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Columns   |    
State Mental Health Policy: Back to the Future: New Mexico Returns to the Early Days of Medicaid Managed Care
Cathleen E. Willging, Ph.D.; Rafael Semansky, Ph.D., M.P.P.
Psychiatric Services 2014; doi: 10.1176/appi.ps.201400102
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Dr. Willging is with the Pacific Institute for Research and Evaluation, Calverton, Maryland (e-mail: cwillging@pire.org). Dr. Semansky is with Nantasket Roads Health Care Consulting, Washington, D.C. Fred C. Osher, M.D., and Marvin S. Swartz, M.D., are editors of this column.

Copyright © 2014 by the American Psychiatric Association

Gubernatorial administrations in New Mexico have initiated four overhauls of the publicly funded behavioral health care system over the past two decades. The most recent effort, Centennial Care, was implemented under a Section 1115 Medicaid waiver in January 2014. The authors describe Centennial Care, which closely resembles the now defunct restructuring of the public system that introduced Medicaid managed behavioral health care to the state in 1997. They also note disruptions in services to clients and hardships for providers, described locally as a “behavioral health crisis,” that resulted from actions taken in 2013 by the current gubernatorial administration to force the takeover of 15 nonprofit service delivery agencies by five Arizona companies. These actions led to an onsite investigation by the Centers for Medicare and Medicaid Services.

Abstract Teaser
Figures in this Article

Since 1997, three consecutive gubernatorial administrations in New Mexico have initiated four overhauls of the publicly funded behavioral health care system, most notably the precedent-setting “Transformation” of 2005. For the Transformation, 15 state agencies that financed behavioral health services were convened into a purchasing collaborative (“the Collaborative”). The Collaborative sought to introduce administrative simplicity by contracting with a single behavioral health organization (BHO) to administer these services. Collaborative members were cabinet secretaries and agency leaders, who met monthly to plan and implement a comprehensive, seamless, and recovery-oriented system of care in the public sector (1).

Other states have an interest in New Mexico’s various reforms because of the state’s demographics as a mostly rural, majority-minority state. In New Mexico and nationwide, rates of morbidity and mortality are higher among Hispanic and Native American populations, compared with non-Hispanic white populations (2). The state, which leads the country in deaths related to alcohol, drugs, and suicide, is distinguished by long-standing shortages of specialty behavioral health care and low spending on services for adults with serious mental illness, children with emotional disturbance, and persons with substance use problems (2,3).

By 2013, the gubernatorial administration had scarcely maintained the Collaborative established by its predecessor. Meetings occurred only sporadically and were poorly attended. The administration ended the Transformation through a fourth overhaul of public behavioral health care. The Centers for Medicare and Medicaid Services (CMS) approved the latest reform, called “Centennial Care” in recognition of New Mexico’s 100th year of statehood, under a Section 1115 demonstration waiver.

Whereas the Transformation was designed to extend clinical and recovery support services to low-income New Mexicans, Centennial Care limits enrollment to the Medicaid eligible. Its structure closely resembles the Medicaid managed care (MMC) program of 1997, in which three managed care organizations (MCOs) subcontracted with three BHOs to administer behavioral health care services statewide (Table 1). Centennial Care began on January 1, 2014, coinciding with the start of the New Mexico health insurance exchange and Medicaid expansion under the Affordable Care Act (ACA).

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Table 1Behavioral health care reforms in New Mexico, 1997–2014a
Table Footer Note

a MCOs, managed care organizations; BHOs, behavioral health organizations; CMS, Centers for Medicare and Medicaid Services

A review of the waiver application suggests that economic considerations guided the design of Centennial Care. The language of recovery, so prominent in in the framing of the Transformation (1), was generally absent in the official correspondence and discussions of Centennial Care. The application emphasized the earlier 1997 MMC goals of cost containment, competition, and efficiency, even as it added new forms of expensive bureaucracy to an already underfunded public system. At public hearings regarding implementation, high-ranking state officials heavily promoted Centennial Care’s ability to “reduce utilization” and “drive down” the long-term cost of Medicaid services.

In the design of Centennial Care, the gubernatorial administration neglected published research and audit reports produced by public entities, including the New Mexico legislature and the CMS, which described the earlier MMC program and its detrimental effects on behavioral health services (4,5). The program’s complicated structure facilitated diversion of capitation payments by the MCOs to general medical care and corporate administration, resulting in less spending on behavioral health care. Provider agencies delivering direct services experienced financial problems because of low reimbursement rates, utilization review restrictions, and delayed payments (4). Sixty clinical programs closed, and others reduced services in the early years of MMC. Specialty practitioners became increasingly reluctant to accept Medicaid clients because of difficulties getting services authorized and reimbursed (5). Under Centennial Care, three of the MCOs are administering the behavioral health benefits. The fourth MCO entered into an administrative-services-only contract with an outside entity to perform this function.

