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This Web site is a component of the SAMHSA Health Information Network. |
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Organization & FinancingSAMHSA Managed Care Initiative Training SessionsFebruary 1998
Dates: February 11, 1998-Parklawn Conference Center, Rockville, Maryland
Title: Trends in the Use and Management of Carve-Outs of Mental Health Services
Speaker: Monica Oss, President
Summary Ms. Oss began her presentation by observing that the literature published 10 years ago predicted carve-outs of mental health services were only a trend, and soon would be replaced by the total integration of mental services with primary medical care. The 10-year history of carve-outs now illustrates the inaccuracy of that prediction. The term "carve-out" is defined as the phenomenon where segments (i.e., mental health and chemical dependency) of insurance risk are financially separated from overall risk (i.e., other clinical services) and managed under a separate contract. Carve-out generally refers to one of two types of organizational structures:
Ms. Oss explained that the same carve-out industry organizations or managed behavioral health (MBH) programs (e.g., Merit, Green Spring , and Value) compete for both the primary and secondary carve-out contracts. The main differentiation lies in who is responsible for the funds and who has the carve-out contract. Over the last 10-12 years, the only new dimension in the growth of the carve-out phenomenon is the fact that the term "carve-out" has now become synonymous with the term "managed care." Even though "carve-out" does not, by definition, mean managed care, 99 percent of carve-outs fall in the managed care category and usually are managed by some entity-even if it is a provider-integrated delivery system-that has the attributes of a managed care organization. The carve-out concept is an extension of the historical separation of mental health from the rest of health care. For example, there always have been separate state departments of mental health; there is a separate Community Mental Health Act; and mental health is excluded, in any meaningful way, from the HMO Act. The driving force behind the carve-out of mental health benefits by employers/states, however, is not cost-based. From a purely financial point of view, it is less expensive for most payers to leave the mental health benefits in a series of competitive health plans, allowing the health plans to manage the funds and the delivery of the services. The primary reason for the decision to carve-out is a lack of confidence, by the payer, that the HMO can actually manage behavioral health services. The following statistics illustrate the growth of the carve-out concept:
These data also represent an emerging divergency in carve-out models. Carve-out companies are beginning to specialize in particular areas-the states represent "social service models"; employers and the employer market are regarded as the evolving "human-risk management model"; and the HMO market, which has become the price-sensitive sector of the market, is called the "medical model." True carve-out differentiation, at both at the provider level and at the managed care level, will occur as specific groups are identified with these different models and serve these different markets. Enrollment data also can be used to identify the growing influence of carve-out organizations. January 1997 data, reflecting the enrollment in carve-out programs, shows a steady increase in private sector employers' enrollment in all managed behavioral care programs (almost 100% of employer-insured programs use carve-out managed behavioral care programs), particularly in terms of provider-sponsored, integrated delivery systems. Last year also saw the biggest increases both in Employee Assistance Programs (EAP) and risk-based, capitated programs (as opposed to risk-sharing models). The growth of EAPs also is attributed to the growing dissatisfaction of employers with the mental health benefits from HMOs. The risk-based piece reflects the industry's increasing willingness to enter into and compete in the marketplace on the basis of price, as well as the payers (particularly the states') desire to cap their spending on Medicaid mental health through the use of a contract with a proprietary program. (By January 1996, 40% of Medicaid recipients were in managed plans.) Another aspect in carve-out analysis is the changing "flavor" and management complexities of carve-out programs, illustrated by the proportion of individuals with schizophrenia (SPMI) enrolled in MBH programs. The current estimate suggests that at least 11 states have managed care models that include this chronically mental ill population, representing 51 percent of individuals with schizophrenia in the U.S. This can serve as an example to advocates, who for years paid little attention to managed care because they believed it was used by the "working well" population-not the seriously mentally ill. It also demonstrates that, as states "fold-in" such populations into their managed care spheres, behavioral care management, particularly at any government level, becomes more demanding. Another developmental area in carve-out models is the use of reimbursement trends such as risk corridors and risk pools. Risk corridor, a financial relationship between the group that is managing the benefits and the government agency, is defined as a way of moving the delivery system toward capitation, while controlling the risk for both by setting upper and lower cost limits, based, generally, on encounter data. The use of risk corridors has certain advantages that include the ability to:
