Medicaid Seeks to Bring Managed Care to Behavioral Services

Beth Fitzgerald | November 14, 2011 | Health Care
Response from advocates of the behavioral health community is generally positive, but concerns are voiced about timetable and reimbursements

Valerie Harr, director of the Division of Medical Assistance and Health services at the DHS.
New Jersey is seeking federal approval to redesign its system for providing behavioral health services to Medicaid members — one of the many changes the state Department of Health (DHS) proposed in the Comprehensive Medicaid Waiver it submitted in September.

If the plan is approved, it would mark the first time that adult Medicaid beneficiaries with mental illnesses and addictions would be administered by a behavioral health managed care provider. The DHS has long used managed care to deliver physical health services to most of the Medicaid population.

Advocates for the behavioral health community said they welcome many of the proposed changes, but caveats and concerns remain. Some question the program’s aggressive timetable. Others, like Phillip Lubitz, director of advocacy programs for the New Jersey chapter of the National Alliance on Mental Illness, are worried about whether low Medicaid reimbursements will affect quality of service.

“The fear,” Lubitz said, “is that as dollars become tighter, we will see rate reductions but not see new services developed or increases in rates for some services where the rates are so poor that there is a lack of availability of services.”

Other are looking for more details from the state, which at this point seem to be in fairly short supply.

Among the proposed changes that have won general approval is the plan to coordinate behavioral health services with the physical healthcare that Medicaid patients now receive through four managed care companies. The DHS would solicit bids from managed care companies that specialize in behavioral health,

Advocates also applaud the DHS plan to encourage innovative models of care, such as “patient-centered behavioral health homes,” where behavioral and physical health services are integrated, using a team approach to address the full spectrum of the patient’s needs. Experts point out that behavioral health clients often have serious medical ailments, citing studies that show that individuals with chronic mental illness can die 25 years earlier than their peers.

The state’s aggressive timetable, however, has raised a flag among some members of the behavioral health community. January 1, 2013 is too soon to allow a smooth transition, according to Debra Wentz, executive director of the New Jersey Association of Mental Health and Addiction Agencies.

Lubitz also feels the deadline should be moved back. “There is serious doubt the state would be able to meet that schedule. We are really talking about a sea change in the delivery of mental health care in New Jersey.”

Wentz did agree that the state’s goals could improve care coordination and yield better ways to integrate physical and mental health. “Families will get a better system, and some of these innovations really can be brought to fruition in a great way,” she said. “The timetable, though, is at odds with the state” being able to implement these advancements.

Valerie Harr, who oversees Medicaid as director of the Division of Medical Assistance and Health services at the DHS, said the waiver already reflects recommendations from the behavioral health provider community.

Harr said the behavioral health community will be involved in the process every step of the way, as the state moves to managed behavioral healthcare.

She said the provider community didn’t want behavioral health turned over to the four managed care companies that now oversee physical health services for about 900,000 of the state’s 1.3 million Medicaid members. And Harr pointed out that the DHS followed the community’s recommendation.

“Behavioral health services are very complicated and these individuals are very fragile,” Harr said. The providers “wanted to make sure that individuals are getting all of the services they need, and providers need time to transition to a managed care model.”

Harr said the DHS will establish a steering committee that includes members of the behavioral health advocacy and provider community “to work through all aspects of designing the program” and for drafting a request for proposal (RFP) to choose a behavioral managed care company.

Wentz said she is seeking clarification from the DHS on how the switch to managed care will affect the day-to-day finances of her 170 member agencies, which are “safety net” providers of behavioral health and addiction services to Medicaid members and the uninsured poor.

Today, these agencies serve the Medicaid population under contracts with the state, which Wentz said supply stable operating funds so the agencies can also treat non-Medicaid patients, including the uninsured and indigent who need services but can’t pay for them. The waiver talks about combining funds from Medicaid, a state and federal program, with other revenue sources, such as state and federal grants, with an eye to maintaining the financial stability of the state’s mental health providers. Many of the providers are community-based nonprofits that do extensive fundraising in the community to defray costs that aren’t covered by government money, Wentz noted.

