Frontier Mental Health Services Resource Network

This Letter to the Field draws upon the work of many other authors and researchers not referenced here. A more comprehensive treatment of this material with citations is available from the Frontier Mental Health Services Resource Network.

General Overview

As the behavioral health care industry enters the second decade of the development of care management strategies, managed care for mental health has come to many frontier regions and may soon come to others. It has already come to Medicaid and other public sector recipients in rural and frontier areas of Arizona, Colorado, Montana, New Mexico, Oregon, Utah and Washington. Despite some arguments to the contrary, it seems likely that the residents of these states will soon be joined by many others whose behavioral health care benefits will be managed. Those frontier residents in private health plans may also come under managed care due to increasing enrollment in health maintenance organizations (HMOs) and other managed plans, as well as continued market growth for companies managing behavioral health. However, since most health care in frontier areas is government funded, this letter will largely focus on the impact of managed care on public payers such as Medicaid. While many of the principles will be applicable to private and other government payers such as Medicare and CHAMPUS, the impact of Medicaid managed care on public systems will be the central focus.

Managed care raises many concerns, including the potential for decreased quality in the interest of decreased costs and damage to the publicly funded safety net of services in rural and frontier communities. Beeson (1994) has described several concerns given the increased incentives to control costs, including: neglect of vulnerable populations, cost-shifting or "dumping" of high need/cost people from managed to unmanaged systems (e.g., state hospitals, corrections systems), denials of appropriate care, limited access to care, decreased funds overall, a decline in resources for mental health and substance abuse treatment in particular, risks inherent in the privatization of public services (e.g., private systems historically under-serving persons with severe and persistent mental illness, the potential loss of gains in consumer and family involvement), and decreased influence of local communities. Mental health consumers have echoed many of these same concerns. In response to these and other concerns, pressure is building at a federal level and in many states to increase government regulation of managed care plans

Despite increasing public sentiment against managed care, there are still compelling factors arguing for increased care management in frontier areas, particularly for the public sector. First, mental health care costs have risen dramatically, even exceeding the rate for general health expenditures. For example, Medicaid mental health costs in Colorado rose over 80% from 1990 to 1995. Despite these tremendous cost increases, traditional funding approaches (including fee-for-service insurance and prior initiatives by federal and state governments through community mental health centers and state hospitals) have failed to adequately serve frontier and rural areas. The rising tide of mental health care financing has yet to reach rural, let alone frontier, America.

Yet frontier areas tend to be unattractive markets for managed care development. By definition they have small populations that tend to be scattered rather than clustered. There are few providers among whom to foster competitive markets. Finally, there is little room is left for cost-cutting given that health care is more expensive to deliver in frontier areas and reimbursement is already significantly below urban rates. Nevertheless, a recent analysis of managed care trends in rural areas argues for increased prospects for managed care expansion.

System Design Considerations in Frontier Areas

Risk Assignment. When designing care management approaches for frontier areas, policy-makers must look at the full array of financing approaches available to them and the incentives that they create. On the one extreme are fee-for-service arrangements, in which the payer bears all financial risk. The more services provided, the more the payer must spend, regardless of how many services are eventually provided or their outcome. This creates an incentive for providers to provide as many services as possible (the more services provided, the more income generated) and a situation in which payers face essentially unlimited liability for increases in the cost of care. These two factors strongly motivate payers to move to managed care.

On the other extreme is capitation. Capitated health plans achieve their savings and increased accountability largely by transferring the risk of the cost of care from payers (e.g., federal and state government agencies in the case of public plans, insurance companies or self-insured corporations in the case of private plans) to providers (e.g., networks of independent practitioners, community mental health centers, regional governmental entities, managed behavioral health care organizations, etc.). In a capitated health plan, a provider agrees to provide all the health care services required by a specified population in return for a pre-set amount of dollars. If the costs of care are less than the pre-set amount, the provider makes a profit; if the costs exceed the pre-set amount, the provider incurs a loss.

Between these two extremes are a variety of intermediary strategies that offer payers options for managing care short of full capitation, including:

It is important to keep in mind that a single managed behavioral health care system may employ several of these strategies. For example, a state may award a capitated contract for the entire Medicaid mental health plan to a single managed care organization, but retain traditional funding for its state hospital. The managed care organization may in turn employ managed fee-for-service arrangements (e.g., fee schedules, prior authorization for treatment, and concurrent review) with the providers with whom they sub-contract and perhaps even a case-rate for certain sub-populations (e.g., persons with severe and persistent mental illness).

