Mental Health/Substance Abuse Treatment In ...

At the Intersection of Health, Health Care and Policy Cite this article as: J J Callahan, D S Shepard, R H Beinecke, M J Larson and D Cavanaugh Mental health/substance abuse treatment in managed care: the Massachusetts Medicaid experience Health Affairs, 14, no.3 (1995):173-184 doi: 10.1377/hlthaff.14.3.173

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DataWatch

Mental Health/ Substance Abuse Treatment In Managed Care: The Massachusetts Medicaid Experience by James J. Callahan, Donald S. Shepard, Richard H. Beinecke, Mary Jo Larson, and Doreen Cavanaugh Abstract: Massachusetts was the first state to introduce a statewide specialty mental health managed care plan for its Medicaid program. This study assesses the impact of this program on expenditures, access, and relative quality. Over a one-year period, expenditures were reduced by 22 percent below predicted levels without managed care, without any overall reduction in access or relative quality. Reduced lengths-of-stay, lower prices, and fewer inpatient admissions were the major factors. However, for one population segment--children and adolescents-readmission rates increased slightly, and providers for this group were less satisfied than they were before managed care was adopted. Less costly types of twenty-four-hour care were substituted for inpatient hospital care. This experience supports the usefulness of a managed care program for mental health and substance abuse services, and the applicability of such a program to high-risk populations.

U

se of managed care is increasing, although it has not been defini1 tively proved to be a means of controlling rising health care costs. First adopted by business, managed care is now being seized upon 2 by state Medicaid programs. More than five million Medicaid beneficiaries-15 percent of the Medicaid population-were enrolled in managed care 3 in 1993, twenty times the number enrolled in 1981. New waiver activity under Section 1115 will lead to an estimated Medicaid enrollment in 4 managed care of close to eight million persons when implemented. Medicaid managed care programs aim to control costs by producing more 5 appropriate patterns of health care use. These plans vary along the dimensions of enrollment (voluntary or mandated), organizational structure (use of intermediary health maintenance organizations [HMOs], individual practice associations [IPAs], preferred provider organizations [PPOs], or James Callahan is research professor and director of the National Institute of Mental Health (NIMH) Training Program in Mental Health Serdces Research at the Heller School, Brandeis University, in Waltham, Massachusetts. Donald Shepard is research professor there and adjunct lecturer at the Harvard School of Public Health. Richard Beinecke is assistant professor in the Department of Public Management, Suffolk University, in Boston. Mary Jo Larson is a senior research associate in the substance abuse group at the Brandeis University Institute for Health Policy. Doreen Cavanaugh is a doctoral candidate at the Heller School; she was formerly a regional director in the Office of Children in Massachusetts. Health Affairs, Volume 14, Number 3 ©1995 The People-to-People Health Foundation, Inc. Downloaded from content.healthaffairs.org by Health Affairs on July 14, 2011 by guest

174 HEALTH AFFAIRS | Fall 1995 benefit carve-outs), the range of services covered, and methods of payment 6 (fee-for-service, capitation, or negotiated contract). State programs also vary by the specific subgroup of enrollees that participate. Most programs enroll Aid to Families with Dependent Children (AFDC) recipients, and a 7 few serve disabled persons. Despite this widespread adoption of managed care, however, specialty managed mental health programs within Medicaid are still somewhat un8 common. Uncertainty about costs and about the responsiveness of mental 9 health services to financial incentives have been particular concerns. The most common approach to mental health treatment within Medicaid waiver programs is to include only limited acute treatment within the managed plan and to rely upon state mental health or substance abuse 10 (MH/ SA) systems for more intensive treatment. Studies have found that prepaid or capitated payment systems reduce hospitalization among seri11 ously mentally ill persons without consistent evidence of ill health effects. Massachusetts was the first state to introduce a statewide specialty mental health managed care plan in Medicaid. When begun, it was the largest managed care program with capitated mental health care.” Beginning 1 July 1992 the state enrolled approximately 375,000 disabled (mostly Supplemental Security Income [SSI]) and nondisabled Medicaid (mostly AFDC) recipients in a managed care program under federal 1915 waivers. For managed care enrollees, medical and surgical care is coordinated by primary care clinicians, while MH/ SA care is managed as a benefit carveout by a private company, First Mental Health, Inc. (doing business in Massachusetts as MHMA). This DataWatch reports on the first year’s experience of enrollees in the MH/ SA managed care program (MH/ SAP). The state’s Division of Medical Assistance (DMA) contracted with MHMA to change existing utilization patterns by reducing average lengthof-stay in bed days per recipient; reducing admissions to overnight care (hospital inpatient and nonhospital residential) through the use of aggressive case management, outpatient care, and nonresidential settings; contracting for cost-effective services with a network of credentialed providers (expanded to include nonhospital residential providers); and using competitive rates. The incentive structure is designed to reduce costly admissions while allowing widespread use of less expensive MH/ SA treatment. MHMA allows ambulatory mental health and alcohol abuse treatment providers to provide up to eight sessions of ambulatory care per year without prior approval. Beyond eight sessions, providers must develop an approved treatment plan and receive authorization for a specified number of additional sessions. All twenty-four-hour services require prior approval. When approval is granted, it generally is only for a few days, and additional days require an Downloaded from content.healthaffairs.org by Health Affairs on July 14, 2011 by guest

