An Analysis of the GAO’s recent Report on
Medicaid Managed Care Mental Health "Carveout" Programs and the
Implications for California
By: Melinda Bird, Managing
Attorney, Southern California office, November
3, 1999
In September, 1999, the United States Government Accounting Office (GAO)
released a report entitled: "Medicaid Managed Care: Four States’
Experience with Mental Health Carveout Programs," GAO/HEHS-99-118.[1] This report has significant implications for
California, which has operated a mental health managed care program of the type
studied by the GAO for the past two years.[2]
California’s request for a two year renewal of its $700 million mental health
managed care program is presently pending with the Health Care Financing
Administration ("HCFA"), the federal agency charged with approval of
these Medicaid managed care demonstration projects.
California shares many of the
positive characteristics identified by the GAO, such as an ombudsman program,
annual on-site reviews and a stakeholder/advisory committee which includes
mental health consumers. However, California
also shares many of the problems identified in the report, including
inconsistent state oversight and the attendant risks of poor access and quality
of care for vulnerable consumers. It has failed to take effective action when
its own oversight reviews revealed non-compliance and lacks the quantitative
measures of plan performance adopted by the states studied. California has
failed to impose even minimal performance standards on its county managed care
plans and has not used the contracting process to ensure that a range of
voluntary, community-based, outpatient services are available to consumers.
In fact, the state’s recent independent assessment of its mental health
waiver program revealed troubling new data. Although inpatient expenditures are
down, involuntary hospital admissions are up; although length of hospital stay
is down, re-hospitalization rates are up.[3] This suggests that the pressure to
reduce costs under managed care has led to "churning" in which
hospitals discharge patients without aftercare or adequate outpatient services
in the community. By failing to set any standards for timely follow-up care or
even requiring county data reporting on issues such as waiting times for
services, the state has abdicated its oversight role in this area. Unless
California
strengthens its own managed care monitoring program, it can expect difficulties
with its current request for continued Medicaid funding and approval, since
HCFA intends to increase its oversight and scrutiny of state programs in
response to the GAO report.
ELIMINATING PLAN CHOICE AND THE RIGHT TO
DISENROLL
The GAO was asked to prepare this report because "many states,
beginning in the early 1990's, received waivers of certain Medicaid rules to
establish new managed care programs for mental health services." GAO
Report at 1. The GAO explains that using these Medicaid waivers, "many
states ‘carved out’ or separated mental health services from physical health
services placing them under separate financing and administrative
arrangements." As of July 1998, 36 states, including California,
had Medicaid waivers for managed mental health services. GAO at 2. In its
report, the GAO studied 4 states -- Massachusetts,
Iowa, Colorado
and Washington -- which had
completed at least one contracting cycle for mental health managed care and
thus "had more experience than most other states." GAO at 2. As in
California,
these four states mandated enrollment for all Medicaid recipients and offered
mental health consumers no choice of managed care plan, so that they could not
disenroll from a plan they did not like. GAO at 2, 10-11.
The GAO noted that generally, managed care creates a "risk that
[prepaid health plans] may undertreat illnesses in order to contain costs.
Underservice can be particularly problematic for Medicaid beneficiaries needing
mental health services." GAO at 2. The GAO noted that "[f]reedom of
plan choice can help promote quality and offset incentives to restrict
access" through competition between different plans. GAO at 10. Most
managed care programs for physical health care permit consumers to choose from
among several different plans and to enroll and disenroll at regular intervals.
Consequently, eliminating any choice of managed care plan, as California
and the four states in the GAO study have, has troubling implications. As the
GAO explains, "mandating enrollment in a single plan prevents consumers
who are dissatisfied with their managed care from acting on their
dissatisfaction by choosing another plan or [leaving managed care entirely].
Because there is no competition among plans, enrollees must accept the coverage
and quality of services that the plan provides." GAO at 12.
California was granted special
federal permission from HCFA to limit mental health consumers to a single
managed care plan in each county. In contrast, California
gives consumers in most other Medi-Cal managed care programs a choice of at
least two managed care plans or provider groups and the protection of switching
plans if dissatisfied. If California’s
request to continue its mental health managed care waiver is approved, quality
assurance and state enforcement should be even more stringent than with other
types of managed care, since mental health consumers lack the right to change
plans if their needs are ignored.
PROBLEMS WITH WEAK STATE ENFORCEMENT
Although stronger state enforcement would offset the loss of patient
protections when there is no freedom of plan choice, the GAO noted that state
enforcement efforts may be inhibited when is only a single managed care plan.
"If there are major problems with a plan’s performance, state officials
may be less prepared to force it to improve performance or to cancel the
contract when an entire state or area would be affected by the decision,
because this action could disrupt mental health care for many people." GAO
at 12.
