InvisALERT Solutions – ObservSMART

A New Face on Familiar Trends

Last year I attended a conference at which Dr. Michael Hogan, the former Commissioner of the New York State Office of Mental Health, delivered a keynote address on emerging issues and trends within health care reform. He distilled a seemingly inchoate mass of movements, mandates and initiatives into a select group of “Megatrends” he believed would direct the course of reform (Hogan, 2015). Although our landscape has continued to evolve and some of the Megatrends he identified have risen or receded in importance, his conceptualization provided both a welcome framework through which today’s challenges and opportunities could be understood and a tool to distinguish true signals from continuous background noise. I believe another confluence of Megatrends promises to challenge and transform our health and social service systems in the coming decade, and service recipients, providers and other key stakeholders would do well to heed them.

Continuing deinstitutionalization of highly vulnerable populations is an overarching trend whose repercussions extend well beyond our health and social service systems. This is hardly a new trend, but its current iteration is markedly different from its predecessors. Fifty years ago, President Kennedy signaled a major shift in national policy concerning the treatment and support of individuals with mental illness in his sponsorship of the Community Mental Health Act (National Council for Behavioral Health, 2016). Borne of the noblest of intentions, this Act spawned a movement to reintegrate individuals into their communities of origin and to provide support services essential to their lasting stability and community tenure. Evidence to date suggests this movement accomplished much of its primary objective. The census of state-operated psychiatric facilities has dwindled to approximately 5% of its peak capacity in 1955 (Fisher, Geller, & Pandiani, 2009). This movement has faltered in pursuit of its secondary objective, however. Investment in community-based services has often failed to meet the needs of those with serious behavioral health conditions, and this failure effectively transformed a movement of deinstitutionalization into one of “transinstitutionalization.” Many individuals formerly treated in state-operated psychiatric centers found themselves in homeless shelters and correctional facilities in the absence of essential community support systems. There is a well-established inverse correlation between the census of state-operated psychiatric centers and the population of individuals with serious behavioral health conditions within correctional facilities. During the past 50 years the former has decreased as the latter has increased (Primeau, Bowers, Harrison, & XuXu, 2013). Few would suggest this is merely coincidental. Simply put, we have transferred our most vulnerable citizens from facilities that provided a modicum of care and support to others that offered neither. Many who have avoided transinstitutionalization have nevertheless struggled to access the basic resources and amenities that make community life worthwhile.

The current trend in deinstitutionalization is arguably even more ambitious than previous ones in the pursuit of its primary objective. It has gained currency through the Recovery Movement which has rightfully placed individuals and their expressed needs and preferences at the center of care. Most individuals naturally prefer to reside in fully integrated, community-based settings irrespective of the scope or severity of their health concerns or impediments to stability. The current trend has garnered additional support through legislative and judicial developments, including the passage of the Americans with Disabilities Act (ADA) and the ruling of the U.S. Supreme Court in Olmstead v. L.C., a decision which enshrined the right of individuals with disabilities to reside in the least restrictive settings available to them. In view of these developments there is great impetus to reduce the census of state-operated psychiatric centers, adult homes and nursing facilities and to offer their former denizens opportunities for treatment and rehabilitation in fully integrated settings. These goals are laudable insofar as they respect the expressed needs and preferences of vulnerable individuals and mitigate the deleterious effects of institutionalization, but a successful deinstitutionalization movement must deliver on its promise to provide robust community-based support services for this population. Sadly, another emergent trend suggests these services will likely remain as elusive for the newly-deinstitutionalized as they did for their forebears.

The widespread implementation of managed care models of payment and service delivery within publicly-funded healthcare systems is another trend that is inextricably linked to the latest chapter of the deinstitutionalization movement. This trend was logically borne of the state’s broken Medicaid program and its failing Fee-For-Service system that has produced exorbitant costs and mediocre results. In 2011 New York’s Governor Cuomo charged a Medicaid Redesign Team (MRT) to reduce its bloated budget and enact the principles of the Triple Aim of healthcare reform. This ambitious, tripartite pursuit of increased efficiency, improved population health and enhanced quality has informed the MRT’s activities since its inception. Much of the MRT’s activity proceeds from its premise that Fee-For-Service systems incentivize healthcare providers to deliver more, but not necessarily better, services. Its replacement with managed care models that cap providers’ compensation and reward quality over quantity should promote the Triple Aim. The logic behind this premise is axiomatic and beyond reproach, or so many observers contend. But a bird’s eye view of systems transformation may obscure failures of implementation that occur at a granular level.

New York is not the first state in the Union to delegate the management of its Medicaid program to private Managed Care Organizations (MCOs). Many other states have recruited MCOs to limit their Medicaid expenditures. These arrangements have typically entailed some form of budget capitation wherein MCOs receive fixed “per member per month” payments for the provision of all covered services to enrollees, and they are reputed to reduce costs by eliminating the perverse incentives characteristic of Fee-For-Service systems. Simply put, providers whose fees are capped have no incentive to deliver more care. These reductions do not merely represent improvements in quality and efficiency, however. A portion of savings is retained by MCOs to offset their operating and administrative expenditures and, in the case of for-profit enterprises, a return on investment to shareholders. These “savings” are significant resources that would otherwise be committed to treatment. It is therefore not surprising that some of the states that zealously adopted managed care models subsequently encountered serious problems when they failed to deliver on their initial promise (Geyman, 2015).

