Annotated Bibliography - Public Sector

This special supplementary section of the bibliography provides an independently produced annotated bibliography on managed behavioural healthcare prepared for the US Substance Abuse and Mental Health Services Administration; please see the first page of the supplement for recommended citation information.

Table of Contents

  1. Introduction
  2. Benefit and System Design
  3. Capitation
  4. Community Mental Health Services
  5. Diagnosis-Related Groups (DRGs)
  6. Economics, Forecasting, and Pricing
  7. Employee Assistance Programs (EAPs)
  8. Health Maintenance Organizations (HMOs)
  9. Law and Ethics
  10. Provider Issues
  11. Public Sector
  12. Quality Assurance and Outcomes
  13. Special Populations
    1. Children
    2. Elderly
    3. Ethnic Groups
    4. Women
  14. Substance Abuse
  15. Training and Education
  16. Utilization Management
  17. Author Index
  18. Keyword Index

Public Sector

253. Austin, M. J., Blum, S. R., & Murtaza, N. (1995). Local-state government relations and the development of public sector managed mental health care systems. Administration and Policy in Mental Health 22(3), 203-215.

This article begins by establishing the existence of a trend over the past three decades of devolution of authority for the raising of funds and provision of services in the mental health arena from the Federal government to States and from States to county and city gov-ernments. Resources are extremely scarce in the realm of mental health services, and therefore policy makers have adopted the theory that they can best be managed and fairly distributed by local authorities. This article describes how county governments handle the burden of responsibility for mental health services and problems that emerge. Some of the problems raised are the difficulties in raising adequate funds, the failure to move dollars from inpatient to community care, the burden of costly reporting and accountability requirements, and the expanding of responsibility without simultaneous increase in funding or autonomy. The advent of managed mental health care is beginning to once again alter the dynamic of respon-sibility between State and county governments. The authors identify potential implications for county mental health services.
Keywords: local governments, public sector

254. Beinecke, R. H., & Lockhart, A. (1998). A provider assessment of the Massachusetts Medicaid managed behavioral health program: Year four. Administration and Policy in Mental Health 25(4), 411-426.

This article reports the results of the third annual assessment of the Massachusetts Medicaid Managed Mental Health/Substance Abuse Program. A random sample of 80 providers, strati-fied by service type and region, were interviewed by phone for their views on the program in year four as compared with year three. Providers were questioned about access, utilization, and quality of care; severity of the clients seen by providers; length of stay; readmission; emergency room admissions aftercare; effect on clients in the program; integration of care in the program; clinical review process; medication use; hospital discharge; and administration of the program. The results indicated that access and quality of care were better or the same; client severity continued to increase; length of stay decreased; and readmission, aftercare, and emergency room admissions were the same. The providers reported difficulties with integra-tion of services, linkages with support services, and the administration of the program.
Keywords: carve-outs, evaluation, Massachusetts, Medicaid, public sector

255. Beinecke, R. H., & Perlman, S. B. (1997). The impact of the Massachusetts managed mental health/substance abuse program on outpatient mental health clinics. Community Mental Health Journal 33 (5), 377-385.

This article discusses how mental health clinics in Massachusetts have responded to the Medicaid Mental Health/Substance Abuse Program (MH/SAP). Data were used from a tele-phone survey of a random sample of providers in the Mental Health Management of America (MHMA) network, and from MHMA claims payment data for fiscal years 1993 and 1994. The authors found that total expenditures decreased while utilization increased over the pre-vious year, and that service indicators such as access, utilization, and quality of care were similar or better. The article also discussed providers’ problems with program management, and changes outpatient providers have made in their services and their organization in response to the MH/SAP.
Keywords: carve-outs, community providers, evaluation, Massachusetts, Medicaid, public sector

256. Beinecke, R. H., Shepard, D. S., Goodman, M., & Rivera, M. (1997). Assessment of the Massachusetts Medicaid managed behavioral health program: Year three. Administration and Policy in Mental Health 24(3), 205-220.

