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Having a voice in managed care: Consumer/survivors can influence the system

By Daniel Fisher, M.D., Ph.D.

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The corpse of national health care reform is still warm and yet a new suitor, managed care has appeared. Can this marriage of public sector resources and private managed care companies work? We can deny managed care is happening, we can try to block it, or we can find ways to influence its course.

To influence policy, you need to go where the money is. Billions of mental health service dollars come from Medicaid. Therefore, for consumers to influence mental health policy it is important that we understand the major changes happening today in the administration of Medicaid mental health benefits.

Until recently, the Health Care Financing Administration (HCFA) formulated a single set of national Medicaid policies which were uniformly applied to all states. During the last several years, however, almost all (44) of the states have applied for waivers (a 1915, Freedom of Choice waiver or a 1115, Research and Demonstration Waiver) from HCFA which would allow them to develop their own set of Medicaid policies at a state or county level. Most of the states that have obtained one of these waivers have decided to run their Medicaid program through a managed care (MCO) organization (see glossary), in order to reduce costs. These changes are evolving quickly. States are not generally reaching out to consumers. Exceptions are Maryland and New York. In Maryland, the legislature has required the state to include consumers in the planning of the state's waiver. In New York, the Office of Mental Health has organizied a collaborative task force, chaired by a consumer, to plan the development of Medicaid managed care.

Here are some ways to gain a voice in managed care policies:


NEC has materials that can introduce you to the general issues but you also need to find out what is specifically happening in your state by contacting your state-wide consumer group, offices of consumer relations, or state officials.

In order to educate consumers as quickly as possible about managed care, consumer groups, which have had difficulty working together in the past, are recognizing the need to collaborate. As an example, NEC and the National Mental Health Self-help Clearinghouse sponsored a half-day institute on consumers and managed care at Alternatives '95 on August 3rd. NEC is also planning to collaborate with the Consumer Managed Care Network and the Consumer/Survivor Research and Policy Work Group.


Find out where the policy decisions about managed care are taking place and insist on your consumer group getting a place at that table. In states that are just getting a waiver from HCFA, influence the form of that waiver. After the waiver has been obtained, play a role in deciding how the state will manage its Medicaid program. Work with allies. Coalitions of consumers, people with other disabilities, and families are more effective than a single interest group.


This is a new idea for most Medicaid Departments but a vital part of consumer involvement. NEC helped establish a consumer advisory council to Medicaid services in Massachusetts which is focusing on measuring informed consent by consumers.


In Massachusetts, the pace of change to managed care has been rapid. A freedom of choice waiver was obtained and the state Medicaid mental health and substance abuse program was carved out of the overall Medicaid Program and contracted to a private managed care organization, MHMA, in 1992. There was little consumer or family involvement in that process. This year, the Massachusetts Department of Medical Assistance (DMA) is preparing a new Request for Proposal to administer a larger contract which will add The Department of Mental Health acute inpatient and crisis services to those already covered by Medicaid services. The following are a set of recommendations to the Massachusetts Department of Medical Assistance to ensure that the values underlying our movement are incorporated into the practice of the managed care organization which gets the bid. These points could be helpful for consumer groups in other states as their Medicaid programs are increasingly contracted to managed care organizations. These recommendations are based on the Empowerment Model of Recovery as outlined by me in an article in Hospital and Community Psychiatry (Sept., 1994). Available at NEC.

To address each of the usual shortcomings of managed care for people with psychiatric disabilities, the managed care organization should:

  1. Develop a procedure for regular, meaningful participation of consumers and families in the policies, services, quality improvement and evaluation of the managed care organization and its provider networks. Massachusetts DMH has established some avenues of consumer input through community planning groups, the Office of Ex-patient and Consumer Relations, and collaborative standard setting but there is no such mechanism for the MCO. There could be more direct participation for families and consumers by the requirement that the MCO assist in the formation of central and local consumer/family councils to DMA/MCO. The mission of such joint DMA/MCO consumer/family councils would be to monitor evaluations and quality indicators gathered by joint consumer/family evaluation teams, modeled after the Georgia Evaluation and Satisfaction Team.

