BCBS of Florida Takes Dangerous ‘New Directions’

By Stephen A. Ragusea, Psy.D, ABPP
May 2, 2012

BCBS of Florida Takes Dangerous New Directions“Double, double toil and trouble; Fire burn, and caldron bubble.”
– Macbeth by William Shakespeare

In the latter half of 2011, psychologists in Florida detected the scent of an unholy witches’ brew wafting out of Jacksonville. The malodorous signs were obvious. First there were rumors of a carve-out for mental health services. Then the letters started.

First, each participating mental health provider for Blue Cross Blue Shield of Florida (BCBSF) received an odd letter in the mail, announcing that all providers were to have their contracts terminated in 90 days because “BCBSF has partnered with New Directions for the management of all aspects of behavioral health services including provider network contracting…. You will receive an application from New Directions for network participation.”

Oddly enough, BCBSF put the burden of patient notification on the doctors. “Please notify your patients… that you will not be a participating provider as of Jan. 1, 2012.”

Of course, we all immediately went on the web to investigate this New Directions outfit and discovered that it was a small managed care company in Kansas run by a psychologist I’d met briefly some years earlier. I vividly remembered him talking about how a community with 68 active psychologists only really needed 12 and he coolly described to me how he would go into such a community, take over mental health services and then slash the panel to reduce utilization and increase profits.

It was a chilling conversation that I often recounted to others over the years as an example of the underlying profit motive behind the managed care industry. Little did I know this guy would ultimately be implementing his strategy in my own state. Soon, providers received another letter from New Directions laden with distasteful and mysterious ingredients.

The letter and accompanying complex contract was approximately 20 pages long and requested a response “within 15 days” although the letter itself was undated. Included was a new reimbursement rate schedule that reduced existing BCBSF rates, already discounted by 30 percent to 50 percent below Medicare’s reimbursement levels.

There were also a variety of surprising elements that seemed to be illegal, unethical and/or inappropriate. The Florida Psychological Association (FPA) formally sought the assistance of the Florida Office of Insurance Regulation. They intervened and, soon thereafter, New Direction revised the contracts and made a new mailing to providers, but there were still many problems.

We learned that BCBSF had actually become a co-owner of New Directions and, therefore, this carve-out was more like a modified carve-in. We also learned that BCBSF was beginning to partner with other states to spread this new version of the gospel of mental health cost containment.

Individual psychologists began reporting inconsistent information received from New Directions and BCBSF. Confusing and disturbing misinformation was also apparently being given to patients increasing stress and interfering with good treatment. The FPA and the APAPO contacted a variety of regulatory agencies and elected officials; expressing great concern about the new direction mental health coverage had taken in Florida.

On Aug. 25, 2011, the Parity Implementation Coalition (http://parityispersonal.org/) wrote a letter to three federal departments: Health and Human Services, Labor and the Treasury.

Why was the Parity Implementation Coalition involved? Why would an organization “formed to help ensure that the Mental Health Parity and Addiction Equality Act of 2008…is properly enforced” be interested in Florida’s little problem? I don’t know for sure, but I’m guessing that they think the same way I do about this mess.

I think that this move by BCBSF is really the initiation of a national movement to circumvent the Mental Health Parity legislation we all worked decades to pass. I think that by reducing reimbursement rates to levels lower than the hourly rate plumbers, auto body shops workers and electricians charge, BCBSF hopes to drive doctors out of its panel, making it much more difficult or impossible for patients to find doctors willing to accept BCBSF health insurance.

Obviously, that process cuts utilization, drives costs down and pushes profits up. That undermines the intent of the 2008 parity legislation, making it more difficult for patients to get expert treatment.

Although Florida happens to be the state where the model is being given a trial run, it appears that this unholy witches’ brew is destined to be served nationally. That makes this assault on mental health care terribly important and that’s why so many organizations are working hard to challenge this initiative.

The APAPO, the American Psychiatric Association, the National Alliance for the Mentally Ill, and the FPA have all been working cooperatively to bring the facts to the attention of regulatory agencies who should take action. They should block this destructive maneuver destined to set back the treatment of mental health problems in America by decades. What can you do to help?

First, be aware of what’s going on and tell others. Second, join your state’s psychological association and pay the APAPO assessment so that we can add more power to our own brew to break the spell cast by managed care. Third, contact your legislators and let them know about this plot to subvert legislative intent and to assault the rights of patients and the professionals who work so hard to serve them.

Throw these good ingredients into the pot and help neutralize the witches’ corrupt cauldron concoction. The fire is burning and the mix is bubbling.

Your support is badly needed. Our professional futures and the futures of our patients may depend on it.

National trend brewing?

Humana imposed rate cuts in March in Illinois similar to the Florida BCBS cuts. Terrence Koller, Ph.D., executive director of the Illinois Psychological Association (IPA), told The National Psychologist that Humana and its subsidiary, LifeSynch, lowered the most common reimbursement rate for Illinois psychologists to $58.

He said the IPA and the APA Practice Organization (APAPO) sent a letter April 4 to Illinois insurance regulators seeking an investigation. APAPO and the Florida Psychological Association sent a similar letter in March to Florida insurance regulators. APAPO also requested that federal parity enforcers investigate the BCBS rate cuts as a violation of the 2008 federal parity act.


Stephen A. Ragusea, Psy.D., ABPP, is in private practice in Key West, Fla. He is a past-president of the Pennsylvania Psychological Association and currently chair of the Florida Psychological Association’s ethics advisory committee. His email address is Ragusea@Raguesea.com

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