Challenges Facing Counseling Psychology

THEMAJOR
Cooper,
COUNSELING
GottliebCONTRIBUTION
/ ISSUES
PSYCHOLOGIST
WITH MANAGED
/ March
CARE
2000
Ethical Issues With Managed Care:

Challenges Facing Counseling Psychology
Caren C. Cooper
Independent Practitioner, Austin, Texas
Michael C. Gottlieb
Independent Practitioner, Dallas, Texas
With the advent of managed care, counseling psychologists are encountering vexing ethi-
cal issues. These issues arise not only for practitioners but for researchers, educators,
and trainers as well. In this article, the authors briefly describe the evolution of managed
care and review basic biomedical ethics and ethical decision-making models. The
authors then examine specific ethical issues and offer suggestions for practice, research,
and education and training. This article concludes with a research agenda, a review of
projected general trends in health care delivery, and a discussion of counseling psychol-
ogys role in addressing current concerns as well as influencing the future evolution of
health care delivery.
During the course of the last decade, psychology has witnessed an explo-
sion in the growth of managed mental health care organizations across the
nation. Although psychology has encountered many challenges over the
years, none may have as far reaching an impact on our profession as the man-
aged care movement. As managed care rapidly evolves, counseling psy-
chologists are, and will continue to be, faced with numerous challenges in the
foreseeable future. In light of these challenges, managed care has become
quite a loaded topic among psychologists regardless of their specialty.
In the largest survey of the managed care era, commissioned by the
American Psychological Association (APA) Committee for the Advance-
ment of Professional Practice (CAPP), Phelps, Eisman, and Kohout (1998)
explored the activities and concerns of almost 16,000 psychologists whose
primary work settings included independent practice, academia, govern-
ment, medical settings, and other settings such as schools, forensics, and
business. They found that half of the sample was in full-time independent
practice and another third engaged in part-time independent practice. More
important, they found that, regardless of primary work setting, 4 out of every
5 respondents reported that managed care was having a negative impact on
their professional work and that ethical dilemmas were one of their top five
concerns.
THE COUNSELING PSYCHOLOGIST, Vol. 28 No. 2, March 2000 179-236

2000 by the Division of Counseling Psychology.
179
180 THE COUNSELING PSYCHOLOGIST / March 2000
In this article, we address the ethical issues presented by managed care.

We intend to take a balanced approach making the presumption that managed
care has advantages and disadvantages just as any other health care delivery
system would, and hope to avoid a polarization of the issues. In taking this
perspective, it is our hope that the reader will experience an invitation to
become a much needed participant in the dialogue surrounding the delivery
of health care in our nation.
Our purpose is to highlight ethical challenges facing counseling psycholo-
gists working within the current managed care context, synthesize concep-
tual information regarding these ethical dilemmas, and offer suggestions that
will inform counseling psychologists as they provide services, conduct
research, and educate and train students. We will focus on three areas.
First, we will address ethical issues encountered by practitioners and sug-
gest issue-specific guidelines to assist practitioners as they grapple with a
variety of ethical challenges. These include informed consent, confidential-
ity, competence, integrity, human welfare, abandonment, conflict of interest,
record maintenance, business relationships, and conflicts between ethics and
organizational demands.
Second, discussion surrounding ethical issues and managed care has been
primarily focused on the practitioner. However, the managed care movement
is now affecting researchers as well. We will highlight the ethical issues of
confidentiality, competence, integrity, professional/scientific responsibility,
conflict of interest, human welfare, and business relationships, and offer sug-
gestions to assist researchers.
Third, we will examine how the managed care movement has resulted in
ethical issues that face educators and trainers. We address ethical issues of
maintaining competence, professional responsibility, and informed consent,
and offer suggestions for continuing education for both applied and research
faculty as well as reform of graduate curriculum and training experiences.
Throughout this article, we hope it is apparent that counseling psycholo-
gists possess knowledge and skills that are advantageous when working
within the managed care context. For example, managed care organizations
(MCOs) are invested in the short-term treatment of acute problems affecting
normal client populations that may arise during the course of the life span.
Counseling psychologists are specifically trained to work with normal client
populations from a developmental perspective and to provide services within
short-term therapy models. Furthermore, given that managed care may
increase access to mental health services for a broad spectrum of persons,
counseling psychologists embrace a multicultural perspective that prepares
them to provide services to diverse clientele. Finally, counseling psycholo-
gists are recognized for their commitment to outcome research, which is an
integral part of the managed care environment.
Cooper, Gottlieb / ISSUES WITH MANAGED CARE 181
THE EMERGENCE OF THE MANAGED

CARE MOVEMENT
Given the varying familiarity that readers may have with managed care,
we begin with a brief historical review, description of key concepts, and sali-
ent characteristics of MCOs to assist with the discussion that follows regard-
ing ethical issues with managed care. For a more comprehensive review of
the following information, see Corcoran and Vandiver (1996), Lowman and
Resnick (1994), and Austad and Berman (1991a).
Two-Party System
In the early 1900s, our health care system involved a straightforward pay-
ment arrangement between the provider and the recipient who directly paid
for services. The majority of health care costs was paid for by the persons
receiving services (Harris, 1994). Insurance plans were available, primarily
through employers, but the employee purchased them from the employer
(Corcoran & Vandiver, 1996).
Three-Party System
Following the Great Depression, a significant number of people were not
able to pay their medical bills. The two-party system of provider and recipi-
ent/payor was no longer working. To ensure payment for services, hospitals
began offering insurance, creating a three-party system (i.e., provider, recipi-
ent of services, and third-party payor). This became the model for Blue
Cross. In this arrangement, the cost of health care was still being paid by per-
sons insured by the plan (Corcoran & Vandiver, 1996).
During World War II, while a period of wage controls was in effect, some
employers began to offer benefits other than wage/salary increases, such as
health insurance coverage. As more and more employers began to offer this
benefit, there was corresponding growth in the insurance industry. This
development contributed to the current expectation that employers should
offer such benefits to their employees. Until recently, the current American
health care system placed a significant amount of responsibility on employ-
ers. However, the federal government accepted some of this burden as well
through programs for the elderly (Medicare), the disabled (Medicaid), and
federal workers (CHAMPUS). Nevertheless, at this time more than 40 mil-
lion Americans, many of whom are employed, have no health insurance at all
(Austad, Hunter, & Morgan, 1998). It is important to note that the United
States is the only industrialized country other than South Africa that does not
offer health care to all citizens (Corcoran & Vandiver, 1996).
THE EVOLUTION OF MANAGED

MENTAL HEALTH CARE
Prior to the 1950s, mental health care was generally not included in benefit
plans. One reason for this was that people did not believe that mental health
problems occurred very often. Furthermore, the domain of mental health
treatment was seen as involving only persons with severe mental illness who
were institutionalized. The care for these persons and expenses were sup-
ported at the state level (Corcoran & Vandiver, 1996).
Beginning in the 1950s, several factors contributed to the inclusion of
mental health benefits in most insurance plans. For example, studies began to
provide evidence that mental health problems were more common than was
originally believed (Corcoran & Vandiver, 1996). Mental health services
began to be provided more often on an outpatient, rather than inpatient, basis
(Austad & Berman, 1991b). General hospitals began to include psychiatric
units and many psychotropic medications were developed (Corcoran & Van-
diver, 1996). Also, the number of mental health providers increased, as well
as the number of theoretical schools and related interventions (Austad & Ber-
man, 1991b). Furthermore, with the Health Maintenance Organization Act of
1973, federally qualified managed care programs were required to include
mental health services (DeLeon, VandenBos, & Bulatao, 1994).
Four-Party System
The three-party health care system was based on the premise that a large
group of persons would pay a premium to offset the cost of care for the few
who were ill. As the number of insured persons using their benefits increased
and the cost of services increased, insurance companies (the third party)
began to grapple with methods for controlling costs (Broskowski, 1994). For
some employers, mental health care costs accounted for as much as 25% of
total health care costs, with inpatient mental health care comprising the
majority of this percentage (Austad & Berman, 1991b; Patterson & Berman,
1991).
Managed care represented one method for responding to these cost
increases. Adding managed care to the preexisting relationship established a
four-party system: the client, the provider of services, the insurance company
(MCOs employer), and the managed care company (Corcoran & Vandiver,
1996). Managed care is not a new approach, having been in existence for sev-
eral decades. However, with the Health Maintenance Organization Act of
1973, which provided federal funding for the development of managed care
programs and required employers to offer a managed care option to employ-
ees, managed health care began to expand (DeLeon et al., 1994). Toward the
mid- to late 1980s, managed mental health care grew in strength (Corcoran &
Vandiver, 1996) and has become a major force influencing health care in gen-
eral and psychological services in particular.
MANAGED CARE: DEFINITION, GOALS,

AND KEY CONCEPTS
It is important to understand that managed care is not a unitary concept but

encompasses a wide array of health care delivery systems (Resnick, Botti-
nelli, Puder-York, Harris, & OKeefe, 1994) that operate on a fixed budget
(Backlar, 1996). Broadly defined, managed care refers to the administration
of physical and mental health care services by a party other than the practi-
tioner or client (Corcoran & Vandiver, 1996).
The managed care movement has resulted in psychology having to strug-
gle with the merging of two cultures, psychology and business (Shapiro,
1995). The overarching goals of MCOs are to (a) contain costs and (b) ensure
quality of care (Corcoran & Vandiver, 1996). Cost containment refers to pro-
cedures that control mental health care costs, whereas quality assurance
refers to a review of a clinicians work to determine to what degree the clini-
cians work approximates the ideal (Corcoran & Vandiver, 1996). The pri-
mary avenues through which MCOs achieve these goals includes reducing
the rate charged for mental health services, allowing services only in those
cases in which treatment is considered medically necessary, and evaluating
treatment plans and outcomes (Corcoran & Vandiver, 1996).
Managed Care Psychotherapy

How is the provision of mental health services different within an MCO?
Psychotherapy that occurs within a managed care system is designed to use
the least extensive, least expensive, least intrusive intervention (Austad &
Berman, 1991b, p. 11). Some of the defining characteristics of MCO psycho-
therapy follow.
First, although not a unitary model, brief therapy is mandated and is char-
acterized by focused and rapid assessment of the clients presenting con-
cerns, clearly defined treatment goals, and an active therapist (Austad & Ber-
man, 1991b; Resnick et al., 1994). Second, therapists form a pragmatic
therapeutic alliance, in which the therapist works with the client to provide
the most efficient and effective treatment, with minimal intrusion, and
encourages use of adjunctive therapeutic modalities (Austad & Berman,
1991b). Third, there is a primary care orientation; that is, the psychologist is
akin to the psychological family doctor who adopts a developmental orienta-
tion in which clients are followed for brief periods during the course of the
life span (Austad & Berman, 1991b; Cummings, 1991a). Fourth, there is usu-
ally mandated communication with the primary care physician (PCP), as
well as increased interaction with other types of health care professionals
(Austad & Berman, 1991b; Cummings, 1995). Fifth, working with MCOs
involves the monitoring of the therapy process by the MCO (Austad & Ber-
man, 1991b; DeLeon et al., 1994; Resnick et al., 1994), and typically
includes at least documentation of treatment necessity and periodic submis-
sion of treatment plans.
The process of monitoring therapy is called utilization review (UR), and
refers to the use of predefined criteria to evaluate treatment necessity, appro-
priateness of treatment intervention, and treatment effectiveness (Corcoran &
Vandiver, 1996). UR can take place before, during, and after treatment. That
is, MCOs tend to use some form of prospective, concurrent, and retrospective
UR. Prospective UR refers to the demonstration of treatment necessity and
obtaining authorization to initiate treatment. How MCOs determine treat-
ment necessity and approach varies. With regard to concurrent UR, MCOs
evaluate ongoing services when practitioners request authorization for con-
tinued treatment. With regard to retrospective UR, MCOs are interested in
treatment outcome and often assess client satisfaction with services received
(Corcoran & Vandiver, 1996).
Systems of Managed Care

As previously mentioned, managed care encompasses a variety of health
care systems. For the purposes of this article, the following two commonly
encountered systems of managed care will be highlighted: fee-for-service
and capitated. With regard to the former, practitioners may provide mental
health services within a fee-for-service system of managed care, such as a
Preferred Provider Organization, or PPO. The fee-for-service system is more
similar to the traditional system of mental health provision, except that ser-
vices are often provided at a discounted rate, authorization for treatment is
typically required, and treatment plans have to be periodically submitted.
When receiving mental health services from a practitioner who is on a PPOs
preferred provider list or panel, the client is given a lower deductible and/or
copayment. Practitioners who contract with fee-for-systems usually main-
tain their own offices (Patterson & Berman, 1991).
Advantages of the fee-for-service system typically include greater choice
of practitioner for the consumer. Practitioners generally will have increased
autonomy, less pressure to compromise the quality of care, the option to
resign from a particular panel if the practitioner chooses to do so, and the
freedom to contract with other plans or private-pay clients (Patterson & Ber-
man, 1991). Potential disadvantages for the practitioner may include the
potential for utilization review procedures to become burdensome and/or
adversarial for the practitioner. The MCO may have more difficulty control-
ling costs, or experience cream skimming (i.e., practitioners refusing to
accept less-desirable clients) (Patterson & Berman, 1991).
In contrast to fee-for-service systems of managed care, practitioners may
provide services within a capitated system. The capitated or pre-paid sys-
tem of managed care has sparked much debate. In this system, persons within
a catchment area (e.g., university employees) pay a predetermined fee to
enroll, which is usually done via a payroll deduction. The MCO then sets a
spending cap or limit on expenditures. Risk or financial responsibility is then
distributed between the MCO and the provider; that is, the MCO and provider
share the risk that there will be enough money to cover the cost of services
provided and still make a profit. Herein lies one of the major points of debate:
the fewer sessions used, the greater the profit.
One of the most frequently encountered models of a capitated managed
care system is a Health Maintenance Organization or HMO. The stereotypi-
cal HMO employs its own salaried practitioners who are housed in the same
place as primary care medical personnel (Patterson & Berman, 1991;
Resnick et al., 1994). As with fee-for-service systems, services typically are
provided at a discounted rate, authorization for treatment is required, and
treatment plans must be submitted. However, HMOs usually have a closed
provider panel; that is, a subscriber can obtain services only from those pro-
viders employed by the HMO (Resnick et al., 1994). In addition, services
tend to be more closely monitored (e.g., more frequent submission of treat-
ment plans).
With capitated systems, members deductibles and copayments generally
are much lower than those of traditional indemnity insurance, and usually
somewhat less than fee-for-service plans. In addition to lower cost to the con-
sumer, potential advantages of capitated systems include lower cost to the
MCO because of increased organization, centralized care, and better man-
agement of emergencies. Also, there can be improved communication
between health care providers due to the primary care physician serving as
the on-site informational hub (Patterson & Berman, 1991). Potential disad-
vantages include limited choice of practitioner for the consumer, long waits
for appointments, and risk of insufficient care due to session limitations or
practitioners caseloads being so large that they can only offer clients infre-
quent sessions. Practitioners may face increased routinization and decreased
flexibility in the choice of procedures available to them (Austad & Berman,
1991b; Patterson & Berman, 1991).
ETHICAL ISSUES FACING

