On November 14, 1998, the Executive Council of the Texas Society of Psychiatric Physicians adopted a set of guidelines drafted by the Managed Care Committee entitled “Recommendations to Managed Behavioral Healthcare Organizations Operating in Texas.” Members are encouraged to become familiar with the recommendations and share them with patients, managed care companies and the public.

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The Texas Society of Psychiatric Physicians makes the following recommendations to managed behavioral healthcare organizations (MBHOs) operating in Texas:

★ Recognize the unique role of the psychiatrist as a physician practicing medicine and a clinician with special expertise in evaluation, diagnosis and treatment of disorders with biological, social and psychological components
★ Support combined psychotherapy and medical management visits by psychiatrists as the preferred approach for some psychiatric patients
★ Acknowledge the complexity of psychiatric medical management by authorizing a sufficient number of extended visits with higher paying codes after patients have received a comprehensive psychiatric assessment
★ Apply medical necessity decisions in a realistic and flexible manner to accommodate the unique circumstances of each patient and the factors that complicate treatment of the patient’s illness
★ Assure that physician and nonmedical reviewers have firsthand knowledge and experience with clinical matters under their purview including active hospital experience for reviewers who certify inpatient admissions or continued stays
★ Assure that physician reviewers have a valid Texas medical license
★ Avoid threatening or intimidating behaviors by reviewers towards psychiatrists or their office staff members, and recognize that psychiatrists are trained professionals with time pressures and significant responsibilities
★ Conduct confidential surveys of network psychiatrists and hospital utilization review coordinators to learn about their experience with individual and non-medical physician reviewers
★ Use American Psychiatric Association practice guidelines to assess care provided by psychiatrists
★ Eliminate barriers to telephone access by psychiatrists and their office staff by responding promptly to telephone requests to precertify care or determine a patient’ s benefits and by avoiding placing psychiatrists or their office staff members on hold for more than five minutes
★ Eliminate precertification requirements for a psychiatrist who covers for another psychiatrist by conducting hospital rounds on weekends or holidays
★ Maintain telephone accessibility twenty-four hours a day for inpatient precertification requests
★ Develop a simplified one page outpatient treatment report specifically designed for psychiatrists conducting medical management visits
★ Approve psychiatric medical management visits for a year at a time (for ten or fewer visits per year)
★ Facilitate prompt appeals for use of nonformulary medications
★ Eliminate policies that prevent a patient from taking a medication recommended by the patient’s psychiatrist until the patient has tried and failed to respond to other medications preferred by the managed care company
★ Recognize that denial of care is a denial to the patient and not to the physician or to the hospital
★ Assure that denials of care are in writing and include in specific terms why clinical information about the patient does not support the need for additional inpatient days or outpatient visits
★ Avoid denials based on minor technical flaws or typographical errors in claim forms
★ Expedite all appeals of denied care and provide independent reviews if the appealing psychiatrist believes the denial is arbitrary, clinically unsound or the result of a conflict of interest
★ Provide a broad range of service codes with adequate levels of reimbursement to accommodate the unique training and skills of psychiatrists and the medically complex services often required by psychiatric patients
★ Pay claims promptly, no later than thirty (30) days from submission, and designate a specific entity within the managed care organization to deal with disputes over timeliness of payments



Managed care organizations have proliferated during the last ten years in response to escalating healthcare costs. Spurred by pressures from employers and aided by relatively few regulatory constraints, managed care organizations have come to dominate delivery of private healthcare services in most regions of the United States and are increasing their role in governmental programs such as medicaid and medicare.

The stated objectives of managed care organizations are to supply high quality medical care to enrollees, eliminate excessive or unnecessary care, reduce healthcare expenditures by employers and government agencies, and generate profits for the healthcare organizations and their shareholders.

To achieve these objectives, managed care organizations employ a range of tactics and strategies including limited provider panels; explicit or implicit incentives to reduce healthcare spending; mandatory precertification for hospitalization, surgical procedures and outpatient care; and concurrent review of outpatient and inpatient care.

Paralleling the growth of organizations managing delivery of general medical and surgical services is the flourishing of a distinct group of managed care organizations established to manage healthcare services provided to people with psychiatric and chemical dependency disorders. These managed behavioral healthcare organizations (MBHOs) reflect the perceived need of employers and insurers to “carve out” psychiatric and chemical dependency services for special treatment.

