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Mental Health

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Financial incentives may influence health care providers' mental health treatment decisions

The mental health services a person receives depends not only on the benefits covered by his or her plan, but also the financial incentives offered to doctors that encourage them to use or withhold such services. A recent study underscores the major role played by financial incentives offered on access to mental health services. The study, which was supported by the Agency for Healthcare Research and Quality (HS09660), found that when a managed behavioral health organization (MBHO) changed the way it contracted for outpatient mental health care with its network providers from a fee-for-service (FFS) system to a case-rate system (fixed payment for all covered treatment per patient), mental health visits went down 25 percent.

More intense utilization review of mental health service use nearly doubled the effect of the case rate. The share of revenue from FFS patients worked in the opposite direction. FFS revenue raised visits by 34 percent relative to the case-rate effect with no FFS revenue. The effect of physician financial risk sharing on treatment choices also seemed to depend on the level of the case-rate payment associated with a given patient. For example, a $100 increase in the case rate would result in only a 10 versus 25 percent reduction in visits relative to FFS.

Also, providers who shared the financial risk appeared to tap into collateral services that were less costly to themselves, although not necessarily to patients or other stakeholders, as substitutes for their own services. For instance, case-rate patients were more likely than FFS patients to receive medications, to be referred to self-help programs, and to be referred to a community mental health center, notes study author Meredith B. Rosenthal, Ph.D., of the Harvard School of Public Health. She surveyed 26 group practices and independent practice associations about financial incentives, organizational factors influencing mental health treatment choice, and internal reimbursement schemes to examine the impact of provider risk sharing on number of mental health visits.

For more details, see "Risk sharing in managed behavioral health care," by Dr. Rosenthal, in the September 1999 Health Affairs 18(5), pp. 204-213.

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