This article reports the results of the second annual assessment of the Massachusetts Medicaid Managed Mental Health/Substance Abuse Program. Information was collected from claims data in fiscal years 1993 and 1994 and a random sample of 88 providers, strati-fied by service type and region, who were interviewed by phone for their views on the pro-gram in year two. The authors interviewed providers, professionals, consumer organizations, and public officials from the Division of Medical Assistance and Mental Health Management of America. Providers were questioned about access, utilization, quality of care, severity of the clients seen by providers, length of stay, readmission, aftercare, integration of care in the program, and the clinical review process. The results indicated that access and quality of care were the same or better in year three, client severity was higher, and aftercare planning and integration of care had improved. However, providers reported continuing problems with program administration.
Keywords: carve-outs, evaluation, Massachusetts, Medicaid, public sector

257. Callahan, J. J., & Merrick, E. L. (1997). Designing public sector managed care systems. In K. Minkoff and D. Pollack (Eds.), Managed mental health care in the public sector: A survival manual (pp. 45-58). Amsterdam: Harwood Academic Publishers.

This chapter discusses system-level considerations and decisions involved in the design of public sector managed care arrangements. The authors address the implications of a variety of decisions for the organization of health care delivery and for consumers, mental health practitioners, third-party payers, and managed care companies. The following issues are discussed: the "make" versus "buy" decision, for-profit managed care organizations (MCOs) versus nonprofit agencies, total population versus subpopulation coverage, statewide versus sub-State coverage, carve-out versus integration with general health care services, selection of strategies for limiting utilization (demand- versus supply-side controls, capitation versus non-capitated payment mechanisms, managed care networks versus HMOs, and the selection of methodologies for accountability and quality control.
Keywords: overviews, public sector

258. Callahan, J. J., Shepard, D. S., Beinecke, R. H., Larson, M. J., & Cavanaugh, D. (1995). Mental health/substance abuse treatment in managed care: The Massachusetts Medicaid experience. Health Affairs. 14(3), 173-184.

This study assesses the impact of Massachusetts Medicaid’s specialty mental health managed care carve-out on expenditures, access, and quality of care in the first year of operation. The report is based on information from the program’s "independent review" submitted to the the Centers for Medicare and Medicaid Services. Access was evaluated based on the percentage of enrollees who used services. Quality was based on the percentage of discharges followed by readmissions. The findings show that a 22 percent reduction in expenditures below levels pre-dicted without managed care was accomplished; that access and quality were not diminished on the whole; and that cost savings resulted from reduced numbers of admissions, shorter lengths of stay, use of alternative nonhospital 24-hour care facilities, and lower prices. One possible area of concern within the findings is in the treatment of children and adolescents, whose readmission rates increased slightly and whose providers reported lower levels of satis-faction. On the whole, the authors find results that confirm the potential benefits of managed mental health and substance abuse treatment.
Keywords: carve-outs, children, costs, evaluation, Massachusetts, Medicaid, outcomes, public sector, substance abuse, utilization

259. Chalk, M. (1997). Privatizing public mental health and substance abuse services: Issues, opportunities, and challenges. Quality Management in Health Care, 5(2), 55-64.

This article provides a discussion of the concerns faced by States as they move into contracting with private companies for the provision of public mental health and substance abuse treat-ment services. The author notes that States are making a large number of critical decisions, such as whether to "carve out" certain services or populations, and complicated calculations, such as determining reasonable capitation rates for vulnerable groups, without adequate infor-mation or experience in the practice of health care management. States may not recognize the particular complexities and challenges of managing substance abuse and mental health services. The management of these services is a newer field in which there is less experience on which to base policies. The author discusses the chronicity, stigmatization, and social costs of mental illness and substance abuse problems as examples of the unique complexities of mental health and substance abuse treatment. The author addresses resulting implications for policy making in the course of privatization initiatives. Topics discussed include organizational structure, coordination and integration of agencies and private companies, organizational mission and values, establishing methods of performance assessment, and ensuring consumer participation and control.
Keywords: contracting, public sector, substance abuse

260. Cuffel, B. J., Snowden, L., Masland, M., & Piccagli, G. (1996). Managed care in the public mental health system. Community Mental Health Journal, 32(2), 109-124.

