Shrink Rap


Your insurer may not be who you think it is. Even as your little plastic HMO membership card sits snugly in your wallet, your mental health benefits—coverage for therapy, in-patient psychiatric care, and sometimes drug treatment—are most likely being farmed out to an entirely different business whose name is nowhere on your card. As managed care marches bizarrely along, these new companies have sprung up to manage mental health care for the companies that already manage the rest of your care.

Managed “behavioral” health companies, as they’re called, are not notable simply as markers of the strange moment in health care financing, they are also wreaking havoc on therapists all over town. Providers are complaining their profession is being, yes, shrunk, and possibly even slowly strangled by these powerful cheapskates lurking behind the scenes.

Therapists do have reason to fear for their profession—and patients for their care. Over the past 10 years, as these new middlemen have come into being, the value of the benefits they manage has dropped more than 54 percent, according to a recent report by the Hay Group. For a sense of how extreme that is, consider that health benefits overall have decreased just over 7 percent in that same period, and much has been made of that drop. Those savings, which have translated into big money for these largely for-profit companies, have come from both cutting fees and scaling back care.

A giant entity known as Magellan Behavioral Health, which oversees mental health benefits for nine major managed-care companies in New York, has recently cut reimbursement rates for therapists in the Aetna/US Health Care, Prudential, WellCare, and Empire Blue Cross and Blue Shield networks in the area. As of January 1, psychologists who were making $72 for a 50-minute session in the Empire network are getting $50, setting off predictions that only the most desperate providers will continue with the company. But since Magellan oversees the benefits of more than 2 million New Yorkers (in creepy behavioral health–speak, that’s more than 2 million “covered lives”), even if you switch HMOs, you may well still end up with Magellan making your mental health decisions.

The companies themselves will tell you this takeover has been good for patients. “We put mental health under the supervision of experts,” says Pamela Greenberg, executive director of the American Managed Behavioral Healthcare Association, an industry trade group that lobbies for companies. Indeed, mental health costs were spiraling upward under the old fee-for-service system, and Greenberg says that all-purpose companies are less efficient at managing mental health care. “Because we have a specific focus, we’re more knowledgeable than a general health care company.”

But psychologists, social workers, and other mental health providers, many of whom are watching their incomes plummet, complain that the companies are sacrificing patients to bottom lines. Therapists report having their decisions second-guessed, often with the end result of shortening a patient’s talk therapy or replacing it with antidepressant drugs, regardless of his or her needs.

Manhattan-based therapist Beth Meehan says she has to reapply to the managed behavioral health companies for permission to continue treatment as often as every five sessions, and that her requests are often denied. To Meehan, the attitude toward mental health under managed care is “stepchild treatment.”

For clinical psychologist Karen Shore, totalitarian political regimes offer a better metaphor for the corporate takeover of mental health (“One of their first acts is to banish, imprison, or murder the intellectuals who would rally opposition to the new regime,” she notes). If the comparison seems a bit extreme, it conveys the sweeping, destructive effect many clinicians feel managed care has had on mental health. Just 10 years ago, therapists were for the most part in charge of treatment decisions. Now cost factors in heavily and, according to Shore, patients’ problems are glossed over in the process. “They focus on the most prominent symptom,” says Shore. “But they don’t want you to explore why this is happening.”

Shore, who heads the National Coalition of Mental Health Professionals and Consumers, says she was unable to provide the best therapy when she briefly worked with a managed-care company a few years ago. “Every time I filled out a report asking for more sessions I felt I was betraying my patient and making therapy unsafe,” she says. “I found myself wanting to wrap up therapy so I could be a good girl and be in the company’s favor, while my training would have told me slow down and see if there is anything the patient is avoiding.”

Shore has since decided not to work within any managed-care networks. But not everyone can afford to turn away from what is now by far the largest funding source for mental health care. One hundred sixty-two million Americans are now in managed behavioral health companies, while a mere 14.3 million Americans still have their mental health benefits managed directly by their HMOs. Because the behavioral health companies regularly merge with one another, their numbers are actually going down, while the number of patients they manage is going up. Magellan alone, which is for-profit ($1.5 billion in revenue last year) and publicly traded, manages more than 61 million members. The industry’s steady stream of mergers and acquisitions often means that patients’ benefits change unexpectedly.

Even as the market affects what happens to patients, it is unclear whether the behavioral health companies are subject to patient-protection laws. Gayle O’Brien, the director of legal and regulatory affairs at the New York State Psychological Association, says that several of the organization’s members have complained that they were recently taken out of the provider network of Merit Behavioral Care (which has since been taken over by Magellan) without any notice. “New York State has a law that prohibits that kind of termination,” says O’Brien, “but the law speaks in terms of health care plans, HMOs, and insurers, and Merit doesn’t fall into any of those categories.”

In what Shore might call a minor resistance movement, some psychologists are suing managed behavioral health companies, along with managed-care companies, alleging that both are violating their contracts and misrepresenting their policies. The suits, which are coordinated by the American Psychological Association, will make the argument that taking treatment decisions out of clinicians’ hands is dangerous for patients.

But proving such a case is near impossible. When it comes to mental health, outcomes are less clear-cut than in other areas of medicine. So, while therapists point to studies that show patients benefit when they and their providers control treatment, the industry refers to other literature that suggests patients are better served by its shorter-term approach. And regardless of whether they’re right, the new managed behavioral health companies are running the show their way—which also happens to be the cheapest way.