disputes between physicians and health plans. Many physicians have reported that health care plan denials of tests or treatment have aggravated their patients' health status.⁶⁶

Managed care for mental health services
During the last five years there has been significant change in mental health care. The market has been altered by the growth of "carve-out" managed care plans that provide separate, specialized mental health coverage. This means that a consumer's managed care plan subcontracts mental health services to another company. Rand Corporation and UCLA Center on Managed Care for Psychiatric Disorders conducted three studies examining issues surrounding mental health benefits under managed care. The studies focused on the costs of mental health services under managed care and the implications of the 1996 parity legislation for cost and benefit design.⁶⁷

 

According to the studies:⁶⁸

* Unlimited mental health benefits under managed care cost virtually the same as capped benefits. The average increase was about $1 per employee compared with costs under a $25,000 cap, which was a typical limit in other existing plans. The study concluded that benefit caps on mental health coverage had little effect on employers' overall health care expenses. (See Figure 7, on the next page)

* An even more comprehensive change required by some state laws (i.e. removing limits on inpatient days and outpatient visits) will increase costs by less then $7 per enrollee per year.

* Despite increasing benefits, the switch to managed care led to a substantial reduction in costs for mental health care. Costs per covered member under fee for service coverage were high and rising at a rate of 20% annually. Following the transition in 1991, costs immediately fell 40% and continued to decline slowly over the following years. (See Figure 2, on the next page)

* The switch to managed care did not reduce access to mental health care. The number of patients receiving mental health specialty care increased.

* Factors responsible for cost reduction were that fewer patients were hospitalized, the average length of stay was reduced, and the cost per inpatient day fell drastically. All of these trends began before the carve-out but were accelerated by managed care.

There has also been a litany of complaints specific to mental health services under managed care. The National Coalition of Mental Health Professionals and Consumers is an organization which addresses the negative impact of managed care on patients and practitioners in mental health care. The following are examples of problems which it has identified:⁶⁹

* Because managed care limits referrals to specialists, it forces many professionals to treat special problems for which they do not have the training or experience.

* In managed mental health, utilization reviewers often have limited experience and education. These reviewers routinely overrule and change the treatment decisions of greatly experienced specialists.