D ATAWATCH 1 75 extension. Both ambulatory and twenty-four-hour services are paid on a fee-for-service basis, but expenses (providers’ time to develop and gather necessary information, develop treatment plans, and telephone MHMA) are not reimbursed separately. Methods Our report is based on an evaluation that was prepared to meet the Health Care Financing Administration’s (HCFA’s) requirement that an “independent review” of the program be submitted for the waiver to be renewed. The review must examine costs and access and must ensure that Medicaid enrollees are not significantly worse off under the waiver than before. We refer to this requirement as “relative quality.” Measures. Access was evaluated primarily by examining penetration rates for MH/ SA services overall and by type of service. The overall penetration rate was the proportion of enrollees who used any MH/ SA service during the fiscal year. Additional measures concerned answers to questions on access from a random survey of providers. Relative quality was measured by the proportion of discharges followed by readmission to twenty-fourhour care within thirty days of discharge and by answers to questions on quality in the provider survey. To gauge the impact on costs, we compared total actual expenditures for MH/ SA care with costs that were predicted absent the new Massachusetts program. Predicted service expenditures without managed care were estimated by calculating expenditures per enrollee from fiscal years 1990 (the year ending 30 June 1990) through 1992 by eligibility category and type of care, and expressing all values in constant FY 1993 dollars to adjust for inflation. This adjustment was based on the medical care component of the Consumer Price Index (CPI), the best available measure of overall medical care prices. Fitting trend lines to the results, regression analysis predicted values for FY 1993. Aggregate service expenditures, assuming there was no managed care, were estimated by multiplying actual enrollment in each category by predicted FY 1993 costs per enrollee. Predicted (based on past trends) and actual administrative costs were added to predicted and actual service expenditures, respectively. Data. The utilization and cost analyses were based on fiscal year reports for periods before (FY 1990 through FY 1992) and after (FY 1993) managed care was introduced. These included aggregate summary reports of expenditures and enrollments, aggregate summary reports of selected items with comparable data for the two periods, and Medicaid-paid claims for overnight care for FY 1992 and 1993. The process evaluation was based on reviews of documents, personal interviews with key informants in fortyDownloaded from content.healthaffairs.org by Health Affairs on July 14, 2011 by guest

176 HEALTH AFFAIRS | Fall 1995 three organizations, and telephone interviews with a stratified random sample of ninety-eight providers. The informant interviewed was the person identified as having the most working contact with MHMA. Usually this was a top clinician, but occasionally it was an administrator. Results Of The Analysis Exhibit 1 shows Medicaid costs for MH/ SA treatment with and without the managed care waiver. Exhibit 2 shows the results of the cost adjustments for N 1990-1993. As intended, the program sharply reduced expenditures for twenty-four-hour care. Disabled and nondisabled enrollees. The MH/ SAP uses two risk categories to determine the prepaid per capita monthly payments to its private contractor: the disabled eligibility group (SSI and Medical Assistance only) and nondisabled eligibility groups (primarily persons on AFDC, but including refugees and Medical Assistance clients under age twenty-one). Actual expenditures per enrollee were 37 percent lower for the disabled, 16 percent lower for the nondisabled, and 27 percent lower overall (Exhibit 3). However, the decline in costs within each eligibility category was partly offset by an increase in the percentage of enrollees who were disabled, from 14.4 percent in N 1992 to 16.1 percent in N 1993. Twenty-four-hour and ambulatory care. We decomposed the savings between twenty-four-hour care and ambulatory care, again comparing predicted and actual values (Exhibit 4). Of the $57 million savings from reduced provider payments for direct services, $44 million (78 percent) was Exhibit 1 Medicaid Costs For Mental Health And Substance Abuse Services With And Without The Managed Care Waiver, Fiscal Year 1993 Type of cost