The use of risk corridors, however, does require a fair amount of sophistication on the part of the state representatives who are negotiating the contract. For example, terms that are ill-defined, or murky obligations and integration points, can result in each case becoming a financial crisis. The second reimbursement trend in provider-integrated delivery systems is the risk pool. This is a type of provider self-insurance. Because of the lack of affordable stop-loss insurance (i.e., limiting the amount of money that can be lost) for groups that are new to bidding on capitated state or local contracts, providers are setting up their own risk pools (funding pools). This is accomplished by setting aside a certain percentage of income as a risk pool, and then setting thresholds-based on an individual case or the aggregate-of the maximum amount of expenditure for any individual provider on an individual case. The risk pool is used for supplementation, if necessary. The use of risk pools is one way that providers have been able to mitigate some of the unknown risks associated with competing for contracts for the first time, particularly since many provider groups initially are commercially uninsurable because of their lack of experience. Ms. Oss predicted that there will be more immediate use of risk corridors-particularly in area of state and county government contracting of mental health initiatives-because the data are uncertain. She also predicted greater future use of risk pools, as more providers consider establishing their own integrated delivery systems and competing for contracts. Providers also have formed partnerships with MBH firms, which then provide some of the risk management tools and share in both the upside and downside of risk with groups of providers. Moving from an analysis of the carve-out market in general, to the activities of specific companies, the current trends include the following:
To illustrate the consolidation trend, Ms. Oss presented a listing of the programs with the largest share of the constantly changing MBH market. Each year, in terms of enrollment in carve-out programs, there has been more consolidation of the market share. It is estimated that, by the end of 1998, there will be three MBH companies, representing approximately 70 percent of the market share. Magellan Health Services, for example, has become the largest-with its acquisition of Merit, Green Spring, and Human Affairs International-and now provides mental health services for approximately 27 percent of the insured U.S. population. Ms. Oss predicted that the wave of carve-out consolidations in the last six months will cause a massive wave of consolidation at the provider level, probably a year from now. The reason is that consolidation results in fewer "slots" for providers within the resulting networks. Current effects, particularly at the provider level, of carve-out consolidations include:
This lack of future sustainability is due to: (1) higher administrative costs under the current discounted FFS contracts, which continue to increase, as care management organizations push more accreditation activities to the provider level (e.g., National Committee for Quality Assurance (NCQA) accreditation); (2) extended payment time-increasing the amounts in accounts receivable; (3) more time involved in the preauthorization process; and (4) no guarantee of volume and shorter lengths of stays and patient visits. In addition, carve-out companies have become the influencing factor on how mental health services are delivered. For example, best practice manuals or clinical criteria sets from managed care organizations (MCOs), not policies from professional organizations, now are considered the "gold standard" of the industry. Following this trend, pharmaceutical companies are targeting their marketing efforts in the introduction of new drugs toward the MCOs, not the individual practicing physician. In spite of the consolidation activities, MBH carve-outs are not making money. As a result, proprietary MBH companies are adopting a variety of market strategies in order establish profitability. Three distinct strategies are emerging that include:
(3) Partnerships-the provider continues to serve the consumers while their managed care partner is providing the managed care infrastructure. Legislators, also, are pivotal to the mental health carve-out process. To produce the best legislation, there are a variety of issues they should be cognizant of, including:
In the final analysis, the evolution of the market is not a function of proprietary versus not-for-profit, or provider versus care manager. The line between provider and managed care organization in mental health has already become quite thin. The systems that are successful are multi-model, multi-disciplinary, geographically-dispersed, integrated delivery systems that provide services and accept financial risk for services. Questions will emerge, such as:
The concept of managed mental health care carve-outs in the public system has moved from mental health to include more social services-particularly child welfare. This appears to be the topic for the immediate future, as proprietary firms view child welfare as their next expansion market. There is a drive to move child welfare into the managed care arena, with the same proprietary growth and diversification (as well as in community health centers) that was seen 12-years ago in behavioral health (mental health) care. The driving forces encouraging child welfare to become more managed are similar to those found in the mental health field, such as the increasing use of residential care (increasing cost); the increasing numbers of provider organizations entering the child welfare field (a supply-driven increase in cost); and the lack of good outcome definitions. As MBH carve-out companies move toward a social services model, they will be developing the financial systems that push the states in the direction of managed child welfare. Such expansion also will demand even more specific contractual definition, not only in terms of medical necessity, but social necessity. Ms. Oss summarized, the current status and future trends for MBH carve-outs, suggesting that:
Interestingly, the future of the MBH carve-out is dependent on the HMO and the medical community, as the demise of the carve-out will only occur with the true integration of primary care with mental health services.
