Managed Care 101 – The Utilization Review Hoax

I happened to start practicing psychiatry at a time when managed care was just starting to build momentum. From a political standpoint there was concern in the popular press that healthcare services were being over utilized. There is a famous study by the RAND Corporation looking into whether or not angiography and bypass surgery were being used to frequently to treat cardiovascular disease. There was a concern that medical and surgical procedures in general were being over utilized. This was part of the driving force for a large scale experiment called the Medicare PRO or Peer Review Organizations.

In the late 1980s and throughout much of the 1990s I was a physician reviewer for the Medicare PROs, first in Wisconsin and then in Minnesota. My job was to look at cases selected from all psychiatric hospitalizations in the state and determine whether the total length of time in the hospital was appropriate for the condition and whether or not there were any associated quality problems. There was an extensive list of quality problems that nurse reviewers would identify and forward to me for further assessment. Examples of quality problems ranged from death on a psychiatric unit to abnormal vital signs at the time of discharge to the appropriate monitoring of the therapy like lithium that require close monitoring. All physician reviewers working for this organization had to be carefully screened for conflicts of interest.  I could not review any case if I had any financial interest in the hospital or clinic where the incident occurred.

At about the same time managed care companies were establishing utilization reviewers for their insured members. They had no quality focus or quality markers. Their only focus was whether or not one of their members was entitled to inpatient coverage or a specific course of outpatient therapy. There were no conflict of interest considerations because the reviewers were all paid by the managed care company and therefore their financial interests were aligned with the corporation.

You could consider the two different forms of utilization review to be the great experiments in the provision of medical care in the 1990s. More appropriately the Medicare PROs were probably the experimental side and the managed care utilization reviewers represented a business model that really required no experimentation. It seemed quite obvious that if you could deny care that you would make more money.  What happened to these two models over the next 10 years?

Despite the rigorous screening and structurally defined quality problems used by the Medicare PRO, at one point it was determined that the amount of over utilization found in the state of Minnesota was not enough to justify the cost of the program. After all of the hype in the press about how physicians and hospitals were providing unnecessary care, that was a stunning finding on such a large scale that it should not have been ignored. It essentially meant that from an objective scientific standpoint utilization review is unnecessary. Minnesota stopped its utilization effort and decided to partner on the quality side with health care organizations to improve the treatment of specific conditions.

Utilization review on the managed-care side has not only continued but flourishes despite the fact that there is no objective basis for it and that managed care organizations have complete control over reimbursement to physicians and hospitals and the reimbursement for psychiatric services is the absolute lowest.  The most recent development has been internalizing utilization review directly into the hospital and using care managers to force discharges from hospitals. These care managers often depend on a quasi-scientific set of guidelines or standards that frequently ignore the specific needs of patients

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Psychiatry has been hit particularly hard by this quasi-quality approach that disproportionately rations care to psychiatric patients. We are currently seeing people with complex disorders like unstable bipolar disorder discharged from psychiatric hospital within a few days because the "crisis" is over and yet they are not able to function by themselves at home. We have allowed managed care organizations to essentially dictate a standard that suggests the only reason that a person should be a psychiatric unit is if they are "suicidal" or a threat to others.  There is broad interpretation of what "suicidal" means and of course the physician reviewer for the insurance company has never personally assessed the patient or their circumstances.  The vast majority of patients who would benefit from quality care in a hospital would not meet either of those criteria and frequently have no other resources.

The fallout from this approach has been tremendous. Psychiatric care in hospital settings is generally viewed as being very poor in quality. Many outpatient psychiatrists I have consulted with have told me that there is essentially no place that their unstable outpatients can be stabilized because they are frequently discharged from hospitals in a few days and the treatment has not been changed. There is little collaboration between inpatient and outpatient psychiatrists because of the need for high turnaround and the time constraints.  The actual inpatient environments are frequently so toxic that people with fairly severe problems don't want to be there.  Managed care is focused primarily on providing high-volume, low quality care by the application of a method that has no basis in reality.