COUNSELING PSYCHOLOGY
As managed mental health care continues to evolve, counseling psycholo-

gists are encountering vexing ethical issues. Some of these issues are unique
to the managed care environment and some have been encountered in other
settings, but perhaps not to the degree seen in the managed care environment.
Given this new terrain, a recent report by the CAPP Task Force on Ethical
Practice (1998) urged psychologists to refamiliarize themselves with APAs
(1992) Ethical Principles of Psychologists and Code of Conduct. However,
the most recent revision of the APA ethics code (APA, 1992), although offer-
ing general guidance with these issues, is not always of adequate assistance in
the ethical decision-making process (Austad et al., 1998; Gottlieb, 1992). In
part, this is due to the fact that the revised ethics code (APA, 1992) was devel-
oped before the impact of managed care had been fully felt. Also, managed
mental health care is evolving so quickly that ethics code revisions cannot
possibly keep pace. Furthermore, the ethical issues that arise can be so com-
plex that it is not possible to write ethical guidelines that are sufficiently
detailed to apply them without severely restricting the professional judgment
and discretion of psychologists.
The following are three broad areas where we believe counseling psy-
chologists are struggling with ethical dilemmas involving managed care:
practice, research, and education and training. In the following sections, we
will highlight salient ethical issues in each area and offer practical guidelines
regarding them. Before addressing specific ethical issues, we will begin with
a general discussion of biomedical ethical principles and a brief review of
some ethical decision-making models.
Biomedical Ethics
When examining ethical dilemmas, it can be useful to evaluate them with
respect to the following four moral principles of biomedical ethics presented
by Beauchamp and Childress (1994): autonomy, nonmaleficence, benefi-
cence, and justice. The first principle is respect for autonomy that, among
other things, involves respect for the clients independent decision-making
capacity. The second principle is nonmaleficence, or the primary importance
of avoiding harm to the client. The third principle is beneficence. This refers
to the injunction that we work to benefit others and strive to balance benefits
against costs or risks. The fourth principle is justice, which refers to the fair
distribution of benefits, risks, and costs.
These four principles were integrated into the APAs ethical principles
(APA, 1992) at the aspirational level of general principles, as well as at the
more specific and sanctionable level of the Code of Conduct. For example,
with respect to the biomedical principle of autonomy, Principle D states that
Psychologists . . . respect the rights of individuals to privacy, confidentiality,
self-determination, and autonomy (APA, 1992, pp. 1599-1600). With
regard to nonmaleficence and justice, Principle E states that psychologists
weigh the welfare and rights of their patients or clients. . . . When conflicts
occur among psychologists obligations or concerns, they attempt to resolve
these conflicts . . . in a responsible fashion that avoids or minimizes harm
(APA, 1992, p. 1600). At the more specific level, Ethical Standard 4.02 incor-
porates the principle of autonomy by stating that the practitioner must obtain
informed consent from the client before proceeding with treatment.
Beauchamp and Childress (1994) also discuss the following four moral
obligations of health care professionals that express the four core principles
mentioned above: veracity, privacy, confidentiality, and fidelity. First, the
obligation of veracity entails the need to deal honestly and speak truthfully.
Second, privacy involves clients rights to control knowledge of information
about themselves. Third, confidentiality comprises a pledge to not divulge
information to others. Fourth, fidelity consists of the notion of faithfulness or
professional loyalty and the disposition to be true to ones word.
These four moral obligations also are incorporated into the ethical princi-
ples (APA, 1992) at both aspirational and specific levels. For example, at the
aspirational level, veracity is reflected in Principle B, which states that Psy-
chologists . . . are honest . . . do not make statements that are false, misleading,
or deceptive (APA, 1992, p. 1599). Privacy and confidentiality are
addressed in Principle D, which states, Psychologists . . . respect the rights
of individuals to privacy, confidentiality (APA, 1992, pp. 1599-1600). At
the more specific level, veracity is emphasized in Ethical Standard 1.25
(APA, 1992, pp. 1602-1603), which states, Psychologists do not misrepre-
sent their fees, and 6.21, which states, Psychologists do not fabricate data
or falsify results in their publications (p. 1609). Privacy and confidentiality
are discussed in an entire section of the ethics code (APA, 1992). Fidelity is
reflected in several ethical standards including those addressing issues of
informed consent (4.02), confidentiality (5.02), clarification of roles (7.03
and 8.03), and terminating the professional relationship (4.09).
A Useful Ethical Decision-Making Framework

The APAs (1992) ethical principles are aspirational in nature and provide
guidance regarding general ethical issues, whereas the Code of Conduct
addresses more specific behaviors that are sanctionable. Unfortunately, when
interfacing with managed care, neither may be of sufficient assistance when
complex ethical dilemmas arise. The CAPP Task Force on Ethical Practice
(1998) emphasized the importance of using a systematic problem-solving

process when dealing with difficult ethical dilemmas.
To assist with complex ethical decision making, Kitchener (1984) devel-
oped an ethical decision-making model. She suggested that decisions were
first made at an intuitive level based on the facts of the situation and ordinary
moral sense. If this level of analysis was not sufficient, she then suggested a
critical-evaluative level that included consulting ethical theory, ethical prin-
ciples, and professional codes and law.
Later, Haas and Malouf (1995) developed a more detailed decision-
making model. In brief, their model suggested that, prior to examining an
ethical issue, the practitioner must gather certain information such as identi-
fying and clarifying the relevant ethical issues, determine all parties who may
have an interest in the outcome of the ethical dilemma (e.g., client, therapist,
MCO, clients partner), and clarify any preexisting pertinent standards. Once
this information has been gathered, the practitioner is then able to proceed
with the decision-making process. Haas and Malouf recommend initially
approaching ethical decision making via a review of the literature and/or con-
sultation with a colleague to explore perspectives regarding relevant legal,
ethical, or social standards. Next, they recommend identifying the relevant
ethical principles of the ethical dilemma and then generating a list of possible
and ethically appropriate actions. Each possible action should be followed by
a cost-benefit analysis. Once the action that results in optimum resolution of
the ethical dilemma has been chosen, the practitioner is then ready to imple-
ment the action. After implementation, the practitioner should review the
outcome of the process and consult with colleagues.
Consider, for example, the psychologist who is an employee of an HMO
and is referred a client who presents with anxiety symptoms due to surfacing
memories of childhood neglect. The clients benefit plan allows for eight out-
patient sessions, and the astute practitioner is aware that it will likely require
more than eight sessions to address the clients presenting issues. How is the
practitioner to proceed? According to Haas and Malouf (1995), before pro-
ceeding with decision making, the practitioner must identify the relevant
ethical issues. In this case, the relevant ethical issues are informed consent
and conflict of interest. That is, the practitioner must discuss all appropriate
treatment options with the client as a matter of informed consent, despite the
fact that the practitioners employer will not necessarily pay for some of the
treatment due to the limitations of the clients benefits. Furthermore, the
MCO may not even approve of the practitioner discussing these options with
the client. Once the ethical issues are identified, the practitioner must identify
the parties who have an interest in the outcome of the ethical dilemma. In this
case, the parties who have a stake in the outcome are the client, therapist,
MCO, and perhaps the clients significant other.
With this information in mind, the practitioner then explores the APAs
ethical principles and finds relevant standards. For example, Ethical Standard
4.02 informs the practitioner that he or she must discuss all possible treatment
options with the client, including referring the client to a practitioner who can
provide longer term therapy. Also, Ethical Standard 8.03 informs the practi-
tioner that, in the case of a potential conflict of interest, the practitioner must
discuss his or her dual role (i.e., therapist and HMO employee) with the cli-
ent. In addition to reviewing the APAs ethical principles, the practitioner also
consults with a colleague to discuss these issues. Together, they generate a list
of possible approaches to this situation and evaluate the cost and benefits of
each. After careful consideration, the practitioner chooses to discuss various
treatment options with the client. After this session, the practitioner again
consults with his or her colleague to review how the chosen strategy worked.
Haas and Malouf (1995) acknowledged that their ethical decision-making
framework did not take legal considerations into account. This is a limitation
of their model because practitioners, as a matter of course, must consider
legal as well as ethical matters. For example, given the scenario presented
above, what if the practitioner signed an MCO contract that contained a gag
clause that prohibited the practitioner from disclosing information about cost
containment practices? If the practitioner then disclosed information to the
client, the practitioner could be accused of breach of contract. What Haas and
Malouf argue is that it is appropriate and helpful for the practitioner to con-
sider the ethical issues as a first step when confronted with both legal con-
flicts and ethical dilemmas. This is good advice and we agree with it. How-
ever, we would go further and suggest that the goal in all cases of ethical
decision making is that the ethical decision be one that is both legal and clini-
cally indicated. We recognize that such a goal is an ideal, but it is one worth
striving for and with effort often can be attained.
ETHICAL ISSUES AND RECOMMENDED

GUIDELINES FOR PRACTICE
Managed care has significantly reduced the amount of time that practitio-
ners spend with certain clients. Although this is not always the case, many
practitioners feel tremendous pressure to get to the work of therapy as quickly
as possible to comply with managed care restraints. Sometimes doing so can
result in giving ethical issues insufficient attention. However, it is our funda-
mental belief that, although understandable, such practice is not defensible.
That is, we believe that it is precisely because of the constraints placed on
practice by managed care that addressing ethical issues with clients is so
important. It may seem a paradox to some that we recommend spending a
higher percentage of allotted time on ethical issues when so little may be

available to begin with. We do so in the belief that the managed care environ-
ment creates ethical dilemmas not heretofore encountered and requires prac-
titioners to address issues that in the past were not necessary. Although this is
not therapy per se, following such procedures may well be therapeutic. Even
if it is not, doing so is clinically indicated and shows the appropriate respect
for the autonomy of clients.
Informed Consent
Before initiating therapy, practitioners must obtain informed consent
from the client (APA, 1992). Informed consent is a concept derived from the
biomedical principle of respect for the persons autonomy (Beauchamp &
Childress, 1994). There are four elements to informed consent that were
included in the latest revision of the APAs (1992) ethical principles. Ethical
Standard 4.02(a) states the following: Informed consent generally implies
that the person (1) has the capacity to consent, (2) has been informed of sig-
nificant information concerning the procedure, (3) has freely and without
undue influence expressed consent, and (4) consent has been appropriately
documented (p. 1605).
INITIAL SESSIONS
Ethical Standard 4.01(a) (APA, 1992), regarding structuring the therapy

relationship, states that Psychologists discuss with clients or patients as
early as is feasible in the therapeutic relationship appropriate issues, such as
the nature and anticipated course of therapy, fees, and confidentiality (p. 1605).
Working within the managed care context may require additional informed
consent procedures not enumerated in the APAs ethical principles. It is
hoped that more adequate guidance regarding informed consent procedures
will be included in future revisions of the ethical principles (Fisher & Young-
gren, 1997). As stated by Walsh (1998), Like a popular canned soup, man-
aged care plans come in several varieties, none of which, however, carries a
consumer warning label (p. 27). In addition to the requirements of the ethics
code, practitioners are well advised to inform clients regarding their benefit
plan, any potential limits on treatment options, and the relevant exceptions to
confidentiality (Barnett, 1998a, 1998b; Fisher & Younggren, 1997; Gottlieb,
1992; Haas & Cummings, 1994; Higuchi, 1994; Lowman, 1994a; Miller,
1996a; Rodwin, 1995; Walsh, 1998).
It is important not to assume that clients have complete information
regarding managed care in general, their specific benefit package, or how
their benefits might be limited (CAPP Task Force on Ethical Practice, 1998;
DeLeon et al., 1994). Not having adequate information can, for example,
result in the client having unrealistic expectations regarding his or her psy-
chotherapy benefits. It is important for the practitioner to educate the client
about these matters, offer clarification at every opportunity, and reevaluate
expectations for treatment when needed (Gottlieb, 1992).
In the difficult situation where an MCO has not practiced truth-in-
packaging, that is, the MCO has been misleading in its advertising, a practi-
tioners informed consent procedure must be very clear (Bak, Weiner, &
Jackson, 1991; Gottlieb, 1992). For example, a clients benefit information
may state that the client is covered for 20 sessions per year, yet the MCO may
only authorize 6 sessions. When such situations arise, practitioners should
inform the client of available options and explain the limitations of their role
(Gottlieb, 1992). It is also recommended that clients be encouraged to report
situations such as this to their benefit managers because employers are con-
cerned with the welfare of their employees and are the MCOs customers
(Bak et al., 1991). Remember that year to year, MCOs make various changes
in their policies and procedures. It is recommended that the practitioner
and/or client contact the MCO and make sure benefit information is accurate
and current.
FINANCIAL ISSUES
Ethical Standard 4.01(a) (APA, 1992), states the following: Psycholo-