Question and Answer Session
17: Why are HMOs traditionally poor at managing mental health (behavioral health)? 1: I think because most HMOs still are driven by physicians and, generally speaking, mental health and psychiatry are at the bottom of the physician totem pole. 17: That is interesting, since most professionals who work in those systems speak rather passionately about the superiority of having an integrated model. 1: Most of the time, when we go in and look beyond the paper, looking at integration from three perspectives-clinical, financial, and administrative-we find that in many HMOs (but not all) the integration is not real. It's on paper but, from a consumer's point of view, the connection of mental health care with physical health care is no better than that with a carve-out. 17: Many of the approaches for substance abuse treatment don't use a physician or utilize medical input. Perhaps this segment of services is "off the totem pole." 1: One of the big issues related to that observation is the concept of the primary care physician "gate-keeper" in a health plan. Should you, as a consumer of mental health or substance abuse services, have to go through the "gate-keeper" to access the mental health system? There is some fairly good evidence that suggests such a step reduces the number of people who present for care because they do not want to involve their primary care provider. 17: Another aspect is that the majority of patients with mental health problems who are seen in health care settings never get to the specialty services. That, theoretically, is an argument for integrating mental health services with general medicine. 1: Some of the data shows that if you look at physician visits for mental health, about 50 percent are delivered by non-psychiatric physicians, although that data is 10-years old-but it does support your point. Some of the data I have seen, however, suggests that even the general practitioner who is treating patients with mental health problems is less likely to seek specialized health care when it is needed. That is always the argument-how good is the busy primary physician? I'm not disagreeing with you-in the ideal world integration is the best thing; I just don't see that ready access in most health plans. 17: Could you comment on the issue of brief detoxification admissions in terms of the medical part trying to place the responsibility on the behavioral carve-out side when, in most physicians' view, it more properly belongs on the medical side? Where does that issue sit in most carve-outs? 1: That issue is one of the strongest arguments against having a carve-out. There are many such "definitional points" in health plans. A very good contract is essential to make a mental health carve-out work. It must be very specific about all sorts of borderline areas, including defining who gets care, where, and what is the interface-in terms of medical records, clinical care, and transfer of responsibility. The issue, for me, is not whether medical detoxification is in the health plan or the carve-out, as long as everyone knows and agrees. I think the problem that consumers have is that the contract is not clear, the health plan and the carve-out are arguing about the terms, and the consumer and the provider is caught in the middle. The other big argument for integration, which relates very strongly to chemical dependency, is that when you separate the financing of the mental health and chemical dependency benefits from the health plan, you are not going to see the offset effect realized by the primary care health plan. There will always be a tendency for the health plan to try to depress spending on mental health and chemical dependency. The linkage really does provide incentives, if you have a broader-thinking management of the health plan, to invest, particularly in chemical dependency treatment, because you can see the financial benefits. We also are seeing the same issues, on a different scale, coming up with the state mental health carve-outs and access to psychotropic medication. The health plan, who is managing the psychotropic medication budget, does not want to pay for the new drugs because the cost is much more than anticipated, and if the patient is rehospitalized several times, it is not paid out of their capitated amount. There is a lot of pressure now on the state to get health plans to remove preauthorization requirements and add antipsychotic medications to the formulary. 17: What happens to those SPMI individuals under state carve-out systems who would, in the past, have been in state hospitals? 1: One of the problems is that, with a few exceptions, most states that are putting out bids for mental health carve-outs are not up to the task of negotiating contracts with most of the managed care companies. Many of the issues that should be addressed up front, such as the chronically mental ill, are not. This results in a tremendous amount of cost-shifting back to the state because they have not adequately defined what they expect to get from their capitated payment to the manager of mental health services. 17: How many of the states that include SPMI individuals in their managed behavioral health programs are addressing only the Medicaid benefit, or are they mixing Medicaid with other state and public funds? 