DOCUMENT RESUME EC 306 174 ED 416 623 Rutman, Irvin D.; Baron, Richard C.; Hadley, Trevor R. AUTHOR The Impact of Managed Behavioral Health Care on TITLE Rehabilitation Services to Persons with Serious Mental Illness. Matrix Research Inst., Philadelphia, PA. INSTITUTION 1997-00-00 PUB DATE NOTE 10p. Matrix Research Institute, 6008 Wayne Avenue, Philadelphia, AVAILABLE FROM PA 19144; World Wide Web: http:// members.aol.com/workmri/mancr.htm -- Opinion Papers (120) Information Analyses (070) PUB TYPE MF01/PC01 Plus Postage. EDRS PRICE Accountability; Behavior Change; Cost Effectiveness; DESCRIPTORS Delivery Systems; *Health Care Costs; *Health Maintenance Organizations; *Mental Disorders; Private Sector; Privatization; *Psychiatric Services; *Psychological Services; Psychosis; Public Agencies; Public Policy; *Rehabilitation; Severe Disabilities ABSTRACT This monograph examines issues in the field of psychosocial/psychiatric rehabilitation (PSR) services for people with serious mental illness, placed in the context of a debate within the field about trends toward managed behavioral health care companies. Four main (1) the degree to which managed behavioral health care issues are addressed: companies will assume responsibility for the delivery of rehabilitation services for persons with serious psychiatric disabilities (evidence suggests (2) what effects, if any, involvement in PSR relatively little involvement); by managed behavioral health care companies will have on the nature of PSR (3) the security of future funding for PSR services; and (4) services; whether the basic values and concern for accountability that underlie managed behavioral health care and PSR are sufficiently congruent to permit effective collaboration. The paper concludes that rehabilitation services for persons with serious mental illness are at risk of a diminished financial base, programmatic changes born of cost control imperatives incompatible with the fundamental values of PSR, and the possibility of these services becoming the neglected stepchild of the mental health delivery system. Decision making concerning these issues is seen to lie not at the federal but at the state and local levels. Communication and cooperation among localities are urged. (Contains 14 references.) (DB) ******************************************************************************** Reproductions supplied by EDRS are the best that can be made from the original document. ******************************************************************************** The Impact of Managed Behavioral Health Care on Rehabilitation Services to Persons with Serious Mental Illness Irvin D. Rutman Richard C. Baron Trevor R. Hadley PERMISSION TO REPRODUCE AND DISSEMINATE THIS MATERIAL HAS BEEN GRANTED BY 'FFUJ FF TO THE EDUCATIONAL RESOURCES INFORMATION CENTER (ERIC) U.S. DEPARTMENT OF EDUCATION Office of Educational Research and Improvement ED CATIONAL RESOURCES INFORMATION CENTER (ERIC) This document has been reproduced as received from the person or organization originating it. Minor changes have been made to improve reproduction quality. Points of view or opinions stated in this BEST COPY AVAILABLE document do not necessarily represent official OERI position or policy. 2 Matrix Focus of the Month The Impact of Managed Behavioral Health Care on Rehabilitation Services to Persons with Serious Mental Illness contact: Richard C. Baron Matrix Research Institute 6008 Wayne Avenue Philadelphia, PA 19144 3 Introduction Over the past five years there has been an explosion of interest in the concept of managed behavioral health care and the ways in which this new approach to organizing, funding, and providing mental health programs will impact on the services available to people with serious mental illness. This has been a particular concern within the community of providers of psychosocial/psychiatric rehabilitation (PSR) services, as the mental health landscape has been reshaped around them. Some have urged PSR providers to prepare now for the advent of managed behavioral health care, to reconfigure their services and their marketing approaches to respond to the anticipated interests of the managed behavioral care companies. Others have argued that the interests of the companies are antithetical to the PSR approach and to the needs of persons with serious psychiatric disabilities, and have resisted the encroachment of managed behavioral health care. The intensity of the debate has increased recently (American Managed Behavioral Health Care Association, 1995; American Managed Behavioral Health care Association, 1994), and this article attempts to identify some of the key issues that face the PSR field. Four broad issues are at the center of concern. First, to what degree will the managed behavioral health care companies assume responsibility for the delivery of rehabilitation services for persons with serious psychiatric disabilities? Despite all the preparation for managed behavioral health care in the PSR community, there is no firm evidence that the companies will be significantly involving themselves in the delivery of such care (Landress & Bernstein, 1994). Second, should there be an active interest in psychosocial/psychiatric rehabilitation services on the part of the managed behavioral health care companies, will this substantially alter the nature of those services? While some change is inevitable, there is considerable disagreement about whether those changes will be positive or negative. Third, will future funding for psychosocial/psychiatric rehabilitation services be secure? Some argue that PSR faces an encouraging financial future, while others argue quite the opposite (Berkman, 1988; Keisler, 1992). Fourth, are the basic values and the concern for accountability that underlie managed behavioral health care and psychosocial/psychiatric