During the past several years most state Medicaid programs began to enroll their beneficiaries in managed care plans. The Balanced Budget Act of 1997 accelerated this trend by facilitating mandatory enrollment in managed care and permitting states to contract with health plans that serve populations composed either predominantly or solely of Medicaid enrollees. Although this growth mirrors that of managed care enrollment in the Medicare and commercial health care sectors, the rise in market penetration of Medicaid managed care raises many unique issues because of the structural features of the Medicaid program and the health care needs of those enrolled in it.
In this column we argue that the delivery of mental health and substance abuse services under Medicaid managed care merits particular attention, given the health care needs of those seeking such care and the variety of ways in which states have structured these services. We describe some of the decisions that state Medicaid programs face in the delivery of behavioral health services and discuss the origins and nature of variations among states and the potential implications of different approaches to delivering these services.
States generally use one or a combination of three models to deliver mental health and substance abuse services to their Medicaid populations.
• In integrated programs, the state Medicaid agency contracts with managed care organizations for the delivery of physical health services and at least some behavioral health services; both types of services are covered under a single capitation rate.
• In carve-out programs, the state or county contracts directly with a specialty health care entity for the delivery of mental health services, substance abuse services, or both. These entities may be private organizations—often called behavioral health organizations—county health departments, or any entity in a range of public-private partnerships created especially for the provision of mental health and substance abuse services to designated populations. In a carve-out, these entities are typically placed at financial risk for the provision of behavioral health services, either on a capitated or a risk-sharing basis. In these states, physical health services may be provided to Medicaid enrollees under separate managed care plans or on a fee-for-service basis.
• Fee-for-service programs pay providers on a fee-for-service basis for behavioral health care and do not involve care management of any kind. Of the 19 states that deliver mental health and substance abuse services on this basis statewide, three—Louisiana, South Dakota, and Wyoming—do not have a Medicaid managed care program in operation for physical health services and thus use a traditional fee-for-service program for all health services (
+Table 1). The other 16 states exclude behavioral health services from the capitated set of services delivered through their Medicaid managed care programs.
+Tables 2 and
+3 summarize the organizational approaches that state Medicaid managed care programs use to deliver mental health and substance abuse services and include some of the basic features of each state's capitated Medicaid managed care program (or programs). As even the limited information in the tables demonstrates, the simple classification system outlined above obscures much of the variation in states' strategies for delivering behavioral health services to their Medicaid populations.
Overall, the key elements of state programs that likely shape enrollees' experiences in them include, but are by no means limited to, the following features:
• The eligibility groups that are included, such as TANF or SSI enrollees and, if a group is excluded, the alternatives that are available to that group
• Whether enrollment in managed care organizations and, in the case of carve-out programs, behavioral health organizations is mandatory or voluntary for various eligibility groups and, if enrollment is voluntary, the alternatives that are available to those groups
• Whether the program is statewide or operates only in selected regions of the state
• Whether any of the plans holding Medicaid contracts serve a population dominated by or limited to Medicaid enrollees
• Whether mental health and substance abuse services are handled in the same manner—for example, whether substance abuse services are excluded from a state's carve-out program
• Whether the program covers individuals who are not eligible for Medicaid but who are receiving behavioral health care financed either by state-only funds or by block grants.
This work was supported by the Center for Health Care Strategies, Inc. The center was made possible by a grant from the Robert Wood Johnson Foundation's Medicaid Managed Care Program. The authors thank Julie Donohue, Deborah Garnick, Sc.D., Domenic Hodgkin, Ph.D., and Connie Horgan, Sc.D., for their comments and assistance in the preparation of this paper.