gists discuss with clients or patients as early as is feasible in the therapeutic
relationship appropriate issues, such as . . . fees (p. 1605). Ethical Standard
1.25(e) (APA, 1992), regarding fees and financial arrangements, states that
If limitations to services can be anticipated because of limitations in financ-
ing, this is discussed with the patient, client, or other appropriate recipient of
services as early as feasible (pp. 1602-1603). Ethical Standard 1.15 (APA,
1992), which addresses the misuse of psychologists influence, states that
Because psychologists scientific and professional judgments and actions
may affect the lives of others, they are alert to and guard against personal,
financial, social, organizational, or political factors that might lead to misuse
of their influence (p. 1601). Another aspect of informed consent involves
the full disclosure of financial arrangements. Clients are entitled to know how
the practitioner is compensated by the MCO because clients are paying for a
portion of the service indirectly through their employee benefits and payroll
deductions. Full disclosure of financial arrangements such as fee splitting,
referral fees, discouraging of referral to specialists, and incentives for short-
term treatment are particularly important when financial arrangements might
affect the practitioners judgment or treatment recommendations (CAPP
Task Force on Ethical Practice, 1998; Corcoran & Vandiver, 1996; New-
man & Bricklin, 1994). When relevant, practitioners are advised to disclose
information regarding financial arrangements in a sensitive and supportive,
but straightforward, manner.
We should note that such financial arrangements are at the center of much
debate at the present time. As a matter of good risk management, we recom-
mend that the practitioner consult with his or her state licensing board and per-
sonal attorney before signing contracts that might include such provisions.
INFORMED CONSENT AS A PROCESS
One particularly challenging aspect of informed consent is that clients can

only be truly informed to the degree they understand what they are told.
Often, clients may not fully understand what they are consenting to because
they are anxious, depressed, and unable to pay adequate attention. As a result,
many of the issues must be revisited from time to time when the practitioner
becomes aware that the client may not remember or may not have understood
the information initially.
Another challenging aspect involves the scenario where treatment needs
change as additional information is revealed, thereby necessitating that the
practitioner provide further information to the client. Consider the example
of a woman who presents with what appears to be a moderately acute single
depressive episode. As treatment progresses, she reveals that she was physi-
cally abused as a child and has been experiencing intrusive memories of that
experience. In such a situation, the informed consent issues that were dis-
cussed at the outset of treatment are not sufficient to address the new treat-
ment issues that have arisen. As a result, after reevaluating her condition, the
practitioner is advised to revisit the treatment plan and options with the client
as a matter of informed consent.
In response to problems with informed consent such as these, the Ameri-
can Psychiatric Association (1987) recommended that practitioners obtain
as much informed consent as possible continuously. In other words, practi-
tioners should view informed consent as an ongoing process rather than a sin-
gle event that occurs prior to or at the outset of psychotherapy (CAPP Task
Force on Ethical Practice, 1998; Pope & Vasquez, 1991). It is hoped that
future revisions of the APAs ethical principles will include this suggestion.
In light of session limitations imposed by MCOs, we recognize that this sug-
gestion is time consuming. However, it is has been our experience that fol-
lowing the suggestion has numerous advantages. First, clients appreciate the
time that is taken to explain these matters even though it detracts from time
that could be devoted to treatment. Second, as a clinical matter, taking the
time to inform clients is a way of strengthening the therapeutic relationship
(Barnett, 1998a). Finally, it is simply a matter of good risk management (Bar-

nett, 1998a).
Confidentiality
Numerous ethical standards exist regarding confidentiality. Ethical Stan-
dard 5.01(a) of the APAs (1992) ethical principles states the following: Psy-
chologists discuss with persons and organizations with whom they establish
a scientific or professional relationship (1) the relevant limitations on confi-
dentiality . . . (2) the foreseeable uses of the information generated through
their services (p. 1606). Ethical Standard 5.01(b) states that Unless it is not
feasible or is contraindicated, the discussion of confidentiality occurs at the
outset of the relationship and thereafter as new circumstances may warrant
(p. 1606). Furthermore, Ethical Standard 5.04 (APA, 1992) states that Psy-
chologists maintain appropriate confidentiality in creating, storing, access-
ing, transferring, and disposing of records under their control, whether these
are written, automated, or in any other medium (p. 1606).
The practitioner-client relationship is crucial to the delivery of mental
health care services. A defining component of the practitioner-client rela-
tionship is confidentiality (Barnett, 1998a; Walsh, 1998). Given confidential-
ity, clients feel secure and are able to disclose upsetting personal information
to the practitioner. However, within a managed care context, confidentiality
may no longer be presumed in the therapy situation. Managed care shifts the
traditional basis for limits on confidentiality to issues of cost containment
(Walsh, 1998). For example, traditionally, a practitioner would waive a cli-
ents right to confidentiality only in those situations in which a client was a
risk to self or others. With managed care, the practitioner is obliged to provide
client information to the MCO for purposes of determining treatment
necessity.
ISSUES
Prior to the involvement of insurance companies as the third party in the

professional relationship, the ethics code (APA, 1992) provided sufficient
guidelines for practitioners. Psychologists were obliged to maintain the con-
fidentiality of their clients. Because the practitioner and client were the only
parties involved, adherence to this guideline was generally maintained with-
out much difficulty.
In the early 1970s, professional psychology began to advocate for third-
party reimbursement to obtain parity with organized medicine, and the effort
was successful. However, this change raised concerns regarding confidenti-
ality because practitioners were required to reveal information about their

clients to others when they completed insurance forms. Despite initial con-
cern, apprehension regarding the potential compromise of confidentiality did
not become a significant problem because practitioners were seldom asked
for more than a diagnosis and most clients complied because of the financial
benefit to them. Furthermore, the tradition of confidentiality that existed at
that time still operated to keep information relatively secure and clients sel-
dom needed to worry about their records being compromised.
Since the mid 1980s, however, with the involvement of managed mental
health care, the maintenance of confidentiality has become a much more
complex matter (Barnett, 1998a; Davidson & Davidson, 1996; McDaniel &
Erlen, 1996). Today, MCOs often request extensive and personal information
about clients, and detailed treatment plans may be required by MCOs at dif-
ferent points during the therapy process.
Optimally, treatment plans are mailed to the MCO, but time constraints do
not always allow sufficient time to do so, and practitioners are sending these
data by fax to ensure that sessions will be covered in time for the clients next
appointment. Even if the treatment plan is mailed, the information from it is
then entered into a computer system and may become part of a national data-
base of health care records without the clients knowledge (CAPP Task Force
on Ethical Practice, 1998; Hoyt, 1995). Thus, as a result of these technolo-
gies, practitioners can no longer assure their clients of confidentiality at any
level because once client information is provided to the MCO, control of the
information is lost.
RECOMMENDATIONS
Clients should be clearly and fully informed of the managed care compa-
nys role in their treatment, including the potential problems regarding confi-
dentiality that may arise (Barnett, 1998a; Gottlieb, 1992). As always, it is
helpful if the practitioner can anticipate ethical issues. Thus, the practitioner
is well advised to obtain a copy of a managed care companys policy regard-
ing confidentiality. This allows the practitioner to review the companys pol-
icy, anticipate problems, and then, if necessary, make suggestions to the man-
aged care company (Corcoran & Vandiver, 1996; Gottlieb, 1992). In the
event that a managed care companys policy for processing confidential
information is not adequate and cannot be changed, the practitioner should
only release the minimum amount of information needed to protect the cli-
ents privacy (Barnett, 1998a; Gottlieb, 1992; Hoyt, 1995). The practitioner
should also inform the client of the MCOs policy and discuss the implica-
tions of it with the client. It is important that the practitioner remember that
the client owns the privilege to release confidential information, and to
remain mindful that the practitioners primary obligation is to work for the
benefit of the client. The managed care company may not have the same pri-
orities (Gottlieb, 1992).
It may be helpful for the practitioner to develop his or her own policy
regarding the release of confidential client information (Gottlieb, 1997). For
example, the practitioner might have a policy that states that he or she will
only release a treatment summary, rather than case notes or an entire client
record. In the event that a managed care company requests information about
a client that is not compatible with the practitioners policy, the practitioner
can then discuss this dilemma with the client and ask the client to decide if
and how much information should be released (Gottlieb, 1992).
In some instances, the practitioner will be asked by managed care compa-
nies to have general releases of information signed by the client during the
first treatment session. In other cases, the client may have already signed a
general release of information before ever seeing the practitioner. Clients
often do not even remember signing such forms. Even if they do, they will not
always recall their contents or understand the implications of having signed
them. Therefore, in all instances, it is important that the practitioner inform
clients about the nature of the release form and the implications of their signa-
ture (Barnett, 1998a; CAPP Task Force on Ethical Practice, 1998; Gottlieb,
1992; Resnick et al., 1994).
After a client signs a release form, practitioners will be periodically
required to submit treatment information to the MCO. As a rule, information
should not be released without first discussing it with the client, allowing the
client time to ask questions and discuss the implications of the release (Bar-
nett, 1998a; Gottlieb, 1992; Hoyt, 1995). Involving the client in this process
is not only good risk management but when done well also can provide a
therapeutic function.
In some cases, managed care companies may request case notes from the
practitioner. In our view, case notes are akin to raw test data (Gottlieb, 1992),
and we believe that it is inappropriate for nonmental health professionals to
review them. We recommend that practitioners avoid sending case notes, but
offer to send a treatment summary or other documentation that the MCO may
require. It is our experience that managed care companies generally respect
this boundary and are receptive to this alternative when they view the practi-
tioner as generally forthcoming.
Technological advances have resulted in serious challenges to confidenti-
ality. For example, treatment plans sent by fax machines may be sent to the
wrong place, conversations over cellular telephones may be overheard by
others, and information sent via e-mail may be retrieved from computers
without our knowledge. In light of these advances, it is important that the
practitioner take certain precautions (CAPP Task Force on Ethical Practice,
1998). Optimally, we recommend that the practitioner mail requested paper-

work to the MCO whenever it is reasonable to do so. When time does not per-
mit this practice, it is important that the practitioner take precautions such as
contacting the managed care company to make certain that the case manager
will be the one receiving a fax transmission. Although not foolproof, another
precaution is to include a cover sheet with a confidentiality statement written
on it (Barnett, 1998a). Finally, as with faxes, e-mail messages can be inadver-
tently sent to the wrong address. As a result, we strongly recommend that the
practitioner not use e-mail communication to discuss confidential client
material. It is hoped that the APAs (1992) ethics code will be updated to
reflect these technological advances in information exchange (Austad et al.,
1998).
Competence
Psychologists are obliged to maintain high standards of competence
and to use only those techniques for which they are qualified (Principle A)
(APA, 1992, p. 1599). Given the managed care environment, some issues
regarding competence become particularly salient. We will review these
issues in light of Ethical Principle A (APA, 1992), which states the following:
Psychologists strive to maintain high standards of competence in their work.

They recognize the boundaries of their particular competencies and the limita-
tions of their expertise. They provide only those services and use only those
techniques for which they are qualified by education, training, or experience.
Psychologists are cognizant of the fact that the competencies required in serv-
ing, teaching, and/or studying groups of people vary with the distinctive char-
acteristics of those groups. (p. 1599)
BRIEF THERAPY MODEL
MCOs endorse a brief therapy model. Although the precise definition of

this model varies, practitioners should assess whether they are competent and
willing to use this approach. For example, an MCO notifies its provider panel
that it is adopting a crisis management policy and approving treatment for
only five sessions and that requests for further treatment will not be approved.
In such circumstances, a practitioner must assess whether he or she is compe-
tent and willing to practice within that model (Gottlieb, 1992; Haas & Cum-
mings, 1994). The practitioner must assess whether he or she has had ade-
quate education and training in crisis management and very brief therapeutic
interventions. In making this decision, it would be helpful for the practitioner
to learn more about the MCOs treatment model. Obtaining this information
may help the practitioner assess whether she or he is competent and willing to
work within the parameters of that particular MCO. If a practitioner has the
requisite training and experience and is comfortable working within these
constraints, she or he may proceed.
On the other hand, if a practitioner endorses a long-term, insight-oriented
theoretical orientation, the practitioner should carefully assess whether it is
advisable to work within the managed care context (Gottlieb, 1992). If a prac-
titioner fails to perform this self-assessment, several problems may arise.
First, it is unethical for a practitioner to join a managed care panel if the prac-
titioner does not have adequate training and experience to practice within a
brief therapy model. Agreeing to do so is tantamount to misrepresentation.
Second, the practitioner who is not adequately trained in brief therapy
approaches may harm clients. For example, a 40-year-old man presents with
what appears to be an acute depressive episode. During the third session, he
reports frequent flashbacks of an upsetting event that occurred in his early
20s. At this juncture, the practitioner who subscribes to the MCO model must
respond differently than would someone working from a long-term perspec-
tive. To allow the client to believe that he will have unlimited time to process
this experience only to have his time severely limited could result in harmful
consequences. Finally, disingenuously agreeing to work in this way is not
good for the practitioner personally as he or she may become increasingly
frustrated with what may come to be viewed as an insensitive and hostile
MCO. Such feelings can lead to burn out on a long-term basis that may harm
both practitioner and client.
DIVERSITY
Ethical Standard 1.08 (APA, 1992) states the following:
Where differences of age, gender, race, ethnicity, national origin, religion, sex-
ual orientation, disability, language, or socioeconomic status significantly
affect psychologists work concerning particular individuals or groups, psy-
chologists obtain the training, experience, consultation, or supervision neces-
sary to ensure the competence of their services, or they make appropriate refer-
rals. (p. 1601)
Working with managed care companies may give the practitioner the
opportunity to work with groups that are typically underrepresented in many
practice settings (Gottlieb, 1992). For example, persons who are members of
an HMO plan that requires a 10% copayment may be able to seek counseling
services, but would not be able to do so if he or she had to pay 100% out-of-
pocket or even 50% of therapy fees according to a traditional indemnity
insurance plan. On the other hand, some contend that managed care systems
may limit access and treatment for persons with chronic mental disorders
(Corcoran & Vandiver, 1996; Hoyt, 1995) or for underrepresented groups,
citing research demonstrating that ethnic minorities in the United States, for
example, experience more health-related illnesses than European Ameri-
cans, encounter more barriers to health care services, have fewer resources
with which to obtain health care services, and may receive lower quality
health care services (Abe-Kim & Takeuchi, 1996).
To increase access and provide sensitive and appropriate treatment, it is
critical that the practitioner assess whether he or she is competent to work
with the clientele of the MCO. If the MCOs clientele includes persons repre-
senting particular socioeconomic groups, ages, levels of education, racial and
ethnic groups, and/or sexual orientations, then the practitioner needs to
assess whether she or he has had sufficient education, training, and experi-
ence working with these groups. If a practitioner is referred a client and
decides that she or he is not competent to work with that particular individual,
the practitioner is ethically obliged to contact the MCO and obtain an appro-
priate referral (Gottlieb, 1992). Unfortunately, things are seldom so simple
because there may be no qualified practitioners available within the MCO
network. If so, the practitioner has a duty to advocate on behalf of the client
and should notify the MCO regarding the need to recruit competent providers
in the particular area of need (Newman & Bricklin, 1994). In such situations,
it is tempting to work with the person nonetheless, especially if urged to do so
by the MCO, which may prefer not to be inconvenienced by the request.
Doing so is generally inadvisable because the probability of iatrogenic risk
becomes much higher.
Integrity
Ethical Principle B (APA, 1992) states that
Psychologists seek to promote integrity in the science, teaching, and practice