The growth of MBHOs has had a profound impact on the practice of psychiatry. The Texas Society of Psychiatric Physicians (TSPP) has received numerous reports from its members of what we consider to be burdensome administrative requirements and unfair treatment of psychiatrists and their patients by some MBHOs. Psychiatrists are quick to praise the professionalism and sensitivity to our concerns of some MBHOs, but the practices of others have led to a high level of discontent and anger among private practicing psychiatrists in Texas.

It is our hope that MBHOs operating in Texas will study these recommendations and adopt guidelines and policies to facilitate their implementation. These recommendations pertain to preferred provider organizations, other managed fee-for-service arrangements and, for the most part, capitation programs.

TSPP leaders stand ready to discuss these recommendations with representatives of MBHOs operating in Texas. Such dialogue may be beneficial to all parties and especially to patients seeking psychiatric services.



It is important that MBHOs recognize and support the unique role of the psychiatrist among behavioral healthcare providers. The psychiatrist is a physician practicing medicine and a clinician with special expertise in evaluation, diagnosis and treatment of disorders with biological, social and psychological components.

Psychiatric disorders such as major depression, bipolar disorder, schizophrenia, obsessive compulsive disorder, panic disorder and attention deficit hyperactivity disorder are known to be biologically-based brain disorders best treated by a combination of medical management and psychosocial therapies. The psychiatrist, having completed medical school and psychiatric residency training, is in the best position to evaluate and diagnose patients with these disorders, initiate treatment and recommend adjunctive therapies.

Patients who require concurrent medical management and psychotherapy often receive divided treatment by the psychiatrist and a psychotherapist. However, in many cases the diverse training of a psychiatrist using medical and psychotherapeutic skills simultaneously may be the most cost-effective strategy and lead to improved patient outcome.

Outpatient visits with psychiatrists for medical management during which medications are reviewed can be complex medical evaluations and should not be viewed by MBHOs as simple medication checks. Medical management by a psychiatrist involves diagnostic reassessment; treatment planning; assessment of the patient’s psychosocial status; monitoring of medications with regard to efficacy, side effects and potential toxicity; evaluation and monitoring of general medical illnesses and non-psychiatric medications being taken by the patient; evaluation of possible drug-drug or drug-food interactions; ordering and review of laboratory tests; and coordination with non-psychiatric physicians and with the patient’s psychotherapist in divided arrangements. Medical management visits should be of appropriate duration and adequately compensated (see section on reimbursement below).

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TSPP acknowledges that professionals may have honest disagreements about what is medically necessary in treatment of a patient with a psychiatric or chemical dependency disorder. Disputes about medical necessity are often based on varying interpretations of the same medical facts and involve a degree of subjectivity. Nevertheless, reviewers should respect and give deference to the psychiatrist on the firing line who bears direct responsibility for the patient’s treatment and its outcome.

Medical necessity decisions should accommodate the fact that patients with the same diagnosis may have differing treatment requirements with respect to levels of care, specific therapies and treatment intensity. Reviewers making medical necessity decisions should be alert to complicating factors such as concurrent general medical illnesses, psychiatric comorbidity, nonresponse to previous treatment and current psychosocial stressors. What is medically necessary for a patient with a psychiatric or chemical dependency disorder should be assessed in terms of the unique circumstances of the individual rather than arbitrary – and often unrealistic depictions of average or typical patients with certain diagnoses.

An almost universal perception among psychiatrists is that reviewers are often more focused on denial of services, typically hospital or day patient days, than what is best for the patient. This perception, often shared by the patient and the patient’s family, is created by less than charitable attitudes of reviewers toward physicians and hospitals and by reviewers’ ad hoc pronouncements on medical necessity or purported lack thereof. We believe it is in the interest of all parties for MBHOs to reassess the attitudes and behaviors of nonmedical and physician reviewers and to eliminate arbitrary and capricious medical necessity decisions that harm patients and create discontent and anger among psychiatrists and other providers.



Physician and nonmedical reviewers (case managers, care managers, etc.) for MBHOs should have firsthand knowledge of clinical matters subject to their decisions. Physician reviewers should have a valid Texas medical license as required by rules of the Texas State Board of Medical Examiners.

Admission and continued stay reviews of inpatient psychiatric or chemical dependency services should be assigned only to reviewers with direct experience in caring for patients with these disorders in hospital settings. Patient care is compromised if utilization decisions are based on manuals or software programs rather than familiarity with real patients in actual treatment settings.

Physician reviewers should demonstrate clinical competence by being engaged in active psychiatric practice at least twenty hours a week. Certification of inpatient admissions or continued inpatient stays should be performed only by physician reviewers who are in active hospital practice.

