An Inside Story on (Mental) Health Insurance Reform

There is much misinformation and misunderstanding about the workings of the health care system. Here are a few observations on how things work from the perspective of someone who is a practicing clinical psychologist with experience both inside and outside of hospitals:

1. The Doctor/Patient Relationship. In the days before managed care, doctors and patients really did make decisions without too much interference from insurance companies and the government. While insurance companies set some limits on what they would pay out (maximum benefits for mental health services were usually expressed in dollar amounts) and would pay no more than what they deemed “reasonable and customary” fees for each “service,” they did not typically require that practitioners obtain “pre-certification” (pre-authorization) of those same services. So, if you and your therapist thought you needed the treatment that he was offering, the insurance company let you obtain that care and supported it by paying in accord with the insurance contract that you held directly with them, or, more likely, held through your employer.

Managed care caused several changes. First, it required “pre-certification” for many forms of treatment, thus explaining the “managed” nature of the care. That meant that the practitioner (or a member of his staff) had to fill-out forms that explained the nature of your condition, provide a treatment plan, and justify the type of treatment that he hoped to provide.  Depending on the insurance company, sometimes pre-certification required a phone call with the insurance company’s “gate-keeper” to discuss the information just mentioned. And, depending on the length of treatment or changes in the patient’s condition, this process would be repeated so long as you were in the care of the therapist in question.

It is important to understand that the relationship between the doctor and the insurance company was (and is), at least to some degree, antagonistic. If the therapist is unfettered by the restraint of the managed care arm of the insurance company, he stands to get paid by them for as much treatment as he prescribes and the patient consents to receive. On the other hand, to the extent that the insurance company can limit or say “no” to the doctor’s plan, the company gets to keep more of the money paid to them in insurance premiums. Both sides will maintain that they only work in the patient’s best interests, but it should be easy to see the slippery slope that both parties are on, a slope called “financial self-interest.”

Another change was the establishment of panels of “providers.” The “docs” knew they were in trouble when they began being called providers, a business-type of term, rather than doctors (which would include anyone with a Ph.D. or an M.D. or a D.O or a D.D.S) or therapists or social workers. Some providers agreed to accept discounted fees (saving the insurance companies and patients some money) in return for having patients steered in their direction. Usually, the insurance companies would then give patients encouragement to use practitioners on their list of such “preferred providers,” and better insurance coverage when they consulted those individuals, rather than doctors who were “out-of–network.”

HMOs (Health Maintenance Organizations) worked a bit differently. The care was usually even more strictly managed. There were fewer doctors and hospitals from which to choose, and typically smaller co-payments (the amount the patient paid out-of-pocket to the healer). Even more services were managed and required a referral from the patient’s “primary care physician.” Depending on the nature of the contract between the doctor and the HMO, he or his medical practice might lose money to the extent that he authorized too many referrals and too much treatment. This was clearly another step in the conflict between getting treatment and the ability of the insurance company (and sometimes the docs) to make money.

At present, there are relatively few insurance policies (very, very expensive ones) that don’t attempt to limit your choice of doctors or hospitals, or manage your care in some fashion. So, when you hear some politicians say that they don’t want the government to interfere with the doctor/patient relationship, be aware that your insurance company almost certainly already does that.

Negotiated Fees for Services. I’m always amused when the press, insurance companies or politicians refer to the “fact” of doctors and insurance companies “negotiating” fees for the healer’s services. Understand that doctors have virtually no leverage in these situations. If they wish to participate in “preferred provider” panels in the hope of obtaining more patients, they are typically given a fee schedule as part of the contract that they are offered. Large institutions may have some leverage (hospitals or very, very large practices), but solo practitioners and small practices, which make up most of the providers you would routinely consult, are pretty much told to “take it or leave it” in terms of the contractual conditions and the fee schedule by which they will be compensated. Again, if politicians tell you that they are defending the rights of doctors to negotiate such fees, I’m not exactly sure who they have in mind. Most of the psychologists, psychiatrists, and social workers I know must choose either to take what the insurance company or PPO (Preferred Provider Organization) offers, or to be “out-of-network.” As an out-of-network professional, you can set your own fees, but don’t benefit from the PPO or insurance company’s efforts to send you patients.