of psychology. In these activities psychologists are honest, fair, and respectful
of others. In describing or reporting their qualifications, services, products,
fees, research, or teaching, they do not make statements that are false, mislead-
ing, or deceptive. (p. 1599)
Ethical Standard 1.26 (APA, 1992) states the following: In their reports
to payors for services or sources of research funding, psychologists accu-
rately state the nature of the research or service provided, the fees or charges,
and where applicable, the identity of the provider, the findings, and the diag-
nosis (p. 1603). In order for clients to be covered for services by their benefit
plans, most MCOs require that a client meet diagnostic criteria for a disorder
listed in the Diagnostic and Statistical ManualFourth Edition (DSM-IV)
(American Psychiatric Association, 1994). Depending on the diagnosis, the
MCO may or may not support the practitioners assertion that the treatment is
medically necessary and then authorize treatment. Such situations may pres-
ent some serious ethical dilemmas.
UPCODING
To ensure that clients receive treatment, practitioners may be tempted to

upcode (Hoyt, 1995). Upcoding refers to the practitioners reporting that the
client has a more serious condition than actually exists to obtain more author-
ized sessions (Corcoran & Vandiver, 1996; Hoyt, 1995), such as making a
diagnosis of major depression rather than an adjustment disorder with
depressed mood. Such a practice is unethical (Corcoran & Vandiver, 1996;
Gottlieb, 1992; Hoyt, 1995) and may be considered fraudulent as well (Bar-
nett, 1998a). If a client does not present with a diagnosable and reimbursable
disorder, the practitioner must discuss this with the client as a matter of
informed consent and outline other treatment options that are available (Gott-
lieb, 1992). Furthermore, providing inaccurate information in this way may
result in an MCO having an inaccurate database regarding how many ses-
sions a certain diagnosis usually requires (Hoyt, 1995), leading to a general
upward creep in the amount of required treatment. Finally, we wonder what
message such a practice sends to clients. How will they regard the profession-
alism of a practitioner who colludes with them to deceive the insurance com-
pany? Such a practice may establish a bad precedent with clients who are
manipulative, and may cause clinical problems later in the treatment process.
DOWNCODING
In other clinical situations, practitioners may downcode. For example,

there is much anecdotal data among practitioners that MCOs will not approve
sessions for persons who have only an Axis II diagnosis. We do not know the
extent to which such an assumption is true, but it is widely held in our experi-
ence that persons with Axis II diagnoses will only be given an Axis I diagno-
sis to obtain reimbursement. Such a practice has all of the disadvantages
noted above for upcoding.
Human Welfare
When working within a managed care environment, practitioners may
encounter challenging ethical dilemmas when striving to promote human
welfare and determining the appropriateness of a brief treatment plan. Ethi-

cal Principle E (APA, 1992) states the following:
Psychologists seek to contribute to the welfare of those with whom they inter-
act professionally. In their professional actions, psychologists weigh the wel-
fare and rights of their patients or clients. . . . When conflicts occur among psy-
chologists obligations or concerns, they attempt to resolve these conflicts and
to perform their roles in a responsible fashion that avoids or minimizes harm.
(p. 1600)
APPROPRIATE TREATMENT
MCOs authorize sessions based on predetermined treatment models and

general guidelines. These guidelines are not designed for individual clients.
During initial sessions, the practitioner must ensure that the recommended
treatment plan is appropriate for the clients condition (CAPP Task Force on
Ethical Practice, 1998). For example, when using a short-term model, prob-
lems may arise if a client rapidly develops strong transferential feelings for
the practitioner (Gottlieb, 1992). When a practitioner suspects that his or her
client may suffer from Borderline Personality Disorder, the practitioner must
carefully consider the benefit of short-term therapy versus its potential cost
because termination of a brief therapeutic relationship may risk recapitula-
tion of abandonment issues and harm the client. If the MCO will not provide
enough sessions to fully implement the treatment plan, the practitioner may
be tempted to do what I can for the client despite the limitations imposed
(Gottlieb, 1992). Superficially, this alternative is understandable, as it
appears to be more humane. It is also in the interest of the practitioner to make
this decision because it results in filling an appointment time. Furthermore,
the practitioner may inaccurately presume that proceeding with treatment
will buy him or her time to get approval for more sessions from the MCO.
This practice is inadvisable as it risks client abandonment if the MCO does
not approve further treatment. If it is in the clients best interest to receive
longer term psychotherapy, it may be appropriate to refer the client before
establishing a therapeutic alliance (Gottlieb, 1992). We suggest that the prac-
titioner share her or his treatment recommendations openly with the client
and discuss all the available treatment options within the context of the MCO
limitations.
TREATMENT REFERRAL
The practitioner must also determine whether the client is able and/or
willing to pay out-of-pocket for treatment. If the client does not have the
resources to do so, then it may be necessary to refer him or her to another

practitioner or a community agency that offers lower fees or sliding scale
options (CAPP Task Force on Ethical Practice, 1998). Unfortunately, this
option may not always be as available as one would like. With reductions in
governmental allocations for mental health during the past 25 years, commu-
nity mental health facilities have either closed or curtailed many services
offered in the past. As a result, referral to a community agency may not neces-
sarily result in the client receiving the treatment that he or she needs. There-
fore, practitioners must monitor the availability of such services on an ongo-
ing basis. Then, if a referral is indicated, it can be done meaningfully and
avoid the client feeling abandoned once again by a subsequent agency that
refuses to treat the clients condition. We have no solution to this difficult
dilemma and urge practitioners to make such decisions after a thorough
assessment of the clients needs.
PREVIOUS THERAPY
A more complex issue may arise when, upon intake, a practitioner learns
that a client has had therapy in the past. In such cases, before developing a
treatment plan, it is important to ascertain whether past treatment was helpful
or successful. If it was not, it is good clinical practice to obtain the records
from the previous therapist, inform the MCO, and consider a consultation or
second opinion before initiating treatment (Gottlieb, 1992). In some cases,
the MCO may already have an established mechanism for peer consultation
with a like provider that may be helpful. In any event, working within a man-
aged care environment may mean anticipating treatment issues with clients
whose treatment may be difficult to manage or who have histories of non-
compliance or treatment failure.
Abandonment
As previously mentioned, working within a managed care context typi-
cally requires using a brief therapy model of treatment. Thus, practitioners
must plan for termination virtually from the outset of treatment (Gottlieb,
1992). Ethical Standard 4.09(a) states that psychologists do not abandon
patients or clients (APA, 1992, p. 1606). Ethical Standard 4.09(c) (APA,
1992) also states the following:
Prior to termination for whatever reason, except where precluded by the pa-
tients or clients conduct, the psychologist discusses the patients or clients
views and needs, provides appropriate pretermination counseling, suggests
alternative service providers as appropriate, and takes other reasonable steps to
facilitate transfer of responsibility to another provider if the patient or client

needs one immediately. (p. 1601)
REQUEST FOR ADDITIONAL SESSIONS
If concurrent review to obtain additional sessions is required, clients

should be informed of this necessity during the initial session and reminded
of it as the time for reapproval approaches. Practitioners also should inform
clients that such requests for additional sessions may or may not be granted
(Gottlieb, 1992). As a result, it is important to make application for additional
sessions well in advance of the last authorized visit. In the event that the
request for additional sessions is denied, the practitioner then has time to pro-
vide termination counseling and referral when necessary (Gottlieb, 1992).
DENIAL OF REQUEST
If a request for additional sessions is denied, it is important to inform the

client of this information as soon as possible. It is not appropriate to terminate
a therapeutic relationship without adequate notice, and practitioners should
strive to provide a terminating interview whenever it is possible and appropri-
ate (Barnett, 1998b; Gottlieb, 1992). This allows the practitioner and the cli-
ent time to review gains made in therapy and goals left to be accomplished.
The practitioner should also suggest alternative services when brief therapy
has not provided what the client had desired (Miller, 1996a). If referral is rec-
ommended, it is the practitioners responsibility to strive to make a referral to
other professionals who are qualified to treat the client and, with the clients
appropriate release, to communicate pertinent clinical information to the
subsequent provider.
A decision to terminate therapy should be mutual whenever possible. That
is, it should be the product of a collaboration with the client in conjunction
with the practitioners clinical assessment. It should not be a result of session
limitations arbitrarily imposed by the MCO (Corcoran & Vandiver, 1996).
Unfortunately, managed care no longer provides us with the opportunity to
follow this guideline. It is now a common occurrence for requests for addi-
tional sessions to be denied, despite the practitioners judgment that the client
should not or cannot be terminated or transferred. If termination is not indi-
cated, it is the practitioners obligation to appeal the MCOs decision through
the MCOs appeals process (CAPP Task Force on Ethical Practice, 1998;
Corcoran & Vandiver, 1996; Gottlieb, 1992). Peer review is the appropriate
procedure for appeals, and the practitioner should insist upon review by a
professional holding comparable credentials (Gottlieb, 1992). Unfortu-
nately, doing so is not always easy as many MCOs insulate appeals reviewers
with many layers of bureaucracy. Therefore, although the practitioner should
request to deal directly with that professional, doing so will often be easier
said than done.
While going through an MCOs appeals process on behalf of a client, the
practitioner should continue treatment if it is practically possible to do so
until a referral can be appropriately accomplished (Corcoran & Vandiver,
1996; Gottlieb, 1992; Hoyt, 1995). To do otherwise may be considered aban-
donment and malpractice (Haas & Cummings, 1994; Simon, 1994). There-
fore, it is vital that the practitioner remember that he or she continues to be
responsible for the client whether he or she is being paid by the managed care
company or not (Austad et al., 1998).
Conflict of Interest
A conflict of interest may result when a practitioner has responsibilities to
two or more parties that have competing interests. APAs (1992) Ethical Stan-
dard 8.03 states the following:
If the demands of an organization with which psychologists are affiliated con-

flict with this ethics code, psychologists clarify the nature of the conflict, make
known their commitment to the Ethics Code, and to the extent feasible, seek to
resolve the conflict in a way that permits the fullest adherence to the Ethics
Code. (p. 1611)
TRIANGLES
With the two-party system, client welfare was more secure because the
practitioner was less likely to have obligations that might influence or con-
flict with her or his clinical judgment. When working in the four-party sys-
tem, the practitioner plays the role of both therapist and MCO employee,
even if one is an independent contractor. That is, the practitioner is expected
to provide quality care to the client and at the same time contain costs on
behalf of the MCO (Haas & Cummings, 1994; McDaniel & Erlen, 1996;
Newman & Bricklin, 1994). Therefore, working within a managed care con-
text can create a triangle that places the practitioner in the middle of poten-
tially competing interests (Backlar, 1996; Gottlieb, 1992; Haas & Cum-
mings, 1994; Pipal, 1995; Sabin, 1994). Although triangles are not inherently
problematic or unethical, they do pose risks for the practitioner. For example,
the practitioner may be caught between advocating for a client who requires
additional treatment and supporting the MCOs goal of cost containment. As
the APAs (1992) ethical principles indicate, the practitioner has an obliga-
tion to address issues of conflict of interest with both parties to resolve the
conflict (Backlar, 1996; Higuchi, 1994; Miller, 1996a; Sabin, 1994).
If a practitioner has been referred a series of severely disturbed clients
who require a great deal of treatment, he or she may come to be seen as unco-
operative with the MCOs brief therapy philosophy. Such an assessment of
the practitioner, albeit incorrect, might result in a reduction of referrals or
even refusal to renew the practitioners contract. Regardless of these possible
adverse consequences, business considerations must always be secondary to
our ethical obligations to our clients (Newman & Bricklin, 1994).
CONTRAINDICATIONS FOR BRIEF THERAPY
A related conflict of interest may arise when the practitioner agrees with
the brief treatment model endorsed by the managed care company, but is
faced with a situation in which using a brief treatment approach is contraindi-
cated (Gottlieb, 1992). For example, with clients who present with signifi-
cant dissociative experiences, the practitioner may be tempted to provide
brief treatment and do the best he or she can given the circumstances (Gott-
lieb, 1992). However, this approach may not be in the clients best interest
and, in fact, may be harmful. On the other hand, the practitioner may elect to
communicate this dilemma to the MCO. Although diverging from the
MCOs treatment model may result in the MCO perceiving the practitioner as
uncooperative, it is also possible that, if the practitioner has been seen as sup-
portive of the MCO in the past, exceptions could be made. In this case, the
practitioner succeeds by doing the best thing for the client and avoids alienat-
ing the MCO in the process.
Record Maintenance
Practitioners have an ethical obligation to maintain adequate records
(APA, 1993). However, utilization review processes place additional respon-
sibilities on the practitioner. Before discussing these issues, it is important to
be mindful of relevant ethical standards including 5.03(a) (APA, 1992),
which states that To minimize intrusions on privacy, psychologists include
in written or oral reports, consultations, and the like, only information ger-
mane to the purpose for which the communication is made (p. 1606). Also,
Ethical Standard 5.04 (APA, 1992) states that Psychologists maintain
appropriate confidentiality in creating, storing, accessing, transferring, and
disposing of records under their control, whether these are written, auto-
mated, or in any other medium (p. 1606).
In light of utilization review processes, it is important that the practition-