This article describes managed care’s organizational arrangements using "principal-agent the-ory," wherein the managed care organization (MCO) has as its primary functions the role of agent for the payer and the responsibility of managing the relationships between payers, providers, and consumers. These players enter into contractual relationships with one another, thereby creating an "agency relationship." In this relationship, however, there is the potential for the provider party to act in its own interest, rather than that of the other parties, because of the fact that the other parties have imperfect knowledge of provider behaviors and con-sumer outcomes. According to this theory, the MCO presents a potential solution to this problem in that it is able to oversee these behaviors and outcomes. This role becomes more complex in the public mental health system when MCOs are responsible for managing the relationships between citizen/taxpayer and government, consumer and provider, and govern-ment and mental health authority. In addition, there may be multiple agency or program payers at multiple levels of government. These authors argue that MCOs must recognize the intricacies of their responsibility to each of these parties, and that public agencies must recog-nize the value of oversight and information-gathering made possible by MCOs in order for this partnership to be successful.
Keywords: contracting, managed behavioral health care organizations, public sector

261. Dangerfield, D., & Betit, R. L. (1993). Managed mental health care in the public sector. New Directions for Mental Health Services, 59, 67-80.

In 1991, the Utah Medicaid Prepaid Mental Health Plan was implemented in three regions of the State. This chapter describes the implementation of this plan at one site, Valley Mental Health (VMH), a private, not-for-profit corporation that provides mental health services under contract with the State. Prominent features of the Medicaid demonstration project include capitation, placing the provider at financial risk, providing incentives for providers to manage care wisely, and tying payments to a specific risk pool. VMH developed a number of principles to ensure that clients receive appropriate and timely services. These principles include enhanced services to severely and persistently mentally ill persons, individualized treatment planning, broad array of services, attention to location of services, and single clinical authority. A case example illustrates the VMH approach.
Keywords: capitation, public sector, Utah

262. Egnew, R. C., & Baler, S. G. (1998). Developing principles, goals, and models for public/private partnerships. Administration and Policy in Mental Health, 25(6), 571-579.

At a time when behavioral health authorities are becoming the major administrative entity responsible for the provision of behavioral health care services, many have begun to explore the option of developing a public/private partnership with a for-profit managed care organi-zation for specific administrative or technologically based services. This article examines the necessary philosophy, common set of principles, and objectives for this type of partnership to be successful. The authors identify principles on governance, administration, participation, and services and demonstrate four potential models for collaboration. Finally, they consider potential benefits as well as obstacles to collaboration and present suggestions for public sector behavioral health authorities considering such a partnership.
Keywords: models, public sector

263. Essock, S. M., & Goldman, H. H. (1995). States’ embrace of managed mental health care. Health Affairs, 14(3), 34-44.

It is important for State Mental Health Authorities (SMHAs) to take advantage of specialized health care management expertise that has been developed in the private sector. At the same time, the authors are concerned with the need for SMHAs to continue to make use of their own expertise in serving vulnerable populations. This article discusses present issues and trends in the development of public sector managed behavioral health care: how States can fit togeth-er their own management goals with those of managed care contractors; how managed care techniques such as contracting, utilization review, and monitoring can be put to use in public sector programs; how States can navigate the transition from delivering services to monitoring their delivery; and how they can effectively write incentives into contracts to promote better management of care.
Keywords: contracting, public sector

264. Feldman, S., Baler, S., & Penner, S. (1997). The role of private-for-profit managed behavioral health in the public sector. Administration and Policy in Mental Health, 24(5), 379-389.

