Has managed care found a way to follow these principles to meet the needs of seriously and persistently mentally ill patients? In the main, no. Capitated rates are too low to cover these needs. Continuity is impossible if, for instance, companies seek less expensive outpatient services for a patient and then, when hospitalization is required, refer the patient to a less expensive hospital unrelated to the outpatient program. Cost overrides continuity. Case management to bridge such gaps is alien to most companies bidding on Medicaid mental health contracts. Long-term rehabilitation, even if a benefit under the contract, is rarely approved. Companies consider it a nonmedical or unproven intervention. If rehabilitation is approved, the time allowed is rarely consonant with the literature, which shows that up to 18 months may be required to achieve results.