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Managed Care

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Has managed care influenced or changed the ways in which healthcare providers make medical decisions? Why or why not?

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A group of physicians in Tallahassee, Florida has begun signing up private practitioners in a union-like organization. Their activities so far have been cautious; however, it has been reported in business Week that the organization is negotiating with insurers for each doctor individually. Once this is accomplished, the organization will in effect represent the entire group.
Since 75% of U.S. physicians have signed managed care contracts, there is considerable interest in how successful this group will be. A previous attempt during the late 1980's by the Colorado Union of Physicians and Surgeons was not successful. The Sherman Antitrust Act prohibits self-employed business owners (private practitioners) from illegal price-fixing. One way or another, pressure is building for professionals to creatively explore options for unified action in the changing health care marketplace.
CCEMHC has been asked to respond to the recent contracted provider fee reductions by a large national managed care company. Federal and state laws prevent our organization from participating in contract disputes/negotiations or in any attempt to organize a boycott. Professional organizations are also prohibited from activities of this sort. It is important that you know your options and limitations in dealing with such contractual conflicts.
When you sign a contract with a managed care company, you are designated as a contractor. Contractors are free to negotiate new contracts. However, the contracting company can refuse while they find another provider who would be willing to sign a non-negotiated contract. If you have an unusual specialty, you may be in a position to force a negotiation. Generalist mental health contractors have little leverage to force negotiation.
Under the California Knox-Keene Act, individual contractors cannot organize or appear to organize a boycott of an insurance company. Further, any attempt by contractors to form a group, association, or union in order to negotiate for a contract would be viewed as a violation of the federal McCarran-Ferguson Act and the Sherman Anti-Trust Act under price fixing violations. Anti-trust violations are subject to severe criminal and civil penalties.
Some providers argue that they are defined as contractors but are in fact treated as employees, without the many rights and benefits of employees. Provider status is debatable. The IRS has attempted to distinguish employees from contractors (IRS Circular E, Publication 15). To date, the IRS has not ruled on the status of mental health providers within managed care contracts. But the use of contractors instead of employees is a growing trend among various businesses in order to cut costs and bypass their due process responsibilities toward employees. Because of this rapid growth of the use of contractors, this area is ripe for IRS scrutiny.
Another determination could come from the National Labor Relations Board (NLRB). Historically the NLRB has been conservative, but some people now believe Clinton's appointment of Chairman Kennedy will lead to more liberal interpretations.
If providers are determined to be employees, there are drawbacks. The autonomy of private practice could be affected even more than it is now under managed care. Also, the option to engage in multiple contracts would be restricted. On the other hand, if practitioners were defined as employees, managed care companies would have to pay Social Security, Workers Compensation, and withholding taxes.
Some providers have explored forming or joing independent practice associations (IPAs) to avoid managed care and fee reductions. However, IPAs who contract with managed care are subjected to a level of interference and reduced fees not so different from being an individual contractor. If the IPA goes for capitated contracts, a business practice that is very risky, providers may be paid even lower fees than they are now getting, and they'll need an MBA to keep the machine running.
The bottom line for most providers, then, is to decide to contract or not to contract based on their self-interest. Meanwhile, CCEMHC will continue to address managed care within the scope of our legal rights and responsibilities
The American Mental Health Alliance, or AMHA, is a unique IPA ...

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