Beyond the Constraints of Categorical Thinking: Issues of Finance

Editor's note: First in a 3-part series.

Psychotherapy is the most valuable service derived from the psychosocial approach to healthcare. A psychosocial focus also facilitates a major reorientation for our field. It abandons categorical thinking and offers a different basis for approaching our work and our pay. Fee-for-service billing reflects our clinical categorization and is a crumbling historical artifact. Similarly, compensation in healthcare is changing.

Our field organizes human experience into discrete categories. Freud gave us an elaborate mental structure with interconnected categories. Psychiatry has produced 5 versions of a diagnostic manual that divides suffering and dysfunction into reliable categories. Blue Cross gave us a way of billing for distinct medical services in the 1930s, and this proved more dominant than the early Kaiser HMO model.

Insurance Billing

Insurance billing for psychotherapy is an odd fit. Most therapists realize their work is not confined by a DSM diagnosis. They let the work’s benefit speak for itself regardless of classification. Diagnosis is more than a forced choice. It is exclusionary, as with critical, non-diagnostic health behaviors. Clinical disorders like depression are real. So, too, are other elements of health and illness that are not codified.

Services outside the main categories may be poorly reimbursed. Wellness and wellbeing are wonderful concepts, but they are not lucrative in the insurance billing realm. It is not surprising that most primary care practices offer only basic education in these domains. Similarly, therapy focused on such things as personal growth have long been disparaged as not being serious or necessary.

We also have artificial divisions in clinical work and its funding streams that are profoundly destructive. Consider the separation for mental health and substance use disorders in both treatment and funding. Nearly 9 million suffer from both, yet many languish with treatment plans stuck in one category or the other. How many disastrous stories rooted in these rigid categories are needed for whole person care?

Practitioner Compensation

Compensation for clinicians is an indicator of change. The rise of salaried physicians is signaling fee-for-service medicine’s ultimate demise. Employed doctors are becoming the norm. A related secondary sign is that physicians are frustrated with their additional bonus compensation (averaging 13% more). They doubt the value of all their efforts toward coding and calculating their productivity.

Medscape documented this in its recent survey. Only 21% of those under age 45 are self-employed. For older physicians, only 41% over 45 are self-employed. Why? The self-employed earn only 20% more ($357,000 vs. $297,000) than employed MDs. Salaries garner a decent income, along with decreased concern with administrative coding and reporting.

Think of reporting efforts as the tyranny of categorical thinking. Billing and other administrative categories are only bearable when highly lucrative. Physician compensation is showing the way to a new world built less on billing categories. This fits well with related changes in services like therapy. Aid to people outside classification systems may be as important as helping those inside. Who are they? All of us at one time or another. People with distress due to life’s stressors; with painful symptoms that fall short of a fully diagnosable disorder; with unhealthy behaviors that contribute to being overweight and at risk of chronic diseases; with attitudes or beliefs that lead to self-defeating behaviors like non-adherence to needed medications. These issues contribute to poor functioning at home and at work.

Beyond the Categorical: Narrative and Expressive Modes of Thought

Psychiatrists are the most highly trained clinicians in our field. Their training fully embraces categorical thinking from diagnostics to pharmaceutical treatment. It is natural to believe our best trained clinicians embody our best thinking. Yet they have mastered only one type of thinking. This is especially true since the majority of psychiatrists eschew psychosocial solutions like psychotherapy.

The type of thinking required in psychotherapy is not easily categorized. We know that empathic listening without judgment is critical. Reflecting on the therapy relationship is often helpful. Categorical thoughts about a person being depressed or chemically dependent do not automatically lead to therapy interventions. Yet advocates of guideline-driven therapy aspire to this idealized medication model.

Let us move to the end point, the clinical outcome. Our work presumably produces good results. Reimbursement might assume that our time is spent creating them, and reporting would then focus less on diagnosis or service codes and more on validating positive outcomes. Our field is well suited for salaried clinicians less focused on coding. This is fortunate since it may be our future direction.

Billing and compensation are built upon the medical model in which we work. This is not a critique of diagnostic thinking or medical solutions, but rather an effort to point to how they obscure other valuable clinical contributions. Experts in psychosocial solutions should not feel their work is inferior. Just ask medical experts like primary care physicians. They are eager to find behavior change experts for their practices.

Ed Jones, PhD, is senior vice president for the Institute for Health and Productivity Management.