Community Support

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

Introduction

Managed health care has undergone extraordinary growth in both public and private sectors in the United States, moving rapidly from a peripheral practice to the most prevalent form of insurance coverage. A recent Wall Street Journal article described managed care as no less than "a revolution that has swept through both medical and mental-health-care fields" (Hymowitz, December 21, 1995, p. 1). Accompanying this trend, however, has been a rising tide of complaints about arbitrary service reductions and improper utilization review procedures, among other problems. Recognizing a need for public safeguards against possible abuses, numerous states have begun to intensify their regulation of managed health care entities. More are sure to follow in this same direction.

The purpose of this report is to provide a policy analysis of public regulation of managed care with a special focus on mental health services, and to consider the role of evaluation as a regulatory tool. What types of regulatory initiatives are surfacing in different states? Which regulatory methods seem most suited to emerging managed mental health care issues, and which promise to be ineffective? How can evaluation research findings be used to improve the regulation of managed mental health care? Not only have such questions received minimal attention to date, but little effort has been given to developing a framework of analysis for linking the regulation of managed mental health care to other regulatory activities in mental health, health, and additional policy sectors. Lacking such a framework, however, it is impossible to draw on the broader public policy lessons that are available, or to formulate recommendations that are sufficiently encompassing in their view of public/private interactions in mental health care.

The following section begins this policy analysis by examining the strong political currents that underlie the managed care regulatory movement. Next, a description is given of the main regulatory strategies that are under development on the state and federal levels. In the middle part of this report, the concepts of "policy instruments" and "quality assurance" are introduced; in both instances, the purpose is to situate managed care regulation into a larger context that defines a spectrum of policy action. With this framework as a foundation, regulatory initiatives for managed mental health care are then assessed. Finally, the special role of program evaluation as an adjunct to conventional regulatory intervention is discussed.

The general standpoint guiding this report is that fair and efficient regulation has an essential role to play in the health care system. Only free-market purists will see this, ipso facto, as an anti-managed care position. On the other hand, uncompromising regulatory proponents who hold little regard for public/private boundaries in health care are sure to encounter their own sorts of difficulties with the analysis within.

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