Negotiating case decisions in substance abuse managed care

In substance abuse managed care, the number of treatment sessions that a provider can deliver is constrained by the policies and procedures of the specialized managed care organizations (MCOs) that typically administer the substance abuse portions of healthcare plans. Managed care organizations commonly are alleged to control treatment providers through rules, but they also might rely on a particular patterned authorization of discretion, whereby they determine when and how frequently to respond to providers' appeals of rule-based decisions. The current paper uses data from a national random sample of managed care contracts between MCOs and substance abuse providers to test the hypotheses that (1) managed care organizations' "logics" about the types of provider discretion to allow affect the rate to which they concede to appeals, and (2) the rate of conceding to appeals, in turn, affects the providers' duration of substance abuse treatment. Results from generalized linear estimation models support the hypotheses and suggest that many MCOs pattern discretion to balance strict rules with concern about the quality or cost of care. The results more generally suggest that MCOs use discretion in planned ways, and thus that the patterns of control are more complex and sophisticated than commonly described in the literatures on managed care, transaction cost economics, or other perspectives.