When Carla Hochalter's 16-year-old daughter, Anne Marie, was paralyzed in the Columbine school shooting three years ago, the 48-year-old homemaker plunged into a depression so black that she sought hospitalization. After 30 days as an inpatient at Porter Adventist Hospital in Denver, Hochalter's behavioral managed-care provider, PacifiCare, ruled hospitalization no longer medically necessary, forcing her into a partial-treatment program. One week after her inpatient discharge, Hochalter entered a gun shop, asked for a pistol, loaded the weapon and killed herself on the spot. Her widower, Ted Hochalter, is suing PacifiCare, as well as Porter Adventist and Carla's psychiatrists.
The Hochalters' experience with behavioral managed care does not reflect a system gone awry, but a system functioning according to a harsh directive: to minimize costs. Managed-care companies make money when they deny treatment and lose money when they grant benefits--hence the complex algebra of pre-certification and gatekeepers, financial incentives to doctors who deny care and fail-first drug policies that require patients to use standard or generic drugs before newer, more-effective medication.
"Managed care starts with the presumption that there's a restriction," says Darcy Gruttadaro, a senior attorney at the National Alliance for the Mentally Ill (NAMI). "People who are more costly are not going to make money for the organization."
The mentally ill are at a further disadvantage when dealing with managed behavioral health organizations (MBHOs), HMO "carve-outs" that administer mental-health benefits, because psychiatric disorders leave people ill-equipped to handle the bureaucratic road blocks inherent in managed care. There are no routine blood tests or CAT scans for obsessive compulsive disorder or schizophrenia, so MBHOs can contest a "subjective" diagnosis of mental illness. This is often accomplished by a narrow interpretation of the mandate to provide "medically necessary" treatment.
"The managed-care industry has made its living on this phrase," says Bryant Welch, Ph.D., a psychologist and attorney who litigates exclusively on behalf of mental-health consumers. "The term means whatever the managed, care company says it means. You can have an expansive benefit system, but it's all contingent on treatment being deemed 'medically necessary.'"
Pamela Greenberg, executive director of the American Behavioral Healthcare Association, a trade group that represents 17 MBHOs, defends her industry. "Patients have the idea that if we can't get coverage, it's the wrong decision, and that's not always true," says Greenberg. "Medical necessity determinations are made using clinical guidelines developed by the American Psychiatric Association (APA)."
"Guidelines can say anything you want," counters Karen Sanders, the APA's liaison to managed-care companies. "But how they're actually utilized is crucial."
A key MBHO money-saver is the curtailment of inpatient psychiatric treatment. Consumers are diverted to residential day programs, as was the case for Carla Hochalter. This is common in the private and public sectors alike. When Colorado privatized Medicaid in the mid 1990s, inpatient psychiatric expenditures dropped from $30 million to less than $10 million in one year. The state tried to offset these cuts with a $17 million boost to community-based outpatient services.
Similarly, in Kansas the Mental Health Reform Act of 1990 precipitated a stark drop in hospitalization--the inpatient population fell from 1,000 to 375 during the 1990s. For Blake Hansen, who was no longer covered by his father's health plan when he turned 19 in 1995, this meant a sudden end to inpatient psychiatric treatment for his mounting paranoia and depression. Hansen had been diagnosed with schizoaffective disorder, and his psychiatrist made three recommendations for long-term treatment at a state hospital, twice following suicide attempts. Each time, a state gatekeeper overruled the psychiatrist's recommendation and diverted Hansen to a community day program. In response, "the psychiatrist, Mukhtar Shah, shrugged his shoulders and said, 'It happens all the time. The [state] comes in and takes control,'" recalls Hansen's mother, Connie Masters. Hansen repeatedly begged for hospitalization; community health workers insisted that he would hate living as a psychiatric inpatient. The cycle continued until Hansen killed himself on December 22, 1995. Hansen's case file was officially closed with the notation: "Depression caused lack of good decision-making."
Masters embarked on a three-year legal battle with the county and state; she won $35,000, after legal fees and expenses.
Plaintiffs with employers who self-insure encounter even steeper legal hurdles. The Employee Retirement Income Security Act (ERISA) exempts these employers from complying with state laws designed to protect consumers. "We need a federal law," says NAMI's Gruttadaro. "Especially since Congress cannot enact patient-protection measures." The Bipartisan Patient Protection Act of 2001 was drafted to expand patients' rights to sue HMOs and to secure special and emergency care, but it stalled in Congress last summer. The Mental Health Parity Act of 2001, which addressed disparity inherent in insurance for physical versus psychiatric illnesses, was killed last December.
All states require private MBHOs to have internal medical review procedures, and 40 states mandate an external grievance process when internal appeals are exhausted.
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