rehabilitation sufficiently congruent to permit an effective collaboration between the two approaches? Here again, arguments can be made on both sides of the question (American Managed Behavioral Health care Association, 1995). The Growth of Rehabilitation Services Rehabilitation services are an essential aspect of a decade-long interest in helping people with long-term mental illness to live successfully in community settings. This concern with rehabilitation , however, is relatively new; earlier, the nation's response to the rapid deinstitutionalization of state psychiatric hospitals in the 1960s and 1970s had been the establishment - primarily with federal and state funds- of community-based inpatient, outpatient and partial hospitalization programs, part of a projected national network of community mental health centers. By the end of the 1970s, however, it was clear to most mental health practitioners, as well as to service consumers and their family members, that these programs did not fully address the pragmatic problems faced by those with serious psychiatric disabilities in the daunting task of adjusting to community life. CMHC programs were primarily clinically oriented, and needed to be supplemented by a range of rehabilitation-focused services that led to more effective and independent living. Over the past twenty-five years, a widening range of rehabilitation services has emerged: residential and housing services assisting people to live in small group settings or on their own; classes in activities-of-daily-living' to teach people the basics of personal hygiene, financial management, food preparation, public transportation, etc.; academic programming to help people complete or advance their education; socialization experiences to help people strengthen their personal ties to families and friends; case management employment assistance to encourage people to work; and other program elements services, special emphases on multiculturalism, sex education, parenting classes, help in addressing stigma at both the societal and personal levels, and more. Over the past 20 years, these programs have been offered in a variety of settings: in free-standing psychosocial rehabilitation agencies; as part of a community mental health clinic's overall services' within a CMHC's partial hospitalization unit; as consumer-run rehabilitation facilities within a psychiatric hospital. While only a handful of PSR programs targeted to persons with serious psychiatric 4 disabilities existed in the 1960s, today the International Association of Psychosocial Rehabilitation Services (IAPSRS) - the professional association that speaks for both agencies and practitioners in the field - estimates that there are approximately 3,000 such programs serving tens of thousands of persons each workday (IAPSRS, 1990). Although there are many PSR models from which to choose, the essential thrust of the PSR approach can be characterized as the rapid engagement of individuals in a caring community that seeks to teach needed living skills in the real world' environments of community life. The funding base for PSR programs historically has been varied and problematic, in part because PSR evolved some time after treatment-oriented inpatient, outpatient and partial hospitalization programs had already dominated available mental health dollars, and in part because PSR funding was supported through state allocations. Most PSR programs maintain themselves by cobbling together state funds, charitable contributions, federal HUD grants, fee-for-service payments from their local Offices of Vocational Rehabilitation, client fees and third-party insurance payments. More recently, funding for these critical services has come to rely heavily upon Medicaid payments, the federal/state health insurance partnership that reimburses health care providers for "medically necessary" services to persons who are poor and/or disabled. The Medicaid program has been under close scrutiny lately because of the widely accepted need to slow the rapid rate of growth in its expenditures, costs that impact both federal and state budgets. A significant portion of those costs (about 15%) have been expended on mental health and substance abuse services. The fiscal concerns of public policy makers have been spurred by dramatic trends: in 1993 alone, for instance, Medicaid expenditures rose by 29% (The New York Times, 1993), and analysts see for no substantial slowing of growth rates in the foreseeable future for either general medical care or mental health care's proportion of those overall costs. Current Medicaid expenditures on mental health care can be roughly divided into two unequal parts; first, most Medicaid mental health dollars go toward federally-mandated "medically-necessary" services inpatient and outpatient clinics within hospital settings. Second, the federal government permits the states to expand Medicaid services for a range of optional community programs, including inpatient, outpatient, partial hospitalization, case management services and rehabilitation programming. Over the past decade, most states have used these new spending options to fund a growing number of PSR services, fueling expansions in both program scope and federal and state costs. From this perspective, of persons with serious psychiatric disabilities who have been able to access this new generation important Medicaid-funded PSR services have benefited significantly. From a quite different perspective, however, there is serious concern about the escalation of general health care costs, of which mental health care is only a small part and psychosocial rehabilitation a still smaller part. With the collapse of President Clinton's national health care reform initiative, the states have stepped up their own efforts to control health care