In an earlier report specifically on California,
the GAO had already noted that lack of competition and weak enforcement were
significant problems with this state’s Medi-Cal physical health managed care
plans. See, GAO Report 95-87, April, 1995. With mental health managed care
plans, oversight continues to lack "teeth." The state has an
oversight process with annual on-site reviews of each county mental health
plan. The oversight reviews have identified numerous violations and directed
counties to prepare plans of correction. However, since no action has ever been
taken against a county which is out of compliance, there is little incentive
for rapid resolution by the county managed care plan. For example, after its
June, 1998 oversight review Yolo
County
disputed an issue of compliance for so long that its plan of correction was
resolved only weeks before its next review a year later. In other cases,
counties have ignored corrective action plans with impunity. The
Lassen
County mental health plan has been
out of compliance with state requirements and its own corrective action plan
since the managed care program began; while the state has complained, even the
most serious deficiencies remain uncorrected and no sanctions have been
imposed.
The other states studied by the GAO took a more active enforcement role.
Massachusetts
and Iowa, for example, used both
penalties and incentive payments based on quantitative measures of plan
performance. Colorado fined plans
which did not submit required data in a timely fashion.
EXTERNAL QUALITY REVIEWS WILL BE A MORE
EFFECTIVE MONITORING TOOL THAN A STATEWIDE INDEPENDENT ASSESSMENT
Federal Medicaid law requires most managed care organizations to have annual
external quality reviews by certified peer-review organizations, in addition to
regular monitoring by the state oversight agency. The external quality reviews
involve a clinical review of a sample of cases within each plan, as well as
other focused reviews. The GAO noted that these are "an important
monitoring requirement" because they are "done by qualified
professionals who are independent of the plan" and "tend to be
focused evaluations of each plan’s quality of care." GAO at 24, n. 44.
In contrast, HCFA currently exempts mental health plans from the requirement
for annual external quality reviews and requires only a statewide independent
assessment which HCFA admitted is "often of uncertain quality." In
California,
the consultant who completed the state’s most recent "independent
assessment" is a former state mental health employee who also receives
funding and consulting contracts directly from the county plans that she was
supposed to be evaluating. See, Footnote 3 Callahan Report. While her
study did produce new and useful information, only 10 of California’s
counties were examined in any depth. In addition, the consultant lacks clinical
experience and could not do any review of cases or clinical practice.
In response to the GAO report, HCFA has stated that it intends to improve
oversight by requiring each mental health plan in a state to have an external
quality review by a peer-review organization. California
has already asked HCFA for an exemption from this requirement, claiming that it
will be "burdensome." However, HCFA told the GAO that it "does
not, as a matter of policy, waive quality provisions" such as the external
quality review, so California’s
request is likely to be denied. GAO at 24. Given the lack of consumer choice
and shortage of outpatient services, California
should recognize the importance of an in-depth review of every county plan in
order to ensure quality care.
OTHER STATES USED QUANTITATIVE PERFORMANCE
STANDARDS TO ENSURE QUALITY CARE
According to the GAO, other states do not rely solely on annual reviews of
mental health managed care plans, as does California.
Massachusetts and Iowa
state officials also "relied heavily on the use of quantitative
performance goals, to which they attached monetary awards and penalties."
GAO at 27.
In its contract with the carveout plan, Massachusetts
established twenty performance measures. These measures included medication
monitoring after discharge, notification of hospitalization to the outpatient
primary care physician, after care planning and intensive case management for
persons with both a psychiatric and a substance abuse diagnosis . . . [Later,]
Massachusetts instituted a performance measure to increase consumer involvement
in treatment planning.
GAO at 28-29.
Unlike Massachusetts,
California
has set no performance standards for patient care. The state has not
incorporated into its plan contracts the performance standards which are common
to every monitoring protocol in the behavioral health care community, including
those used by large commercial providers such as ValueOptions or Magellan.[4]
The most basic is a requirement that the managed care plan arrange an
outpatient visit within 7 days of discharge from a psychiatric hospitalization.
California, however, does not
require its mental health managed care plans to meet this standard, or even to
keep data on waiting times for services and whether patients get follow-up
appointments after discharge
California’s lack of standards
is compounded by the lack of data about how county mental health plans are
performing, since the most basic measures are unreported even though the raw
data apparently is available. The California Mental Health Planning Council has
recommended that the state begin compiling county-by-county reports on a number
of measures, including involuntary admissions as compared to all inpatient
admissions and all Medi-Cal admissions; inpatient readmissions within 30 days;
"penetration rate" which is the percent of Medi-Cal eligibles who
receive some mental service by age, gender and ethnicity; and percent of
persons discharged from inpatient care who receive services in 7 days.[5]
HCFA will soon require this and other data as part of a new "early
warning" system developed with SAMHSA[6] to monitor managed mental health
plans. The HCFA indicators will include data on service authorizations,
homelessness, inpatient recidivism and involuntary admissions. As part of its
request for a waiver renewal, California
needs to expand its state oversight to incorporate the GAO’s observations on
effective use of quantitative data as utilized by other states in the study.
