Impact of Medicaid Managed Mental Health Care on Delivery of Services in a Rural State: An AMI Perspective

Rural mental health issues present a special challenge as we enter into the new "less is better" mindset of health care delivery. Challenges of service delivery intrinsic to rural areas have been extensively described (1) and include problems related to poverty, low population density, difficulty in staff recruitment and retention, and the absence of public transportation. Rural residents account for nearly 40 percent of the population in Iowa, a state with 99 counties and a total population of about 3 million people.

In March 1995 Iowa implemented a statewide mental health carve-out program—called the managed mental health access plan—under a Medicaid Section 1915b waiver from the Health Care Financing Administration. This report summarizes the impact of Medicaid managed care on a rural population from the perspective of the Alliance for the Mentally Ill (AMI) of Iowa.

Medicaid managed care in Iowa

Background

Before implementation of managed care, the Iowa mental health system for persons with serious and persistent mental illness was not ideal. Torrey and associates (2) rated the state as "going nowhere" and noted that "community-based mental illness services in Iowa are about as hard to find as a mouse in a cornfield." An uneven distribution of psychiatrists and other mental health professionals across the state has been described (3,4).

In most rural counties, one of the state's 35 private not-for-profit community mental health centers serves as the primary site of service provision for persons with mental illness. Most (60 percent) of the CMHC executive directors are social workers, and most rural CMHCs do not employ a full-time psychiatrist (5). Because a psychiatrist is often not available on site to see a patient with emergency needs, persons presenting to the CMHC in crisis are often admitted, voluntarily or involuntarily, to state or community hospitals.

A two-year contract with an estimated value of $100 million was initially awarded to Value Behavioral Health (VBH) in June 1994. However, the initial contract with VBH was rescinded and awarded to MEDCO after MEDCO, the second highest bidder, sued the state because of the appearance of a conflict of interest between VBH and the state. Shortly thereafter, MEDCO was sold to Kohlberg, Kravis, Roberts, & Co. and its name was changed to Merit Behavioral Health Care of Iowa.

The contractor was required to establish a program that would help clients maintain full and productive lives by providing education, prevention, early intervention, and appropriate treatment in a flexible array of community-based services and supports. The contractor was to allow clients to receive mental health care while they continued to live and work in their own communities. The contract covered persons with persistent mental illness enrolled in the Supplemental Security Income program and children and adolescents with serious emotional problems enrolled in Iowa's Family Investment Programs, which replaced Aid to Families With Dependent Children.

Although the primary incentive of the managed mental health access plan was to reduce the escalating costs of mental health care under Medicaid, the statewide implementation of a service network also offered the potential for services that were more consistent in quality and accessibility across counties. However, many problems have arisen since the implementation of the Medicaid contract, and optimism has frequently been replaced by discouragement.

The leadership of AMI believed that the contractor's approach to treatment was modeled too much after the approach it had used in employee assistance programs in private industry. In the early stages of implementation, AMI members felt that corporation staff lacked training to understand the needs of persons with serious and persistent mental illness.

This lack of training became evident in the contractor's adherence to a strict definition of authorizing only services of "medical necessity," an approach that did not take into account that supportive services are necessary to maintain the stability of many persons with serious mental illness. In addition, program staff did not appear to be knowledgeable about the availability of regional resources and, in particular, did not appear to recognize the limited availability of community-based services in most rural areas. Other problems reported to AMI were clients' difficulty gaining access to the new system, denial of inpatient hospitalization, untimely provider payments, and lack of education for providers, consumers, and families.

Realizing that the main focus for cost savings by the managed care contractor would be to limit the utilization of inpatient care, AMI of Iowa has advocated for development of assertive community teams and crisis services by the managed care contractor. In addition, AMI has advised the contractor that adequate community-based services such as housing and supports, rehabilitation, clubhouse models, and other programs need to be in place before inpatient care can safely be reduced.

NAMI study

In 1996 AMI of Iowa received a two-year grant from the National Alliance for the Mentally Ill (NAMI) to guide and critique managed mental health care in Iowa from the viewpoint of families and consumers. Focus groups were formed around the state to gather information. A NAMI survey on managed care was also used with the groups. The group meetings were held in areas of the state that would ensure participation by both urban and rural residents. About 300 persons attended the focus groups.

The resulting study by a consultant group made several observations (6).

• Limited access to a psychiatrist for evaluation and assessment was a serious problem.

• Lack of transportation for clients was a major obstacle to care and rehabilitation.

• Housing needs were not being adequately met.

• Supportive services and outreach to clients' homes were not available.

• Managed care decisions were not being formally appealed by consumers or family members.

• Employment and rehabilitation opportunities were inadequate. The general unemployment rate in Iowa was 3.1 percent, compared with a 60 percent rate among consumers of mental health services.

• Interruption of benefits was a problem.

• The educational system was not responsive to early intervention for children and adolescents.

• Although primary care physicians are often the only available physicians in rural areas, they were often reluctant to treat persons with serious mental illness and sometimes lacked adequate knowledge of medications.

To address these problems, several mechanisms were suggested in the consultants' report. Outcome measures, including use of report cards and determination of hospital readmission rates, should be monitored. Programs known to be effective should be developed and encouraged. Managed care companies should be subject to regulation by federal and state laws. Education for consumers and families should ensure that medical necessity is defined to the managed care company rather than by the managed care company. Sites and situations in which adverse consequences of service restriction may occur should be monitored. They include the emergency room and crisis services, as well as the use of civil commitment and homeless shelters and inappropriate use of the criminal justice system.

Other recommendations were that the managed care contractor should encourage consumers to take advantage of opportunities for higher education and encourage linkages between primary care physicians and psychiatrists.

Working toward solutions

AMI of Iowa has limited resources and has been able to focus only on education and self-advocacy training. Consumers and their families need help to form a basic understanding of managed care and of what the changes introduced by the Iowa carve-out mean for a person with serious mental illness. The training includes how to use the grievance procedure when care is denied. The most important tool for consumers and families is an understanding of the contract and the services it includes. Self-empowerment is an important aspect of the learning process.

The problem involving the strict definition of medical necessity is currently being addressed by the Iowa Department of Human Services, which has revised the medical necessity criteria in the latest request for proposals for managed mental health care.

In response to pressure from consumers and advocates, the first assertive community team is being implemented in three programs—two in urban settings and one in a rural area. Training began in April 1998. The grant program for the team by Merit Behavioral Health Care of Iowa was developed in cooperation with AMI of Iowa and the Iowa Department of Human Services. AMI officials and members are pleased that the value of this form of treatment has been recognized by Iowa's managed mental health care program.

In addition, providers can now approach Merit with innovative ideas for delivering community-based services. Merit has improved such services in a few rural areas, but much improvement is needed if people with serious mental illness are to reside in the community independently with supports.

Merit staff have developed more skills in working with persons who have serious mental illness. The company holds a monthly roundtable meeting where issues can be brought forward for frank discussion. It has also hired a family and consumer advocate to meet with individuals as needed. In addition, fewer providers seem to be reporting problems with slow reimbursements.

Conclusions

Advocates must be diligent in monitoring the effects of managed care on persons with serious mental illness. Cost savings achieved by the state through capitation offer a powerful incentive for the contractor to enhance profits by restricting mental health services to a population that already is underserved. As managed care becomes the norm, families, consumers and professionals must work together so that mental health care of tomorrow is better and more humane.

Ms. Stout is executive director of the Alliance for the Mentally Ill of Iowa, 5911 Meredith Drive, Suite C-1, Des Moines, Iowa 50322-1903. This paper is one of several on rural psychiatry in this issue.