Background and Explanation
To meet payer and consumer expectations, any entity which claims to manage behavioral healthcare must keep their enrollees healthy; eliminate medically unnecessary care; select providers using the least restrictive, most effective, geographically accessible, and most appropriate treatment setting; and ensure provider accountability through data collection which targets positive clinical outcomes and consumer satisfaction.

?Three events are occurring which require AMBHA to critically examine the issue of PSOs' abilities and competencies:

1. Some AMBHA managed behavioral healthcare organizations are part of larger corporate structures which include provider delivery systems.
2. AMBHA has entered into cooperative discussions with the National Association of Psychiatric Health Systems. NAPHS believes certain existing MCO regulations should be modified to allow PSOs to effectively compete with MCOs.
3. On January 21, 1997, with the backing of America's major hospital associations, legislation (S. 146, H.R. 475) was introduced in the United States Congress to allow PSOs to administer risk-based programs under Medicare. The legislation would allow the national government to override (preempt) all state regulation of PSOs while MCOs would continue to be subject to both national and state government regulations.

?Currently, 14% of health plans with state HMO licenses are PSOs.

?Financial reserves are required of MCOs in order to guard against adverse and/or unanticipated changes in enrollment, utilization, catastrophic problems, claims management, and performance measurement reporting. PSOs which accept risk are faced with the same possibility of catastrophic and unexpected illnesses as MCOs.

?Currently, 41 states hold the enrollee harmless for the cost of covered services in the event of MCO insolvency. Further, 33 states require the MCO to provide health care coverage of their enrollees in the event of insolvency.

?The National Association of Insurance Commissioners, in their Consolidated Licensure of Entities Assuming Risk (CLEAR) Model Law, suggest that PSOs meet the same standards as HMOs and insurance companies. The American Academy of Actuaries Solvency Work Group has recommended that solvency standards and reporting requirements be uniformly applied across all health plans and should not vary by type of sponsor or state.

?NAPHS argues that PSOs should be granted more flexible solvency requirements, in order to adequately compete with MCOs. For example, they argue that assets in lieu of cash reserves should be allowed.

?Recommendations:
AMBHA's positions on PSOs include:

1. Any entity which claims to manage behavioral healthcare be held to the same performance measurement, quality assurance, and consumer protection expectations and requirements.
2. Any entity which claims to manage behavioral healthcare should be held to the same financial solvency and reserve requirements.
3. PSOs should meet the same national and state regulatory requirements as are required of MCOs.

AMBHA Members: CMG Health, Inc., Owings Mills, MD; CNR Health, Inc., Milwaukee, WI; ComCare, Phoenix, AZ; Comprehensive Behavioral Care, Tampa, FL; CORPHEALTH, Fort Worth, TX; FPM Behavioral Health, Winter Park, FL; Green Spring Health Services, Columbia, MD; Human Affairs International, Salt Lake City, UT; Managed Care Washington, Seattle, WA; MCC Behavioral Care, Eden Prairie, MN; Options Healthcare Inc., Norfolk, VA; PacifiCare Behavioral Health, Laguna Hills CA; Plan 21, Houston, TX; Principal Behavioral Health Care, Inc., Rockville, MD; United Behavioral Health, Minnetonka, MN; Value Behavioral Health, Falls Church, VA; Vista Behavioral Health Plans, San Diego, CA.

Further Information:
E. Clarke Ross, D.P.A.,
Executive Director, AMBHA
April 1997