1: It varies. Each state can have a different MBH model. That is a very real problem for providers as every state is evolving in a different direction. Even 10 years from now it will be difficult to tell which state did the best because there is not a lot of good, solid data being generated for comparisons/evaluations to be done. 17: Can you comment on EAPs and their relationship to the carve-outs, particularly in the large employer setting, whether it's plan-based or workplace-based programs. 1: The other area that we have seen an increase in enrollment, in addition to MBH, is in EAPs (including traditional and the newer integrated models that serve as a gate-keeper and essentially manage MH benefits). The integrated EAP model is the fastest growing model in the employer sector and the market sector predicted to grow the most in the next 10 years. Employers are using EAPs to increase access to mental health services and to comply with aspects of the ADA and recent Equal Employment Opportunity Commission (EEOC) rulings about psychiatric disabilities. Also, as we become more of a service economy that relies on human capital, in terms of "intellectual property", employers are realizing the need for "healthy" individuals to perform the work duties. 17: What about the drug-free workplace testing? 1: Except where required, drug testing programs are falling out of favor among employers. 17: Have you seen risk corridors operational, pulling together the funds of various child welfare agencies, specifically the issue of wrap-around services (e.g., mental health, juvenile justice)? 1: I haven't seen that, but the Kansas program, with their paid case-rates, have privatized adoption, foster-care, and family preservation in three separate contracts. They have a risk corridor arrangement that is reconciled annually. I don't know the details, but it's based on utilization. In terms of child welfare type of services, it's the only one I know. 18: What is the percentage of patients in managed care versus non-managed care? 2: On the employer side, about 15 percent of the insured population is still in traditional indemnity and about 85 percent is in some form of managed care model. HMOs are at approximately 20 percent and Point of Service (POS) about 5 percent. 19: Do you think the issue of confidentiality has anything to do with people being willing to pay out-of-pocket for mental health services? 3: I think the answer to that is definitely yes! If people can afford it, they would prefer not to have all of their mental health history in some computer file. 20: In addition to a decrease in unit rates, what have you observed in terms of the utilization of different classes of mental health professionals? 4: We did a pre/post managed care analysis, with actual claims data from a MCO, and found that the use of psychiatrists (based on encounters) dropped to 5 percent (as opposed to approximately 25% before managed care); the use of psychologists dropped slightly; and M.S.-level Clinical Social Workers picked up the majority of the encounters. 21: Based on that, although it is a small sample, would you expect the "global practitioner" of the future will be a Masters-level trained individual? 5: Yes, in terms of the gross number of encounters. 22: When you said the MCOs are now setting the standards, as opposed to the professional organizations, how public and available are those standards? 6: Most of them you can get for a nominal fee; MCC you can download from the Internet. 23: What is the impact of consolidation on quality of care? 7: We write a lot of proposals for contracts for carve-out bids, and my rule of thumb is that you can not win a bid in the mental health business if you're more than 15 percent higher than the lowest bidder. You may be able to make a case for a 15 to 20 percent increase in cost, if you can demonstrate quantitatively that your have better quality. Once you get beyond that, however, most employers or government agencies don't believe that the extra money is worth whatever extra amount of quality you can present. 24: What are the criteria of quality? 8: Currently, the criteria of quality are in the hands of the payer. In terms of quality of service, the barometer that is used is determined by the government or the state. That is very different from what a group of practicing professionals would define as quality of service. The employers are focused on return to work; they are not very interested in the clinical aspects. States have political overtones in what they regard as quality of service. 17: Are management formularies included in carve-outs, and, if so, what is the impact on the range of medications available? 9: In terms of risk, Tennessee is the only plan that I know of that has included the cost of psychotropic drugs in the capitated rate for the carve-out. In a recent study we did for the state, our conservative estimates suggest that the psychotropic medication budget, with a reasonable amount of use, will take up one-half of the capitation rate. The result will be a decrease in services in order to pay for the cost of medications. 17: What is the effect of capitation on inpatient utilization? 