Amount

Predicted Medicaid costs without waiver Administration in Division of Medical Assistance Payments to providers Subtotal

$ 2 208 210

Medicaid costs with waiver (actual) Administration in MHMA and Medicaid Payments to providers Incentive payments to MHMA Subtotal

$11 151 1 163

Dollar savings

$4 7

Percentage savings

22%

Source: Massachusetts Division of Medical Assistance; and authors’ calculations. Note: Millions of dollars.

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D ATAWATCH 1 77 Exhibit 2 Expenditures For Mental Health And Substance Abuse Care For Medicaid Managed Care Enrollees, Millions Of Dollars, By Fiscal Year Direct service payments, by eligibility group Disabled Nondisabled

1990

1991

1992

1993

$ 48.6 73.8

$ 64.2 89.2

$ 87.1 97.4

$ 71.0 79.8

1.7

1.7

1.8

12.0

177.4 311.1

196.6 360.6

219.2 378.5

237.4 375.4

14.4%

16.1%

Total administrative expenses Inflation and enrollment a Boston medical care services CM b Total enrollment Percent disabled

14.3%

13.6%

Source: Massachusetts Division of Medical Assistance; and authors’ calculations. Consumer Price Index. Thousands of persons, average number.

a

b

cut from twenty-four-hour care (hospital, detoxification, and residential care) and $13 million (22 percent) from ambulatory care. We further decomposed the savings within each type of care. Compared with predicted values, the number of twenty-four-hour admissions fell by 7.2 percent, and length-of-stay declined by 12.3 percent. Savings from the mix of settings (reducing cost per day by 9.1 percent) were the result of transferring some days of care from hospitals ($475 average per day) to nonhospital facilities ($130 average per day). The savings in price per day resulted from the fact that MHMA paid less per day than the evaluators estimated that Medicaid would have paid without the waiver. Had FY 1993 rates just been held to the levels in FY 1992, FY 1993 prices would have been 7.7 percent below expected levels. In fact, the actual price savings (16.4 percent) were much greater. MHMA’s use of its market power thus was one of the major sources of savings, reducing expenditures by $16.4 million below what was expected. Overall, all of these changes in twenty-four-hour care are consistent with Exhibit 3 Predicted And Actual Direct Services Expenditures Per Enrollee, Fiscal Year 1993 Disabled Nondisabled Total

a

Actual

Dollar change

Percent change

$1,854 303

$1,172 253

-$682 -5 0

-37% -1 6

553

402

-151

Predicted

-2 7

Source: Authors’ calculations. Without managed care, adjusted for trends, inflation, and disabled enrollment mix. b Calculated prior to rounding per enrollee expenditures. a


b

178 HEALTH AFFAIRS | Fall 1995 Exhibit 4 Sources Of Savings By Component, Predicted Versus Actual, FY 1993 Savings Share 78% 12 21 15 29

Amount a

Indicator Twenty-four-hour care expenditures Number of admissions Length-of-stay Mix of settings (impact on cost per day) Price per day

Decline 38.2% 7.2 12.3 9.1 16.4

Ambulatory care expenditures b Inferred number and mix of services Price per service

12.9 5.7 7.7

22 9 13

12.6 5.3 7.3

Subtotal, direct service expenditures

27.4

100

56.8

-

-10.0

-

$46.8

Administration Total

22.3%

$44.2 6.9 12.1 8.8 16.4

Source: Massachusetts Division of Medical Assistance; and authors’ calculations. Notes: “Predicted” carries forward trends in utilization, applies them to actual shifts in enrollment, and an overall 8.3 percent rate of inflation. “Share” is based on total savings in direct service expenditures. a Millions of dollars. b Inferred from difference between change in expenditures and the overall rate of inflation.

