The APA Monitor
VOLUME 29, NUMBER 2 - February 1998


Complaints voiced against managed-care organization

California PPO charges fees, but where are the referrals?

by Jeannine Mjoseth
Monitor staff

Psychologists in five states are protesting fees they paid to a California managed-care organization for patient referrals that never materialized.

Although they expected to become part of a selected group of preferred providers for ConserviCare of Huntington Beach, Calif., psychologists from Florida, Massachusetts, New Jersey, New York and Texas instead found themselves contacting APA and the state psychological associations to complain about the company.

Now several states and the Federal Trade Commission have been alerted by APA and state psychological associations about ConserviCare’s actions and asked to determine whether the company is operating a legitimate preferred-provider organization (PPO).

The New York State Psychological Association (NYSPA) tried to contact ConserviCare by phone, but were unable to reach the company. Responding by letter, Gregory Keith, ConserviCare’s director of provider contracting, noted that the company asks provider applicants to defray the costs of their contracting by paying an upfront nonrefundable credentialing fee of $100 per individual and $250 for a group.

In its mass mailings to psychologists, the company gives no guarantee that psychologists will be accepted for the plan or receive referrals, Keith says.

According to California Attorney General Daniel Lungren, “No one has apparently ever met the owner of the company, and even determining ownership might be difficult.”

The California Better Business Bureau (BBB) has rated ConserviCare “very unsatisfactory” and reported that its business appears to be collecting fees from health-care providers rather than providing health services or insurance.

Over the last several years, the APA Practice Directorate’s Legal and Regulatory Affairs Office has witnessed an increase in complaints about managed-care practices. APA members report problems they are encountering with managed-care companies to the directorate’s Office of Managed Care, which provides guidance on issues such as possible misrepresentations by managed-care entities.

A number of complaints alleged that after fees were paid, no services were provided and contacting the company was impossible, the BBB says. All known telephone numbers for this business are recorded messages, and addresses appear to be mail drop boxes, the BBB says. The Monitor’s efforts to contact ConserviCare were also unsuccessful.

Keith explains that ConserviCare does not publish its toll-free numbers on its provider applicant documents because its staff is not permitted access to provider credentialing information and the “writing only” policy helps it avoid verbal misunderstandings and lawsuits.

He says publishing the toll-free number on the document results in counterproductive inquiries about the status of applications, which increases overhead costs and prolongs the credentialing process.

But, according to Elizabeth Cullen, director in the legal and regulatory affairs office in the APA Practice Directorate, it is standard in the industry to provide a valid phone number for providers to call if they have questions or concerns. Most companies, in fact, maintain provider-relations departments where providers can call to inquire about the status of their credentialing application or report problems they are experiencing, Cullen says.

As for the BBB’s other criticisms, Keith told writers at The Indiana Psychologist that while some complaints about its responsiveness are legitimate, others are the result of a backlog in the credentialing process due to the company’s successful expansion.

ConserviCare’s request for an application fee to join its provider panel is not inherently illegal, says Shirley Higuchi, the directorate’s assistant executive director for legal and regulatory affairs. Providers must, however, carefully assess what they will receive in exchange for the application fee and if, in fact, the company is legitimate and viable, she advises.

Fortunately, practicing psychologists aren’t expected to run into too many cases similar to ConserviCare, APA officials say. In the past several years, the legal and regulatory affairs office has received only about four inquiries about companies, like Conservicare, requiring prepayments for provider applicants.

“We hope to have fewer complaints in the future due to state and federal consumer protection legislation and a heightened awareness by regulatory agencies like the Federal Trade Commission surrounding managed-care activities,” Higuchi said.

APA’s Practice Directorate recommends that, before contracting with a PPO, providers carefully review all documentation provided by the company, check with the local BBB, contact the company directly and check with colleagues who have had direct contact with the company.Y

APA members report problems they are encountering with managed-care companies to the Practice Directorate’s Office of Managed Care (OMC), which provides guidance on issues such as possible misrepresentations by managed-care entities. Psychologists should also feel free to contact the OMC at (202) 336-5886 to inquire about a particular company or to report problems they are experiencing.