It is essential that good patient care and professional ethics not be compromised by economic incentives. Decisions by MBHOs to hire, promote, engage by contract, or retain nonmedical or physician reviewers should be based on reviewers’ clinical experience, expertise, judgment and skill in communicating with psychiatrists and other professionals. These decisions should not be based on frequency of denials or approvals, number of inpatient days approved or denied, number of outpatient visits authorized or denied, or claims paid or not paid as a result of reviewer decisions. Such information should not be made available to individuals making human resources or contracting decisions with respect to nonmedical or physician reviewers.

MBHO reviewers should not engage in threats or intimidation but should communicate with psychiatrists and members of their office staffs in a respectful manner. They should recognize that psychiatrists are trained professionals with time pressures and significant responsibilities. Bullying tactics, e.g., telephone messages such as “if we don’t hear from you by 2:00 p.m., it will be denied” are inappropriate and engender animosity on the part of psychiatrists toward the MBHO.

Reviewers’ attitudes and behaviors towards psychiatrists and other providers should be an important consideration in their selection and retention. MBHOs should hire reviewers with flexible and clinically realistic views of patients’ needs and should avoid those with arbitrary or rigid views of medical necessity (see section above on medical necessity).

TSPP recommends that MBHOs conduct confidential surveys of network psychiatrists and hospital utilization review coordinators to learn about their experience with individual nonmedical and physician reviewers. Information obtained from these surveys should be reviewed only by MBHO executives who are independent of review functions and should serve as a basis for evaluating the performance of reviewers.

The American Psychiatric Association practice guidelines for psychiatric disorders were developed at considerable expense and reflect the current state of the art with respect to patient care.

MBHO reviewers should be familiar with these guidelines and rely upon them when assessing care provided by psychiatrists.

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Precertification decisions regarding hospitalization should be based on an individual assessment of a patient’s medical condition and circumstances, giving due deference to the observations and opinions of the psychiatrist who evaluated the patient. Medical necessity for hospital care should not be construed by MBHOs as equivalent to civil commitment criteria – imminent danger to self or others. Instead, the need for hospitalization should be viewed in the broader context of the seriousness of the patient’s symptoms and behaviors, level of disability and functioning, psychiatric comorbidity, complicating or confounding general medical or psychosocial problems, and the likelihood that harm will come to the person or others in the absence of stabilization in an inpatient setting.

Outpatient care by psychiatrists should be recognized by MBHOs as a critical component of treatment and a major factor in reducing patients’ symptoms, morbidity and complications; enhancing their functioning and quality of life; and reducing the risk of emergencies and hospitalizations.

To pursue these objectives for their patients, psychiatrists conduct comprehensive psychiatric assessments followed by periodic medical management visits. A fifteen or twenty minute medication management visit is sometimes sufficient if a patient is doing reasonably well, responding to prescribed medications and free of disabling symptoms and medication side effects. Often, however, patients cannot be adequately assessed or managed in fifteen or twenty minutes. The complexities of managing many psychiatric patients outlined above in the section on the role of the psychiatrist require that the psychiatrist spend thirty and occasionally forty-five minutes with the patient for a medical management visit.

MBHOs should approve a sufficient number of extended medical management visits by psychiatrists in addition to briefer visits. The complexity of medical management should be recognized by MBHOs, and outpatient visits by psychiatrists for this purpose should be appropriately compensated. Use of the same, slightly larger or even lower payments for extended visits is demoralizing to patients and psychiatrists and does little more than promote substandard care.

To reduce burdensome administrative requirements on psychiatrists, outpatient medical management visits of patients with major psychiatric disorders should be approved by MBHOs for a year at a time (for ten or fewer visits per year).

MBHOs should eliminate barriers to telephone access that interfere with patient care and are annoying and costly to psychiatric practices. Psychiatrists and their office staff members attempting to precertify psychiatric care or check a patient’s benefits should not be confronted by labyrinthine voicemail systems, extended delays and protracted periods of being placed on hold. MBHOs should have sufficient staff to handle telephone traffic from providers with whom they contract. TSPP recommends that under no circumstances should psychiatrists or their office staff members be placed on hold for more than five minutes by an MBHO.

A psychiatrist is typically on call for his or her patients twenty-four hours a day but may rotate weekend call with other psychiatrists to obtain an occasional weekend off. MBHOs should acknowledge this fact by compensating covering physicians who see hospital patients for the attending psychiatrist on a weekend or holiday. MBHOs should not require precertification for covering physicians since this creates an impossible burden on the physician. The covering psychiatrist may not know which patients he or she will see until the weekend begins and will not have access to insurance information.