the goals of the MH/ SAP. Actual expenditures for ambulatory care, before any adjustments, fell by 1.2 percent, from $86 million to $85 million. When adjusted for enrollment, utilization trends, and inflation, however, N 1993 expenditures were 12.9 percent below predicted levels. MHMA paid outpatient providers using the same fee schedule rates that Medicaid had used in FY 1992. The absence of any inflation adjustment was equivalent to a 7.7 percent price reduction below expected levels, or a savings of $7.3 million. There was a $5.3 million decline from use and mix of services. Within that total, 13 $2.5 million was probably the result of a change in payment procedures. The remaining $2.8 million reduction was a 3.0 percent decline in outpatient use or mix of services below predicted values. It should be noted, however, that these predicted values were based on a 3.9 percent annual increase in use per enrollee (standardized for enrollment mix). After adjustment for everything except trends, outpatient visits were 0.9 percent above predicted levels. That is, while outpatient services continued to increase, the rate of increase was below recent trends. Mental health/ substance abuse services. Compared with inflationadjusted 1992 values, mental health costs per enrollee declined by about 19 percent (from $446 to $359), while substance abuse treatment costs declined by 48 percent (from $82 to $42). In both cases, reductions in twenty-four-hour care accounted for the greatest change: 30 percent and 67 percent, respectively. Outpatient care expenditures decreased by 9 percent Downloaded from content.healthaffairs.org by Health Affairs on July 14, 2011 by guest

D ATAWATCH 1 79 for mental health, largely because reimbursement rates did not rise with inflation. Ambulatory substance abuse treatment costs rose 8 percent above inflation. Access. Utilization generally changed from N 1992 to N 1993 in accordance with the incentive structure described earlier (Exhibit 5). For example, the proportion of enrollees receiving outpatient mental health clinic treatment grew by 10.6 percent. The overall volume of MH/ SA Exhibit 5 Mental Health And Substance Abuse Care Users Per 1,000 Enrollees, By Type Of Service, Fiscal Years 1992-1993 Mental health a Inpatient mental health Clinic treatment (outpatient) Clinic evaluation

1992 16.5 118.5 67.5

Users per 1,000 enrollees 1993 Percent change 16.1 -2.4% b 131.2 10.6 70.8 4.8

Outpatient (hospital) Psychiatrists Clinic medication

59.7 32.5 24.7

48.7 c 28.6 31.9

-19.2 -12.0 29.1

Crisis intervention Psychologists Home care

18.3 16.3 6.0

15.9 c 1 1.5 5.4

b

-13.5 -29.6 -10.5

3.7 0.0 0.0 6.0

4.7 38.3 1.3 5.4

27.0 d d -10.5

Inpatient Freestanding detoxification Level III detoxification

9.1 5.5 0.0

3.5 7.9 2.4

-6 1 . 2 45.2 d -

Acute residential Outpatient Methadone counseling

0.0 9.6 5.4

3.2 9.2 6.2

Methadone dosing Acute residential (child/ adolescent) Acupuncture detoxification

0.0 5.2 0.49

6.3 0.1 0.4

-4 . 4 15.5 20.2 d _ -13.7

222.6

4.6

Psychiatric day treatment Clinic consultation Acute residential (children) Community health center Substance abuse

Total, all services

e

212.7

d

Source: Massachusetts Division of Medical Assistance; and authors’ calculations. This entry is the sum of two service types: “Inpatient mental health” and “inpatient under 21.” They are combined because payment categories shifted between 1992 and 1993. b In 1993 emergency (crisis intervention) services for patients already in clinic treatment were paid as additional clinic treatment sessions. c In 1993 payment for care to inpatients was included under facility reimbursement. d Not applicable because new service. e Users cannot be summed across service types because many users received more than one service during the year. This total is the unduplicated user rate calculated from paid claims. a