costs, and a large number of states have embraced "managed health care" approaches to controlling costs, particularly for Medicaid eligible persons who are poor, elderly, and/or disabled. As part of that effort, a majority of states have begun to managed behavioral health care companies to meet consider -- or have already signed contracts with their mental health obligations (Croze, 1994). Managed Care and Managed Behavioral Health Care Seen in its most positive light, managed care promises significant cost savings coupled with improved quality of care. Most managed care plans involve some form of capitation: the managed health care provider agrees to deliver all specified health care services for a designated population at a pre-set cost-per-person-per-year fee. Under such a plan, the managed care provider accepts certain risks and has certain incentives: if actual expenditures for the stipulated services exceed the capitated payment, the managed care provider loses money. If, however, actual expenditures for the stipulated services are less than the capitated fee, the managed care provider is usually entitled to retain as profit whatever funds remain. This contrasts dramatically with the current Medicaid system, which (along with most other insurance programs) reimburses the health care provider-at pre-determined fees- for whatever medical services the doctor and/or patient deem necessary. In the managed care scenario, the health care provider 5 has a strong incentive to control costs. medical arena use a combination of mechanisms often To control costs, managed health care plans in the services is more tightly controlled; the referred to as the ABC's of managed care. First, Access to guide Utilization Review staff in deciding managed care provider often uses specific protocols that before they authorize payment for the which medical conditions mandate which medical procedures either physician (who previously were authorized service. This clearly shifts final decision-making from (who increasingly have won the right to influence the to determine treatment approaches) or consumers Review process and its shortsightedness are rife. nature of their care). Complaints about the Utilization provides limiting both the array of services that Second, Benefits are restricted, with some managed care of their of time services can be offered. Employers have reduced the costs are available and the length with managed health care companies for a health care plans for employees, for instance, by contracting services than they previously supported. Third, Costs for services are more limited range and duration of practitioners, as well as clinics and hospitals. reduced by holding down the fees of physicians and other low rates, which many perceive as also The companies use their buying power to contract for care at managed care companies have demonstrated lowering the quality of the services rendered. Nonetheless, sometimes dramatically. their ability to diminish the nation's overall health care costs, planned involvement with managed health care As noted above, most states now have some on-going or which the state contracts with one or more companies, primarily through their state Medicaid office, in elderly and/or disabled on a capitated basis. companies to provide health care to persons who are poor, in their plans and the service providers may Although service recipients may chafe at the lack of choice judgement to the second-guessing of Utilization Review resent the need to submit their professional Austad, Morgan & Holstein, 1992; Berkman, officers (Austad & Berman, 1991; Austad & Hoyt, 1992; general medical service delivery. 1988), managed health care is clearly a fact of life for differently. In the private sector -- for Mental health services, however, have been treated somewhat companies have often instance, in health care plans provided by employers -- managed care deliver the mental health subcontracted with a private managed behavioral health care company to the public sector, two contractual patterns services required under their contracts with the employer. In for all health care services with currently predominate: first, the state Medicaid office may contract the mental health services portion of medically-oriented managed care provider, who will subcontract second, the state their responsibilities to a private managed behavioral health care company; or, directly with a private managed behavioral Medicaid office may itself contract for mental health services individual who once received mental health care company. In either instance, the Medicaid-eligible is now on a capitated plan and subject to the health services through the traditional fee-for-service plan Medicaid office and the provider. Similarly, the rules and regulations of the contract between the state reimbursed for care through the state or county mental health services provider who was once directly with the private authority or through the Medicaid office must now seek contractual arrangements the ABCs of managed and regulations managed behavioral health care company, subject to the rules care. between state Medicaid offices and Of particular importance, is the fact that to date most contracts clinically-oriented services of managed behavioral health care providers cover only the traditional they have not included the delivery of inpatient, outpatient, and partial hospitalization care; that is, mental health client currently rehabilitative services. Rehabilitation services to the Medicaid-eligible Medicaid fee-for-service continue to be funded either by state mental health dollars of through separate companies are very involved in the design and arrangements. While managed behavioral health care they have little or no contractual delivery of Medicaid programs that have carved out' clinical