Complaints Rise Against Behavoiral Managed Care Company
As Magellan Health Services Inc., the nation's largest managed care company for mental health and substance abuse treatment, has grown in size, the number of complaints lodged by beneficiaries and providers against the company also has grown, the Wall Street Journal reports. The Journal reports that, "with little public attention," managed behavioral health care companies like Magellan, have "transformed the treatment of mental illness and substance abuse" by contracting with insurers and large employers to "serve as gatekeepers, using their own medical guidelines and networks of hospitals and therapists to control the kind and amount of care patients receive." These firms "sprang up in response to soaring costs for mental health benefits, which a decade ago were consuming as much as 12% of employers' health care budgets," the Journal reports, adding that today, behavioral managed care has "grown into a $4 billion industry." According to Open Minds, a consulting firm, 158 million people are now enrolled "in some form of managed mental health program," with more than one-third of those people in Magellan plans. The Journal reports that many Magellan members complain of an inability to find providers and report struggles in getting care reimbursed -- with delays up to 35 days before receiving approval for counseling. One example cited is a woman with anorexia who was denied reimbursement for hospitalization even though she lost 20% of her body weight. "[M]edical criteria used by a competitor" said that her weight loss signaled "an immediate red flag warning," the Journal reports. Providers also have complaints, saying that they endure "hours" of paperwork, "haggling with Magellan's case managers" for authorization to continue treatment, "heavy-handed oversight, sharp cuts in reimbursement levels and long delays in getting paid."
Consultant James Wrich, who compares health plans for employers, said that Magellan has "stricter criteria" for receiving care than similar plans and has an "incentive to limit care" because "its rapid growth has loaded it with debt." In the fiscal year ending last Sept. 30, the company had $1.87 billion in revenue and $1.05 billion in debt. Magellan originally began as Charter Medical, an operator of psychiatric hospitals that purchased a behavioral managed care company and tried to merge its two interests. In 1997, the company "abruptly switched gears," changing its name to Magellan and "shed[ding] most of its interest in hospitals ... and started buying up more behavioral managed-care firms." Magellan Chair and CEO Henry Harbin said that the company's debt has not affected its operations, adding that its treatment authorization guidelines are "very much in the norm of [Magellan's] competitors." He said that much of the "criticism" against the company results from the fact that "American physicians and hospitals don't like some of the cost controls and oversight that have been placed on them by managed care and they are in an economic battle to fight back."
The main obstacle Magellan faces, the Journal reports, is that many providers have quit Magellan's networks. Sandra Hass of the American Psychiatric Association said, "There's a whole phantom network. The managed care companies tell the public they have certain providers on their panel, but when you start calling they're not in the network anymore or they're not available for a long period." In Colorado, a group called the Patient Advocacy Coalition called all 34 psychiatrists on Magellan's referral list and found that 23 "were either no longer in Magellan's network or not available." In another example, Sandra Turner, director of the employee assistance program for Ernst & Young LLP, which contracts directly with Magellan, called providers on the plan's list and "found that some addresses and phone numbers were wrong, while some other therapists were retired or had quit Magellan's network. One was dead." Maryland's insurance commissioner fined Magellan $300,000 for "violating a prompt-pay law" and "failing to give patients a complete directory of therapists." The Journal reports that Magellan says it has corrected these problems.
Some managed care companies that contract with Magellan have been pushing Magellan to improve. After finding that some beneficiaries calling Magellan were left on hold for up to 15 minutes and referrals and appointments "took too long to get," Aetna Inc. has called for Magellan beneficiaries to be able to speak with a care manager within 30 seconds of the automated phone greeting and to receive a therapist referral within six hours and appointments for nonemergency counseling within five days. Aetna spokesperson David Carter said that in response, Magellan has "quickly beefed up its provider network" and improved telephone response time. Magellan CEO Harbin said, "We recognize that our company needs to address the changing needs of our members, customers and practitioners. I believe Magellan has made significant progress in this regard" (Geyelin, Wall Street Journal, 5/8).