180 HEALTH AFFAIRS | Fall 1995 ambulatory services per enrollee, however, fell slightly (3 percent) below expected values, which was not anticipated. Similarly, use of twenty-fourhour care declined after adjusting for enrollment changes; admissions fell by 7.2 percent, and length-of-stay by 12.3 percent. Overall, expenditures fell much more among disabled enrollees (37 percent) than among nondisabled enrollees ( 16 percent). Disabled enrollees tended to use more twenty-fourhour care and more intensive ambulatory care than nondisabled enrollees. The total number of MH/ SAP users per thousand enrollees increased slightly, rising from 212.7 in FY 1992 to 222.6 in N 1993. The number of users of inpatient hospital services (except for services in psychiatric facilities serving persons under age twenty-one) fell, while access increased for freestanding and Level III detoxification centers, acute residential substance abuse facilities, methadone treatment, clinic treatment and consultation, and psychiatric day treatment. Level III detoxification centers and new acute residential substance abuse programs substituted for inpatient care. Also, the mix of program services changed. Of the thirteen types of mental health services, six showed increases and seven, decreases. In substance abuse, six of nine showed increases. The survey of providers asked respondents to compare access under managed care with access under the previous system. Their average score of 3.02 on a scale of 1 (worse) to 5 (better) was virtually the midpoint. In providers’ aggregate opinion, therefore, there has been no change in access since managed care was adopted. Providers reported greater availability of diversionary beds and services (mean, 3.64) but too few diversionary beds when compared with their assessment of need (mean, 2.20). Providers also reported that they thought lengths-of-stay had decreased (mean, 2.08). Providers of all types-inpatient, outpatient, crisis teams, and diversionary-reported that their clients have more severe problems than before managed care was implemented (mean, 4.09). This finding is consistent with the program’s goal of moving clients from inpatient hospital care to the least costly, most appropriate setting, and with providers’ reports of a trend toward more severely ill persons in the community. Relative quality. The thirty-day readmission rate dropped slightly, from 19.9 percent in FY 1992 to 18.9 percent in FY 1993. Thus, overall, patients are not being readmitted more often than before managed care. There was a difference, however, between the disabled group, which had declines in readmissions within thirty days (25.8 percent to 22.7 percent), and the nondisabled group, in which there was an increase (11.1 percent to 13.4 percent). Child and adolescent patients, in particular, showed an increased readmission rate of 10.1 percent (up from 7.5 percent before managed care), which raises a concern about lower-quality care for this group. Providers reported that clinical quality was generally favorable on several Downloaded from content.healthaffairs.org by Health Affairs on July 14, 2011 by guest

D ATAWATCH 1 81 dimensions: treatment recommendations (mean, 3.80), aftercare plans (mean, 3.54), length-of-stay decisions (mean, 3.53), appropriate settings (mean, 3.66), and overall assessment (mean, 3.23). While all of these means are in a favorable direction, about one-fourth of providers felt that clinical decisions were usually inappropriate, and another fourth had mixed views. Children’s inpatient providers were more critical of clinical decisions than other providers were, and treatment of children was cited more often as a problem area by providers in both the scaled and the open-ended questions. The MHMA contract with Medicaid required the establishment of a quality assurance program, including a means of assessing client satisfaction. Since this process was just beginning at the time of this study, data were insufficient to evaluate consumers’ opinion of the services. Management issues. Many informants reported continuing administrative problems with MHMA, including long delays in reaching the utilization review staff by telephone, excessive and time-consuming paperwork, conflicting responses from different utilization staff, differences between oral agreements and final written approvals, and slow or nonexistent transmission of paperwork to providers. As a result, nearly all providers reported that much more provider staff time was being spent administratively managing Medicaid clients than before the MH/ SAP initiative, which required either hiring additional staff or diverting existing staff from clinical tasks. Compared with other managed care providers, however, MHMA was generally considered to be about the same or slightly better on the characteristics of quality of utilization review decisions (mean, 3.45, on a scale of 1 [worse] to 5 [much better]), access for clients (mean, 3.62), flexibility (mean, 3.30), and promptness in making decisions (mean, 3.19). The primary criticisms of the first year of operation were bureaucratic administrative procedures and problems reaching utilization review staff by phone. Discussion Preliminary data for N 1994 show that the savings from managed care have been maintained. Service expenditures per enrollee (current prices) were $421 in N 1994, a 5 percent increase above the comparable amount of $401 for N 1993. This increase was less than the rise in medical care prices in the Boston area and virtually equal to the target set by the DMA. The MH/ SAP represents a new generation of Medicaid managed care programs in several ways: It is a statewide program administered by a for-profit managed care company; it assumes financial risk for reducing expenditures, tracks both inpatient and outpatient utilization, covers both mental health and substance abuse treatment (thus creating the possibility Downloaded from content.healthaffairs.org by Health Affairs on July 14, 2011 by guest