Under the previous reforms, the state government altered the service array that providers were responsible for delivering to clients, as well as the administrative and information technology (IT) requirements for coverage screening, claims processing, and quality control. With each overhaul, behavioral health agencies incurred uncompensated expenses, and staff at all organizational levels experienced competing pressures to increase productivity and at the same time raise quality (3,5). No overhaul included provisions to reimburse agencies for the cost of adapting to changes. Instead, agencies were typically remunerated for clinical services only, usually through traditional fee-for-service billing systems managed by MCOs and BHOs.

Problems interfacing with the basic operational and IT systems put in place by MCOs and BHOs and adapting to continually evolving processes to enroll clients, obtain authorizations, and submit claims for ambiguously defined services contributed to financial losses. These ongoing problems adversely affected the organizational climate of behavioral health agencies, resulting in diminished morale and job satisfaction and increased turnover, particularly among providers working in financially strapped rural agencies serving ethnic-minority populations (3,5). Because Centennial Care reintroduces administrative complexity into the delivery system, it may also exert negative effects on the fiscal health of agencies, which must adhere to not one but four distinct claims and reimbursement processes of the multiple MCOs. For low-income clients not covered by Medicaid, these agencies must still submit claims to the single BHO first established under the Transformation, which will continue to maintain its own payment mechanisms.

In the months preceding implementation of Centennial Care, New Mexico’s gubernatorial administration unexpectedly reduced access to behavioral health care. In June 2013, it accused 15 nonprofit service delivery agencies that cared for upwards of 88,000 New Mexicans, including 30,000 Medicaid enrollees, of “egregious mismanagement,” “fraud,” and “corruption” (6). Most of the agencies facing fraud charges were decades-old community mental health centers.

The administration based its allegations on an audit undertaken by the Public Consulting Group of Massachusetts and abruptly suspended reimbursement for services rendered by the agencies. The findings of the audit were never disclosed to the inculpated agencies, the state legislature, or the public. The administration provided the leaders of these agencies with two choices: submit to a “takeover” by five Arizona companies or face closure (6). Because of “pay holds” surpassing $13.5 million in early November 2013, dwindling reserves, and no new state financing for the foreseeable future, most agency leaders consented to the assumption of both management and clinical care functions by the Arizona companies. The process of transitioning staff to the new employers was erratic, resulting in turnover among service providers and discontinuity of care for clients (7).

Inundated with complaints about disrupted services from clients, families, caregivers, and advocates, federal and state legislators sought to intervene in what is defined locally as a “behavioral health crisis,” prompting the CMS to undertake in September 2013 an onsite investigation of access and quality-of-care problems. The CMS found that most Arizona agencies were operating between 67% and 79% of pretransitional staffing levels and confirmed findings from our prior longitudinal research (3,5) concerning the increasingly “fragile” morale of staff of behavioral health agencies subjected to multiple reforms. Providers were also diverted from service provision, because their new employers required them to “repeat trainings and certifications when current coverage had not lapsed or expired” (8). Providers commonly experienced delays in receiving client records, which the state Medicaid agency had impounded. Thus providers had to repeat clinical activities related to assessment and treatment planning with clients, tasks that further contributed to staff fatigue and to longer wait times for appointments and delayed care for Medicaid clients (8). In a separate evaluation, the state legislature documented that calls to the statewide crisis hotline had increased by 72% during July and August 2013 compared with the previous five months (7).

Finally, the CMS questioned the ability of the BHOs under Centennial Care to ensure access and high-quality services across the state, especially in rural areas. The CMS also raised concern over the administration’s decision to cease payments to the state’s largest federally qualified health center network, a major provider of behavioral health care in ethnically diverse rural areas (8).

During a period in which state-funded behavioral health services are once again in flux, New Mexico is implementing not only Centennial Care but also the ACA. Insufficiently staffed behavioral health care agencies are immersed in the chaos generated by the crisis. We anticipate that existing agencies will encounter substantial challenges to caring for the newly insured under Medicaid expansion and the ACA. Because of this chaos and the state government’s problematic track record undertaking Medicaid managed care reforms in the past, availability, accessibility, and quality of services under the new Centennial Care program remain uncertain.

