State Health Watch News Briefs NJ wins HCFA approval to develop hospital-based managed care WASHINGTON, D.C. New Jersey has won federal approval for its Managed Charity Care Demonstration program, which will emphasize the use of coordinated care systems rather than expensive hospital and emergency room treatment for low-income, uninsured individuals. Under the Section 1115 waiver approved Feb. 13 by the Health Care Financing Administration, hospitals will be required to develop hospital-centered managed care networks. New Jersey hopes the approach will allow it to serve more uninsured low-income residents through the more efficient use of disproportionate share hospital funds and by using less costly and intensive care settings. Participation in the new program is voluntary and eligibility standards will remain the same as they are under the current program. Currently, individuals with family incomes up to 200% of the federal poverty level are entitled to fully subsidized inpatient and outpatient care, while those with incomes between 200% and 300% of the poverty level are eligible for partial subsidies. Rather than offering a specific benefit package, hospitals will offer services that are tailored to the specific needs of their own patients. However, substance abuse and mental health services must be offered as well as care for any other conditions that would benefit from care coordination such as diabetes and hypertension. Columbia/HCA sells Value Behavioral Health for $230 million NORFOLK, VAÑFHC Health Systems, parent of OPTIONS Health Care, Inc., announced Jan. 29 that it was purchasing Value Behavioral Health (VBH) from Columbia/HCA Healthcare Corporation for $230 million. The move is the latest in a wave of mergers to hit the increasingly consolidated behavioral health-care industry. VBH is a division of Value Health, Inc., which was just acquired by embattled Columbia/HCA last August. Columbia's desire to sell the behavioral health firm was well known. The combined company will become the second largest managed behavioral health-care company in the country, with approximately 20 million covered lives in the public and private markets and projected 1998 annual revenue of more than $580 million. Magellan Health Services Inc's recent acquisition of Merit Behavioral Care Corp. created the largest firm in the field with more than 60 million covered lives in the public and private sectors.