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How Does Clients’ Method. of Payment Influence Psychologists’ Diagnostic Decisions?

How Does Clients’ Method. of Payment Influence Psychologists’ Diagnostic Decisions?

o what extent does payment method (managed care vs. out of pocket) influence the

likelihood that an independent practitioner will assign a Diagnostic and Statistical

Manual of Mental Disorders (American Psychiatric Association, 1994) diagnosis to

a client? When a practitioner does diagnose, how does payment method influence the

specific choice of a diagnostic category? Independent practitioners responded to a vignette

describing a fictitious client with symptoms of depression or anxiety. In half of

the vignettes, the fictitious client intended to pay via managed care; in the other half,

the fictitious client intended to pay out of pocket. Payment method had a very significant

impact on diagnosis such that relative to out-of-pocket clients, managed care clients

were much more likely to receive diagnoses and more likely to receive adjustment

disorder diagnoses in particular. We discuss implications involving informed

consent and other ethical issues.

Keywords: diagnosis, managed care, independent psychotherapy practice, ethics,


The effects of managed care and other forms of third-party payment on the independent

practice of psychology have been studied via numerous empirical surveys

of practitioners (e.g., Bell, 1999; Murphy, DeBernardo, & Shoemaker, 1998;

Phelps, Eisman, & Kohout, 1998; Rothbaum, Bernstein, Haller, Phelps, & Kohout,

1998). Additionally, numerous authors have published nonempirical commentarETHICS

& BEHAVIOR, 14(2), 187–195

Copyright © 2004, Lawrence Erlbaum Associates, Inc.

Requests for reprints should be sent to Andrew M. Pomerantz, Southern Illinois University,

Edwardsville, Campus Box 1121, Department of Psychology, Edwardsville, IL 62026. E-mail:

ies on the impact of managed care on psychotherapy (e.g., Karon, 1995; Miller,

1996). These surveys and commentaries have focused on the effects of managed

care on many aspects of the therapy process, including duration, quality of care,

confidentiality, and to some extent assessment, but limited attention has been paid

to the effect of managed care on specific diagnostic decisions made by clinicians.

Thus, our purpose in this study was to examine two specific questions involving

the relation between payment method and diagnosis: To what extent does payment

method (managed care vs. out of pocket) influence the likelihood that an independent

practitioner will assign a Diagnostic and Statistical Manual of Mental Disorders

(4th ed. [DSM–IV]; American Psychiatric Association, 1994) diagnosis to a

client? When a practitioner does assign a DSM–IV diagnosis, how does payment

method influence the choice of a specific diagnostic category?

Restrictions imposed by insurance companies and managed care organizations

have resulted in a decline in payment for psychodiagnostic testing in recent years

(e.g., Butcher, 1997; Cashel, 2002; Piotrowski, Belter, & Keller, 1998), but it is not

entirely clear how truncated assessment procedures might influence the likelihood

of psychologists assigning diagnoses at all, and if they do, how they influence the

choice of a particular diagnostic category. Murphy et al. (1998) found that Division

42 members (Psychologists in Independent Practice) of the American Psychological

Association strongly believed that managed care has led to inadequate or inappropriate

assessment and also that managed care influences psychologists to alter

diagnoses to ensure reimbursement and protect patient confidentiality. Danziger

and Welfel (2001) similarly found that mental health counselors report problems

accurately diagnosing clients in a managed care system. Epstein et al. (2001)

found that the probability of a psychiatrist diagnosing a patient with major depression

depends on the percentage of patients who pay that psychiatrist via managed

care. Beyond these few studies, however, the literature lacks empirical studies exploring

the relation between payment method and diagnosis by mental health professionals.

Particularly absent are quasi-experimental studies in which clinicians

are presented with descriptions of clients who pay differently but are otherwise

identical. This study represents an attempt to fill this void in the literature.



Members of Division 42 of the American Psychological Association were randomly

selected and surveyed via mail. Of the 750 members who were surveyed,

188 respondents provided usable data, representing a 25.06% return rate. Mean

age of participants was 54.81 years (SD = 9.16), and mean number of years in private

practice was 20.21 (SD = 8.41). Respondents were primarily men (65.45%)


and White (97.40%). Most had earned PhD degrees (88.00%) as opposed to EdD

(6.80%) or PsyD (5.20%) degrees, and most specialized in clinical psychology

(86.50%) as opposed to counseling psychology (12.00%) or other areas (1.50%).

Eclectic orientation was most frequently endorsed (45.50%), followed by cognitive

(28.30%) and psychodynamic (14.70%). Most (63.40%) worked primarily in solo

independent practices, whereas some (29.30%) worked primarily in group independent


Materials, Design, and Procedure

Each participant received a survey that included two vignettes, one describing a

client with depressive symptoms and another describing a client with anxious

symptoms. For participants in the managed care condition, both fictional clients

were described as paying via managed care. For participants in the out-of-pocket

condition, both fictional clients were described as paying out of pocket. The appendix

provides an illustration of these vignettes. Participants also received a cover

letter and a brief demographic survey.

Each vignette was intended to portray a client with a problem commonly seen

by independent practitioners, the severity of which was near the threshold for a

DSM–IV diagnosis. Specifically, the anxious client was described as demonstrating

just enough symptoms of generalized anxiety disorder to consider the assignment

of this diagnosis. The depressive client was described as demonstrating several

of the symptoms of a major depressive episode but not quite enough to merit

the diagnosis. The description of the depressive client’s symptoms also lacked any

mention of symptom duration, which according to DSM–IV, must exceed 2 weeks.

The vignettes also included additional (nonsymptomatic) background information

about each client (gender, marital status, work, activities, etc.) to “flesh out” the

character and make him or her seem more like an actual client rather than an abstraction

or mere list of symptoms. The blend of symptoms with nonsymptomatic

background information was intended to match the actual presentation of clients in

independent practice.

After reading each vignette (which included presenting problem, symptoms,

and some background and demographic information), participants were asked

“Would you assign this client a DSM–IV diagnosis?” (“yes” and “no” choices provided),

and “If you answered yes to the previous question, what specific diagnosis

would you provide?”(blank space rather than specific choices provided).

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