This article discusses the rapid growth of public sector investment in the provision of behav-ioral health services through contracts with private managed care companies, the reasons for this growth (political climate, need to contain costs and prove effectiveness), and its out-comesÑ both benefits and drawbacks. Among the topics discussed are the observation that merging public and private sectors can lead to a clash of cultures with different sets of values, priorities, and practice patterns; and concerns that the public sector has traditionally served a very different population from those traditionally treated in the private sector. The article also presents divergent models that are emerging, using Solano County, CA, and Kings County, WA, as examples.
Keywords: California, local governments, models, public sector, Washington

265. Fisher, W. H., Lindrooth, R. C., Norton, E. C., & Dickey, B. (1999). How managed care organizations develop selective contracting networks for psychiatric inpatient care: A Massachusetts case study. Inquiry, 35(4), 417-431.

This case study describes the formation of a public managed care network to service Medicaid beneficiaries in Massachusetts. The study draws on the Massachusetts example to answer questions applicable to the Medicaid managed mental health care market around the Nation. It models how hospitals’ experience with Medicaid psychiatric patients, prior reimbursement rates, and geographic location each affected the decision of a Massachusetts hospital to bid for membership in a managed care organization (MCO). Also, the study models which factors determined the MCO’s choice of hospitals with which to contract. The data analysis shows that hospitals are more likely to bid if they have treated more psy-chiatric inpatients and more Medicaid Supplemental Security Income individuals, and MCOs are more likely to choose hospitals for their network based on experience with Medicaid patients and geographic dispersion rather than reimbursement rates.
Keywords: contracting, Massachusetts, Medicaid, public sector

266. Frank, R. G., & McGuire, T. G. (1997). Savings from a Medicaid carve-out for mental health and substance abuse services in Massachusetts. Psychiatric Services, 48(9), 1147-1152.

This article describes cost savings accomplished by the Massachusetts behavioral managed care carve-out, as the first and one of the few such behavioral carve-outs to have employed a for-profit company to deliver services of this kind to this population. Using data from publicly available documents, mainly those used in the contract rebidding process, these authors com-pare expenditures for the delivery of services by the managed care vendor to projected expen-ditures based on the year before the carve-out adjusted for inflation. Findings show savings of 25 percent below projected expenditures, and show that these savings were maintained in later years. Furthermore, an examination of incentives built into the contract with the State indi-cates that the vendor had relatively weak incentives to reduce costs below target for the direct services component of its budget, while having greater opportunity for profit through savings in the contract’s budget for administrative functions. These authors conclude that other moti-vations existed for the vendor to practice "managing to the contract," such as the interests of recontracting and of pursuing other clients by pleasing Massachusetts Medicaid.
Keywords: carve-outs, contracting, costs, evaluation, Massachusetts, Medicaid, public sector

267. Geller, J. L., Fisher, W. H., McDermeit, M., & Brown, J. M. (1998). The effects of public managed care on patterns of intensive use of inpatient psychiatric services. Psychiatric Services, 49(3), 327-332.

Public sector managed behavioral health care is intended to change utilization in ways that lead to more cost-effective uses of mental health services. Some changes, however, may actually affect certain populations of patients adversely, making their care less cost-effective. This article presents a study of patterns of inpatient mental health services utilization by frequent users, in order to recommend ways for public sector managed care systems to serve these patients more effectively. The authors draw their sample of patients from users of the Massachusetts public sector managed care program who were identified by the Massachusetts Department of Mental Health client tracking system as having five or more admissions in any year from 1992 to 1995. They compare such factors as patients’ demographics, levels of function and personal distress, repeated use of the same facilities vs. new ones, frequency of admissions, and length of inpatient stays. The authors conclude that some of the practices of managed mental health care in Massachusetts have an adverse impact on patients in this particular special needs population. For example, their results indicate that patients who made use of multiple different facilities rather than the same one consistently tended to have longer stays. They point out that constraints of managed care networks can lead to this kind of discontinu-ity, which ultimately results in less rather than more cost-effective care. On the basis of these results, the authors make policy recommendations.
Keywords: Massachusetts, outcomes, public sector, serious mental illness, utilization

268. Hadley, T. R., Schinnar, A. P., & Rothbard, A. B. (1992). Managed mental health in the public sector. In S. Feldman (Ed.), Managed mental health services (1st ed., pp. 45-60). Springfield, IL: Charles C. Thomas.