This would also require California
to fully adopt the evaluation measures in the Mental Health Statistical
Improvement Project (MHSIP) Consumer-Oriented Mental Health Report Card
developed by the Center for Mental Health Services in
SAMHSA, which includes measures on client satisfaction, non-coercive treatment,
consumer-run services, consumers in staff positions, and other important
service components.
UNLIKE CALIFORNIA, OTHER STATES REQUIRED THAT PLANS PROVIDE SPECIFIC
REHABILITATIVE SERVICES
Some states used managed care to mandate expansion of outpatient services in
ways that California has not. A
growing body of research is confirming that "psychosocial
rehabilitation" is more effective than traditional medical approaches in
improving consumer outcomes and functioning.[7] In keeping with this research,
Iowa
required that services be based on "psychosocial necessity." GAO at
14. Iowa’s contract with mental
health plans required each plan to provide mobile crisis counseling,
peer support groups, supported community living, assertive community treatment
and intensive psychiatric rehabilitation. GAO at 16. Similarly, Colorado
required its mental health plans to provide "nontraditional
services such as peer counseling and support services, family preservation,
consumer drop-in services and early intervention." GAO at 16.
While California covers all these services under its Medicaid plan, it does
not require county plans to provide each type of services, leaving the choice
and quantity up to the discretion of the county plan.[8] Consequently, many
California counties choose not to provide mobile crisis intervention or crisis
stabilization, although this is a covered Medi-Cal service. Others provide
services such as peer support and supported community living on a pilot basis
only, for a small number of consumers. Some important services are not required
at all under the county contracts such as transportation assistance to mental
health visits.[9] California could increase the effectiveness of its
contracting and monitoring by following the lead of other states and requiring
that every county mental health plan provide a specified range of
rehabilitation services in sufficient quantity to respond to all consumer
requests.
CONCLUSION
In general, the GAO was critical of HCFA’s
lax oversight of state managed care projects and noted that the federal agency
"recognized its need to oversee mental health carveouts more
systematically." When this tighter review occurs, California runs the risk
of federal sanctions or even defunding if it fails to modify its own monitoring
program to adopt the measures identified by the GAO as desirable, including:
a.
taking action and
imposing sanctions when annual state oversight reviews reveal that plans are
not in compliance;
b.
requiring each county plan
to have an annual external quality review by a peer-review organization;
c.
setting minimum county
standards for discharge and aftercare services and compiling quantitative data
on county performance including involuntary admission rates and other measures
in the MHSIP Consumer-Oriented Mental Health Report Card;
d.
using its contracting
authority to require county plans to provide a specified range of the
rehabilitative services that consumers request.
Endnotes
[1] The full report is available from the GAO website,
www.gao.gov, or by calling Protection and Advocacy, Inc. at 213-427-8747.
[2] In California,
the Medicaid program is known as Medi-Cal. Under California’s managed care
demonstration project, county operated mental health plans authorize specialty
mental health services for Medi-Cal beneficiaries who meet certain eligibility
criteria. Medi-Cal recipients are limited to the single managed care plan in
their county and may obtain services only from the plan’s network of contract
providers.
[3] Callahan and Yamamoto, I.D.E.A. Consulting, California’s
Medi-Cal Mental Heath Delivery System - Independent Assessment of HCFA 1915b
Waiver, August 1999.
[4] There is a national consensus on
appropriate performance measures which stems from the 1997 Santa Fe Summit
convened by the American College of Mental Health Administration, in which many
California officials participated. The report produced by the Santa Fe Summit, Preserving
Quality and Value in the Managed Care Equation, contains a core set of
indicators and values and a comparison of different measures with common items
identified.
[5] See, California Mental health Planning
Council, Draft Chapter from the Master Plan Update on System Oversight
and Quality Improvement, Sept, 22, 1999.
[6] SAMHSA is the Substance Abuse and Mental
Health Services Administration of the United States Department of Health and
Human Services.
[7] See, e.g. Barton, "Psychosocial
Rehabilitation Services in Community Support Systems: A Review of Outcomes and
Policy Recommendations," Psychiatric Services, April 1999, Vol. 50,
No. 4 (summarizing research studies).
[8] The fact that all covered Medi-Cal
services are not available through every county mental health plan also
suggests that services are not available on a state-wide basis, as required by
federal Medicaid law.
[9] Transportation is covered as a case
management service and is recommended for inclusion in managed care contracts
in a recent SAMHSA technical assistance manual, Partners in Panning:
Consumers’ Role in Contracting for Public-Sector Managed Mental Health and
Addiction Services, April 1998, at 37.
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