Psychiatric Annals

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The San Francisco Medically Indigent Adults: One Possible Solution

Joseph Hartog, MD

Abstract

A formidable adventitious coalition of insurance companies, labor unions, industry and certain politicians has chosen to do away with fee-for-service psychiatry, under the guise of reducing health costs (which arc really mostly medical /surgical hospital costs). Fee-for-service however is a red herring issue; the real target is solo practice, the highly efficient cottage industry which is the last hope for personalized health care. The very politicians, business and labor leaders who advocate and legislate public government clinics or HMOs are not likely themselves to be seen in such facilities. The logical outcome of the campaign now underway would be the salaried employment of all doctors one way or another, except for a handful who will cater to the rich and powerful. This will be the case, in spite of all the evidence that bureaucratic medicine is less humane, less responsi ve, less personalized and less efficient, while costing more, because of higher unit costs and layers of inefficiency, caused by administrative overhead. For example, in the San Francisco Community Mental Health Services (CMHS), the highest average productivity achievable from clinical staff can be 50%; ie, for eight hours of work, one can expect, at best, four hours of therapy, on the average. The unit cost of an hour of psychotherapy, whether performed by a paraprofessional, a trainee or a doctor, is from one-third to 100% higher in Community Mental Health Services than if the psychotherapy is done by a private psychiatrist in his/her own office.

Those of us who have practiced in both settings know how efficient we are in our own private offices and we also know how many meetings we must attend and how many hours we must devote to supervision in public service. This is not to mention the issue of quality and versatility of experienced psychiatrists vs possibly less experienced, less motivated or less versatile non-medical therapists. These considerations are particularly relevant in connection with the treatment of the mostly non-neurotic, more seriously ill patients cared for under the Medicaid system. HaU" of these patients typically require medications and a significant number have physical illness in addition to their mental disorder.

This article will describe a program to rescue the private solo practitioner model to the maximum extent possible in a third-party reimbursement world. The program came into being in response to recent legislation in California, mandating that "Medically Indigent Adults" (MIAs) no longer be eligible for private psychiatric treatment, as of January I, 1 983. This is the harbinger of "consolidation," ie, the transfer to Community Mental Health Services of responsibility for all Medicaid psychiatric treatment, to begin sometime after July 1983. Under the legislation (AB 799), the counties received less than 70% of what the State had been paying for treatment of the same population.

The counties have had the option of contracting with private doctors or of just absorbing these previously private patients into their already overcrowded public community mental health centers. Only San Francisco County chose to contract with private practitioners (psychiatrists and Ph.D. psychologists) for the treatment in their own offices of a number of the MIAs. The choice was made in recognition of the importance of continuity of care and also because t he number of patients treated by private practitioners was so large.

The Family Service Agency of San Francisco ( FSA/ SF) won approval to be the fiscal intermediary and contractor with the City and County of San Francisco, for six months. This agency, which has provided counseling and other services to families, the elderly and children for many years, enjoys a solid reputation in San Francisco. The…

A formidable adventitious coalition of insurance companies, labor unions, industry and certain politicians has chosen to do away with fee-for-service psychiatry, under the guise of reducing health costs (which arc really mostly medical /surgical hospital costs). Fee-for-service however is a red herring issue; the real target is solo practice, the highly efficient cottage industry which is the last hope for personalized health care. The very politicians, business and labor leaders who advocate and legislate public government clinics or HMOs are not likely themselves to be seen in such facilities. The logical outcome of the campaign now underway would be the salaried employment of all doctors one way or another, except for a handful who will cater to the rich and powerful. This will be the case, in spite of all the evidence that bureaucratic medicine is less humane, less responsi ve, less personalized and less efficient, while costing more, because of higher unit costs and layers of inefficiency, caused by administrative overhead. For example, in the San Francisco Community Mental Health Services (CMHS), the highest average productivity achievable from clinical staff can be 50%; ie, for eight hours of work, one can expect, at best, four hours of therapy, on the average. The unit cost of an hour of psychotherapy, whether performed by a paraprofessional, a trainee or a doctor, is from one-third to 100% higher in Community Mental Health Services than if the psychotherapy is done by a private psychiatrist in his/her own office.

