Community Support

Regulating Managed Mental Health Care
A Policy Analysis and Discussion
of the Role of Evaluation

Executive Summary

Managed care has undergone extraordinary growth in recent years to become the dominant form of health insurance coverage in the United States. This trend has brought with it rising public and professional controversy concerning the utilization- and cost-control techniques employed by managed care organizations (MCOs). Media coverage on the topic of managed care reflects this unease, with frequent reporting of instances of patient discontent and other industry problems.

Parallel to this worsening public image, hundreds of legislative proposals to regulate managed care practices have been advanced on the state and federal levels. These measures, some already enacted, address such areas as information disclosure, consumer protection, mandated benefits, quality monitoring, licensing, selective contracting, and data collection.

Mental health care is a common managed care benefit that increasingly is provided through the use of specialized "carve-out" organizations. Many state Medicaid programs are now pursuing, or have in place, federal waivers to move their enrollees into private managed care; typically, these arrangements also designate separate plans to handle mental health services.

Mental health consumers, advocates, and providers have voiced numerous concerns about the delivery of mental health services by MCOs. Seeking to curb potential abuses, they have often participated in the general drive to regulate managed care. At other times, they have formulated their own agenda of detailed protections and remedies geared to mental health care issues and user groups. Vermont, Rhode Island, and Massachusetts are three states where the regulation of managed mental health care has surfaced as a major item of legislative business during the past few years.

To analyze regulatory policy changes for managed care, it is useful to refer to the concepts of "policy instruments" and "quality assurance." The study of policy instruments clarifies the status of regulation as one of a variety of tools in the hands of government, as well as the fact that regulation has its own spectrum of applications featuring different levels of coercion. A survey of the field of quality assurance shows the many public and private actors working to promote quality in managed care settings. New legislative regulations need to be seen as a supplement to this ongoing activity, more than a solitary or unique influence.

Shaping the impact of new regulations for managed mental health care will be a number of forces that arise from the regulatory process, changing health system trends, and dynamics of the mental health sector. This report discusses specific issues in the following areas:

post-legislative politics
bureaucratic capacity
regulation as symbolic action
limits of information disclosure
consumer participation
mental health exceptionalism
contracting
prescribed treatments
regulatory coordination

Finally, the role of program evaluation as a crucial regulatory tool is examined. Almost entirely neglected in the current round of legislation on managed care, evaluation research is required to weigh the costs and benefits of new regulations, guide bureaucratic officials in adjusting their implementation strategies, and provide feedback to legislative policymakers needing to consider future substitutions among regulatory and nonregulatory instruments. Quantitative and qualitative approaches to evaluation are indicated, as well as the establishment of consolidated state data centers.

Table of Contents | Next