The organization of substance abuse managed care

Managed care came to dominate the delivery of substance abuse services during the 1990s. This paper uses literature and new data to describe and analyze the set of arrangements it implies. The description suggests that substance abuse managed care typically is "carved out" of the general health care plan and treatment is coordinated by a behavioral health managed care company that manages treatment access, length, type, and intensity. This administrative agent is provided financial incentives to keep costs low and otherwise faces such mandates as to ensure timely access to treatment and to deliver reports. A typical agent has some interest in improving the quality of decision-making, but has few incentives for controlling the treatment technology. In contrast, agents tend to control treatment providers through relatively rigid rules that substitute outpatient for inpatient care, regulate the length and intensity of services, provide limited social services, mandate accreditation, allow limited clinician discretion, administer an entire "network" of providers as an only slightly differentiated mass, and rarely shape the details of the treatment process. These patterns are analyzed in terms of transaction cost economics and institutional and resource dependency theories. In general, it is argued that managed care reflects an interest in controlling costs but also in ensuring access within an environment where there is uncertainty accompanying competing demands, varying conceptions of the client, and controversies over the efficacy of specific treatment technologies.