InvisALERT Solutions – ObservSMART

Enhancing Behavioral Care Services Via Managed Care

The President’s Freedom Commission on Mental Health, under President George Bush and lead by former New York State Office of Mental Health Commissioner Michael Hogan, has stated “the mental health system is broken.” Great strides have been made in the decade since the Commission’s report in 2003. The Affordable Care Act is now the law of the land, and it expands on the health care reform from the Mental Health Parity and Addiction Equity Act of 2008, which requires parity for behavioral health. This fundamental change in insurance coverage, along with some tragic current events such as Sandy Hook, has catapulted behavioral health care to the forefront of our national conversation. In our own state of New York, Governor Cuomo has empowered a Medicaid Redesign Team (MRT) to increase quality and efficiency in the New York Medicaid program within the rubric of the triple aim: 1) improving care, 2) improving health, and 3) reducing costs. New York State is moving toward “Care Management for All.” Under this mandate, the vast majority of Medicaid-reimbursed services will be moved away from a fee-for-service model to a managed care model.

A Provider Perspective

By Stella Pappas, Executive Director, New York City Behavioral Health Organization (moved from provider field to managed care in 2013)

Before I go into the reasons for this change, I should first acknowledge that consumers, providers, and managed care companies are all apprehensive as they, together, wade these unchartered waters in New York Medicaid behavioral health. As a longstanding provider, I know that the predominant provider view has been that managed care is:

  1. Exclusively bottom-line focused
  2. Does not understand behavioral health
  3. Develops “best practices” in isolation and then mandates them
  4. A payer and not a partner

Having moved from the provider world to the managed care world in only the last few months, I have found much to my surprise, that quite the opposite is true on each of those points. Furthermore, I have been specifically surprised by:

  1. The number of behavioral health professionals (aside from MDs) employed by Optum at all levels (sales, management, etc.) – MSWs, PhDs, PsyDs, etc.
  2. The incredibly deep commitment to recovery and use of peer services as a means to improving both health and behavioral health outcomes.
  3. The corporate values being much aligned with the consumer-based organization world from where I have come.
  4. The use of an internal research team that reviews emerging best practices, as well as an internal clinical group that, with significant peer representation, develops clinical guidelines based on the literature. These are vetted with both our external policy advisory forum and our consumer advisory board which have representation from across many disciplines and geographic locations. For example, Optum has recently published an article in the December issue of Psychiatric Services that describes the first clinical level of care guidelines for peer services.
  5. The strategic partnerships with providers across the country around pay-for-performance contracting and, more recently, episodic and bundled payments. Optum now has such contracts in place in 22 states.

So why is there a movement from fee-for-service to managed care? We are all aware of the research that demonstrated that persons with mental health and substance abuse disorders die 25 years earlier than those without those disorders. We know that many of these individuals lack basic primary health care.1 We know that their emergency room utilization, hospitalizations, and uncoordinated care for chronic health conditions and end of life are huge drivers of cost. The lack of integrated services and strategies, often due to lack of information and payment support, feed the lack of coordinated services. Managed care has developed strategies to help break the readmission cycle and will work closely with its network providers to address these cost drivers, while improving integration of care and recovery-based outcomes. The shift to managed care and its approved waiver will allow the Department of Health to move toward care integration and allow for payment of previously non-reimbursable services. Also, the role of the health homes will be well-facilitated through managed care.

A Managed Care Organization

Perspective by Sandy Forquer, Senior Vice President, Government Programs, Optum (moved from government field to managed care in 1995)

Managed care functions have changed as the care models have changed. When I started in managed care in 1995 after serving as deputy commissioner for the New York State Office of Mental Health, our functions were quite straightforward. We managed the utilization of services and therefore, managed financial risk. Managing services was a much simpler function at that time. In 1995, we only had five levels of service that included outpatient, day treatment, partial hospitalization, residential and inpatient services. That was it. We managed clinical services through the development of level of care guidelines and the use of utilization review. We would bring together respected clinicians from the community to help us identify inclusion and exclusion criteria. An appeals system was available to request a review of denials when the provider or family disagreed with the decision. As a result of so few levels of care, service options were very limited.

We also managed the provider network which consisted of credentialing tasks, renewals and recruitment where we had access deficits. Additionally, we were responsible for ensuring quality measures were achieved and this required us to have a data system that was capable of collecting data from our providers and formatting it according to state specifications and then submitting it. We produced very simple data reports that shared penetration rates by geographic area, number of complaints, number of appeals, etc. We were accountable for contract deliverables but there were no financial penalties in those early days of managed care for missing objectives.

Today, managed care still performs these basic functions, but the scope and sophistication of work efforts have expanded. Our contracts now require us to monitor for complex medical conditions, coordinate and share information with primary care, provide wellness and technology solutions; use predictive modeling packages to identify high users of services and identify gaps in service, and reduce emergency room visits and hospitalizations. There is a new focus on reducing readmissions as well. We are also tasked with developing innovations to address all of these issues. There is a serious commitment to achieving the triple aim through enhancing the member’s experience, improving outcomes and reducing cost trends. The use of peer support services in achieving all of these outcomes is a major investment and innovation for managed care today. At Optum, we invest in medical economics, the identification of existing and emergent evidence-based practices and training our networks to become proficient in these practices.

Turning data and data analyses into useful information that can be shared with all stakeholders to reduce variation and improve outcomes is a major function of managed care today. The use of dashboard reporting on websites provides a new transparency that allows consumers to make better choices about where to receive services. These new and enhanced services give providers, families and consumers new information to meet both the physical and behavioral needs of our members. The speed of evolution of solutions is greatly enhanced today by advances in both peer support services and technological innovations.

Ensuring a Successful Transition

An assumption of positive intent of all stakeholders is a productive approach that will lead us all in the right direction. Consumers, providers, and managed care companies are truly much more aligned then we expect. All stakeholders are concerned about outcomes. Consumers want to feel better and lead enriched lives. That is also what providers and managed care companies want, for that achieves the triple aim of improved care, improved health, and reduced costs.

To get there, together, we must all shift our beliefs and our behavior. Together, we must protect the continuum of health care resources in New York City. While successfully deployed managed care programs will likely shift services, outright service disruption is completely unnecessary. The focus should be on “repurposing” services and resources to support an improved delivery system.

As a community we can continue to work together to identify existing gaps, consider solutions, make recommendations, and implement improvements. Optum believes that it is incumbent upon all of us to continue to transform the nation’s crisis system into a community-based, recovery-oriented response system integrating peer supports and a no-force approach to care.


  1. The National Association of State Mental Health Program Directors (2006). Morbidity and Mortality in People with Serious Mental Illnesses.

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