182 HEALTH AFFAIRS | Fall 1995 of treatment integration), and includes all levels of mental health need, not just high-cost cases. The program significantly restructured the payer/ provider relationship by instituting treatment protocols and contracting with a subset of providers. Selective contracting gave more control to the contractor over rates, treatment protocols, and client flow, thus enhancing the chance of savings and service coordination. We believe that selective contracting for inpatient providers could not have occurred had Medicaid not “privatized” the program. Political pressure to contract with “my hospital” was blunted when the decision was put into private hands. We do not believe that costs were shifted to the alternative payers: insurance, the Department of Mental Health, or the Bureau of Substance Abuse Services. Recipients lacked private insurance and the purchasing power to pay for services directly. Among other public programs, the Department of Mental Health faced its own budget and bed constraints and also reduced the number of admissions it financed. The state’s Bureau of Substance Abuse Services, a last-resort payer for substance abuse treatment, capped the total payments to each facility below its demand. Thus, all of these facilities sought to use Medicaid whenever possible. Finally, bad debt pools also were tightly limited in Massachusetts. The experience in the program’s first year of operation reflects the incentives and administrative features of a carve-out program, the types of populations enrolled, the historical use pattern, and the competitive and 14 well-developed mental health market in Massachusetts. Massachusetts is not typical of all states. It has a generous Medicaid benefit package for medical and mental health services, with good provider participation. Its per capita Medicaid expenses for substance abuse are about equal to those of the median state, and it had a history of rapidly rising mental health 15 expenditures when the MH/ SAP was introduced. Other states cannot necessarily expect the same types of Medicaid cost savings if they implement a similar mental health managed care program. Nevertheless, there are lessons that can be put to use by other states. First, the DMA chose a proactive approach with a private contractor using detailed contracting specifications with reporting requirements on access assurance, service expenditures, and consumer compliance, which are closely monitored by the agency. While even this monitoring did not produce quality control as rapidly as planned, the DMA’s intense engagement with the contractor is clearly an ingredient linked to the program’s success. The contractor, in turn, is credited with introducing new arrangements for interagency collaboration and negotiation with the state MH/ SA authorities. Second, the financial incentives under the MH/ SAP are different from fee-for-service and HMO-type approaches. MHMA receives a predeterDownloaded from content.healthaffairs.org by Health Affairs on July 14, 2011 by guest

D ATAWATCH 1 83 mined monthly payment and has a risk corridor in which it shares savings or losses, but the service providers continue to be paid fee-for-service. Thus, while the contractor has a strong financial incentive to contain costs, the providers do not have a direct financial incentive to withhold care since they continue to be paid fee-for-service. Third, MHMA was able to control provider prices through selective contracting, particularly with hospitals. Service providers therefore must be more competitive than under the previous systems, which can translate into improved quality. The contractor has adopted more detailed recommended treatment protocols than were previously used. These protocols specify a certain standard of care, which at times requires higher quality than that which has been evident in the performance of providers in the fee-for-service system (for example, the guarantee of a psychiatric evaluation within a specified period for all twenty-four-hour stays). Fourth, MHMA showed its capacity to negotiate rates of payment that were below former payment levels based on historical costs. For inefficient providers, this is an incentive in the right direction to improve their cost performance. Lower fees, however, may lead to skimping on necessary or desirable services. Furthermore, the increased administrative burden (reported consistently by providers) may have caused them to emphasize administrative tasks at the expense of clinical tasks. This should be examined in future research. Fifth, patients may be benefiting from the protocols and increased service coordination. Nonetheless, some advocates are concerned that providers may become more sensitive or responsive to MHMA than to the needs of their patients. The impact of “fourth-party” involvement in these types of situations is not necessarily obvious within the first year of operation. Sixth, the MH/ SAP had different effects based on disability status and age. Access for adult disabled enrollees increased, while that for adult nondisabled enrollees decreased. It is not clear why this occurred. It is clear, however, that children and adolescents faced more problems under the MH/ SAP than adults did: The thirty-day readmission rate for children and adolescents increased sharply. Providers reported that the average lengthof-stay was inadequate to provide sufficient assessment on evaluation services for the exceptional needs of some children. For certain children with complex needs, coordination among family, school systems, and perhaps other state agencies is required, but under the MH/ SAP there is much less time and funding available for this. This could account for some of the reported problems. This relatively favorable evaluation gives a picture of the start-up phase of the program. How it will perform in the long run will require further evaluation. Downloaded from content.healthaffairs.org by Health Affairs on July 14, 2011 by guest