Psychiatric emergencies do not always occur during regular business hours. MBHOs should have sufficient staff to handle telephone requests for precertification of hospital admissions twenty-four hours a day. Physicians and hospitals are expected to be available for emergencies around the clock and so should organizations that manage the medical care they provide.



MBHOs should eliminate burdensome administrative requirements such as excessively detailed or irrelevant outpatient treatment reports (OTRs) or treatment plans. OTRs should be tailored to the services provided by the psychiatrist conducting initial comprehensive assessments and subsequent medical management visits. They should request only the information necessary to make a decision on appropriateness and intensity of care. No question should be included in an OTR unless it is directly relevant to this determination. We recommend simplified one page OTRs for medication management such as those used by some MBHOs operating in Texas.

Questions in OTRs that relate to psychotherapy services by nonmedical providers (licensed psychologists, licensed social workers, licensed professional counselors, licensed marriage and family therapists) are not appropriate in OTRs for psychiatric medical management services. However, psychiatrists requesting that they provide simultaneous medical management and psychotherapy for selected patients may be required to meet more stringent criteria established by the MBHO and complete an OTR specifically designed for this purpose.

OTRs submitted to MBHOs by psychiatrists for medical management of patients should be reviewed by psychiatrists employed or contracted by the MBHO rather than by individuals who lack relevant medical training.

To reduce the administrative burden on psychiatric practices, OTRs should be required for medical management no more often than yearly or after every ten visits.

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Managed care plans with restrictive formularies – typically determined by economics rather than pharmacological research should permit expedited appeals to utilize non-formulary medications in treating psychiatric patients. Managed care organizations should recognize that medications in the same class are not equivalent and that choice of medication reflects the physician’s experience and level of comfort with various medications in a class and the unique characteristics of patients including their history of side effects, concurrent medications and their experience with previous psychiatric medications.

Managed care organizations should recognize that medical specialists such as psychiatrists have extensive education and experience in the use of pharmacological agents specific to their specialty. It is unacceptable to psychiatrists that patients be forced to take medications preferred by a managed care organization and then to fail to respond to them before being permitted to take a medication that the psychiatrist believes to be potentially more effective or safer for the patient. We believe such practices are serious intrusions into the patient-physician relationship, are potentially harmful to patients and may reflect financial conflict of interest on the part of managed care and pharmaceutical enterprises.

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MBHOs should understand and reiterate in communications with psychiatrists, their office staff members and hospital utilization review personnel that denial of care by the MBHO is denial to the patient and not to the psychiatrist. Statements by reviewers such as “I’ll give you one more day” blur that important distinction. Although MBHOs may deny care based on the MBHO’s determination of lack of medical necessity, the uncertified care for that patient may be, in the eyes of the patient and the psychiatrist who is treating the patient, necessary care.

Denials should be in writing and not couched in vague terms invoking the “medical necessity” mantra, but should indicate in specific terms why clinical information about the patient provided to the MBHO by the psychiatrist or hospital does not support the need for additional inpatient days or outpatient visits.

Denials should be based on relevant clinical considerations including type, intensity and level of care and not upon minor typographical or technical errors in claim forms.

Appeal processes for all levels of care should be completed in a timely manner to make the patient aware of his or her options as early as possible and to minimize treatment paralysis.

If the patient or psychiatrist believes a denial is arbitrary, clinically unsound or the result of a conflict of interest, the MBHO should provide a prompt independent review of all relevant clinical information.

The patient’s insurance card, in addition to listing a toll free telephone number for behavioral health and chemical dependency services, should include a toll free telephone number to the Texas Insurance Commission to voice complaints about the managed care organization or network providers.



The tendency of some MBHOs to trivialize psychiatric care or to label psychiatric services as “medication management only” in contrast to ostensibly more valuable services of other providers, has been accompanied by ratcheting down of reimbursements for psychiatric services and omission from payment schedules of service codes necessary to provide adequate psychiatric care such as extended medical management visits. These developments are distressing to TSPP members.

MBHOs should recognize the critical role played by psychiatrists in providing care and treatment to their enrollees. Adequate compensation should be made for psychiatric services across a range of codes.

Claims by psychiatrists should be paid in a timely manner, no later than thirty days from submission of the claim. Disputes over timeliness of payments should be handled by a specific entity within the MBHO, the identity of which should be made known to all psychiatrists on the network.