10: The use of inpatient services by capitated carve-outs drops precipitously. Residential utilization drops the most, followed by inpatient. You cannot bid on commercial HMO mental health business if you have much more than 15 days/1000 enrolles of psychiatric beds. A survey we conducted last year of the large carve-out companies about their use of residential services found that most no longer offer the benefit. It's a covered benefit, in terms of the health plan, but, in terms of their best practice criteria, it is rarely ever used. I don't think that will change unless you see payers force that. 17: Are any studies being done on outcomes? What is happening to people other than going back to work? 11: The more progressive employers do have a variety of evaluation tools in place. The issue on the employer's side, however, is that the larger employers who have more invested in running a good carve-out, or perhaps integrating with EAPs, have larger budgets that pay for such services. It's not really comparable with looking at a Medicaid carve-out. In the financial dynamics, there's really not the pressure of the carve-out company to get people out of the hospital. There is a cost-containment element to it, but it is not that driven by the budget. When you go to the lower end of the capitation rate scale, and look at commercial HMOs, you see capitation rates that haven't gone up in 12 years. Some of the new NCQA accreditation requirements may have forced some increase in their budgets, but it's not much. On the state side, there is a range of evaluation activities-but none are completed. 17: Would medical savings accounts also pertain to behavioral health care services? 12: My guess is they would; I haven't seen anything to indicate they would be excluded. 17: Is there a place or a niche for preventive care in carve-outs? 1: The amount of preventive care/programs provided is commensurate with the length of the contract. If the contract is for three years, the investment in preventive programs will have a three-year payout. One of the big public policy issues is that, unless primary prevention and education are specified in terms of what is to be delivered, the managed care companies will do only what they choose to do. For example, they tend to like community treatment and early identification of substance abuse problems-things that really do reduce their expenses in the time frame of a short contract. The longer term investments will not be made unless mandated. 17: Doesn't the HMO market, particularly ones with a large penetration rate in a community-where perhaps 90 percent of the community is included in some managed care arrangement-realize that , soon or later, they may enroll that person, so it would behoove them all to provide preventive care? 1: They don't think in such global terms-that, eventually, they all may share the same population. Most of the actuaries and Chief Financial Officers doing the underwriting are very short-sighted. 17: I would think, with more consolidation and fewer players resulting in less member turnover, it would encourage prevention. 1: It does, but that is another classic argument for integration, and not having carve-outs. If you did not have a carve-out and, instead, had a long-standing relationship with an HMO, the HMO then would have an incentive to invest in the you (the member) and keep you as a long-time beneficiary. When you have consumer choice at that primary health plan level, that is possible. The nature of primary carve-outs is that they are exclusive; so that every three years, Massachusetts, for example, is going to go out to bid. Therefore, the very nature of carve-out contracting, which does take away consumer choice, lends itself to this shorter time horizon. So it's really two very different systems of financing and consumer choice. 17: Isn't prevention used as a marketing tool, as part of the "package," because people like the concept? 1: Yes, it's trendy. It's similar to what is now called "demand management." Organizations are retooling all their old "wellness programs," and calling them demand management. I'm somewhat skeptical when I see a lot of "prevention" activities by managed care firms. I want to know exactly what is it that is being delivered, what is the budget, who is doing it, and how the effectiveness is being measured. 17: What is the effect of the consolidation of provider systems on funding for teaching functions? 1: More money will have to be allocated specifically to pay for teaching and education. There will not be any margin left over from managed care contracts to pay for teaching functions. Also, academic psychiatric departments have to establish accounting practices that will separate service delivery, education, and research into separate functional areas to determine the exact costs of each and where monies are needed. Most of the MBH companies no longer contract with teaching hospitals for psychiatric services at all, or they rarely use them. 17: With all the consolidation and integration, at what point does it become monopolistic and anticompetitive? 1: I was told by someone at the Federal Trade Commission, off the record, that when one of the firms get close to 50 percent they will start to worry about it. 17: Are consumers of mental health services better relying on state or private systems? 1: The consumer reaction to the state use of carve-outs has not been all negative. There are many states where consumers think that state services have been improved as a result of carve-outs. In truth, the jury is still out on the answer to that question.