Policymakers have introduced a number of proposals to apply capitation and managed care to public sector mental health programs serving chronic mentally ill persons. These proposals are based in part on cost containment models developed over the past 30 years. This chapter describes capitation demonstration projects in five States. In general, these experiments are designed to improve coordination of services and discourage inpatient care. This is achieved through the use of incentives to provide more individualized treatment, and by centralized management. The provision of mental health care through capitated financing requires the development of a single funding stream administered by a central authority, such as a county office. Resources and responsibilities are transferred either "downstream," from Federal to State to local authorities, or "upstream," from local to higher level authorities. The authors discuss the savings as well as the costs of downstream financing, and conclude that capitation models should be adapted to meet the unique needs of their communities.
Keywords: capitation, public sector, serious mental illness

269. Hogan, M. F. (1996). Managing the whole system of care. New Directions for Mental Health Services, 72, 13-24.

As managed care increases its penetration into the public mental health system, responsibility for mental health care shifts from the public sector to the private sector, bringing about ten-sions over which populations should receive priority for care, along with the concurrent changes in the financing and organization of services. This article analyzes the match between managed care methods and public mental health services. The author examines several factors in assessing the congruence between the two, including the ability of managed care to meet the needs of the diverse and needy population served by the public system; the fit between public and private system management strategies; the applicability of managed care to other aspects of the public mental health system such as housing and rehabilitation; and the implications of managed care for public mental health programs involving social or legal control. The article also discusses the social and political implications of allying the private and public sectors to manage public care.
Keywords: overviews, public sector

270. Hoge, M. A., Davidson, L., Griffith, E. E. H., & Jacobs, S. (1998). The crisis of managed care in the public sector. International Journal of Mental Health, 27(2), 52-71.

This article discusses the current trends in public sector managed behavioral health care and defines the potential opportunities and dangers of using managed care. The authors begin with a brief overview of past public sector efforts in managed care and set forth an ideal approach. They then discuss recent trends in public sector managed care, classifying public sector managed care initiatives into three general categories (managed Medicaid, initiatives focused on populations with severe and prolonged mental illness, and programs that main-stream the severely ill into health maintenance organizations [HMOs]), and summarize find-ings about the outcome of managed behavioral health care in the public sector. The authors discuss the potential opportunities created by public sector managed care (greater accounta-bility, access, and coordination of care for specific individuals and for the system of services as a whole; less restrictive treatments of care; greater cost control and flexibility in spending; enhanced quality control; and expanding coverage for the uninsured), and the potential dangers (using managed care as a ploy for decreased funding; fragmentation of funding and services with little pooling of funds; cost-shifting; erosion of local systems of care; and an erosion of a skilled workforce). They offer several conclusions on the current state of public sector managed behavioral health care.
Keywords: Medicaid, public sector, serious mental illness, trends

271. Hoge, M. A., Davidson, L., Griffith, E. E. H., Sledge, W. H., & Howenstine, R. A. (1994). Defining managed care in public-sector psychiatry. Hospital and Community Psychiatry, 45, 1085-1089.

This paper attempts to draw a connection from managed care in the private sector to the adoption of managed care policies by the public sector. The authors offer a conceptual frame-work and a working definition of public sector managed care. The argument first analyzes the four major service delivery strategies used by the public sector: case management, assertive community treatment, local mental health authorities, and financing strategies. On the basis of these core functions, the authors posit a definition of managed care in the public sector, and use this definition to evaluate the existing public-sector managed care delivery system as well as the Clinton administration’s proposed changes to the health care system.
Keywords: overviews, public sector

272. Hoge, M. A., Jacobs, S., Thakur, N. M., & Griffith, E. E. H. (1999). Ten dimensions of public-sector managed care. Psychiatric Services, 50, 51-55.