Those of us who have practiced in both settings know how efficient we are in our own private offices and we also know how many meetings we must attend and how many hours we must devote to supervision in public service. This is not to mention the issue of quality and versatility of experienced psychiatrists vs possibly less experienced, less motivated or less versatile non-medical therapists. These considerations are particularly relevant in connection with the treatment of the mostly non-neurotic, more seriously ill patients cared for under the Medicaid system. HaU" of these patients typically require medications and a significant number have physical illness in addition to their mental disorder.

This article will describe a program to rescue the private solo practitioner model to the maximum extent possible in a third-party reimbursement world. The program came into being in response to recent legislation in California, mandating that "Medically Indigent Adults" (MIAs) no longer be eligible for private psychiatric treatment, as of January I, 1 983. This is the harbinger of "consolidation," ie, the transfer to Community Mental Health Services of responsibility for all Medicaid psychiatric treatment, to begin sometime after July 1983. Under the legislation (AB 799), the counties received less than 70% of what the State had been paying for treatment of the same population.

The counties have had the option of contracting with private doctors or of just absorbing these previously private patients into their already overcrowded public community mental health centers. Only San Francisco County chose to contract with private practitioners (psychiatrists and Ph.D. psychologists) for the treatment in their own offices of a number of the MIAs. The choice was made in recognition of the importance of continuity of care and also because t he number of patients treated by private practitioners was so large.

The Family Service Agency of San Francisco ( FSA/ SF) won approval to be the fiscal intermediary and contractor with the City and County of San Francisco, for six months. This agency, which has provided counseling and other services to families, the elderly and children for many years, enjoys a solid reputation in San Francisco. The pressure of time between November 1 982, when approval was given, and January 1983, when services were to be provided, did not allow much negotiation. Therefore the City and County proposed its standard contract, the one it uses in dealing with various other private, non-profit health agencies providing services to the public. This contract gave the FS A/ SF $34 1 ,000 to treat 750 patients for six months, (an average two visits per month per patient). In turn, FSA/ SF drafted a contract for the psychiatrists and psychologists who wished to continue serving MIAs and receive reimbursement for their services.

About 80% of these often transient patients were seen by psychiatrists and 20% by psychologists. The contract between the doctors and FS A/ SF contained some unsatisfactory phraseology dictated by the City and County government, having to do with ownership of patient records and the County's liability. This phraseology was altered so that the patient's records could not be construed as belonging to the County, but billing records could still be requested from the doctors. The issue of liability was left for later, since most of the initially participating practitioners (60 psychiatrists and 20 psychologists) felt that the contract was an interim arrangement, not set in concrete. A new contract, giving the practitioners a better legal position, would be required if the program were to be extended beyond the first six months. Such an extension has since taken place.

Basically the present contract is easier to manage and is no more restrictive than that of the State Medicaid system under which we have operated for years. But now we can do battle with and influence an organization closer to home, one with relatively sensitive administrators and clinicians. Most importantly, the participants selected the members of the Provider Policy Review Committee (PPRC) which has had the task of developing policies and procedures for the program as well as interfacing and negotiating with Community Mental Health Services Staff about such issues as the formulary, referral methods, peer review, etc. The PPRC consists of four psychiatrists and two psychologists. We are fortunate in having an outstanding Project Coordinator, who also chairs the Utilization Review Committee consisting of two elected psychiatrists and two elected psychologists. The cooperation and support we have had from the Executive Director of FS A/ SF has been excellent. We have acted very much like a board of directors composed of practicing clinicians, although FSA/SF, as the prime contractor, has potential veto power. But, it is a symbiotic arrangement: The FSA/SF needs the practitioners (as does the City and County of San Francisco) and we need a fiscal intermediary between the City and County and ourselves.

The first 60 psychiatrists and 20 psychologists who signed contracts had been seeing the bulk of the MIAs prior to the contract. The non-signing doctors either had very few or no MlAs, or were waiting to see how the program would work. Some were dissatisfied with the contract and a number of psychologists did not like the 28% difference in reimbursement between the two professions.