In 2014, when Medicaid eligibility is expanded under the Affordable Care Act, many individuals who are not covered today will be in the Medicaid system. Wentz said she needs more details on how managed care intends to bridge the gap to broader Medicaid coverage.

According to the waiver application, New Jersey had about 60,000 adults and 40,000 children receiving Medicaid behavioral health services in 2010. Wentz said her member agencies serve many non-Medicaid patients for a total or more than 300,000 children and adults.

Lubitz also said more information is needed on how the transition to behavioral managed care will work. “We have received assurance from DHS that they will convene a stakeholder group to supply input into this process. I think DHS is sincere and they clearly want to develop a good system of care and we don’t doubt their intentions.”

Since 2002, the Medicaid behavioral health services to children have been overseen by PerformCare, a division of AmeriHealth Mercy. PerformCare is a managed care company that handles administration and care coordination but does not assume risk: the managed care company doesn’t get a predetermined amount of money to arrange care for certain patient populations.

Initially, the managed care company chosen for the adult program would initially handle only administration and coordination; after a year or so would it gradually begin to assume risk.

Wentz said she has concerns about having the managed care company take on financial risk. “There is a distinct possibility that much more costly but clinically necessary care might be denied if the managed care organization doesn’t feel it has enough money,” she said. “There are a few programs that we think could really be vulnerable, such as behavioral health residential programs, peer support programs and rehabilitation treatment programs.”

Lubitz echoes this point, saying that he is concerned that that as the managed care company assumes more financial risk, it may become more difficult to get approval for more expensive forms of treatment.

But he also said that eight years of managed care in the children’s Medicaid program, which is limited to administration and care coordination “has shown there is some benefit in having care managed. We have limited resources for mental health and the allocation of those resources has become more need-driven.”

In Lubitz’s opinion, the managed care system for children “has been able to establish some new programs by rightsizing some elements that had been over-utilized — so there is some benefit from it.”

According to figures from the DHS, one impact of managed care on the children’s behavioral health program, has been to lower the average cost per child of delivering services. In the waiver, the DHS reports that the annual Medicaid behavioral health cost per child declined from about $30,000 in 2002 to about $15,000 in 2009.

The behavioral managed care health company will improve the system, Harr said, because it will “apply managed care principles,” ensuring that Medicaid members get the right level of treatment, care coordination, and coordination between physical and behavioral services. “The savings,” she added, “will really be achieved through coordination: getting people into preventive care and [monitoring] their adherence to medication. It is the recognition of the interconnectedness between your behavioral health and your physical needs; that is why we want the care coordination to occur.”

Harr said the DHS will ensure that the managed care company isn’t allowed to place its profits above the needs of the patients. She said on the physical health side, the four managed care companies already assume financial risk in their administration of that program.

Based on the state’s experience with Medicaid managed care for physical health, Harr said she is comfortable with the applying the concept to behavioral health. The possibility that managed care firms might place profits above care “is not a concern of mine,” Harr said. “There are measures and contract requirements you put in place, there is oversight and quality assurances.”

One way to coordinate behavioral and physical care is with what is known as a patient-centered behavior health home. One such home was launched about two years ago in Paramus by Care Plus New Jersey. Said Joseph A. Masciandaro, chief executive officer of Care Plus NJ, “the concept is pretty obvious: you treat the individual as a whole person. You base your services on their needs, and provide a complete range of services that include behavioral health and primary care.”

He said that under one roof, Care Plus provides services from mental health professionals, physical health services from physicians and nurses, nutrition counseling and, exercise programs. “The impact has been positive,” for the nearly 200 patients in the program, he said. “For the severely ill, we are finding it is much easer to get them engaged in their physical health and their mental health” by having professionals from both fields working together at the same location.

It is common for individuals with chronic mental illness to also have medical ailments like diabetes, he said. “So we have a diabetes educator, a nutritionist who will engage with the client on proper nutrition and how to monitor their own blood sugar and vital signs.” The entire clinical staff meets and discusses each patient, to create a treatment plan tailored to that individual, “which is quite different from going to a medical clinic and then to a mental health provider.”

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