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Formularies Are Latest Managed Care Strategy

Practice & Managed Care (PP&MC) and Psychiatric News will continue updating APA members on practice management issues via the pages of Psychiatric News. This abbreviated version of PP&MC will be printed bimonthly in Psychiatric News and will coincide with the posting of each new issue of PP&MC on APA's Web site. To access the newsletter, go to <www.psych.org>, click on "Members Corner," and scroll down to "Newsletters."

Pharmacy costs are the fastest growing component of health care costs, and the public and the private sectors have targeted them for containment. The private sector, for the most part,has instituted a two- , three- , or four-tiered system (patients pay increasingly higher copays for more expensive drugs).The public sector, in contrast, has relied more on restrictive formularies. Often these formularies become part of the state's legislative process,which brings clinical decision making into the state's political arena and eventually its bureaucracies.

There is nothing wrong with managing pharmaceutical costs. APA's concern, though, is that all the facts be considered when steps are taken to manage these costs-that the effort not be counterproductive and shift expenses to another sector of the health care system, leaving patients with less than optimal care. West Virginia's Medicaid formulary is a good example of the realities of a state-mandated preferred drug list (PDL).

West Virginia

West Virginia implemented a PDL in early 2003.Psychotropics are subject to the PDL;HIV and some cancer medications are exempted.There is a fail-first policy for atypicals, and a multi-fail policy for SSRIs. Here's a page from West Virginia's PDL:

Although antipsychotics are grandfathered in, APA members report that patients are being switched from medication to medication.Others question the efficacy of a two-week trial for atypicals.

Aside from the clinical fallout for patients, there are also administrative burdens. APA members in West Virginia tell the Office of Healthcare Systems and Financing that they have received no communications about which drugs are on and off the PDL, about the procedures for preauthorizations, or the appeals process.

Managed Care All Over Again
"Opaque"administrative procedures,timeconsuming preauthorization processes, unknown appeals requirements,and intrusions into physician clinical decision making have an all-to-familiar ring to APA members.

APA, with organizations such as the National Alliance for the Mentally Ill and the National Mental Health Association,is striving to get ahead of the curve on this new application of managing care.APA is supporting local district branch efforts, meeting state legislators,and bringing the matter to the public's attention.Note:Florida and Kansas, among others, have already exempted medications for treating mental illnesses from their formularies.

When all the stakeholders work together, drug costs can be contained in a responsible and intelligent way. Educating physicians,mental health professionals,and the public,as well as managing outliers,are just some of the strategies that can contain costs without harming patients and/or shifting costs.

District branches needing assistance on these issues should contact Karen Sanders in the Office of Healthcare Systems and Financing at (800) 343-4671 or Paula Johnson in the Division of Government Relations at (703) 907-8588.

Managed Care Complaints Down

Complaints about managed care continue to be less and less among the Managed Care Help Line's calls.During the first quarter of 2003, most callers wanted information about coding and billing,confidentiality and HIPAA,and business practice issues, such as where to find practice software.

Karen Sanders,manager of the Help Line, said that the number of calls related to managed care was down from an average of 113 calls per quarter in 2002 to 93 calls the first quarter of 2003. The majority of these complaints were resolved.

Lawrence Lurie,M.D.,chair of the Committee on Managed Care, urges APA members to use the Help Line and reap the benefit of APA's service.

Call the APA's Managed Care Help Line at (800) 343-4671.

Are Online Consultations Reimbursable Services?

Online consultations are not covered under Medicare because they are not a face-to-face service, and they do not qualify as "telemedicine services."( Under Medicare,telemedicine refers only to specific services provided via interactive audio and video equipment permitting two-way, real-time communication between the patient and the referring psychiatrist and the consulting psychiatrist.)

Psychiatrists may bill Medicare patients directly for a service that is not covered by Medicare if they tell the patient up front (a) the established fee for the service and (b) that the service is not covered by Medicare.Patients must understand that they are responsible for the fee.At the very least, psychiatrists should document for the record their conversation with the patient about this matter.Better yet,they should ask patients to sign a document indicating that they accept these conditions.

For commercial insurers, physicians must check with each insurer to find out whether they reimburse for online consultations. If they do not, psychiatrists should review any existing contracts to determine whether they can bill the patient directly.

Ignore Magellan's "Bar Date" Notification

If you're a Magellan provider, you may have received a notice from the United States Bankruptcy Court in the Southern District of New York relating to Magellan's bankruptcy. This notice concerned a June 27 "bar date"-the date by which those who believe they are owed money from Magellan for pre-bankruptcy-petition goods or services must file a proof of claim.

This bar date requirement does not apply to physicians. All of Magellan's physician claims for services (those submitted before the bankruptcy filing and current claims) will be paid in full.

If you have questions about Magellan's bankruptcy, see <www.magellanprovider.com> or call the Managed Care Help Line at (800) 343-4671.

Limiting Psychotropics Costs Money

The cost-containment strategies enacted by six HMOs to control pharmaceutical expenditures were analyzed to find out whether they saved money. Susan D. Horn, Ph.D., reported the results in a supplement to Drug Benefit Trends. She wrote,"Limited access,whether to drugs or mental health specialists,was associated with higher total health care costs."

At first, researchers studied five nonpsychiatric diseases-ear infections, asthma, arthritis,hypertension,and ulcers.But a curious phenomenon emerged: one-third of the patients had a psychiatric diagnosis and/or were taking a psychotherapeutic medication. Stephen J. Bartels,M.D., a psychiatrist at Dartmouth Medical School,suggested researchers take a look at that.They found the same results, listed below, for nonpsychiatric illnesses and for depression.

• A strong relationship exists between formulary restrictions and increased resource use for all five nonpsychiatric diseases and for depression, at all levels of illness severity.
  
• Sites with the most restrictive formularies often had double the use of health care services as those with no formulary restrictions.
  
• Sites with no formulary restrictions almost always had the lowest use of total health care resources.
  

Specific Psychiatric Findings
For patients with untreated, undiagnosed, or undertreated psychiatric conditions,

• The number of nonpsychiatric prescriptions was approximately 50 percent higher than the number of prescriptions used by patients who had a medical diagnosis only.
  
• The number of outpatient visits-excluding appointments with a mental health care provider-was about 50 percent higher.
  
• The number of trips to the emergency department and hospitalizations was higher.
  

Drug Benefit Trends has made copies of its supplement "Limiting Access to Medications: Impact on Managing Mental Illness" available to APA members through APA's Office of Healthcare Systems and Financing. For a copy of the 40-page supplement, which was published in December 2002, call (800) 343-4671 or e-mail HSF{at}psych.org.

Footnotes

Mr. Muszynski is director of APA's Office of Healthcare Systems and Financing.

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