Question and Answer Session
2: You said that the standard "employee issue" HMO behavioral health carve-out utilization rate is about 10-15 beds/1000 enrollee per year. How does that compare to the "integrated" staff or group model HMOs? 1: The group or staff models have not been forthcoming with sharing their data. The few datasets we have been able to look at indicate that the rate is about the same-other than Harvard Pilgrim Health Plan or Puget Sound or others who have an expanded behavioral health program. The data does indicate that they are all spending approximately the same amount of money-you don't see the groups that manage their own behavioral health benefits spending more. 17: With spending only 2 percent on behavioral health, don't you reach the point of diminishing returns? 1: Anecdotical, because I don't have any really hard data, within a 10-year period that the two dollar amount has remained about the same, the result is what used to be 20-25 inpatient days per 1000 enrollees per year has dwindled to the 10-15 range. There has been a fairly significant drop in the use of inpatient care. The other issue is that unit pricing, in terms of reimbursement to providers, has declined substantially. 17: Let me follow-up. The old Federal employee program, at the high end, spent 7 percent of the healthcare dollar on mental health and chemical dependency, which included all costs. Now HMOs are at 2 percent. What is your comment on the comparison of costs in terms of the dynamics or level of care? 1: The HMO executives will tell you they are spending the money in other areas of care that the consumer wants-for example, eye health professionals, eyeglasses, and subsidizing dental coverage. This is typical (from observation) of group model HMOs that are largely physician driven-psychiatry does not command much financial respect among group practice doctors. 17: Define "care of" schizophrenia. 1: Most of the states have moved large pieces of the social services arena into the risk-pool that's covered by the MBH program so it includes psychosocial rehabilitation and a wide variety of other components-although this generally applies to persons who are covered by Medicaid, and primarily concerns mental illness, not substance abuse or co-occurring disorders. As we see the complexity of the programs increase you will see more definitional issues arise. There much talk, especially concerning child welfare issues about the need to go beyond "medical necessity" and "clinical appropriateness" and consider "social necessity" or "social resource use guidelines." The question is how to integrate this with other issues. 17: With respect to risk corridors, is it either the Iowa or Nebraska carve-out contract that requires 2 percent of the cost contract, the profit margin, or administrative savings (not sure which) be reinvested into community services? 1: Iowa has a wonderful Community Reinvestment Model. It has a maximum allowable amount for administration and profit and that anything over that amount, in terms of saving, is covered by a mandatory reinvestment provision. It has a very interesting structure that includes a full-time Community Reinvestment Manager. This is not unique, other states have similar programs. It is one way for states, or any government entity, to set maximum loss ratios. 17: Are you seeing MCOs manage the drug benefit component, or are they contracting that out to other firms? 1: It is typically the purchaser who contracts with an outside pharmaceutical benefit management (PBM) organization, not the MCO. They carve-out the pharmacy benefit, just as they do behavioral health. 17: What is the relationship between the large HMO and their carve-out MCO subsidiaries? 1: All have captive markets. Almost 100 percent of the HMO-parent business, in terms of mental health contract management, goes to their subsidiary-or certainly as much as their contracts permit. 17: Do you see MCOs forming fairly exclusive referral arrangements with their charter hospitals and excluding other hospitals? There seems to be great potential for owning the entire distribution chain. 1: It's called backward integration. 17: Is there any "arm's length" negotiation in the public sector between community mental health centers and MCOs? It appears that the MCOs state that they have secured the covered lives and "here is the contract." 1: In terms of FFS contracts, there is no latitude. That is the reason that FFS payment is a losing proposition for most providers. There is some leeway if the provider group specializes in a particular type of difficult to serve consumer, such as Serious Emotional Disturbances (SED) children, but providers also must be willing to assume, and have the ability to manage, risk. Geographic distribution issues also can influence negotiating power, and, in some markets, hospital service rates can be negotiated. 17: Will this lack of negotiation change as more people with severe disorders are enrolled? 1: As MCOs expand, they will have on board or will find the expertise they need, in terms of specialty providers-because they have no choice. This is one reason why the proprietary firms are interested in partnerships, because they realize that they need certain key providers in communities. Their big interest is in providers with experience in community psychiatry and the child welfare system. 