services, for such services if they responsibility, at present, to deliver rehabilitation services. They may contract organizations are free.to choose - indeed, one of the benefits of capitation plans is that managed care but the managed overall costs utilize any service elements that will benefit the client and lower they believe that neither the client's behavioral health care companies are under no obligation to do so if rehabilitation services. health nor the companies' profits warrant an investment in acknowledge their uncertainties Indeed, many of the nation's managed behavioral health care companies and deliver quality care for those clients in this area. The companies are unsure of how to control costs 6 often unfamiliar with the who require ongoing clinical services or long-term rehabilitative care. They are psychosocial/psychiatric rehabilitation in concepts of rehabilitation in general and the benefits of particular. And although the managed behavioral health care companies indicate they may want to refer psychosocial rehabilitation providers, whether they will some portion of their most disabled clients to actually do so - and whether they will feel it necessary to both refer and pay for these services - remains behavioral health care companies to be seen. Reports from around the nation indicate that managed sometimes have drawn PSR agencies into the companies' networks of potential providers, but rarely refer clients to them. The PSR agency may contract with the company on a fee-for-service basis but without referrals the contract prove of little value. Clarifying the Debate Ahead The future of rehabiliation servies within the context of a manged behaivoral health care environment is uncertain for serveral reasons: managed behavioral health care' - while widely in use- currently includes a half-a-dozen - first, the term organizational models under as many different auspices (Keller, McGuirk, & Croze, 1995). The dominant models of managed care range from health maintenance organizations to preferred provider agencies to point-of-service plans, each with differing approaches to controlling costs and monitoring the quality of services. Further, significant differences exist among those managed behavioral health care providers who operate as private for-profit companies, as private non-profit social service agencies, or as public expenditures. county or city governmental mental health agencies seeking new ways to control second, changes in the mental health /rehabilitation environment are occurring at a state-by-state (or county-by-county) level, with Medicaid/Managed Care contracts taking widely divergent forms within rapidly, and without any existing process for an often experimental framework. Change is occurring capturing and disseminating policy developments, contract language, regulatory provisions, and policy statements. and third, decision-making about the role of managed behavioral health care in the public sector has rarely concerned itself with the impact of these new directions upon rehabilitation services. The scope of the broader mental health issues- that is, the sheer enormity of the dollars involved (at either the national level or state level) in the delivery of clinically-oriented mental health services alone - dwarfs the significance of the rehabilitation dollar. And while psychosocial/psychiatric rehabilitation programs have begun to prepare' for the coming of managed behavioral health care into the rehabilitation field, it is by no means clear what that may mean. On the fundamental questions of whether managed behavioral health care companies will assume responsibility for the delivery of rehabilitation services, the jury is still out. Most private companies, only now beginning to recognize the importance of rehabilitation services for this group of clients, are and thus are not oriented to the long-term more familiar with serving less severely disabled individuals needs of clients previously treated entirely within the public system. In fact, the behavioral health care industry is almost entirely oriented to the management of episodic care, and as a result, some managed behavioral health care companies will choose to remain separate from the delivery of rehabilitation services, referring their clients in need of such services to either public or private providers of residential, vocational, social and educational care. other companies may come to believe that the both to the client and to the companies' bottom delivery of rehabilitation services does offer benefits line - and may begin to invest in the provision of such serves to both help disabled person and avoid overwhelming financial costs. There are several corollary issues that also need to be resolved in the years ahead: 1. How much will managed behavioral health care companies value rehabilitation programming? If the companies believe that rehabilitation programs do indeed quickly decrease hospitalization and increase functional performance, it is likely that they will invest heavily in expanding and enriching such by defining rehabilitation programs, whether by absorbing rehabilitation dollars in their state contracts or But the nature of PSR is as a medically necessary service within their existing Medicaid obligations. AVAILABLE 7 BEST COPY based on long-term supports and outcomes and those companies who do not see the cost savings and clinical outcomes promised quickly are likely to de-emphasize rehabilitation programming in favor of still less expensive maintenance services. 2. How will managed behavioral health care companies organize the delivery of rehabilitation serves? The companies will have several options if they choose to offer rehabilitation serves: they can contract (on a fee-for-service or sub-capitation basis) with the existing network of rehabilitation providers; they can absorb those provider agencies within their organizational umbrellas; or they can establish their own internal rehabilitation resources. Theses choices may well impact on program innovation, integrity, and flexibility. 