States taking more responsibility for managed mental health care
States taking more responsibility for managed mental health care
A May 2000 New York City-based Milbank Memorial Fund report on Effective Public Management of Mental Health Care indicates that states are pulling back from an earlier reliance on national behavioral health managed care companies and providing more of the care themselves.
Based on discussions at two meetings convened by Milbank and the Bazelon Center for Mental Health Law of Washington, DC, with officials from state agencies and other organizations from Connecticut, Iowa, Maryland, Nebraska, Ohio, Oregon, and Pennsylvania, the report says that initially a number of states sought contracts with national firms in hopes of injecting corporate business practices directly into public mental health care. In some instances, officials said, switching to an external vendor created an opportunity for reforms that the state agency would not have been able to achieve politically.
Other states chose to rely on the nonprofit sector or to operate their own managed care programs as a way of responding to concerns that for-profit contractors don’t have the skills to run a complex mental health system that deals with patients with the most severe mental illness.
Since that initial division into external and internal camps, trends have emerged based on states’ experiences with mental health care. The report indicates:
1. States are carving out separate contracts for services for people who have severe disabilities.
2. Full-risk contracts with private, out-of-state for-profit companies are giving way to arrangements for administrative services only or with other limitations.
3. There is increasing reliance on traditional safety-net providers.
4. States are becoming their own managed care entities, shifting systems to performance-based contracts but providing their own management.
5. Statewide system reforms are giving way to county-based systems or to systems organized through existing community mental health boards.
Depending on one’s experience with the system, the expansion of managed care to Medicaid recipients with serious mental illness has been seen as a system of unreasonable rationing that hurts those most in need or as the solution to long-standing and difficult problems in public mental health systems. State officials brought together by Milbank said that neither of those assessments was accurate, although managed mental health care has shown both positive effects and problems.
On the positive side, it generally has increased access to care; decreased use of inappropriate inpatient care; provided an expanded array of services; provided more flexibility in service delivery, more consistency in clinical decision making, and more focused, goal-oriented treatment; and given an increased emphasis to accountability and outcomes.
Problems that have arisen include incentives in risk-based contracts to undertreat and particularly to under-serve those with serious disorders; an undue focus on acute care and neglect of rehabilitation and other services with significant long-term payoff in improved functioning; potential difficulties created by Medicaid managed care contracts in serving the non-Medicaid population; frequent billing and payment difficulties during start-up; and difficulty in ensuring quality and outcomes consistently across regions.
State officials who participated in the Milbank dialogue said that states have been motivated to shift to managed care partly to exert more control over both the providers of care and the new vendors of managers of care. Once there is a contract, the officials said, states have a strong mechanism to require accountability, demand or improve performance, and distribute agreed-upon sanctions and rewards when problems arise. In contrast to grant programs, which some state officials said led local providers to act as if they had a franchise that entitled them to continued state funding, managed mental health care emphasizes consumers’ entitlement to covered services and meaningful outcomes. Consumers have much stronger voices, the state officials say, when they have an opportunity to seek alternate providers.
State officials say the most successful managed mental health programs are those in which policymakers have a vision of the goals they want the service system to achieve and then engage in comprehensive planning with stakeholder groups to use managed care to reach their goals. They say managed care is a useful tool to provide financial discipline, demand accountability, force service integration, and generate innovation.
State officials who have made the shift to managed care told their colleagues that other states should consider as goals:
• creating a seamless, integrated health/mental health system;
• saving resources and getting a handle on costs;
• improving access and creating a single health care home;
• emphasizing recovery, rehabilitation, and work, rather than only abatement of mental health symptoms;
• creating (or reorganizing) and supporting a well-developed community service system and reducing reliance on inpatient care;
• reinvesting services from reduction in use of inappropriate services back into development of new services;
• ensuring high-quality care that produces good outcomes for consumers;
• addressing the special needs of rural/frontier areas;
• focusing particularly on children’s unique needs;
• addressing the needs of ethnically and racially diverse consumer populations;
• ensuring a true state/community partnership.
Opposition to for-profit control
In most states making the shift to managed care, stakeholder opposition has focused particularly on the use of for-profit private plans to manage the public mental health system. Also frequent has been provider opposition to changes in the status quo. States that have made the change recommended extensive planning before introducing managed care into the public system.
Those officials voiced strong support for the notion that reform goals must be subject to a wide and thorough debate. Consumer involvement in service system planning, they said, contributed to reductions in consumer complaints following adoption of managed care.
Managed care focuses the debate on the important concerns of cost, efficiency, and quality. It may help introduce new and effective service approaches that will encourage recovery, facilitate innovation, and bring positive change to a system. Several states reported that managed care had moved their systems from an illness model to a philosophy of rehabilitation and recovery involving a wide array of providers. Such an outcome is strongly endorsed by many consumer groups.
To help ensure a smooth transition, state officials indicated that contracts work better when they are not too short. Three to five years seems to be a reasonable time frame, they said. With that much time, problems can be viewed as opportunities to improve or as positive challenges. Several factors were reported to be important to the success of a shift to managed care.
State officials warned that settling on an appropriate capitation rate and level of expenditure is a challenge, so information system issues must be meaningfully addressed early in the process. It is necessary to determine which populations to cover and the ways in which the mental health system will interact with other public agencies. Relationships with local governments must be defined and special problems such as how to meet needs in rural and frontier areas must be addressed. State officials urged strongly that these complex issues be addressed through a comprehensive, careful planning process and that states take the time to resolve them.
Bazelon Center policy director Chris Koyanagi says the discussions over several years that led to the report were "quite illuminating. It was strikingly different to talk with state officials today about managed care in mental health than in the early years. It’s lost both its sense of glamour and its sense of threat."
She adds that the toughest issues facing officials today are questions of what should be included in contracts with managed care companies and how to deal with cost-shifting issues between various sectors. It’s often difficult, she says, to assign responsibility for a child to one agency or split responsibility among agencies that have differing regulations and funding requirements.
Ms. Koyanagi also says that states will need to do a better job of getting the information they need from plans and then analyzing that information. One of the major advantages of managed care is the data that can be obtained, she says. But that’s of no use if data aren’t obtained and then analyzed. States have been busy creating systems and ensuring that claims are paid, and that effort has distracted them from the data collection that will help improve the systems in the future.
[To request a copy of the full report, call Milbank Memorial Fund at (212) 355-8400 or go to www.milbank.org. To contact Ms. Koyanagi, call (202) 467-5730.]
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