ers records also contain whatever additional information the MCO may
require. This is particularly important in clinical situations where, for exam-
ple, a practitioner needs sufficient information on which to base his or her
rationale for requesting additional treatment sessions for his or her client
(Gottlieb, 1992).
PROSPECTIVE AND CONCURRENT UR
Beyond regular record keeping, working with MCOs usually involves the
completion of additional forms and/or having telephone interviews for the
purposes of prospective and/or concurrent UR. Most often, the information
requested involves providing a diagnosis, the treatment plan, therapy prog-
ress, and/or anticipated termination. In general, these forms or interviews
serve the purpose of documenting the medical necessity of therapy. Despite
the common perception to the contrary, such reviews do not necessarily
ensure payment for services because the MCO does not make such decisions.
The MCO makes recommendations to the insurance company that makes the
final decision regarding payment.
One issue that arises during UR involves how much information the prac-
titioner should disclose to the MCO. Even though the practitioner obtained
the clients informed consent regarding the release of confidential informa-
tion, the client does not know specifically what information will be revealed.
This issue is important because once the information is revealed to the MCO,
the client and practitioner no longer have any control over it and, as previ-
ously mentioned, the information could become part of a national database of
health care records (CAPP Task Force on Ethical Practice, 1998). Therefore,
regarding how much information to release, it is recommended that practi-
tioners release only the information that is directly relevant to obtaining
authorization for additional sessions (Barnett, 1998a; Corcoran & Vandiver,
1996).
RETROSPECTIVE UR
In the contemporary managed care environment, practitioners must also

anticipate retrospective UR. In some cases, an MCO representative may actu-
ally visit the practitioners office to review the records of former clients at
random. Although the practitioner may have obtained the clients informed
consent before releasing information to the MCO during treatment, in the
case of retrospective review, the practitioner may not be able to obtain a post-
treatment release of information from the client to tender the record for
review. Therefore, such matters should be addressed with the client at the out-
set of treatment as a matter of informed consent.
If the practitioner can reasonably anticipate such review, he or she must
consider just how much information should be contained in the record that
may be eventually provided to the MCO, and what, if anything, should not be
recorded. In our view, adequate records are an essential means of providing
good care and there is no excuse for failing to keep them. On the other hand,
given the questions regarding confidentiality we have discussed above, we
recommend that the practitioner be very judicious in this regard and only
record information that is directly relevant to treatment (Corcoran & Vandi-
ver, 1996). For example, if a 40-year-old client discloses to the practitioner
that she engaged in bulimic behaviors for 1 month following the breakup of a
romantic relationship several years ago, and these behaviors have not
occurred since then, the practitioner may choose not to include this informa-
tion in the record if he or she concludes that it is not relevant to current pre-
senting concerns.
Particular caution should be used when including information about other
family members in the client record. As a matter of good practice, MCOs
expect the practitioner to obtain a clients history and understand that the
information obtained is a function of the clients perception. However, the
practitioner should beware of the risk involved in providing information to
the MCO about other persons for whom the practitioner does not have a
release of information. This may become particularly troublesome if family
members are members of the same insurance plan and are pursuing treatment
from the same MCO.
INTERACTIONS WITH MCO REPRESENTATIVES
Whether providing information on a form or via a telephone interview,

practitioners should be prepared to explain therapy goals, progress, and treat-
ment rationale in straightforward, brief, and concrete terms. Rarely will the
MCO representative evaluating the information be a peer (Austad et al.,
1998; Gottlieb, 1992; Resnick et al., 1994). Thus, it is important to be patient
and avoid using complicated theoretical concepts that may confuse and frus-
trate the MCO representative and result in less cooperation. It is important to
try to be cooperative with the MCO representative as it is in the clients best
interest to establish a good working relationship with the person/company
who controls the clients access to care (Gottlieb, 1992).
In addition to standard record keeping, it is important for the practitioner
to keep a record of his or her interactions with the MCO (Gottlieb, 1992).
Such documentation may help the practitioner in the event of utilization
review, appeals, conflict with the MCO, lawsuit, and/or a state board com-
plaint. For example, one may wish to document conversations with MCO
representatives, including the representatives name, the practitioners clini-
cal assessment provided to the MCO case manager, the decision of the MCO,
and further actions taken by the practitioner (e.g., an appeal if additional ses-
sions were denied). If an MCO refuses authorization for additional sessions,
it is recommended that the practitioner document this decision and request a
copy of the decision in writing to include in the clients record (Gottlieb,
1992). We understand that this recommendation imposes an additional bur-
den on practitioners already burdened with paperwork. Nevertheless, we
contend that doing so is good clinical practice, ethical, and a matter of sound
risk management.
Business Relationships
To become a participating provider for an MCO, practitioners are required
to sign legally binding contractual agreements with MCOs (Gottlieb, 1992;
Higuchi, 1994; Resnick et al., 1994). These contracts often are quite lengthy
and it is important that the practitioner read them carefully with an awareness
of both the potential ethical and legal issues that may arise (CAPP Task Force
on Ethical Practice, 1998). Ethical Standard 1.02 (APA, 1992), regarding the
relationship of ethics and law, states the following: If psychologists ethical
responsibilities conflict with law, psychologists make known their commit-
ment to the Ethics Code and take steps to resolve the conflict in a responsible
manner (p. 1600).
Generally speaking, it is only prudent to assume MCO contracts are not
standard or the same (APA Practice Directorate, 1996; Gottlieb, 1992), and a
practitioner should not sign a contract assuming that differences can be
worked out later (Gottlieb, 1992). It is recommended that the practitioner
have an attorney who is experienced with health care and relevant state and
federal law review the contract as well (APA Practice Directorate, 1996; Got-
tlieb, 1992; Higuchi, 1994; Resnick et al., 1994). In addition to these general
recommendations, there are some specific issues one should look for in an
MCO contract to avoid potential ethical conflicts because they may directly
impact the therapeutic relationship and/or directly affect the practitioner to
the degree that appropriate care may be compromised.
Confidentiality. It is important to review the contract for provisions

regarding confidentiality. An MCO contract should acknowledge or note the
practitioner as the owner of client records (APA Practice Directorate, 1996;
CAPP Task Force on Ethical Practice, 1998). As the owner of the client
record, the practitioner has an obligation to take precautions to safeguard
privileged information. Because the MCO also has a similar obligation, the
contract should state procedures and guidelines for sharing as well as protect-
ing client information (APA Practice Directorate, 1996; Gottlieb, 1992).
Gag clauses. Referred to as gag or no disparagement clauses, these provi-

sions prohibit the practitioner from disclosing information about an MCOs
practices, including the extent to which treatment may be restricted (Higuchi &
Coscia, 1995; Miller, 1996a). As we discussed in the Informed Consent sec-
tion, because it is unethical for a psychologist to withhold this type of infor-
mation, gag clauses should be excluded from the contract. In some jurisdic-
tions, they are now illegal.
No-cause termination. A provision that can have a silencing effect on the

practitioner is the no-cause termination clause. This provision allows either
party to terminate the contract without cause after notice and a brief interim
period (Higuchi & Coscia, 1995). With this provision, practitioners may fear
the MCOs retaliation in the event the practitioner appeals the MCOs deci-
sion regarding a clients treatment (Higuchi & Coscia, 1995). This practice is
being challenged legally at the present time. In the meantime, contracts
should be carefully reviewed to determine the circumstances under which an
MCO can terminate its relationship with the practitioner (Higuchi, 1994).
Financial incentives. Some MCO contracts contain financial incentives

for limiting services (Gottlieb, 1992). This type of provision places the prac-
titioner in a potential conflict of interest whereby earning more money is tan-
tamount to providing less service to the client (Gottlieb, 1992). Such a model
violates the ethical principle of placing the clients interest first and has been
declared illegal in some jurisdictions.
Utilization review. The practitioner should make sure that he or she fully
understands the MCOs UR procedures. If the procedures outlined by the
MCO could potentially result in providing negligent care, the provider
should not sign the contract (Corcoran & Vandiver, 1996). Also, the practi-
tioner should examine the procedures in place when a practitioner disagrees
with the UR decision and if there is an appeals process. In a contract, the
appeals process should be clearly delineated (CAPP Task Force on Ethical
Practice, 1998). Additionally, the practitioner should inquire if psychologists
are members of the UR panel (APA Practice Directorate, 1996).
Coverage arrangements. Practitioners should review the contract regard-

ing coverage arrangements when the psychologist is not available or out of
town. Some MCO contracts only permit the practitioner to refer to practi-
tioners who are on that particular MCO panel. Arranging coverage can
become quite cumbersome and/or difficult in the event the practitioner is a

provider for several MCOs that have this limitation. It is important for the
practitioner to evaluate this aspect before signing a contract (CAPP Task
Force on Ethical Practice, 1998).
Hold-harmless clauses. Practitioners should be aware of hold-harmless

clauses. Generally, the purpose of this clause is to protect the MCO from legal
actions or judgments against them in cases wherein the practitioner is sued
(APA Practice Directorate, 1996; Higuchi, 1994). Practitioners should be
aware of their legal responsibilities when signing contracts with hold-
harmless clauses. The APA Practice Directorate (1996) suggests excluding
this provision from the contract whenever it is practically possible to do so.
Indemnification clauses. Related to hold-harmless clauses, practitioners

should also review their contracts for indemnification clauses. These clauses
mean that practitioners could be required to compensate the MCO if the
MCO were held liable for the practitioners actions (APA Practice Director-
ate, 1996). As with hold-harmless clauses, indemnification clauses are to be
avoided (APA Practice Directorate, 1996).
For a more comprehensive examination of MCO contracts, we recom-

mend Contracting With Organized Delivery Systems: Selecting, Evaluating,
and Negotiating Contracts, which is part of the Toolbox Series published by
the APA Practice Directorate (1996). This text is a valuable resource that can
supply the practitioner with information regarding MCO contracts, including
key terms and concepts, as well as business, ethical, and legal information.
Finally, there is legislation pending in Congress at the time of this writing that
would prohibit many of the practices noted above (Resnick, 1998). If passed,
some of these issues may be resolved. The APA Practice Directorate may be
contacted for further information regarding this legislation.
Conflicts Between Ethics and Organizational Demands

As managed care has grown, increasing numbers of psychologists have
found employment within MCOs. For example, in one survey, 17% of sam-
pled psychologists were working in MCO environments (Norcross, Karg, &
Prochaska, 1997), whereas in another it was 16% (Belar, 1998). Although
there are no data available on trends, it is only reasonable to assume that these
numbers will increase, at least in the immediate future, and that psychologists
will work in an increasing variety of positions within MCOs. In this section,
we provide examples in which ethical conflicts may arise.
STAFF PSYCHOLOGIST
If the demands of an organization with which psychologists are affiliated con-

flict with this Ethics Code, psychologists clarify the nature of the conflict,
make known their commitment to the Ethics Code, and to the extent feasible,
seek to resolve the conflict in a way that permits the fullest adherence to the
Ethics Code. (p. 1611)
A common issue faced by staff psychologists employed by MCOs is the pre-

determined limitation on the amount of care that can be provided. This par-
ticular problem should not be unfamiliar to counseling psychologists who
often have had the experience of working in university counseling centers
where such limitations have been in place for many years. Unfortunately,
conflicts still arise in cases such as we have noted above in which a clients
treatment needs may not conform to MCO guidelines. Here the psychologist
may find himself or herself caught between advocating for the client and risk-
ing disfavor with his or her employer.
UTILIZATION REVIEWER
Psychologists may also be employed to provide UR services. In this

capacity, the practitioner may be making decisions regarding whether
approval for services should be recommended. There has been recent debate
as to whether psychologists in UR positions making treatment decisions are
engaged in professional practice (Sank, 1997; Shueman, 1997). In a recent
court case at the state level, it was determined that UR decisions are clinical
decisions, not business decisions (Murphy v. Blue Cross Blue Shield of Ari-
zona, 1997). The recent report by the CAPP Task Force on Ethical Practice
(1998) recommended that psychologists who provide UR services be obliged
to uphold the same ethics code as psychologists who are providing therapeu-
tic services. Therefore, psychologists who provide UR services should
remain mindful that they may be held accountable for their decisions as pro-
fessional psychologists who are making treatment decisions. It will be
important for future revisions of the APAs (1992) ethical principles to
address what Austad et al. (1998) referred to as co-practitioner decision-
making guidelines.
POLICY MAKER
Ethical Standard 1.06 (APA, 1992) states that Psychologists rely on sci-
entifically and professionally derived knowledge when making scientific or
professional judgment or when engaging in scholarly or professional endeav-

ors (p. 1600). Psychologists may find themselves in policy making roles
within MCOs. One of those roles may be assisting in determining what con-
stitutes medical necessity, as well as the development of treatment protocols
for various diagnostic categories. MCOs advertise that their protocols, and
therefore their treatment decisions, are based on empirically derived data.
However, much skepticism regarding such claims remains. A conflict may
arise if a psychologist is asked to develop such material, does so in good faith,
but then is overruled and asked to implement treatment guidelines that do not
correspond to the data. Psychologists who find themselves in such a position
will face a difficult ethical dilemma because refusing to implement such a
policy decision could risk disfavor with their employer and perhaps result in
termination of employment.
SUPERVISOR
Psychologists may be hired to supervise the work of other mental health

professionals. Although the MCO may have guidelines regarding who it con-
siders competent to provide its services, the psychologist is nonetheless per-
sonally responsible for the work of his or her subordinates. Ethical Standard
1.22(a-c) (APA, 1992), regarding delegation to subordinates, states the
following:
(a) Psychologists delegate to their employees, supervisees . . . only those

responsibilities that such persons can reasonably be expected to perform com-
petently, on the basis of their education, training, or experience, either inde-
pendently or with the level of supervision being provided.
(b) Psychologists provide proper training and supervision to their employ-
ees or supervisees and take reasonable steps to see that such persons perform
services responsibly, competently, and ethically.
(c) If institutional policies, procedures, or practices prevent fulfillment of
this obligation, psychologists attempt to modify their role or to correct the
situation to the extent feasible. (p. 1602)
Numerous ethical problems may arise for psychologists who act in super-
visory capacities in MCO environments. For example, one of the authors had
a conversation recently with a social worker in a managerial position with an
MCO. The company had just won a large contract and had openings for 50
case managers. When asked about qualifications, he replied that anyone
licensed at the masters level would be eligible to apply. When asked if that
included those who had recently completed their training, he noted that hir-
ing newly minted professionals would not be a problem because the MCO
would provide the few weeks of training needed to do the job. What if the
psychologist/supervisor in this position concludes that the MCOs criteria

for hiring and training practitioners is not sufficient to ensure an adequate
level of care?
A related set of difficulties may arise regarding supervision. Psycholo-
gists must ensure that their subordinates are adequately supervised, but will
the MCO allow sufficient time for them to do so? If not, the potential exists
for the subordinate to cause harm for which the psychologist as the immedi-
ate or ultimate supervisor may be held accountable.
In both of these cases, the psychologist/supervisor finds herself in an ethi-
cal dilemma and delicate personal position. On one hand, he or she risks sub-
ordinates delivering substandard services and harming clients. On the other
hand, raising such concerns with superiors could jeopardize his or her posi-
tion with the MCO if he or she were perceived as making waves or not being a
team player. Unfortunately, the psychologist/supervisor has little choice in
this situation. He or she is ethically obligated to make his or her concerns
known to those who are responsible for such decisions. Although such action
may be unpopular and even risk the practitioners position, his or her primary
obligation remains the welfare of the MCOs clients.
Despite this very difficult situation, the psychologist/supervisor is not
without some resources and alternatives. First, he or she may acquaint the
decision makers with current APA ethical policies and standards regarding
the delivery of professional services. Second, he or she may also obtain
research data demonstrating the need for certain minimal levels of education
and supervision for supervisees to deliver safe and effective services. Third,
the psychologist/supervisor might take the initiative to submit cost-effective
revisions to corporate policy that would not compromise service delivery.
Although none of these efforts are guaranteed to produce the desired results,
psychologists have the ethical obligation to take reasonable steps to protect
client welfare. Steps such as those listed here may not solve the problem of
questionable service delivery, but taking and documenting them may protect
the psychologist/supervisor if disgruntled clients choose to sue the MCO for
inadequate services.