3. Will the nature of rehabilitation programming change in a managed behavioral health care environment? There is considerable concern that the ABC's of managed care may fundamentally alter the nature of rehabilitation service, with access limited to those clients best able to function more independently, benefits limited to short-term interventions with quickly realizable financial and/or clinical outcomes, and costs driven down to a level at which both PSR professionals and consumer-operated program staff believe themselves to be exploited. 4. How strong is the commitment of managed behavioral health care companies to the tenets of consumer empowerment? The delivery of public mental health services has been powerfully influenced over the past decade by consumer empowerment initiatives in which consumers have greater control over the nature and pace of their rehabilitation programs, greater involvement in agency, county, and state policy-making, and greater opportunities to establish non-traditional consumer-operated programs. The companies' emphasis on customer service may well reinforce these trends, or utilization review and bottom-line analyses may de-emphasize them (West Virginia Mental Health Consumer Association Consumer Satisfaction Survey, 1995). 5. If rehabilitation serves are separately funded by the states, how will they relate to managed behavioral health care? While the companies have expressed strong interest in drawing upon the resources of those publicly funded rehabilitation service available, there is no clear pattern yet defining how the two systems will relate to one another, exchanged important information, or collaborate on either individual client goals or intersystem objectives. Some companies are quick, perhaps too quick, to access publicly funded rehabilitation services; on the other hand, some companies have essentially turned a blind eye to their clients' residential or vocational needs raising a new age-old question about services integration. To avoid clients being excluded from care on the grounds that they are unlikely to benefit from them in a reasonable period of time, a new duality of service systems could develop: managed behavioral health care would deliver clinical programs and the publicly-funded system would provide rehabilitation services. There has been a long struggle between clinical and rehabilitation providers within the nation's mental health system, and only in the past decade have we seen a broadening vision on both sides - in which the value of both sets of service are recognized. The concern implicit in all these issues is that companies' pre-occupation with profits and losses will drive PSR services toward contraction - if not extinction. These considerations give rise to a final question: Will there be enough money in the new mental health environment to continue to support rehabilitation programming? Whether or not the managed behavioral health care companies assume responsibility for the delivery of rehabilitation services, it is essential to assure that the still-small and still-insecure funding base for rehabilitation services is not diminished. On this score, it is the states and not the managed behavioral health care companies- that must be held accountable: first, to insure that the future of rehabilitation services becomes a priority topic, and second, to guarantee that either the companies or the states will continue to support an adequate rehabilitation capacity. Summary It is our view that rehabilitation services for persons with serious mental illness are at risk: of a diminished financial base, of programmatic changes (born of cost control imperatives) that are incompatible with the fundamental values of PSR, and of becoming, once again, the neglected stepchild of the mental health delivery system. Further, we believe that decision-making in this arena is not at the municipal) level. For this reason, it federal level, but rather at the state (and sometimes at the county or setting inform decision-making and is important that the issues and answers that emerge in one in one community can cross-constituency discussion in other environments. If promising developments of how best to insure the future of be shared with other communities, there may yet be an understanding rehabilitation services. behavioral health care There is some evidence suggesting that there is considerable promise in managed but there is more to suggest that to strengthen, enlarge, and enrich rehabilitation programming, these rehabilitation programs may be impoverished or altered beyond recognition. And it may be that the changes will be only short-term; the managed behavioral health care companies may enter rehabilitation field, only to discover that the profit margins they expect from a field committed to quality their services to persons with serious disabilities in need of long-term care is simply too small to warrant continued involvement. In five years or ten, the delivery of psychosocial/psychiatric rehabilitation services may return to public auspices. constituencies could play It is important to emphasize that this need not be the case. A wide range of key rehabilitation services develop appropriately. As decisions are a more proactive role in assuring that Medicaid made - within managed behavioral health care companies, within state mental health and there are offices, and within private rehabilitation provider agencies and public rehabilitation programs - have the opportunities for those who are informed to have an impact. 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