Evaluation of agreements between managed care organizations and providers of community-based mental illness and addiction disorder treatments.
OBJECTIVE
To analyze the scope, content, and nature of contracts between managed care organizations (MCOs) and community-based mental illness and addiction disorder treatment and prevention service providers, focusing on implications for managed care policy.


METHODS
Qualitative and quantitative document content analysis.


METHODS
We reviewed and coded 107 provider contracts from 17 states. Data were aggregated on MCO and provider demographics, scope of services, contractual obligations, and financial reimbursement mechanisms. Results were compared with those from a similar study conducted in 1996 with a sample of 50 contracts to identify changes over time.


RESULTS
The MCOs purchased relatively few services from providers, omitting many services integral to the proper management of mental illness and addiction disorders. Service duties were often ambiguously described, leading to potentially significant and unanticipated financial risk for providers. The MCOs exert strong control over treatment decision making. Capitation and other risk-based payment arrangements are increasingly common, although most continue to use fee-for-service reimbursement methods. Contracts are structured to remove provider bargaining power; they allow MCOs to unilaterally amend all provisions on notice and without negotiation and permit termination "at will."


CONCLUSIONS
Managed care contracts favor the needs of the managed care industry and are constructed to (1) shift significant amounts of financial risk onto providers and (2) manage and restrain providers' choices over the use of benefits through close oversight, financial controls, and incentives. Because a signed contract is a precondition to access to patients and insurance revenues, health professionals must sign them and indicate a general inability to negotiate their terms.
Rosenbaum
Sara
S
Center for Health Services Research and Policy, School of Public Health and Health Services, The George Washington University, Washington, DC 20006, USA.
Mauery
D Richard
DR
Teitelbaum
Joel
J
Vandivort-Warren
Rita
R
D003156:Community Mental Health Services / Q000458:organization & administration*; D003284:Contract Services / Q000458:organization & administration*; D003625:Data Collection; D004608:Eligibility Determination; D006801:Humans; D008329:Managed Care Programs / Q000458:organization & administration*; D001523:Mental Disorders / Q000628:therapy*; D016134:Organizational Policy; D010818:Practice Patterns, Physicians'; D012017:Referral and Consultation; D019966:Substance-Related Disorders / Q000628:therapy*; D014481:United States