184 HEALTH AFFAIRS | Fall 1995 An earlier version of this paper was presented at the Seventh Biennial Research Conference on the Economics of Mental Health, National Institute of Mental Health, Bethesda, Maryland, 19-20 September 1994. NOTES 1. B. Dickey and H. Azeni, “Impact of Managed Care on Mental Health Services,” Health Affairs (Fall 1992): 197-204. 2. D.A. Freund and R.E. Hurley, “Medicaid Managed Care: Contribution to Issues of Health Reform,” Annual Reviews of Public Health 16 (1995): 473-495; and R.E. Hurley and D.A. Freund, “A Topology of Medicaid Managed Care,” Medical Care 26, no. 8 (1988):764-773. 3. Freund and Hurley, “Medicaid Managed Care.” 4. C. Helf, Medicaid Managed Care and Mental Health: An Overview of Section 1115 Programs (Washington: Intergovernmental Health Policy Project, The George Washington University, 1994). 5. T.R. Giles, Managed Mental Health Care: A Guide for Practitioners, Employers, and Hospital Administrators (Needham Heights, Mass.: Allyn and Bacon, 1993). 6. See the special issue entitled “Medicare and Medicaid Managed Care: Issues and Evidence,” Health Care Financing Review (Fall 1993); and Hurley and Freund, “A Topology of Medicaid Managed Care.” 7. Spotlight, newsletter of the Center for Vulnerable Populations, National Academy for State Health Policy, Portland, Maine (April 1993). 8. N. Lurie et al., “Does Capitation Affect the Health of the Chronically Mentally Ill: Results from a Randomized Trial,“ Journal of the American Medical Association 267, no. 24 ( 1992): 3300-3304; and Helf, Medicaid Managed Care and Mental Health. 9. B.S. Arons et al., “Mental Health and Substance Abuse Coverage under Health Reform,” Health Affairs (Spring I 1994): 192-205. 10. Helf, Medicaid Managed care and Mental Health. 11. K.B. Wells, W.G. Manning Jr., and R. Burciaga Valdez, The Effects of a Prepaid Group Practice on Mental Health Outcomes of a General Population: Results from a Randomized Trial (Santa Monica, Calif.: RAND, December 1989), v; R.E. Cole et al., “A Mental Health Capitation Program: 1. Patient Outcomes,” Hospital and Community Psychiatry 45, no. 11 (1994): 1096; and S.K. Reed et al., “A Mental Health Capitation Program: II. Cost-Benefit Analysis,” Hospital and Community Psychiatry 45, no. 11 (1994): 1097. 12. Lewin-VHI, States as Payers: Managed care for Medicaid Populations, in the series “The States and Private Sector: Leading Health Care Reform” (Washington: National Institute for Health Care Management, 1995). 13. MHMA included payments to psychiatrists and other professionals as part of the hospital fee in 1993, whereas they are included in what is counted here as outpatient care in 1992. Assuming that there was one health professional visit for every three days of inpatient mental health care and that these visits were paid at $70 (the approximate payment to psychiatrists), this shift would cause an apparent decline in “outpatient” visits of $2.5 million (108,555 inpatient mental health days divided by three days per visit times $70 per visit equals $2.5 million). 14. M. Commons et al., “Paying for Public Drug Abuse Services in the Six New England States,” in Financing Drug Treatment through State Programs, Services Research Monograph 1 (Rockville, Md.: National Institute on Drug Abuse, 1994), 95-142. 15. M.J. Larson and C.M. Horgan, “Variations in State Medicaid Program Expenditures for Substance Abuse Units and Facilities,” in Financing Drug Treatment through State Programs, 21-50. Downloaded from content.healthaffairs.org by Health Affairs on July 14, 2011 by guest