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Editorial: New York’s Medicaid Reform Portends Major Changes in Behavioral Health Service Delivery

The 27-member Medicaid Redesign Team (MRT) appointed by Governor Andrew Cuomo in January made a series of far-reaching recommendation pertaining to the delivery of mental health and substance abuse services (taken together, behavioral health services). The MRT, comprised of stakeholders from provider and consumer organizations, elected officials, unions, and government officials, was charged with the task of making recommendations to both reduce Medicaid costs while maintaining access and improving quality of the system. The group was asked to find $3 billion of savings in the state’s $58 billion Medicaid program.

Behavioral health services emerged as one of the MRT’s central concerns. The state’s 300,000 behavioral health recipients were singled out as being a “high cost” Medicaid population, whose care is “unmanaged” and who’s behavioral and health care services “lack coordination.” For weeks, the MRT considered whether to fold high-need behavioral health recipients into general managed care (currently, Medicaid-funded behavioral health services are paid for on a fee-for service basis in which recipients obtain services without having to go through a managed care company) or to maintain the current “carve out” of behavioral health services, at least temporarily, while at the same time beginning to move toward a managed care system. This “carve out” approach was strongly supported by a broad coalition of provider and recipient advocacy organizations and was championed on the MRT by OMH Commissioner Dr. Michael Hogan and OASAS Commissioner Arlene Gonzalez-Sanchez.

The MRT’s ultimate recommendation was a hybrid of the two plans, which was then adopted in the State budget process. For a two-year period, beginning in October of 2011, regional Behavioral Health Organizations (BHOs) will be established (a total of 5 or 6 statewide). Although behavioral health services will continue to be paid on a fee-for-service basis during this period, BHOs will have a significant role in promoting continuity of care by monitoring both inpatient behavioral health hospitalizations and recipient transitions between hospitalization and community agency services. In three years, BHOs will be replaced by a full managed care system for both behavioral and health care services. It is expected that this permanent system will include all of the typical features of managed care: provider payments will be on a capitated or case rate basis; the managed care entities will implement a system of “prior approval” of services; they will be at financial risk in contracting with the State and will have financial incentives to achieve quality standards and benchmarks.

Both the recipient and provider communities are very concerned about how this major restructuring of the system will unfold. While specialized behavioral health managed care has been implemented in a number of states nationally, in some cases quite creatively to the benefit of recipients, the inclusion of both behavioral and health care services in a single managed care system for high need recipients will be an enormous financial, management and programmatic challenge.

There are many critical questions to be answered as the New York plan moves forward. In mental health, a key question is which services will be folded into the system? Child and Adult Mental health Clinics and PROS programs may be obvious, together with psychiatric emergency and inpatient services, but what about ACT Teams, case management programs, clubhouses and residential services? How will access to services be assured? How will quality standards be developed and implemented? Will payments to service providers be sufficient to assure the maintenance of and future investment in the behavioral health system? Will there be sufficient flexibility in the system to promote the kind of innovation that is needed to achieve the dual goals of having a high-quality system while reducing costs?

Finally, there is the question of how the emerging fully managed care system for high need behavioral health clients will fit into Federal health reform. With the development of health homes, accountable care organizations and other significant reforms under the Federal legislation, these will add another dimension to our challenge in New York State.

Mental Health News will monitor developments closely and update our readers as the process unfolds. We also encourage readers to share your concerns and perspectives on the restructuring of the system at this critical time.

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