GUIDELINES FOR RESEARCH
At this point in the development of managed care systems, some have

called for the involvement of researchers into the discussion (Barlow, 1996;
Seligman, 1996; Seligman & Levant, 1998). We echo this call as it is only
through research efforts that many of the preceding ethical issues faced in the
practice arena may be resolved. However, as researchers interface with man-

aged care, they may face ethical dilemmas of their own.
Confidentiality
Researchers are well versed in maintaining confidential, identifiable
information with which they are entrusted. As stated in Ethical Standard 5.02
(APA, 1992), Psychologists have a primary obligation and take reasonable
precautions to respect the confidentiality rights of those with whom they
work or consult (p. 1606). However, doing research in the managed care
arena may pose additional and unique ethical dilemmas. For example, what is
the researcher to do when he or she finds that client records are being trans-
mitted without proper releases or that unauthorized personnel have access to
client records? Another problem may arise when MCO personnel ask the
researcher for confidential client information for which they were not author-
ized access.
A less likely, but more serious, problem may arise in the following exam-
ple. Professor X was a professor at a major research university in a small
community. The university had its health insurance benefit managed and the
professor received permission to study various aspects of the managed care
function. In receiving permission, she was also given access to client records
with the understanding that such information would be confidential. In the
course of her research, the professor happens across confidential client infor-
mation regarding colleagues. Given these examples, it is important for the
researcher to be mindful of confidentiality guidelines and to anticipate chal-
lenges to these guidelines when possible.
Competence
Ethical Standard 6.07a (APA, 1992) states that Psychologists conduct
research competently and with due concern for the dignity and welfare of the
participants (p. 1608). We will not repeat the qualifications needed to per-
form competent research. However, the managed care environment is unique.
Therefore, we suggest that, no matter how competent a researcher may be,
researchers become familiar with the environment in which they will be
working. For example, familiarity with basic terminology will help research-
ers to ask better research questions. Knowledge of the lines of reporting will
help the researcher understand issues involved in the MCOs chain of com-
mand. Finally, it is important to understand just how much latitude profes-
sionals are allowed with regard to client management. All of the above will
help researchers better understand MCO organizational models, the prob-
lems faced by MCO personnel, and the unanswered questions raised by these
models. Finally, researchers should be mindful that they are not working in a
traditional mental health care facility. The primary goal of the MCO is cost
containment, and it is organized structurally and functionally to that end. The
wise researcher will remain mindful of the role that this goal plays in service
delivery and the ethical issues that it may foster.
Integrity, Professional and Scientific Responsibility,

and Conflict of Interest
Ethical Principle B (APA, 1992), regarding integrity, states the following:
Psychologists seek to promote integrity in the science, teaching, and prac-
tice of psychology. . . . To the extent feasible, they attempt to clarify for rele-
vant parties the roles they are performing and to function appropriately in
accordance with those roles (p. 1599). Ethical Principle C (APA, 1992),
with respect to professional and scientific responsibility, states that Psy-
chologists uphold professional standards of conduct, clarify their profes-
sional roles and obligations, accept appropriate responsibility for their
behavior (p. 1599). Ethical Standard 1.06 (APA, 1992) states the following:
Psychologists rely on scientifically and professionally derived knowledge
when making scientific or professional judgment or when engaging in schol-
arly or professional endeavors (p. 1600). Furthermore, Ethical Standard
6.06c (APA, 1992) states the following: In planning research, psychologists
consider its ethical acceptability under the Ethics Code. If an ethical issue is
unclear, psychologists seek to resolve the issue through consultation with
institutional review boards . . . peer consultations, or other proper mecha-
nisms (p. 1608).
The aspirational goals of managed care are to contain costs and ensure
quality of care. Although no one is opposed to saving money and using lim-
ited resources as fairly as possible, psychologists have an ethical obligation
to provide quality care and distribute limited resources in a manner that is sci-
entifically and ethically supportable (Austad et al., 1998; Resnick, 1998). To
this end, researchers are now being asked by MCOs to perform outcome stud-
ies. However, when researchers are employed by or their research is sup-
ported by MCOs, conflicts of interest can arise that may challenge their pro-
fessional integrity. For example, a university professor may have obtained a
research grant to study the differential effectiveness of long-term versus
short-term therapy. What subtle pressure will the professor experience to find
that short-term treatment is more effective? Even if the MCO says nothing
about it, will the researcher be concerned that, if the MCO finds the results
unfavorable, no further grant money will be forthcoming? A researcher
employed by an MCO might be in a similar position except that unfavorable
results might cost his or her job. Furthermore, if the MCO does not like the
results of a study, will they claim the data as proprietary information and pro-
hibit publication of a study that has occupied much energy and resources?
Although there are no simple answers to the preceding questions,
researchers may find themselves facing these and even more complex ethical
dilemmas in the future. Although adhering to aspirational goals may be diffi-
cult, it is necessary to remain mindful of these relevant standards regarding
the conducting of research. When faced with potential ethical dilemmas such
as these, it is critical that researchers think through these issues as thoroughly
as possible before engaging in such research endeavors. The Haas and
Malouf (1995) model may provide a useful frame for examining these issues.
Researchers also are encouraged to consult with colleagues who are knowl-
edgeable of the managed care environment, as well as their institutional
review board, for guidance.
Human Welfare
As psychologists and researchers, we are expected to pursue the aspira-
tional goal of promoting human welfare (Ethical Principle E) (APA, 1992).
MCOs, as noted above, do not view this as their primary goal, public advertis-
ing notwithstanding. As a result, researchers may find themselves working in
environments where their ethical values are not shared by the organization or
all who work there. This issue may not necessarily pose specific ethical
dilemmas for the researcher. However, one might think carefully about such
differences before proposing to do research in an environment where the staff
and researcher may not share very basic ethical values.
A more specific example may arise if the researcher becomes aware of
cost containment strategies that in his or her judgment deprive clients of
needed services. What is the researcher to do? To whom should one com-
plain? Would complaining matter? Could it jeopardize the research efforts?
Although we do not have answers to these questions, we strongly urge
researchers to consider such matters and develop their own decision-making
guidelines before agreeing to work for a particular MCO.
Academic colleagues must proceed cautiously when considering accept-
ing research funding from an MCO. This is not to say that MCOs will neces-
sarily ask researchers to do things that would violate their ethics. On the other
hand, the prospective grant writer is well reminded of our comment above
regarding working in an environment that does not share his or her values.
Similarly, we suggest that all contractual elements of a research project be
reviewed in considerable detail, perhaps even with the advice of an attorney.

This ensures that the researcher fully understands the expectations of the
MCO and has the opportunity to clarify any contractual points before agree-
ing to proceed.

GUIDELINES FOR EDUCATION
AND TRAINING
Significant developments and changes in health care delivery have

resulted in some difficult ethical issues for practitioners and researchers.
Educators and trainers are now at an evolutionary juncture where they may
also deal with ethical dilemmas presented by the managed care movement.
Psychologists who are responsible for education and training programs seek to
ensure that the programs are competently designed, provide the proper experi-
ences, and meet the requirements for licensure, certification, or other goals for
which claims are made by the program. (p. 1607)
Several authors contend that many educational programs for psycholo-

gists have not kept pace with contemporary realities such as managed care
and related treatment modalities and research models (Austad, Sherman, &
Holstein, 1993; Belar, 1989; Bennett, 1994; Berman & Austad, 1991; Black-
well & Schmidt, 1992; Broskowski, 1995; Budman & Armstrong, 1992;
Cummings, 1995; DeLeon et al., 1994; Hoyt, 1995; Kalous, 1996; Lowman,
1994a). This conclusion was supported by Nathan (1998) who found that
only a fifth of professional training programs devoted time to training their
students about empirically validated techniques. Given the far-reaching
impact managed care will continue to have on psychologists, we contend that
graduate programs are at a juncture where reform is urgently needed.
Whether programs are training researchers and/or practitioners, our students
must be better prepared for the managed care environment.
Competence
For needed changes in curriculum and training to occur, applied and aca-
demic faculty must first educate themselves about managed care if they have
not already done so. Several authors have voiced concern that a majority of
psychology faculty do not have sufficient knowledge of the managed care
movement (Austad et al., 1993; Belar, 1989; Bennett, 1994; Berman & Aus-
tad, 1991; Blackwell & Schmidt, 1992; Broskowski, 1995; Budman & Arm-
strong, 1992; Cummings, 1995; DeLeon et al., 1994; Hoyt, 1995; Kalous,
1996; Lowman, 1994a). There are understandable reasons why many aca-
demic and applied psychologists have hesitated to learn about managed care.
However, regardless of ones personal view of managed care, educators and
trainers have the ethical obligation to prepare graduate students for the man-
aged care environment and the changes ahead in the health care delivery
system.
At the aspirational level, Principle A (APA, 1992) states the following:
Psychologists strive to maintain high standards of competence in their work.

They recognize the boundaries of their particular competencies and the limita-
tions of their expertise. They provide only those services and use only those
techniques for which they are qualified by education, training, or experi-
ence. . . . They maintain knowledge of relevant scientific and professional
information related to the services they render, and they recognize the need for
ongoing education. (p. 1599)
There are at least three ethical standards related to the need for educators
and trainers to maintain competence. Ethical Standard 1.04a (APA, 1992)
states that Psychologists provide services, teach . . . only within the bounda-
ries of their competence, based on their education, training, supervised expe-
rience, or appropriate professional experience (p. 1600). Ethical Standard
1.04c (APA, 1992) states that Psychologist provide services, teach . . . in
new areas or involving new techniques only after first undertaking appropri-
ate study, training, supervision, and/or consultation from persons who are
competent in those areas or techniques (p. 1600). Ethical Standard 1.05
(APA, 1992) states that Psychologists who engage in . . . teaching . . . main-
tain a reasonable level of awareness of current scientific and professional
information in their fields of activity, and undertake ongoing efforts to main-
tain competence in the skills they use (p. 1600).
It is obvious that the APAs ethical principles place a heavy professional
and ethical burden on trainers and educators. How are they to discharge their
obligations in such a rapidly changing health care environment? Certainly
doing so is difficult for all psychologists, but trainers and educators may find
maintaining their competence more of a challenge when they are forced to
divide their time between administrative, teaching, research, and/or practice
activities.
There are a number of ways to pursue continuing education activities
regarding managed care. A few suggestions are listed below.
1. Reading. Within the past few years, a handful of user-friendly books

have been written on managed care that provide the reader within an overall
understanding of managed care such as Psychotherapy in Managed Health

Care: The Optimal Use of Time & Resources (Austad & Berman, 1991a), The
Mental Health Professionals Guide to Managed Care (Lowman & Resnick,
1994), Brief Therapy and Managed Care: Readings for Contemporary Care
(Hoyt, 1995), and Maneuvering the Managed Care Maze (Corcoran & Van-
diver, 1996).
2. Attend workshops on managed care and related topics. Continuing

education workshops on managed care issues and related topics such as
short-term treatment models and outcome assessment have burgeoned and
are now readily available in most localities. Workshops are also provided by
the APA at the annual national convention. Even the managed care compa-
nies themselves are providing continuing education to their panel members.
3. Invite administrators of MCOs to speak at a departmental colloquium.