For New Mexico, a state in which behavioral health care disparities are common (2), we recommend investing capital in the local workforce and changing the system to benefit vulnerable citizens with mental health problems who are at heightened risk of hospitalization as a result of prolonged discontinuity of care. Major reforms spanning two decades have created hardships for provider agencies and imperiled persons most in need of high-quality care (3,4,5,7). Without commitment across gubernatorial administrations to transparency and well-designed behavioral health care plans that are resourced appropriately, attentive to transition processes, and geared toward building capacity, no true transformation for the betterment of services is possible (3). Other states, notably Maryland, have successfully reformed their systems by creating and enacting long-term, holistic behavioral health care plans (9). Unlike other states, however, New Mexico is returning to an old system that adds bureaucracy, isolates the management of Medicaid dollars from other public funds, and has the potential to intensify service access problems.

Hyde  PS:  A unique approach to designing a comprehensive behavioral health system in New Mexico.  Psychiatric Services 55:983–985, 2004
[CrossRef] | [PubMed]
 
 Injury and Behavioral Epidemiology Bureau, Substance Abuse Epidemiology Section: New Mexico Substance Abuse Epidemiology Profile .  Santa Fe,  New Mexico Department of Health, 2013
 
Willging  CE;  Sommerfeld  DH;  Aarons  GA  et al:  The effects of behavioral health reform on safety-net institutions: a mixed-method assessment in a rural state.  Administration and Policy in Mental Health and Mental Health Services Research 41:276–291, 2014
[CrossRef] | [PubMed]
 
 Audit of Medicaid Managed Care program (SALUD!): Cost Effectiveness and Monitoring .  Santa Fe,  New Mexico Legislative Finance Committee, 2000
 
Waitzkin  H;  Williams  RL;  Bock  JA  et al:  Safety-net institutions buffer the impact of Medicaid managed care: a multi-method assessment in a rural state.  American Journal of Public Health 92:598–610, 2002
[CrossRef] | [PubMed]
 
Gallagher  M: AG says mental health audit will remain secret. Albuquerque Journal, 2013, July 30. Available at www.abqjournal.com/227657/news/ag-says-mental-health-audit-will-remain-secret-2.html
 
 Human Services Department Costs and Outcomes of Selected Behavioral Health Grants and Spending .  Santa Fe,  New Mexico Legislative Finance Committee, 2013
 
 Site Review Report: New Mexico Behavioral Health, 9/16/13–9/18/13 .  Dallas,  Centers for Medicare and Medicaid Services, Dallas Regional Office, 2013
 
Semansky  RM:  Maryland’s shared leadership approach to mental health transformation: partnerships that work.  Psychiatric Services 63:633–635, 2012
[CrossRef] | [PubMed]
 
References Container
Anchor for Jump
Table 1Behavioral health care reforms in New Mexico, 1997–2014a
Table Footer Note

a MCOs, managed care organizations; BHOs, behavioral health organizations; CMS, Centers for Medicare and Medicaid Services

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References

Hyde  PS:  A unique approach to designing a comprehensive behavioral health system in New Mexico.  Psychiatric Services 55:983–985, 2004
[CrossRef] | [PubMed]
 
 Injury and Behavioral Epidemiology Bureau, Substance Abuse Epidemiology Section: New Mexico Substance Abuse Epidemiology Profile .  Santa Fe,  New Mexico Department of Health, 2013
 
Willging  CE;  Sommerfeld  DH;  Aarons  GA  et al:  The effects of behavioral health reform on safety-net institutions: a mixed-method assessment in a rural state.  Administration and Policy in Mental Health and Mental Health Services Research 41:276–291, 2014
[CrossRef] | [PubMed]
 
 Audit of Medicaid Managed Care program (SALUD!): Cost Effectiveness and Monitoring .  Santa Fe,  New Mexico Legislative Finance Committee, 2000
 
Waitzkin  H;  Williams  RL;  Bock  JA  et al:  Safety-net institutions buffer the impact of Medicaid managed care: a multi-method assessment in a rural state.  American Journal of Public Health 92:598–610, 2002
[CrossRef] | [PubMed]
 
Gallagher  M: AG says mental health audit will remain secret. Albuquerque Journal, 2013, July 30. Available at www.abqjournal.com/227657/news/ag-says-mental-health-audit-will-remain-secret-2.html
 
 Human Services Department Costs and Outcomes of Selected Behavioral Health Grants and Spending .  Santa Fe,  New Mexico Legislative Finance Committee, 2013
 
 Site Review Report: New Mexico Behavioral Health, 9/16/13–9/18/13 .  Dallas,  Centers for Medicare and Medicaid Services, Dallas Regional Office, 2013
 
Semansky  RM:  Maryland’s shared leadership approach to mental health transformation: partnerships that work.  Psychiatric Services 63:633–635, 2012
[CrossRef] | [PubMed]
 
References Container
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