The initial rates of payment for clinical services were those set by the Medicaid formula used by the State of California. Future rates will not necessarily be tied to this formula and we may in fact suggest other approaches to compensation, which might be better suited to this predominantly chronic patient population. Capitation seems a possibility. For example, a psychiatrist might agree to treat a patient for six months at a fixed fee. This would allow the doctor to adjust the frequency of visits on a clinical, rather than a bureaucratic basis.

We are also exploring ways to provide incentives for the delivery of high quality, cost-effective services. We strongly discourage the use of medications primarily for the sake of proving "medical need." Other ideas for incentives include higher reimbursements for crisis intervention therapy and perhaps evening or weekend admissions to non-medical residential facilities, in lieu of hospitalizaron. For example, if crisis interventions were to be reimbursed at a higher level, then the determination of the existence of a "crisis" could be done by a public health emergency crisis unit. Another possible incentive might be the division of any budget surplus between the practitioners and the City and County. Such a surplus might occur if hospitalizations, the costliest element in psychiatric care, were to be reduced in number or shortened in duration.

The existing contract, which began as an outpatient only program, might conceivably be augmented to include inpatient care also. As it stands, if patients need hospitalization, the county hospitalizes or refers to noncounty facilities. Clearly, this leads to a costly break in continuity of care. A new (hospital) psychiatrist or psychiatric resident can be expected to use at least three days or more, just to make an inpatient assessment. This is expensive at hospital rates of over $300 per day per patient. Again, the private practitioner is most efficient and cost-effective.

The way we, the Provider Policy Review Committee, set up the referral system forces no doctor to accept a patient he or she does not want. All former MIAs who have dropped out and then returned, are first offered their former doctors; patients who will clearly need medications are referred to psychiatrists, while all others are distributed equitably. Patients with special needs (eg, linguistic, cultural, home visiting, etc.) are referred to those practitioners who have expressed a special, matching interest. Psychiatrists and psychologists can, if they choose, refer to each other within the program. In April I983, any San Francisco-based psychiatrist or licensed psychologist (Ph.D.) was allowed to join the program if they carried the one million dollar malpractice coverage required by the City and County.

Remarkably, the Program became fully operational in one month with a staff of one person and a part-time clerk, supported by the directives and advice of the clinicians manning the PPRC. Of course, the Community Mental Health Services also deserve credit, since their staff had to set up the management information system and the contracts with pharmacies and laboratories. (The contract limited pharmacies and laboratories available to the program, but City and County paid for all appropriate medications and laboratory work.) The paperwork, billing and authorization system are different but no worse than the California Medicaid system ("MediCal") and the "payment turn-around time" is comparable.

The road has not always been smooth, but the dialogue between clinicians and officials of the local government has been far more manageable and fruitful than in any comparable relationship (eg, with the State, the Federal Government or even the insurance companies).

The FSA/SF program deals with only a small percentage of the former MIA population, which now includes any low-income individual recognized by the City and County of San Francisco as in need of professional outpatient treatment. So, in a sense, this is a pilot program. Other solutions will be proposed in the future.

What is at stake for the doctors? Not just the fee-forservice mode, which very likely is the source of the high productivity of private vs government medicine. The real issue is the continued existence of the solo practitioner as an independent entity. This individual doctor, making his/her clinical decisions in his/her own office is the last vestige of relative privacy and confidentiality for the patient. Clearly, the ideas of accountability and answerability are here to stay and when the government pays the bills it will call the tune to a certain extent. It might be good to keep in mind that, since the government subsidizes and regulates non-government hea lineare, it will call the tune for (or on behalf of) private insurers too, very soon.

This FSA/SF program is an effort to preserve the private solo practitioner model and high quality care to the maximum extent possible in a third-party-reimbursement-world. It is a prototype of the "PPO," a "Preferred Provider Organization." The greater the participation of the psychiatrists, the greater will be our power to influence policy so that our professional standards, rather than fiscal or bureaucratic expethency, become the guidelines.

10.3928/0048-5713-19830601-10

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