Recent literature on managed care organizations in the public sector has demonstrated that each managed care initiative is shaped by local structures, history, geography, and politics. In this paper, the authors examine existing initiatives in the public sector to extend the knowledge from earlier reviews. They identify 10 dimensions on which a managed care initiative should be assessed in order to understand its likely effect on existing systems of care. The dimensions are objectives, scope, organizational structures and authority, enrollment, benefit package, strategies for managing utilization, best practices, financing, quality management and out-comes measurement, and the impact of the initiative on the public mental health system. From their review of existing initiatives, the authors conclude that most focus on one principal dimension, giving less attention to other important dimensions. They argue for a set of com-mon assessment criteria to enable a comprehensive approach to planning and implementing managed care projects.
Keywords: overviews, public sector

273. Katz, S. E., & Trainor, P. E. (1988). Impact of cost containment strategies on the state mental health delivery system. In D. J. Scherl, J. T. English, and S. S. Sharfstein (Eds.), Prospective payment and psychiatric care (1st ed., p. 172). Washington, DC: American Psychiatric Association.

This chapter discusses the role of State government in mental health, and mental health offi-cials’ concerns about the impact of Medicare’s prospective payment system (PPS) and capita-tion on quality of care. The authors argue that PPS will have three major effects: increase the inpatient caseload, shift costs from general to State psychiatric hospitals, and lead to the loss of Federal funds to support inpatient care in psychiatric hospitals. Prompted by these concerns, the National Association of State Mental Health Program Directors conducted a study of the impact of PPS on the State mental health system in five States. The authors discuss concerns about the DRG (diagnosis-related group)-based and capitation approaches to containing Medicaid costs, and call for evaluation of these efforts. They raise questions about the stan-dards used by professional review organizations to monitor hospital admissions. Finally, they express concern that the private sector will forget its duty to share the responsibility to care for mentally ill persons and inappropriately shift the burden to the State system.
Keywords: capitation, DRGs

274. Leadholm, B., & Kerzner, J. (1994). Public managed care: Developing comprehensive community support systems in Massachusetts. Managed Care Quarterly, 2, 25-30.

In 1991, the Massachusetts commissioner of mental health proposed to restructure the service system through implementing public managed care. The reorganization has led to a shifting of resources from inpatient hospital use to managed community-based services. This article describes the organization of the program within the Massachusetts Department of Mental Health and the ways that the new program’s concern with consumer choice and psychosocial rehabilitation are promoted. Accountability and quality management are ensured through the development of quality councils, a utilization management system, practice guidelines, and performance standards. These features are discussed, as are methods of managed care financ-ing and barriers to implementation.
Keywords: Massachusetts, public sector

275. McFarland, B. H., George, R. A., Pollack, D. A., & Angell, R. H. (1993). Managed mental health in the Oregon health plan. New Directions for Mental Health Services, 59, 41-54.

This article outlines the development of the Oregon Health Plan, which is intended to provide health coverage for uninsured Oregonians. In particular, it describes the efforts to demonstrate the rationality of including mental health coverage in a comprehensive plan. The authors describe the issues and challenges raised in determining which services would be provided and in integrating the Oregon Health Plan with the ongoing public mental health system. The delivery and financing systems are also described.
Keywords: Oregon, public sector

276. Mechanic, D. (1991). Strategies for integrating public mental health services. Hospital and Community Psychiatry, 42, 797-801.

There are significant deficiencies in the delivery and financing of the public mental health sector, particularly for chronically mentally ill persons. A major problem is not just the lack of funds, but the lack of integrated and coherent efforts to provide services. The author pres-ents four generic approaches to building a viable public mental health system: developing assertive community treatment systems, capitating mental health care, building strong local mental health authorities, and developing supportive reimbursement structures. The author discusses the advantages and disadvantages of each model, and recommends that they be implemented conjointly to reduce costs and improve quality of care.
Keywords: models, public sector, serious mental illness

277. Minkoff, K. (1994). Community mental health in the nineties: Public sector managed care. Community Mental Health Journal, 30, 317-321.

The author discusses the recent shift toward managed care in public sector mental health programs. Implications for community mental health professionals are reviewed, and principles for evaluating public sector managed care programs are presented.
Keywords: community providers, public sector

278. Moscovice, I. S., Finch, M., & Lurie, N. (1989). Minnesota: Plan choice by the mentally ill in Medicaid prepaid health plans. Advances in Health Economics and Health Services Research, 10, 265-278.