It is important for educators, trainers, and students to understand the econom-
ics of the health care delivery system. Persons who are responsible for the
management of these companies are in a perfect position to educate trainers,
educators, and students alike regarding the economic realities we face, and
some of them are psychologists. Getting to know them and hearing what they
have to say can be enlightening. It may also offer direct assistance to students
interested in research and practice issues surrounding managed health care.
4. Obtain supervision. Educators and trainers can collaborate with an

applied setting (e.g., university counseling center) where there may be col-
leagues who are familiar with the workings of managed care. They may
choose to provide short-term treatment to a client and receive supervision
from a colleague. No book or workshop can replace the education that comes
from providing direct service using a managed care framework. Having that
experience will be of direct benefit when training students to work within
such a model.
5. Attend case conferences. Educators and trainers can collaborate with a

service setting such as a community counseling agency, staff model HMO, or
university counseling center where colleagues discuss treatment issues
within a managed care framework.
Finally, we suggest obtaining a copy of the report recently completed by

an APA working group titled The Implications of Changes in the Health Care
Delivery System for the Education, Training, and Continuing Professional
Education of Psychologists (Spruill, Kohout, & Gehlmann, 1997). This
report provides reference lists on many of the critical issues in managed care.
Professional Responsibility
FIDELITY
Kitchener (1984) suggested, in addition to the basic principles of bio-

medical ethics originally proposed by Beauchamp and Childress (1994), that
the obligation of fidelity be added. By fidelity, she meant to emphasize issues
such as faithfulness, promise keeping, and professional loyalty. From this
principle, it is easy to deduce the obligation that trainers and educators have
to their students, and it has been codified in the APA (1992) Ethical Standard
1.04c: In those emerging areas in which generally recognized standards for
preparatory training do not yet exist, psychologists nevertheless take reason-
able steps to ensure the competence of their work and to protect patients, cli-
ents, and students . . . from harm (p. 1600).
How are educators and trainers to translate these ethical obligations into
their work with students? For example, do they have an affirmative obligation
to train students in emerging areas of practice such as managed care, or do
they discharge their responsibilities by refusing to compromise their values
and adhere to previously held positions? Although some practitioners may
refuse to compromise, educators and trainers must face the additional issue of
how such a decision will affect the graduate students for whom they have a
fiduciary responsibility.
Informed Consent
VERACITY
A second ethical obligation that is relevant to training and education is that

of veracity. Beauchamp and Childress (1994) described veracity as truth tell-
ing and as dealing honestly with those within ones care. This notion has also
been incorporated in Ethical Standard 6.02a and b (APA, 1992): Psycholo-
gists responsible for education and training programs seek to ensure that
there is a current and accurate description of the program content, training
goals, and objectives (p. 1607); Psychologists seek to ensure that state-
ments concerning their course outlines are accurate and not misleading, par-
ticularly regarding the subject matter to be covered . . . and the nature of
course experiences (p. 1607).
A program has every right to train students in the manner it sees fit. For
example, there is great demand for postdoctoral training in neuropsychology,
and programs may choose to restrict themselves to education and training in
this specialized area. On the other hand, a large number of students will seek
education and training that will prepare them for the more general world of
professional work, and many will interface with MCOs in various roles.
Therefore, it is our view, as a matter of fiduciary responsibility to students,
that program descriptions clearly describe what they do so that students will
have a clear idea of what type of experience they can anticipate. It is our view
that failing to do so does not adequately protect the welfare of the students
who seek education and training from these programs. We believe that train-
ing programs should reevaluate the extent to which certain areas of study are
pursued (e.g., managed care) as a matter of student welfare.
COURSEWORK
Counseling psychology training programs must incorporate education

about managed care into their graduate curricula. This does not mean that
counseling psychology training programs must completely overhaul their
curricula (Spruill et al., 1997). Rather, information regarding managed care
can be integrated where relevant into courses that already are offered. Mod-
ules of information regarding managed care could be integrated into existing
courses such as theories of counseling, multicultural counseling, ethics,
research design, and psychological testing. Ideally, it would be desirable for
graduate programs to offer at least one course dedicated to contemporary
health care delivery systems.
Some psychologists have offered recommendations for graduate curric-
ula. Several have emphasized the need for graduate students to receive more
education and training in brief therapy models and interventions (Bro-
skowski, 1995; Lowman, 1994a; Resnick et al., 1994). Graduate students
also need to be informed and aware of relevant legal and ethical issues when
working within a managed care environment (Lowman, 1994a). Graduate
students need knowledge about and experience working within primary care
and integrated health delivery systems (e.g., multidisciplinary team of physi-
cian, nurse, psychologist) (Belar, 1989; Broskowski, 1995; DeLeon & Van-
denBos, 1991; Murray, 1995). Additionally, they need courses that address
the business (e.g., marketing, finance), economic, and administrative aspects
of health care delivery (Murray, 1995; Resnick et al., 1994; Sleek, 1995). Fur-
thermore, students need to be familiar with those research methods that may
demonstrate treatment effectiveness and other research models used to
explore issues within a health service delivery system (Broskowski, 1995;
Murray, 1995). Finally, it would be advantageous for graduate students to
complete coursework in health psychology (Murray, 1995).
Many of the recommendations noted above were incorporated into the
recent report by APAs education directorate and research office (Spruill
et al., 1997) that summarized current educational needs for graduate psychol-
ogy programs. These needs included the ability to work on health care teams
(e.g., multidisciplinary teams), an understanding of how to conduct applied
research (e.g., treatment outcomes and program evaluation), proficiency at
conducting brief therapy and crisis intervention, knowledge of relevant ethi-
cal and legal issues, knowledge of how to apply business and economic prin-
ciples, knowledge of management and marketing, experience and confidence
using technology such as computer database systems, and an understanding
of psychologists role in health policy and advocacy.
TRAINING
Several psychologists have suggested that traditional predoctoral practi-

cum sites and psychology internships may not adequately prepare trainees
for the practice of psychology within the managed care context (Broskowski,
1995; Charous & Carter, 1996; Constantine & Gloria, 1998). As with educa-
tion, many training programs continue to place a larger emphasis on psycho-
therapy without consideration of the current marketplace (Broskowski, 1995;
Nathan, 1998). Although some training programs provide experience with
managed care, too many training sites are not involved with managed care
and/or do not provide exposure to a broad range of health care professionals
or delivery mechanisms.
Of the more than 50 counseling psychology training programs, some have
developed arrangements for managed care practicum experiences. For exam-
ple, we know of a few sites that have negotiated training opportunities with
HMOs. The HMOs, which employed licensed psychologists, allowed two to
three graduate students to see clients and were provided supervision. This
training opportunity provided practicum students with the opportunity to
provide short-term treatment within a managed care framework, as well as
the opportunity to coordinate treatment with other health care professionals.
In addition to practicum training sites, there are now some APA-accredited
internship opportunities within MCOs or sites that contract to provide ser-
vices for MCOs (Belar, 1989; Constantine & Gloria, 1998).
For other counseling psychology programs (e.g., those in smaller commu-
nities), however, practicum sites may be more limited. For such programs,
alternative approaches for providing exposure to a managed care framework
are needed. One such possibility involves prepracticum, practicum, and/or
internship training in university counseling centers. Although not necessarily
labeled as such, university counseling centers have been using managed care
practices for quite some time. For example, most counseling centers support
a brief therapy model and provide time-limited therapy to a defined popula-
tion or catchment area. Using this setting, a mock managed care environment
could be constructed. For example, a supervisor could play the role of a man-
aged care company that required prospective, concurrent, and retrospective

utilization review. One of us implements this model when supervising prac-
tica or individual graduate students. One consistent piece of feedback has
been that students appreciate the opportunity to interface with and process
managed care issues, language, and agendas in a less pressured, mock
situation.
Before seeing a new client, the practicum student can role-play a phone
call to an MCO to obtain authorization and provide his or her documentation
of treatment necessity (prospective review). The MCO/supervisor might then
authorize two sessions for evaluation and require the practicum student to
complete a treatment plan to obtain additional sessions (concurrent review).
Samples of treatment plan forms can be found in some managed care texts or
can be obtained from colleagues who work with various managed care com-
panies. After the treatment plan is submitted to the MCO, the supervisor
might authorize an additional six sessions and then require a written progress
report to obtain additional sessions (concurrent review). Filling out a treat-
ment plan and a progress report would challenge students to document effec-
tively treatment goals and progress. If the MCO/supervisor only permitted a
maximum of eight sessions per year, students could discuss various case
management issues that might arise given certain factors such as diagnosis,
financial resources, and so forth. Once the student clinician terminated with a
client, the supervisor and student could then discuss how they might assess a
clients satisfaction with treatment and treatment outcome (retrospective
review).
A variation of this plan might involve a team approach to utilization
review. Instead of the supervisor, members of the training site could operate
as the MCO UR panel and share the administrative duties (e.g., reviewing
treatment plans and providing feedback to students). In fact, many training
sites (e.g., university counseling centers) already have a case review/manage-
ment team in place that could easily function in this role. Furthermore, gradu-
ate students could be included on the UR team to provide them with experi-
ence in a UR role.
A final option for training programs in more remote areas entails the use of
teleconferencing. In recent years, medicine has taken advantage of emerging
technologies to provide consultation and training to colleagues in remote
areas by use of various systems generally referred to as telehealth. For exam-
ple, a medical resident may be able to obtain consultation on a rare disease
from a specialist at a large, urban medical center. Psychologists and students
in training can avail themselves of similar training and consulting opportuni-
ties. For example, a graduate psychology student is completing his internship
at a rural mental health agency that is part of a managed care system. He
begins working with a complex client and is uncertain how to proceed given
the MCO treatment model and procedures. As a part of his individual super-
vision or as part of intern seminar training, the intern could arrange for a
videoconference (or conference call if video resources are not available) with
an experienced consultant at an urban mental health agency.
Integrity and Human Welfare

Educators and trainers who are familiar and comfortable with the man-
aged care environment may not find themselves particularly uncomfortable
with or conflicted about their roles within such organizations. For others,
such an adaptation may not be quite so easy. We find ourselves caught on the
horns of this dilemma with our own students. On one hand, we want them to
be able to function in the contemporary work environment and find jobs. On
the other hand, we expect them to practice ethically, independently of the
context in which one works. Nonetheless, we are mindful that as a practical
matter, life is not so simple and situations will arise that will test their mettle.
As trainers and educators, it is our obligation to continue to teach what we
believe to be ethical and proper behavior. At the same time, we feel it is
incumbent on those in such positions to present the world of work realisti-
cally as a matter of professional responsibility to students. We do not have pat
and simple answers to these dilemmas because they raise yet another paradox
for us. How do we teach aspirational goals and expect students to maintain
their integrity and respect for human welfare when so much of their future
environment may militate against it? Our answer is that this is only an appar-
ent paradox because we must maintain our ethical obligations nonetheless.
Although current circumstances may challenge us, it is our obligation to
remain realistic but steadfast, and serve as role models for students in the
hope that it will provide them the values and direction they will need when
coping with occupational realities.
SOME SUGGESTIONS FOR FUTURE RESEARCH
In writing this article, we have found ourselves overwhelmed at times with

the problems created by managed care and more generally by the changes it
presents to the health care delivery system. We also worried about the extent
to which we sounded pessimistic about solutions to what may seem irresolv-
able problems. In this section, we propose a modest research agenda that may
be of assistance in resolving some of the preceding ethical issues. Histori-
cally, ethics has not been considered a substantive area of endeavor because it
did not lend itself well to empirical research. In writing this agenda, we reject
this presumption and contend that many aspects of ethics are amenable to
research study. Our suggestions follow.
Informed Consent
We have taken a rather uncompromising position regarding the impor-
tance of informed consent. We have done this as an ethical matter, but we
wonder if such procedures also enhance treatment effectiveness. Various
ways of providing differing degrees of information could be used as inde-
pendent variables with treatment outcome serving as the dependent variable.
On the other hand, is it possible that there is such a thing as providing too
much information? That is, would such a study also reveal that clients termi-
nated prematurely when they reached some point of information overload?
Confidentiality
Numerous issues regarding confidentiality require research, especially as
discussion increases regarding the advisability of a national data bank for
health care records. First, we would be curious to know if information about a
family member contained in a clients treatment record would be relevant to
decision making when that family member applied for services. For example,
if a wife alleges that her husband is an alcoholic, and the husband then seeks
services for depression, would the information provided by the wife be avail-
able to the reviewer to be considered before a decision to provide care was
made? Second, how is the therapeutic working alliance affected by the pros-
pect of reduced confidentiality and potential limits on time available to
develop the therapeutic relationship? We propose a study in which varying
levels of confidentiality are offered to determine if doing so would affect
treatment outcome.
Competence
Much anecdotal data exist regarding the qualifications of UR personnel. It
would be rather simple to determine their level of training, both in terms of
formal credentials and training for the particular task they perform. We
would be curious to know how comfortable they feel in their role with the
decisions they make and whether they have ethical qualms regarding those
decisions.
With respect to education and training, the need to incorporate informa-

tion regarding managed care models and practices has been emphasized by
several psychologists. Although it logically follows that information in this
area would assist new graduates in performing their professional duties, this
has not been empirically explored. Would additional education and training
regarding the managed care environment help new graduates function more
competently? Would new graduates experience better adjustment (e.g., less
stress/anxiety/depression, increased job satisfaction)? Conversely, are new
graduates trained with long-term, insight-oriented therapy models necessar-
ily experiencing more stress/anxiety/depression? Are new graduates with
dual degrees (e.g., MBA or MHA) experiencing greater job satisfaction and
less stress?
Integrity
MCOs develop treatment guidelines for UR case managers so that deci-
sions can be made quickly and efficiently regarding whether care should be
provided. We worry that such policies are based less on the welfare of sub-
scribers and more on cost containment. We suggest that research be con-
ducted to evaluate not only how these decisions are made but whether persons
in need are receiving the services that are appropriate to their condition. For
example, what is the procedure and what are the criteria by which reviewers
make decisions for provision, continuation, or termination of care? Are there
empirical bases for these decisions? How reliably are these decisions made
across clients?
Conflicts Between Ethics and Organizational Demands

As highlighted by the recent CAPP (1998) survey, those psychologists
who work in managed care environments are experiencing ethical dilemmas.
It would be enlightening to survey UR case managers or staff psychologists
and request critical incidents that they have experienced. In this way, we
could learn firsthand what dilemmas actually occur, their frequency of occur-
rence, and how they are addressed. We would offer a similar suggestion
regarding in-house internal review boards, surveying them using the critical
incident model.
Similarly, we wonder what dilemmas are faced by those who write treat-
ment guidelines. We know that mental health professionals, including psy-
chologists, are involved in the construction of such guidelines. Surveying
their ethical concerns regarding allocations and provision of care could prove
vital to understanding the decision making of MCOs.
Because of the complex ethical issues that arise in doing research regard-
ing managed care, we fear that some researchers may have shied away from
the task, viewing it as too daunting and fraught with ethical pitfalls. If man-
aged care companies are serious about quality of care issues and truly want to
research the best way to deliver health care, we believe this could be done in
the following manner. An MCO could provide funds to an independent
research group, earmarking the money for research to improve methods of
delivering health care within a managed care environment. The agency or
foundation could then send out requests for project proposals and researchers
would submit their proposals. The independence of the foundation and the
arms-length relationship between the MCO and researcher could resolve
many of the conflicts of interest we have discussed above.
Social Responsibility
Several psychologists have emphasized the need for research to direct
future social policy. Ethical Principle F (APA, 1992), regarding social
responsibility, states the following:
Psychologists are aware of their professional and scientific responsibilities to

the community and the society in which they work and live. They apply and
make public their knowledge of psychology in order to contribute to human
welfare. Psychologists are concerned about and work to mitigate the causes of
human suffering. (p. 1600)
We contend that managed care is the result of a larger systemic crisis in the
health care delivery system. That is, in response to spiraling health care costs
and limited financial resources in the 1980s, we were forced to allocate
and/or ration services. When President Clintons health care initiative failed,
the country made a decision that the government should not be in charge of
our health care. The practical result was that the gap created by this action
was filled by business interests that do not have advancing human welfare as
their first priority. The problems with leaving health care to the free market
are now quite apparent. As MCOs have been bought and later sold for
incredible sums, the profits have gone into the pockets of business leaders
rather than into the health care of our population. Now, as those profits have
begun to evaporate and more than 40 million people are without health
insurance, we as a country are in the position of not knowing where to turn.