Moreover, MCOs have operated within the realm of primary and surgical care for many years, and their utilization management and review procedures are largely informed by medical models. These models are appropriate when applied to the management of specialty care and surgical procedures, but they cannot properly capture the needs of individuals with serious behavioral health concerns for whom a broad array of medical, rehabilitative, psychosocial, environmental and economic factors must be considered. A rapidly growing body of evidence suggests social determinants of health, including safe and affordable housing, basic income assistance and psychosocial supports are more determinative of health outcomes than access to medical treatment for highly vulnerable populations (Doran, Misa, & Shah, 2013). MCOs that have never been tasked to coordinate recipients’ access to social determinants of health might be ill-equipped to do so, especially in environments of relative scarcity. For instance, the stock of affordable housing within metropolitan and suburban areas is simply insufficient to absorb the population of individuals released from state-operated psychiatric centers, nursing facilities, adult homes and correctional facilities (Guelpa, 2015). Although the state has released a steady stream of funding for the provision of rental subsidies for this population, these subsidies are unavailable to many and insufficient to cover rental costs in competitive housing markets (Association for Community Living, 2016). Recent initiatives of the New York City and State governments to develop thousands of additional units of subsidized housing notwithstanding, this development is bound to lag behind rapidly rising need. Many among the newly-deinstitutionalized will inevitably be relegated to homeless shelters, rooming houses and similarly substandard residential options that will compromise their tenuous grasp on stability.

The architects of the state’s movement to incorporate all Medicaid-covered services into managed care plans surely recognized the potential importance of social determinants of health to the enduring stability of the most vulnerable individuals. This prompted the acquisition of a federal waiver that permits the delivery of an array of psychosocial rehabilitative services within community-based settings – a seemingly auspicious development for recipients. Once again, however, as sound as the principle underpinning this approach may be, a closer inspection of it at the point of implementation reveals potential flaws that would deny many individuals access to these essential services. These “Home and Community Based Services” (HCBS) may offer many of the most vulnerable individuals the assistance and support needed to flourish in non-institutional settings, but the byzantine mechanisms through which they must be accessed will likely deny their benefits to many. Individuals presumed eligible for these services must undergo assessments administered by Care Managers under contract with regional Health Homes. The Health Home model has delivered care management services to many recipients who were unable to access them under previous models, but in many regions it does not support the staffing ratios necessary for the provision of intensive support services to the most vulnerable individuals. It is not uncommon for Care Managers to maintain caseloads of 40, 50, 60 or more clients, and it is unrealistic to expect them to also coordinate the provision of HCBS to eligible individuals. This coordination requires administration of the aforementioned assessment and development of recipient-specific support plans in ongoing consultation with MCOs and the providers charged to deliver services identified in these support plans. Rube Goldberg would be mystified by the complexity inherent in this framework of service delivery. Thus, we can expect many newly-deinstitutionalized and would-be recipients of HCBS to languish in substandard residential accommodations while they await essential services that founder in a bureaucratic malaise.

Consider all of this in the context of labyrinthine contract and quality assurance activities characteristic of MCO governance. Many nonprofit social service organizations that attend to recipients’ social determinants of health have never executed contracts with MCOs. Most do not possess the infrastructures necessary to effectively manage innumerable contract requirements with multiple payers. Utilization management and review, data analysis and outcome measurement activities serve useful purposes insofar as they promote efficiency and continuous quality improvement, but these activities entail countervailing inefficiencies that could prove especially burdensome for many providers. A recent analysis by researchers at Weill Cornell Medical College and the Medical Group Management Association indicates providers spend approximately $15.4 billion a year on data management and outcome reporting activities (Rice, 2016). A disparate array of quality measures and reporting requirements is bound to increase the administrative workload for organizations unable to shoulder it.

Furthermore, as the lion’s share of public funds devolves to MCOs resources previously allocated via State Aid are bound to vanish. Many providers who deliver psychosocial support services or coordinate access to social determinants of health depend on contracts with state agencies that seldom cover the costs of service delivery. This tragic fact became evident in the dissolution of one of the most senior and well-respected social service agencies in New York. The recent collapse of Federation Employment and Guidance Service (FEGS) under the weight of underfunded contracts with various government agencies is a bellwether for the industry according to forensic analyses of this event (Human Services Council, 2016). The Jewish Board of Family and Children’s Services (JBFCS) inherited many of the contracts FEGS released upon its insolvency. It might have also inherited a flawed financial structure that yields ever-increasing deficits. This trend augurs a tipping point from which the nonprofit service sector may not return.

The confluence of trends poised to transform our service system surely warrants concern. It also entails opportunities for stakeholders to cultivate new payer and provider relationships that reward increasingly holistic approaches to service delivery that account for the full array of supports necessary to ensure the enduring health and wellbeing of individuals entrusted to their care. Rigorous analysis and reevaluation of systems and structures that could thwart our pursuit of the Triple Aim must be part of this equation. MCOs, their governmental patrons and contracted providers possess the collective financial capital and professional expertise to deliver on the promises of healthcare reform, and we have the benefit of history to guide us. Let us not condemn ourselves to repeat it because we have chosen to ignore its lessons.

The author may be reached by phone at (914) 428-5600 (x9228) or by email at

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