  2. Will cooperate in the preparation of annual report cards of the MCO which would serve as an independent assessment. The report cards will include measures of quality in 5 areas outlined in National Task Force on Report Cards: Access to services which would include access to nontraditional services such as consumer-run services and families to family supports; Appropriateness: measures of the degree to which staff promote hope, recovery, choice, and empowerment; Consumer-generated outcome measures such as choice of services, relationships, dignity, and quality of life measures (these would supplement the more traditional outcome measures, such as number of inpatient days, which are overemphasized in the DMH recommendations); Prevention: availability of alternatives to restrictive care and peer self-help groups; Consumer satisfaction surveys that are designed with participation of consumers and are regularly administered.

  3. Demonstrate that consumers and families were part of the preparation of their bid for the contract. This would show that from the start, the MCO was serious about inclusion of consumers and families.

  4. Not be owned by company having other branches which would profit from doing business with the MCO. The profit of the MCO should be limited.

  5. Demonstrate an understanding of the importance of the concepts of recovery, choice, empowerment, and rehabilitation for people with psychiatric disabilities: what are the practices of their provider networks and do any of them engage consumers in quality improvement, planning, or service delivery?

  6. Have a record of funding a variety of voluntary community programs which offer an alternative to hospitalization, such as respite, specializing, day programming, psychosocial clubs, consumer-run services.

  7. Show a history of or a willingness to fund nonmedical approaches to assisting recovery such as acupuncture, stress reduction, biofeedback, or meditation.

  8. Propose the use of subcapitation or some other mechanism to allow providers to broaden the credentialing process to include recovery from a psychiatric disability or from substance abuse as equivalent to academic degrees.

  9. Show a history of or an intention of using people in recovery from psychiatric disabilities to train provider staff.

  10. Inclusion of consumers representing the Massachusetts Statewide Consumer Coalition and Massachusetts Alliance for the Mentally Ill in the process of reviewing the bids, in a blind fashion (i.e., with no indication of name of bidder). This would be essential because only such representatives would be able to adequately assess the ways that uses of language and other fine points reflect the values of empowerment and recovery.

  11. Must ensure that there are adequate safeguards of consumer confidentiality in the provider network and its own files.

  12. Must ensure that there is choice of therapist and doctor.

  13. Must establish waivers that provide for funding of consumer-run alternatives to the traditional system of care without excessive reports of personal information about consumers.

  14. Establish clear and accessible grievance procedures.

  15. Demonstrated cultural competence.


Vast changes continue to rapidly occur at the federal level to all social programs which affect people with psychiatric disabilities (housing, SSI, Medicaid, Vocational Rehabilitation, etc.). Stay in touch with advocacy groups such as Consortium of Citizens with Disabilities and Justice for All to be informed and educate your lawmakers.


Dictionary of Managed Care Buzzwords

Managed Care-Any form of health plan that contracts selectively with providers, employers and/or insurers to channel employees/patients to a specific set of providers (a providers network).

Managed Competition-A model of reform that increases consumers' purchasing power by creating purchasing alliances and stimulates competition among health care plans.

All-Payor Systems-All payors of health care bills, including government, private insurers, large companies or individuals, would pay rates set by the government for services.

Capitation-Health care providers would be paid a set amount each month for each person covered to provide for all health care needed. The amount of money paid per covered individual would be based on scope of services offered, not on services received.

Gatekeeper-Term given to primary care physicians in a managed care network, who control patient access to medical specialists.

Guaranteed Coverage-Component of insurance reform that requires insurers to cover applicants regardless of pre-existing conditions, past claims history and other factors.

Health Maintenance Organization (HMO)-Licensed under state insurance laws, an HMO is an organization that provides health care services rather than reimbursement to individuals. Physicians can be employed by the HMO or they can be contracted for their services. Enrolled employees are not covered for services by other providers; they must use the HMO providers.

Physician Hospital Organization (PHO)-Physicians and hospital form an organization and provide services as one entity.

Preferred Provider Organization (PPO)-A health care provider, usually a hospital, has a contract agreement with insurers to provide care for their insured employees. Insured employees may use providers other than the PPO, but usually at a higher cost to the insured.