17: One of the concerns on the substance abuse side is that the NCQA accreditation rules make it difficult for licensed chemical dependency counselors to get contracts. Similar kinds of questions may be raised about psychosocial rehabilitation and consumer-run programs in mental health. Are you projecting that there will be a movement away from contracting (in the public sector) with individual practitioners to contracting with "systems"-which will result in less need for a licensed medical professional? Will there be more emphasis on contracting for specific programs-which more characteristically are seen with chronically ill consumers? 1: That certainly is the direction that everyone wants to head. It is, however, contingent on several factors: (1) there must be some kind of wholesale regulatory rollback to allow it; and (2) there must be sufficient outcome-based measurements built into the contract to ensure that, since quality is no longer measured on credentials and process but on outcome basis, the data that is collected are solid and can serve as a basis, if necessary, for midstream corrections. Keep in mind, however, that as more social services are integrated with mental health, the expectations of outcomes will be more difficult to measure or define. 17: What are the HMO carve-outs doing in the area of Medicare mental health services? 1: There is basically nothing to carve-out. The entire benefit is so inadequate that there is no incentive. The only carve-out companies doing Medicare work are those that are owned by HMOs that already have an integrated product. 18: What are your suggestions concerning MBH areas for public health advocates to watch? 2: Some of the key things I look for in MBH programs include: (1) Is the proposed plan clear on how consumers will access services? (2) Does the proposed plan improve access or is it simply more complicated? (3) Does the MBH company maintain control over the datasets, or will the state have access to or control over the datasets to give to researchers to actually review? (4) Are loss ratios specified? Out of every dollar, what percentage will go to direct services, as opposed to administration and profit? Loss ratios are truer numbers than profit margins and much easier to measure. This will provide a limit that says anything beyond this amount of administration and profit goes back into a formal community reinvestment program. (5) How much community involvement was there at the design stage, prior to the writing of the contract? 18: What should the loss ratio be? 2: It depends on the program. A medical model can have a 90 percent loss ratio; however, factors such as more social service components, increased administration complexities, and small program size will lower the loss ratio considerably. For example, in Ohio, a Peat-Marwick a study determined that, in terms of loss ratio, a 600,000 population area was the smallest geographic unit that could be used to get maximum economies of scale. 3: When involving the community, what do you do when the "wish-list" character creates insatiable desires-more than was ever contemplated? 2: Stratified sampling methodology can be used to include all reasonable constituencies. But at some point, after input, rational decisions must be made and the program must be designed. More consumer satisfaction will result if consumers, and particularly advocates, are allowed to have an input at the design stage. 17: What is the distribution of the three carve-out models? Is it predominantly what you see in the medical model? 2: The largest distribution, in terms of the number of lives, is found primarily in the medical/ HMO carve-out model. The majority of the revenue distribution is in the employer/human risk management model (e.g., EPAs), in large part because those are higher-margin, better services-more ancillary services-carve-outs. 18: What proportion of the population is actually in carve-outs? 2: About 70 percent of the insured population has mental health benefits managed by a carve-out program, including Medicare. Medicare, however, is the last public sector without significant carve-outs. 25: Are you seeing risk adjustment taking place for serious disorders? 13: Certainly up front, when you are adjusting for the per member/per month fees that are being calculated. Much of pricing is based on projected models, based, in part, on historical data, in part, on our assessment of the group we are working with and their practice patterns, and in part, on what they think they can do in terms of making an impact on how care is delivered. It is not an exact science. 26: What is the presence in the field of managing disabled workers compensation under psychiatric services? 14: Actually it is growing. A number of MBH companies have well-developed programs to work for employers and actually do the reasonable accommodations required under the ADA, as well as manage the long-term psychiatric disability. 17: For the purposes of state and county contract bidding, must each psychosocial service be priced out? 1: Yes, if it is a capitated contract. If the services are going to be paid, they have to be included up front in the budget and in the contract. |
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