproviderstoendtheirrelationshipwith overaccess,benefitutilization,practicepat- ppartoiheinbtist,intghetyhealussoecoofuladhbeaelctohncsatrreuetdeaamsto MterCnsO,aconndtrcoolstos.veTrhtehecomnotvraecmtesnsteeokftboenreeftiaciina- providecoveredservicestopatients. riesandfundsthroughoutthenetworkcreated bytheMCO.Theyshiftfinancialriskfrom InformalInterviewswithMH/SAAgencies theMCOstotheirnetworkprovidersin numerousways,includingeligibilityverifica- During1996wealsoheldinformaldiscus- tionsystemsthatrequireproviderstoabsorb sionswith12MH/SAagencydirectorsortheir theriskoferroneouseligibilitydetermina- staffregardingtheirexperiencesinnegotiating tions,paymentprovisionsthatdonotcontain managedcareprovidercontracts.Mostofthe specifictimelines,coordination-of-benefit respondentsbelievedthatthecontractingpro- provisionsthatplaceresponsibilityforrecov- cesshadbeenopentonegotiation.However, eryofliabilitywiththeproviders,andpost- onlyhalfreportedthattheyhadallcontract- treatmentobligationsandotherprovisions relatedinformationinhandbeforenegotiating designedtocontroltheflowoffunds.MCOs thetermsoftheagreements.Themajorityof usethesetechniquestoensurethatthebasic respondentswhodidnothaveallrelevantdoc- objectiveofthepurchaser—healthcareatthe — priceitwants canbeachieved,whileshield- ExecutiveSummary xi