This study reports on a federally funded demonstration project to test the efficacy of providing prepaid health care services to a Medicaid population. Minnesota was one of six States to receive a Federal waiver for this project, and the only State with a true experimental design in which enrollees are randomly assigned to either a prepaid health plan or fee-for-service system. Thirty-five percent of all Medicaid beneficiaries in Hennepin County were randomly assigned to prepaid plans. The State provided a broker to contact clients and educate them about their choices of health care plans. Those who did not choose a health care plan within 90 days were assigned to a plan. The study examined predictors of voluntarily choosing a plan rather than being assigned to one. Eighty-two percent of clients chose a plan. The two main factors responsible for likelihood of choosing a plan were presence of a usual source of care and education.
Keywords: capitation, Medicaid, Minnesota, public sector

279. Norton, E. C., Lindrooth, R. C., & Dickey, B. (1997). Cost shifting in a mental health carve-out for the AFDC population. Health Care Financing Review, 18(3), 95-108.

Many States have opted to "carve out" mental health and/or substance abuse services from their regular Medicaid programs and contract them to managed care vendors. This article explores the potential that managed care vendors who administer a behavioral health carve-out may have an incentive to promote services in the mainstream health care system to their clientele so as to shift costs to the regular Medicaid program and reap the financial reward. Certain medical and pharmaceutical services (all covered by regular Medicaid) can be substi-tuted for some behavioral health services. These authors examine data for the Massachusetts mental health carve-out serving the Aid to Families with Dependent Children (AFDC) popula-tion. Their analysis shows overall change in expenditures after implementation of the carve-out, examines expenditures for two services covered by the Medicaid program and two covered by the behavioral managed care vendor as a test for cost-shifting, and inquires into whether cost-shifting was more pronounced for patients with severe mental illness. This last inquiry is significant because patients who are more severely ill represent a greater financial risk. Results indicate that total expenditures were reduced after implementation of the carve-out, and that this reduction occurred most dramatically among those with more serious mental illness. However, the authors find little or no evidence for cost-shifting among the AFDC population, in contrast to previous indication of such an effect among the disability population.
Keywords: carve-outs, costs, economics, evaluation, Massachusetts, Medicaid, public sector, serious mental illness

280. Rohland, B. M. (1998). Implementation of Medicaid managed mental health care in Iowa: Problems and solutions. The Journal of Behavioral Health Services & Research, 25(3), 293-299.

Geared toward stakeholders who are developing Medicaid managed mental health care pro-grams, this commentary examines the issues that Iowa encountered in developing such a pro-gram in 1995. The article summarizes Iowa’s strategy for developing the Medicaid managed mental health contract, as well as the resulting problems and regulatory attempts to address these problems. Concerns at the time included denial of hospitalization, premature discharge from the hospital, qualifications of utilization managers, inconsistency among case reviewers, slow payment of claims, and excessive paperwork requirements. The author addresses these problems as well as the success of the regulatory attempts, and provides suggestions for other States on the development, implementation, and oversight of managed care contracts to avoid such issues. Suggestions include developing appropriate contract specifications, providing mechanisms for oversight, and enforcing standards of care in Medicaid managed care contracts.
Keywords: contracting, Iowa, Medicaid, public sector

281. Semke, J., Brown, L., Sutphen-Mroz, J., Cox, G. B., et al. (1994). Impact of mental health reform on service use. Evaluation and Program Planning, 17, 73-79.

This article is one of several in this journal issue discussing the recent reforms and reorganiza-tion of public sector mental health services in the State of Washington. The authors evaluate the impact of the early stages of implementation of mental health system reform on client utilization of community mental health services.
Keywords: public sector, utilization, Washington

282. Stein, L. I. (1989). Wisconsin’s system of mental health financing. New Directions for Mental Health Services, 43, 29-42.