Parenthetically, it should be noted that few if any of the healing professionals I know got into this work for the purpose of making tons of money. Indeed, most of us didn’t think much about the business-side of our work when we chose to pursue our vocation. As you doubtless have already concluded, the business-end can’t be ignored easily.

Covered Services and Pre-Existing Conditions. Insurance companies aren’t all alike. Some have larger provider panels, some cover more services, etc. Depending on your policy, psychological testing, neuropsychological testing, individual psychotherapy, family psychotherapy, alcohol/drug treatment, and marital therapy, might or might not be covered. Indeed, some insurance policies do not cover mental health services at all.

Pre-existing conditions are those from which you suffered prior to the start-date of your insurance contract. If your insurance company excludes pre-existing conditions, it usually does so in one of two ways. It can have a waiting period (perhaps one year) before it will cover you for treatment of that condition. On the other hand, some contracts require that you have not been treated for the condition for a specified period (again, perhaps one year) before they will pay for treatment; this is based on the assumption that if you have not had treatment in that time, any future therapy will probably not be for precisely the same condition.

You should be aware that when you submit an insurance claim, or ask your doctor to do so, you have now been marked down in a sort of “permanent record” kept by the insurance industry. Whenever you apply for insurance on an individual basis, you are routinely asked to sign a waiver that allows the insurance company in question to consult your life history of insurance claims and your past medical records. If they find something that is not to their liking (meaning that it causes them to believe that you are a bad risk), they may deny you coverage either for the particular condition in question or simply refuse to issue you an insurance policy. This can apply not only to health insurance (the topic I’ve been talking about until now), but also disability and life insurance. As a consequence, some people (if they are able) prefer to pay for certain types of health care out of their own pocket, rather than creating a record of illness that might be used against them by insurance companies at a later time.

Needless to say, one of the most consumer-friendly features in the health care legislation just passed by the House of Representatives is the prohibition of pre-existing condition exclusions. The Republican alternative does not have such a provision.

The Efficiency of the Private Sector. My office manager could give you an ear-full about the difficulties that she has in getting insurance companies to do what they are contracted to do; that is, pay bills promptly and correctly. The number of “lost” claims that require resubmission, delayed payments, and incorrectly paid claims give the lie to the notion, at least among the mental health professionals who I know, that the private sector is to  be preferred in this arena to the performance of Medicare. Of course, some companies actually are quite efficient, while others are frank disasters.

Mandatory Insurance and the Idea of a National Health Insurance or “The Public Option.” In order to get a sense of how a mandatory health insurance program might work, it is useful to look at how a similar approach has fared for automobile insurance. Virtually every state in the union requires that drivers have auto insurance. There are reportedly a number of problems that have occurred with this. First, stipulating that there is a requirement doesn’t necessarily get people to buy car insurance–you need an enforcement mechanism to make certain that they follow the law. I’ve heard stories of people who didn’t have insurance and were brought to court after an accident without being required to pay the expected penalty, but instead were ordered to buy a policy and return to court with it. Doubtless, having done this, those folks might then cancel the policy, especially if they couldn’t really afford it. The expense of creating a data base and monitoring all drivers to determine whether they have current auto insurance is costly and perhaps inefficient, since most people who can afford it will probably buy it on their own without threatened penalties. Some states have chosen to attempt to single out “high risk” drivers for particular scrutiny and oversight, presumably at reduced costs.

Almost certainly, some of the same complications would be present in any national health insurance program. Without going into all the arguments for and against, it should at least be noted that we already have a form of national health insurance. Its called Medicare, and the people who have it apparently like it quite well; but it does cost a fortune and creates an enormous weight on the generations who will have to continue to pay for it.

Thus, the moral and practical dilemma: providing coverage for people who need it (before Medicare, for example, it wasn’t unusual for the elderly to live in poverty, having been wiped out by medical bills) vs. the cost of such a program in dependency and dollars.

I hope that I’ve offered at least a little bit of useful information.  Here is hoping that you will, if needed, learn more and weigh-in with your Congressman or Senator; decisions with far-reaching consequences are being made right now.