Organization & Financing

SAMHSA Managed Care Initiative Training Sessions

April 1998

Dates: April 22, 1998-Parklawn Conference Center, Rockville, Maryland
April 23, 1998-American Psychiatric Association, Washington, D.C.

Title: Managed Care and Prevention: An Insider's Perspective

Speaker: James H. Robinson, M.A.
Program Development Specialist
Managed Healthcare Systems of New York, Inc.
7 Hanover Square
New York, New York 10004

Summary

Mr. Robinson's purpose was to initiate serious thought concerning individual commitment to prevention and to focus on how each member of the audience, as a consumer, professional, and an organizational entity can push the concept of prevention forward to ensure its inclusion, as an equal partner, in the overall healthcare continuum. He observed that many tend to believe there is no meaningful way for the concepts of managed care and prevention to mutually coexist.

Can prevention be integrated within the context of a managed healthcare delivery system? Mr. Robinson defined managed care as a financing system-not a program-but simply another way to finance healthcare. He emphasized that all the dynamics of the managed care operation generate around the functioning of the funding system. Managed care, he suggested, has not changed the service delivery system, only its administration. Designed as a mechanism intended to extend service, improve quality, increase access, and deliver more services to more people at less cost, this original intent is evolving. Initially, managed care markets managed costs; then they moved to manage benefits; then to manage health. Eventually, it is hoped that they will manage care.

"Managed Care," as defined by the 1973 HMO Act, was created to provide the one thing that most Federal and private insurance companies, at the time, did not pay for-preventive healthcare services. HMOs were established to provide "improved quality of care, access to services, and provision of primary and preventive healthcare." It is ironic that although HMOs were created to improve or increase the delivery of preventive healthcare services to a population of people, most people do not associate managed care with prevention.

The reality is that MCOs today: (1) remain less than fully committed to prevention activities, despite the fact that they recognize some forms of prevention do work and are more cost effective than treatment, and (2) will provide any service that is reimbursed by their contractor. (The audience made a distinction between the acceptance by MCOs of the effectiveness of preventive care in medical versus behavioral health areas.) Why then aren't they fully committed to a full range of prevention efforts? The "simple" answer is that consumers have not convinced MCOs that they believe prevention is important, as well as cost effective.

There are three components that contribute to MCOs' lack of a full commitment to prevention:

Contractors do not require behavioral health services from their MCOs. (One exception is Employee Assistance Programs, which originally were designed as prevention programs.) This is because contractors have not felt the demand from consumers to include a full range of preventive services in their healthcare benefits. In addition, many states do not believe that MCOs can deliver preventive services successfully and effectively.
Many aspects of prevention, even within MCOs, have no committed funding. The Mental Health Act of 1966, for example, included a large piece on consultation and educational services. The intent of these services was to improve the mental health of the community and assist people in dealing with and alleviating the stresses within the community. It was, essentially, a prevention program built within a treatment act. What happened to it? The funding stopped.
Our society has not chosen to make prevention a priority. Have we, on a personal basis, done all we can to prevent ourselves from becoming ill? Are we exercising? Are we eating a balanced and varied diet? Are we not smoking and, if we drink, drinking only in moderation? Do we visit the doctor for preventive medicine (i.e., physicals, screening tests)? As a society we do not follow the basic rules of prevention, so how can we expect a health care design to do it for us.

Note: Some members of the audience, as mental health and substance abuse professionals, felt the last point was an over simplification of the concept for the purpose of the presentation, implying that if individuals make the "right choices," there is no need for prevention. Further, it justified a lack of commitment on the part of the MCO, because individuals haven't "chosen" to do the correct thing. Both mental illness and substance abuse, they argued, are medical disorders, with aspects of brain involvement. Mr. Robinson clarified, saying that the statement did not mean to suggest that all diseases would be eradicated through individual preventive behaviors, but that the incidence rates, for a majority of illnesses, would be significantly reduced-which would change the entire dynamics (and allocation of finances) of healthcare.

Although there is clear evidence that managed care successfully has reduced the cost of healthcare for businesses, money is not the primary motivating issue. It is one of a number of barriers preventing the incorporation of prevention into MCO designs. They include:

Finances. Capitation, as a finance method, is a disincentive to prevention. If payment is based on member utilization, and utilization decreases due to good health (preventive) practices, there is no incentive to continue prevention. Prevention reduces the amount of money the MCO receives from the contractor by reducing capitation rates. As an example, the application of all possible preventive activities (to include physical and behavioral healthcare) in a baseline physical to an adult male, aged 21-30, requires a utilization-intensive combination of examinations, labwork, questionnaires, and potential counseling. If all is negative, the advice is to come back at an appropriate interval (usually 2-3 years). With continued prevention (screening), utilization will actually be reduced, as more and more of the population reduce their utilization of healthcare services, believing they are "healthy. We want prevention, yet this financing system penalizes its practice.

Note: The computation of capitation rates is based on previous utilization (i.e., the total cost of services that were provided at some other period of time). For example for 1997 rates, an average fee-for-service (FFS) cost for each service category is calculated, based on FFS costs for 1994 and 1995 (the most recent available data). Each average is then multiplied by a specific percentage, which actuarials have determined is the reduced cost to the contractor under a managed care model (e.g., 85 to 90 percent of the average FFS cost). This produces the amount given under the capitation. The MCO is expected to deliver services to a specific population for this amount.

