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Legally Protected Privacy and Confidentiality in a Managed Care Environment

By Fred H. Besthorn, PhD, DAPA

The provision of health care and mental health services in the United States has been inescapably altered by the introduction of managed health care systems. Over the course of slightly more than one decade the psychotherapeutic community has experienced dramatic changes in many of its fundamental principles of practice as a direct result of managed care philosophy (Baer, 1999). While the intended objective of this new managed care mentality was to bring some degree of control to spiraling health care costs; the stark real?ity has been, as with most policy initiatives, a panoply of latent purposes and unintended, if not tragic, consequences.

Managed care has kindled great controversy. Strong emotions are aroused for those who have joined the great managed care debate. For some, managed care is seen as fertile ground for new employment opportunities, unique and innovative treatment strategies and fresh possibilities for collaborative endeavors. But for many in psychotherapy, managed care has meant less access for consumers to mental health treatment services, reduced and undifferentiated salary and reimbursement structures, aggressive and intrusive utilization review processes, erosion of therapist/client autonomy in formulating treatment plans and a profusion of ethical conflicts and legal concerns.

Nowhere have the legal and ethical interests been greater than with regard to issues of privacy and confidentiality. It is with them that the doctrinaire, profit-driven values and practices of managed care have given rise to some of the most contentious disputes. A client's right to privacy with respect to their individual mental health information and the expectation of confidential communication are widely regarded as essential factors in effective psychotherapy (Hansen, 1997). Indeed, the United States Supreme Court recognized in its 1996 ruling in Jaffee v. Redmond (116 S. Ct. 1923) that a protected atmosphere of trust, confidence and privacy was essential to the development of an effective therapeutic relationship. The court established psychotherapy privilege for protecting client communication and found that the granting of this privilege served the greater public good. It specified that psychotherapy privilege was analogous to attorney-client and spousal privilege and affirmed that "the mere possibility of disclosure" of privileged and confidential information would impede development of a trusting therapeutic relationship which has been consistently shown to be vital to successful treatment outcome.

Managed care, on the other hand, is predicated on the dictum that psychotherapists must seek permission to continue treatment by divulging highly confidential client information to cost-control gatekeepers who have never seen the client, are ill-informed and under trained and have limited knowledge of the legal and ethical constraints placed upon practitioners. This has an enormous impact on the therapeutic alliance and puts helpers in situations where the values and therapeutic identity they acquired in training are seen to be increasingly antipathetic to the real world conditions of psychotherapy under Managed Care Organizations (MCOs).

What is deeply unfortunate is the mounting evidence that these kinds of infringements on privacy and confidentiality and the inviolability of the therapeutic relationship will con?tinue to impede mental health care delivery. For example, even though the United States Congress recognized the need to protect individual health information by including provi?sions for privacy standards in the Health Insurance Portability and Accountability Act of 1996 (HIPAA) their failure to act on comprehensive medical records privacy leg?islation as required by HIPAA meant that this responsibility fell to the regulatory aegis of the Department of Health and Human Services (DHHS). DHHS's proposed regulations of late 1999, encompassed in the Standards for Privacy of Individually Identifiable Health Information, apply to all entities that transfer medical data electronically. They lump most mental health treatment records into broad categories of standard medical records which are routinely released for health oversight activities. This effectively means that signed client authorization for release of sensitive mental health records will be abandoned and in broadly exempted areas there is an implied and automatic consent to release information. While these rules are complex and their final form is yet to be determined, it is clear that they will greatly diminish the privilege protection afforded by Jaffee v. Redmond and are a step backwards for clients and psy?chotherapists. In the often maddening, enigmatic language of current political realities, these regulations will actually erode rather than enhance protections of privacy and confi?dentiality in mental health activities. In the end they portend yet another triumph for an out-of-control managed care jug?gernaut against client rights and the integrity of professional practice. Will we raise our collective vocies in dissent or remain silent and hope the storm passes?


l) Baer, M. A. (1999). Mis-managed care. Annals of the American Psychotherapy Association, 2(7), 1,11.

2) Hansen. J. T. (1997). The impact of managed care on the therapeutic identity of psychotherapists. Psychotherapy in Private Practice, 16(3), 53-65.

3) Jaffee v. Redmond, 116 S. Ct. 1923 (1996).

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