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Online ISSN: 1099-176X    Print ISSN: 1091-4358
The Journal of Mental Health Policy and Economics
Volume 5, Issue 2, 2002. Pages: 61-69

Published Online: 11 Nov 2002

Copyright © 2002 ICMPE.


 

Quality Standards and Incentives in Managed Care Organizationsí Specialty Contracts for Behavioral Health

Dominic Hodgkin,1* Constance M. Horgan,2† Deborah W. Garnick2 and Elizabeth L. Merrick3

1Ph.D. Assistant Professor, Brandeis University, Waltham, MA, USA
2Sc.D., Professors, Brandeis University, Waltham, MA, USA
3Ph.D., MSW, Research Scientist, Brandeis University,Waltham, MA, USA

*Correspondence to: Dominic Hodgkin, Ph.D., Heller School, MS 035, Brandeis University, Waltham, MA 02454-9110, USA
Tel.:† + 1-781-736 8551
Fax:† + 1-781-736 3928
E-mail: hodgkin@brandeis.edu.

Source of Funding: This research was supported by grants to Brandeis† University from the National Institute on Drug Abuse (Grant # R01 DA10915), the National Institute on Alcohol and Abuse and Alcoholism (Grant # R01 AA10869), and the Substance Abuse and Mental Health Services Administration (SAMHSA).

Abstract
In the US, most privately insured individuals are enrolled with managed care organizations (MCOs), and a majority of these organizations have subcontracted responsibility for behavioral health care to specialized vendors.† Based on economic theory, we anticipate that MCOs should be more likely to require quality standards in contracts that transfer all financial risk to the vendor.† This hypothesis is tested with multivariate analysis of the use of quality-related standards in a nationally representative sample of commercial MCO products.† All five standards we examined are widely used in behavioral health subcontracts (varying from 47% to 70% of products).† However, the standards are not more commonly used by MCO products with unlimited capitated contracts for behavioral health.† In most cases the opposite is true, and we consider various possible explanations for this.† Future research should examine whether use of these quality standards in contracts is linked to better quality of care.
 

Background: In the US, most privately insured individuals are enrolled with managed care organizations (MCOs), and a majority of these organizations have subcontracted responsibility for behavioral health care to specialized vendors.† Based on economic theory, we anticipate that MCOs should be more likely to require quality standards in contracts that transfer all financial risk to the vendor.†

Aims of the Study: To test whether use of quality standards in behavioral health subcontracts differs between MCOs that transfer full financial risk and other MCOs. Similarly, to test for differences between for-profit and nonprofit MCOs.

Methods: Bivariate tests and logistic regression analysis of the use of five quality-related standards, and the use of any standard, in a nationally representative sample of commercial MCO products in 60 US market areas. Statistical controls include MCO size, chain affiliation, region and market size.

Results: All five standards we examined were widely used in behavioral health subcontracts (varying from 47% to 70% of† products). However, contrary to our hypothesis, the standards are not more commonly used by MCO products with unlimited capitated contracts for behavioral health. In most cases the opposite is true.† In addition, for-profit plans were more rather than less likely to use††† several of the standards.

Discussion: MCOs that transfer full risk may be using mechanisms other than quality standards† (e.g. periodic rebidding) to prevent† skimping; may be less concerned about quality anyway; or may be more skeptical about the value of existing standards. The fact that for-profit plans are equally or more likely to use these standards may reveal that their objectives are not different from those of nonprofits, or that competition is constraining them to adopt standards anyway. Limitations of this study include the lack of more detailed data on the nature of financial risk-sharing, and on the types of financial† penalties associated with each standard.†

Implications For Health Policy: Pressure for accreditation appears to be an effective vehicle for encouraging the spread of standards. It would be useful to know how far use of these quality standards in contracts is linked to better quality of care.

Implications For Future Research: Further studies should examine the relationship between quality standards and quality of care.

 


Received 1 August 2002; accepted 16 October 2002

Copyright © 2002 ICMPE