In 1971, Wisconsin passed legislation requiring its counties to plan for and provide (or pur-chase) services for mentally ill persons. Funding was provided on a formula basis, with each county contributing at least 9 percent in matching funds. This chapter discusses this process of mental health service decentralization and funding integration. The State provided counties with "special needs" funds to facilitate the transition from hospital- to community-based care. This chapter describes the results in the 15 years that Wisconsin has funded its public mental health system via a consolidated mental health budget. A case example of Dane County is used to illustrate how one community successfully implemented this law, which posed a significant challenge to the traditional service delivery model.
Keywords: local governments, public sector, Wisconsin

283. Stoner, T., Manning, W., Christianson, J., Gray, D., & Marriott, S. (1997). Expenditures for mental health services in the Utah prepaid mental health plan. Health Care Financing Review, 18(3), 73-93.

This article reports on an analysis of the effect of the Utah Prepaid Mental Health Plan (UPMHP), a mental health carve-out, on utilization and expenditures for populations in the catchment area of three community mental health centers (CMHCs). The study compares these data for the periods before and after the implementation of the carve-out, and also compares those enrolled in UPMHP to a control group in the same catchment area who were not enrolled in the plan. Both Medicaid and UPMHP claims/encounter forms data were used. Stated goals of the program included reducing expenditures and increasing use of the out-patient facilities while reducing inpatient care. The results indicate that the goal of reducing expenditures on inpatient care was achieved, and that this was accomplished by reducing the number of admissions. For outpatient care, however, there was no difference in utilization between the capitated and noncapitated (enrolled and nonenrolled) populations. Thus, this study does not provide evidence that outpatient care replaced inpatient care. The authors also conclude that the carve-out made no overall impact on mental health expenditures.
Keywords: capitation, carve-outs, costs, evaluation, Medicaid, public sector, Utah, utilization

284. Stroup, T. S., & Dorwart, R. A. (1995). Impact of a managed mental health program on Medicaid recipients with severe mental illness. Psychiatric Services, 46 (9), 885-889.

This article reports on research into the impact of the Massachusetts Medicaid managed behav-ioral health care program on Medicaid clients with severe mental illness. For the purposes of this study, clients defined as severely mentally ill were those with psychotic disorders, certain mood and anxiety disorders, and borderline personality disorder. Using retrospective data about client demographics, diagnosis, and service utilization from the Department of Mental Health’s client tracking system, the authors examined patterns of emergency room referrals and length of stay for patients admitted to the hospital. They compare data on recipients of services through the State’s managed behavioral health program with data on a comparison group of severely mentally ill patients who are demographically and diagnostically similar, but who have another payer. The study covers the 18-month period before, during, and after implementation. The results indicated significant changes in care patterns for both groups, including a 16 percent drop in the number of visits to the emergency room that led to admission, concurrent with an increase in referral to alternative 24-hour care settings. There was also a 27 percent decline in mean length of stay for acute hospitalizations. The authors find that the likelihood of referral or transfer to lower intensity care settings is more common in the managed behavioral health pro-gram population, but they do not find higher rates of denial of care, nor do they find evidence of cost-shifting on the part of the State’s behavioral health contractor. The impact of the pro-gram as well as the larger context of mental health systems change is discussed.
Keywords: carve-outs, evaluation, Massachusetts, Medicaid, public sector, serious mental illness

285. Yank, G. R., Hargrove, D. S., & Davis, K. E. (1992). Toward the financial integration of public mental health services. Community Mental Health Journal, 28, 97-109.

Because of a lack of fiscal and administrative integration of State and community services, the public mental health care system is not meeting the needs of seriously mentally ill persons. Public mental health agencies are accountable to a plethora of funders, policies, and regula-tions. Further, public financing encourages the use of expensive hospitalization by not provid-ing adequate incentives to develop alternative forms of treatment such as crisis intervention. The author argues that capitation, performance contracts, utilization review, and regional men-tal health authorities can stimulate integration by encouraging providers to create coordinated and cost-effective services. The article describes how a number of States have integrated servic-es using these strategies, and how these have led to the expansion of alternative services.
Keywords: public sector, serious mental illness

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This page was last reviewed by Dr Greg Mulhauser, Thursday, 14 October 2021.