How services are to be allocated or rationed is vitally important and should be
the subject of national debate informed by the best scientific data we can
muster.
One way MCOs contain costs is to mandate adherence to a short-term,
symptom-focused treatment model, which may or may not be appropriate for
a particular client and his or her presenting concerns (Miller, 1996b). Bro-
skowski (1995) emphasized that the mental health profession is far from a
consensus regarding what constitutes quality care or appropriate treatment
guidelines. In the absence of an adequate body of outcome research, MCOs
often make treatment decisions based on concerns for cost containment
rather than on empirically based research (Seligman, 1996; Seligman &
Levant, 1998). The challenge for research is to provide sufficient empirical
evidence to support effective, efficient, and ethical treatment models and
guidelines for their delivery (Barlow, 1996; Cummings, 1995; Newman &
Tejeda, 1996; Seligman, 1996; Seligman & Levant, 1998).
Some researchers are committed to studying the existing managed care
system and making modest efforts at fixing what is broken. Although such
efforts certainly are ethically defensible, it has been proposed that research-
ers collaborate with social policy experts in proposing macro-level systems
that will more fairly meet the needs of all of our citizens (Austad et al., 1998).
For example, a health care rationing system was instituted in Oregon
recently. Although the system generated much controversy, it represented a
consensus of the values of the community regarding how scarce resources
should be allocated.
Why can we not do something similar in the mental health care arena? For
example, there are ample data to argue that certain psychological disorders
represent significant costs to our society. Can a system of care be devised that
would establish priorities for treating these conditions? Examples might
include helping the seriously mentally ill remain productive, instituting reha-
bilitation programs for those who are chemically dependent, putting effort
into assisting those individuals with chronic diseases who are nonadherent,
and providing primary prevention interventions for activities such as
smoking.
Such an approach raises the larger ethical and social policy question of
how health care and mental health care in particular should be provided to the
population. McDaniel (1992) stated that research to date has focused almost
exclusively on the client-provider relationship and that we need analysis at
the organizational level. That is, research attention is needed at the macro
level of the mental health care delivery system so that psychology can inform
national policy and help influence the design of MCOs, or other structures,
that will offer the highest quality, yet cost-contained, mental health care.
Some notable examples of macro-level questions and analyses follow.
Lowman (1994b) demonstrated that spiraling mental health care costs
were largely due to inpatient treatment and that the efficacy of inpatient treat-
ment remains unproven. Thus, it could be argued that inpatient care is per-
haps the more appropriate target for cost-control efforts and that persons
should be given more access to outpatient care because it has been shown to
be more cost-effective (Cummings, 1991b; Lowman, 1994b).
Another macro-level ethical question concerns who should receive mental
health benefits. For example, there are clients who have more severe mental
health conditions who will consume more mental health care resources. No
one would contend that these persons should receive less treatment, but in
effect, that is what capitated models are mandating (i.e., the same short-term
treatment model for everyone regardless of their condition) (Lowman,
1994b). Lowman (1994b) argued that a managed care system should be
evaluated based on the extent to which the mental health benefit plan meets
the mental health needs of all its members.
Research that evaluates practices within MCOs is much needed, such as
research on both the effectiveness of UR and the ethics of its practice. The pri-
mary purpose of UR is to ensure that the treatment is both medically neces-
sary and appropriate for the clients condition. However, there are few
empirical data to support the assumption that mental health care is improved
by UR (Resnick et al., 1994). Some psychologists have even speculated that it
costs more for the MCO to provide UR than is saved in health care costs
(Lowman, 1994b; Nickelson, 1995).
Another critical research question involves primary prevention versus
remedial efforts. What would be the impact if more resources and services
were aimed at prevention? For example, in a report by the Public Health Ser-
vice (1991), it was shown that the major causes of death and disability are
behaviorally based. Rather than allocating resources to end stage care, MCOs
could provide increased resources for preventative efforts, which are proba-
bly the best long-term cost-containment strategy. Cummings (1991b)
reported that clients who discuss their stress with their physician are more
likely to be referred for costly medical services, rather than for mental health
services that offset medical costs. Thus, he argued that MCOs need to
develop outreach programs to educate consumers and health care delivery
personnel alike regarding various psychological issues and how they affect
physical health. The idea is that preventive efforts would encourage more
persons to seek brief therapy and hopefully have less need for more costly
medical services later.
LOOKING TOWARD THE FUTURE
As the health care system continues to evolve, several experts have pre-
dicted general trends with respect to the delivery of health care. We believe it
is important for counseling psychologists to be cognizant of these trends in
order to be involved in the discussion and proactive regarding ethical deci-
sion making and future policy. In this final section, we briefly review some of
these trends and discuss what counseling psychologists can contribute.
Expected Trends
Overall, experts agree that managed care, in some form, is here to stay, at
least in the foreseeable future (Cummings, 1995; Lowman, 1994b). In an
interview with Nickelson (1995), Russ Newman, the executive director of the
APA Practice Directorate, predicted several general trends including larger,
multidisciplinary health care practices; integration of health care service
delivery; and a greater emphasis on using business principles to make deci-
sions about how finite health care resources will be used (p. 367). Further-
more, there will be fewer and larger MCOs (Corcoran & Vandiver, 1996;
Hoyt, 1995). As these companies grow and capture even greater portions of
the health care market, it is anticipated that there will be fewer solo practices
and more group practices (Hoyt, 1995; Nickelson, 1995).
Many experts predict increased usage of outpatient mental health services
(Cummings, 1995; Hoyt, 1995). There are at least two reasons for this. First,
it is anticipated that there will be much less inpatient care due to its cost (Low-
man, 1994b). Second, it is expected that increased support will be given to
preventive efforts as awareness increases of the associated medical cost offset
or savings that result from these efforts (Cummings, 1991b; Hoyt, 1995).
Hoyt (1995) emphasized that practitioners can anticipate the need for
more treatment planning, greater focus on outcome measurement, and
increased attention to differential therapies (i.e., what works best with whom
for what problem when). It is expected that practitioners will be doing more
group therapy, especially psychoeducational groups (e.g., stress reduction)
(Cummings, 1995; Hoyt, 1995). Finally, we anticipate that there will be an
increase in the effort to use manualized therapy for various diagnostic catego-
ries to standardize practice and reduce cost.
What Counseling Psychologists Can Do

In noting the preceding trends, we hope to promote thinking about the
future of managed care and health care policy that counseling psychologists
may face and, more important, what role counseling psychologists can take
in addressing these issues. As we noted above, many have remarked that
managed care is here to stay. However, we do not expect managed care to sur-
vive over the long term. Instead, we view managed care as a transitional step
in a longer evolutionary process of determining how health care will be deliv-
ered. Although it is necessary to deal with managed care and the ethical
issues that it raises today, it also is necessary to remember that we are in a
period of rapid change, and it is reasonable to assume that managed care may
be replaced by some other system. If this is true, there are some things coun-
seling psychologists can do.
First, it is imperative for counseling psychologists to adapt to these chang-
ing times. We are acutely aware of the personal, financial, professional, and
moral difficulties faced by many of our colleagues in recent years as managed
care has taken control of the health care system. If we do not adapt, we do so
at our own peril. We are reminded of the famous saying from Ecclesiastes: If
I am not for my self, who am I; if I am for myself alone, what am I; and if not
now, when.
Second, counseling psychologists must be involved in the mental health
care decision-making process. This is especially necessary when ethical
issues arise that compromise the welfare of our clients and our own ethical
principles (CAPP Task Force on Ethical Practice, 1998). Two brief examples
of how counseling psychologists can begin to exert an impact on managed
care decisions will suffice. First, approaches to therapy that fall under the
heading of cost-effective practices need to be evaluated (Austad et al., 1998).
The movement to institute the broad use of manualized therapies raises ethi-
cal and empirical questions about their applicability to general populations as
well as the potential loss of practitioner discretion in treatment planning. Sec-
ond, counseling psychologists have been providing preventive mental health
care for several decades (Humphreys, 1996). We are in a position to educate
MCOs about the value and cost-effectiveness of doing so.
Third, we must help our graduate students cope with this new reality so
that they will know what to expect and be able to thrive. This involves not just
training our students for what they can expect to find in the marketplace today
but preparing them for a very complex future in which they must take an
active hand in managing their careers. As we previously mentioned, graduate
students may interface with the managed care environment in a variety of
roles and it is critical that they are prepared to function effectively and ethi-
cally in these roles. For example, Cummings (1995) predicted that, with
some managed care models (e.g., HMO), doctoral-level psychologists will
be needed to supervise masters-level practitioners. These supervisors will
need a supervision model that is composed of different aspects than some of
the traditional models (e.g., incorporating business concepts into the supervi-
sory experience).
Finally, psychology as a profession must take a seat at the health care
policy-making table. Many of the events discussed in this article occurred
with no input from our profession. Although it is unlikely that this will hap-
pen again, psychologists have a unique role to play in the policy arena, and
our voice has not been heard. Policy makers need to know more about psy-
chology in general so that they can give needed attention to psychological
health issues and appropriate standards of care (Frank & VandenBos, 1994).
No one has found the perfect system for allocating health care. What we
do know is that leaving it solely to market forces results in serious ethical
challenges and the system must be revised. Counseling psychologists can
take a central role in evaluating various health care systems and thus influ-
ence future designs (Berman & Austad, 1991; Lowman, 1994b). This recom-
mendation not only applies to trying to improve the managed care system we
have today; it also applies to long-term policy making. These efforts are
beginning at this time, and it is not too late to find a place at the table if we act
promptly. For example, as previously mentioned, Oregon has developed a
unique and interesting system for rationing health care that has wide public
support. Whether this will become a model for the remainder of the country
remains to be seen. Nonetheless, it is a good example of the kind of experi-
ments that will be conducted in the near term. The long-term goal of our
country is to establish a new health care delivery system. We only hope that as
a profession, psychology will be a part of the decision-making process.
FINAL COMMENTS
The managed care movement poses numerous ethical and professional

challenges to counseling psychology. For the practitioner, researcher, or edu-
cator/trainer, these ethical challenges are further complicated by the fact that
managed care is a rapidly evolving movement. However, as stated by Gelso
and Fretz (1992), counseling psychologists are the most broadly educated
and trained psychologists. We contend that counseling psychologists possess
unique knowledge and skills not only to cope with the evolution of managed
care but to influence its direction. We feel it is imperative that counseling psy-
chologists address the ethical and professional issues outlined here, and
maximize counseling psychologys contribution in these areas. As we noted
above, the managed care phenomenon is only one step along the highway in
the evolution of health care delivery. We have focused on what counseling
psychology can be doing now for the profession and our students. At the
same time, it would serve counseling psychology well to be thinking about

the challenges that lie ahead as further discussion regarding health care deliv-
ery unfolds.
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THEMAJOR

Ethical Issues With Managed Care:

THE COUNSELING PSYCHOLOGIST, Vol. 28 No. 2, March 2000 179-236

In this article, we address the ethical issues presented by managed care.

THE EMERGENCE OF THE MANAGED

THE EVOLUTION OF MANAGED

MANAGED CARE: DEFINITION, GOALS,

It is important to understand that managed care is not a unitary concept but

Managed Care Psychotherapy

Systems of Managed Care

ETHICAL ISSUES FACING

As managed mental health care continues to evolve, counseling psycholo-

A Useful Ethical Decision-Making Framework

(1998) emphasized the importance of using a systematic problem-solving

ETHICAL ISSUES AND RECOMMENDED

higher percentage of allotted time on ethical issues when so little may be

Ethical Standard 4.01(a) (APA, 1992), regarding structuring the therapy

Ethical Standard 4.01(a) (APA, 1992), states the following: Psycholo-

INFORMED CONSENT AS A PROCESS

One particularly challenging aspect of informed consent is that clients can

(Barnett, 1998a). Finally, it is simply a matter of good risk management (Bar-

Prior to the involvement of insurance companies as the third party in the

ality because practitioners were required to reveal information about their

1998). Optimally, we recommend that the practitioner mail requested paper-

Psychologists strive to maintain high standards of competence in their work.

BRIEF THERAPY MODEL

MCOs endorse a brief therapy model. Although the precise definition of

Ethical Standard 1.08 (APA, 1992) states the following:

Psychologists seek to promote integrity in the science, teaching, and practice

To ensure that clients receive treatment, practitioners may be tempted to

In other clinical situations, practitioners may downcode. For example,

welfare and determining the appropriateness of a brief treatment plan. Ethi-

MCOs authorize sessions based on predetermined treatment models and

resources to do so, then it may be necessary to refer him or her to another

facilitate transfer of responsibility to another provider if the patient or client

REQUEST FOR ADDITIONAL SESSIONS

If concurrent review to obtain additional sessions is required, clients

If a request for additional sessions is denied, it is important to inform the

If the demands of an organization with which psychologists are affiliated con-

CONTRAINDICATIONS FOR BRIEF THERAPY

In light of utilization review processes, it is important that the practition-

PROSPECTIVE AND CONCURRENT UR

In the contemporary managed care environment, practitioners must also

INTERACTIONS WITH MCO REPRESENTATIVES

Whether providing information on a form or via a telephone interview,

Confidentiality. It is important to review the contract for provisions

Gag clauses. Referred to as gag or no disparagement clauses, these provi-

No-cause termination. A provision that can have a silencing effect on the

Financial incentives. Some MCO contracts contain financial incentives

Coverage arrangements. Practitioners should review the contract regard-

become quite cumbersome and/or difficult in the event the practitioner is a

Hold-harmless clauses. Practitioners should be aware of hold-harmless

Indemnification clauses. Related to hold-harmless clauses, practitioners

For a more comprehensive examination of MCO contracts, we recom-

Conflicts Between Ethics and Organizational Demands

Ethical Standard 8.03 (APA, 1992) states the following:

If the demands of an organization with which psychologists are affiliated con-

A common issue faced by staff psychologists employed by MCOs is the pre-

Psychologists may also be employed to provide UR services. In this

professional judgment or when engaging in scholarly or professional endeav-

Psychologists may be hired to supervise the work of other mental health

(a) Psychologists delegate to their employees, supervisees . . . only those

psychologist/supervisor in this position concludes that the MCOs criteria

ETHICAL ISSUES AND RECOMMENDED