Virginia is about to roll out a proposal for changing the way the state administers Medicaid-reimbursed mental-health services for children and adults.
The state Medicaid program is expected to issue a draft request for proposals in early October for a private contractor to coordinate the care of people who need a wide range of mental-health services in their communities.
The initiative, part of a budget compromise reached this year in the General Assembly, would test the use of managed or coordinated care under the federal Medicaid program for people who need community mental-health services to avoid more costly institutional care.
Virginia already uses managed care for clinical services, such as inpatient psychiatric care, outpatient therapy and medication management, but this proposal would encompass almost all community-based rehabilitative mental-health services for thousands of children and adults.
"These are the critical services that can keep people out of hospitals," said Mary Ann Bergeron, executive director of the Virginia Association of Community Services Boards.
The state's 40 community services boards would keep a central role under the proposal by retaining Medicaid reimbursement for targeted case management of people's mental-health needs.
The CSBs also would continue to be among the providers of services that a private entity would coordinate under a state contract that would take effect on July 1, 2012.
The Department of Medical Assistance Services does not have a projected date for releasing the final bid request, but the CSBs and other providers say they expect it by late November.
The proposed new system would attempt to reduce the costs of the services to the Medicaid program by moving away from the traditional "fee for service" model to one that ultimately would have a private entity coordinating care for a contractual fee — and the risk that comes with it.
"The overall goal of the project is to improve the value of behavioral health services purchased by the Commonwealth of Virginia without compromising access to behavior health serves for vulnerable populations," said Cynthia B. Jones, state Medicaid director, in a memo to service providers last week.
For two years, the contractor would act only as an administrator of Medicaid services for people with mental-health needs. In the third year of the contract, the vendor would assume the risk of providing the services.
The phased approach would give the state time to test tools for coordinating care, without jumping directly into a managed-care system, providers say.
"I think it's a better approach than what had originally been put in budget language in 2010," said Bergeron, who was part of a compromise for requiring the project in this year's state budget.
Mental-health advocates await the draft proposal with both eagerness and trepidation. They say care could improve with better coordination and money would be saved by keeping people out of institutions.
They want the state to reinvest any savings into better community services so children and adults can get help early and avoid institutional care.
"We're looking at how the service delivery system will be improved, and how the savings will be used," said Mira Signer, executive director of the National Alliance for the Mentally Ill-Virginia.
But they also worry about putting a private contractor in charge of a system that already is spread thin.
"We're obviously very nervous about a for-profit entity coming in and taking resources out of the system when resources are precious and we need more of them," said Margaret Nimmo Crowe, senior policy analyst at Voices for Virginia's Children.
Secretary of Health and Human Resources Bill Hazel said the proposed coordinated care system would be different from the kind of managed care he experienced as an orthopedic surgeon in Northern Virginia.
"Managed care was all about the price," Hazel said. "It was the gatekeeper whose job was to say 'no.'"
In the proposed system, he said, "We want to ensure that individuals are getting the care they need in the appropriate setting when it's needed."
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