Responsibility. It is the responsibility of the purchaser to ensure that prevention activities are included as part of the service delivery system. Purchasers, however, must be assured by consumers that they are willing to pay for prevention, as currently, there is no CPT (i.e., reimbursement) code for "prevention" activities. Thus, ultimately, everyone is responsible for prevention.
Accountability. Who is accountable for the delivery of preventive health services? Is it the MCO? Is it the contractor/purchaser? Is it the providers, if they are different from the HMO? Currently, there is no determination as to who is the single-focused accountable party for ensuring that prevention is an integral part of managed care.
Commitment. We, as a society, have not chosen to pay for the types of preventive services that require long-term, ongoing behavioral changes. "We, the people" are not committed to prevention; do not necessarily believe prevention works; and do not believe prevention is necessary. For example, consider the tobacco issue. We subsidize, grow, package, merchandise, sell, and tax tobacco-in spite of the fact that we recognize it contains an ingredient that is hazardous to health. Tobacco causes deaths and increases medical costs, yet, there is no societal agreement about what action should be taken.

Note: An observation from the audience suggested that when you define prevention in such broad terms, specifics become very difficult. It is necessary to separate aspects of behavioral prevention from medical prevention. For example, immunization of children against certain diseases is a recognized and demonstrated effective prevention strategy. In behavioral terms, we know that a certain percentage of the population will develop depression. We know how many millions; we know at what age-but we do not yet have the scientific knowledge on how to prevent it. We know how to treat it. We know risk factors for developing it. So, by default, the prevention of depression is limited to early identification (secondary prevention) and appropriate treatment in an attempt to lessen the severity and minimize the impact of the disease on the patient and society.

Savings. If we accept the premise that prevention saves costs in the long term, even that creates a barrier. In an integrated system, the cost offset of prevention can be distributed within the same model. In a carve-out model, who benefits from the cost savings of preventive interventions and programs? What happens when there are, in fact, two groups (healthcare from one; mental health services from another) providing services? If prevention can reduce member medical utilization by providing behavioral health services, who should receive the savings? Basing prevention programs on financial assumptions of savings alone is too narrow and restrictive-savings on indirect costs are not factored into the equation.

Is there hope for prevention? MCO finances are not structured to think in the long-term. If one MCO's prevention efforts bring savings, but it is not realized for 10 years, the "return" on that prevention effort, in all probability, will go to some other MCO. The current financing systems and enrollment practices of MCOs must change to encourage investment in preventive practices, as they are the only vehicles that ensure reimbursement.

Although MCOs do offer some level of preventive services, the majority largely are centered on activities that are medical (physical) in orientation. There are, however, ways to ensure that MCOs embrace a full-range of universal preventive services, to include behavioral healthcare. Prevention can be included in managed care through:

increasing funding
accreditation standards
legislative mandates
contractual responsibilities
changing cultural conscious
Individual Responsibilities (Consumer Demand)

Mr. Robinson cited individual responsibility as the most viable, critical piece. Until individuals make it clear to employers (or whoever is the purchaser) that prevention is a non-negotiable component that must be built into the healthcare contract, it will not be provided. Consumers must work with the contractor to create additional incentives and funds. If everyone in each organization demanded and was willing to pay for behavioral healthcare, parity would have been achieved long ago. There are many examples of consumer demands pushing the boundaries of covered benefits, such as Medicaid coverage for mammography screening and the 48-hour postpartum hospital stay.

In the final analysis, there is no major difference between the MCO's mission to provide prevention and that of the Public Health Service. The managed care mission can be united with the public health mission. Although the current domain of the MCO may be smaller than that of public health, they do provide similar and complementary services. That domain, however, is increasing. Currently, approximately 80 percent of the American population is in some form of managed care; and that figure is expected to increase by the beginning of the next century. Soon the domains of managed care and public health almost will be equal. Every aspect of a MCO's mission is contained within that of the public health mission, as evidenced in the following listing:

Public Health Missions Managed Care Missions

· Information Dissemination · Primary Care

· Education · Health Education

· Alternatives · Preventive Services

· Problem Identification and Referral · Case Management

· Community-Based Process · Targeted Prevention

· Environmental · Identification and Referral

The responsibility for the incorporation and expansion of preventive services is not that of a single entity. It is not just a public health issue, just a managed care issue, just a purchaser's issue, or just an accreditation issue. It is an issue in which everyone has a stake. Ultimately, the responsibility falls on consumers to convince the institutions and entities that because consumers think prevention is an important issue, that it works, and it is worth the investment, they should include it. Only through that kind of effort can prevention become a vital component of managed care.

Note: A point was raised that the presentation equated the 1973 HMO Act with current models of managed care. An argument could be made that, based on today's reality, they are two entirely different entities. Managed care has evolved to become such a cost-driven enterprise that it no longer resembles the context in which the 1973 HMO Act was created. In reply, Mr. Robinson agreed, but observed that there is one consistent commonality-voicing the importance of primary preventive healthcare.

In the final analysis, regardless of the amount of financial investment in managed care, healthcare costs are predicted to continue to increase this year at 2.5 percent the rate of inflation. All the utilization management in the world will not contain it. Something must be done to reduce the need for medical care, and that can happen only through prevention.

Note: Mr. Robinson's presentation was delivered as a "participatory/interactive discussion." As he spoke to the audience, he engaged them by asking conceptual questions-which followed the flow of his outline-directing their thoughts toward the points he was making. The "questions and answers" occurred throughout the presentation.

Reference: "Paying More and Losing Ground," a study commissioned by the AFL-CIO and prepared by the Lewin Group; The HMO Act of 1973.