Integrated vs. Carved Out Approaches. Medicaid managed mental health care developments have primarily centered on full and partial capitation. Here, an important debate has taken place between those advocating that mental health funds be integrated with funds for primary care and those advocating that they be kept separate. Often referred to as the choice between an integrated versus a carved out model, the debate seems to have ended up largely in favor of carved out models for the present. Integrated plans, while perhaps the ultimate goal of many, nevertheless pose significant risks for behavioral care. Mental health care tends to be overlooked, underutilized, and poorly managed when part of an overall, primary care oriented health plan. In addition, primary care physicians tend to under-diagnose mental health disorders.

Many are now viewing carved out mental health plans as a developmental step toward increased integration. Carved out plans allow for the development and refinement of care delivery and management systems specifically tailored to the realities of mental health care provision. If integrated delivery systems are developed that coordinate all health care beneath a single funding, administrative and clinical umbrella, today's carve outs may become the robust mental health components of these systems. For frontier areas, the question of carve out or integration may be of less interest. Specialty care, including mental health care, is of little concern in areas that are lucky to have any health care capacity at all. Yet, whether mental health care will diminish in importance or evolve into a stronger component of the overall health care picture may depend upon the outcome of the integration/carve out discussion.

Frontier Considerations. Once these larger, structural questions have been addressed, the realities of frontier care delivery systems must be kept in mind as managed care comes to frontier areas. First, health care is more expensive to deliver in frontier areas. Rates in frontier and rural areas may not offer as much room for cost-cutting given their historically lower reimbursement, especially for inpatient care. However, costs can still be controlled through better aligned incentives. For example, an early finding in Iowa's and Colorado's Medicaid capitation pilots has been decreased costs and increased access. Many reason that these seemingly contradictory results have been achieved by increasing access to outpatient and other less costly interventions that save money by decreasing the need for more costly emergency and inpatient care. Inpatient savings have fueled the system, not through fewer episodes but rather through shorter lengths of stay.

In serving frontier areas, it will be important that urban models are not uncritically applied. For example, hospital savings typically achieved in urban areas may not be realistic in the frontier where outpatient supports and inpatient alternatives are often not available. Specifically, the use of hospital step-downs may not be possible if a consumer has to commute two hours each way to the hospital in order to transition from 24-hour care to partial care.

Another unique challenge in the frontier is that of access to services. Geographic distance and the expense incurred in overcoming it, a shortage of providers, and attitudes that stigmatize the seeking of mental health care already pose a barrier to service utilization. This causes many frontier advocates to fear managed care as yet one more impediment to adequate health care. While managed care can increase access, it will be important for payers to ensure that this is the case for frontier people as well as the plan as a whole. Given that frontier residents often comprise only a small minority of recipients in a plan, access standards governing the plan must ensure, as they should with any minority group, that the impact upon frontier members is examined separately from the overall population average. Otherwise, differential impacts on frontier residents and their communities may be missed.

In fact, managed care in less populous areas may be less focused upon reducing costs and more concerned with improving access to more efficient models of care. While most describe managed care as cost-focused, it can also be viewed as increasing accountability for value from the health care that is purchased. In densely populated areas, value has been increased by holding care providers accountable for cost-efficient services. In these areas, an over-abundance of care providers, both individuals and institutions, chasing fewer and fewer health dollars results in competition to increase efficiency and reduce costs.

The situation is reversed in rural and particularly frontier areas. Here, there are too few providers and too few services provided. In such a context, increased value and accountability to sound health care cuts the other way, calling for increased access to appropriate services. One study of managed primary health care has found that physician availability was the key to successful initiatives. This suggests that mental health care provider availability could be essential to effective managed behavioral health care in rural areas. Some have even argued that Medicaid managed care will create new incentives for providers to come into rural and frontier areas. Although one should not assume that managed care will necessarily lead to increased access to care in frontier areas, managed care does offer the opportunity for payers to revisit the value realized for what they do spend on health care in frontier areas.

In addition to the number and type of health care providers within a reasonable commute, other factors influence the quality of access within a health system. One must also keep in mind that managed care approaches organize the system of care. Currently, the focus of care managers has shifted away from simple cost-cutting to more efficient system design through integration across similar and diverse types of health care providers. System organization is another factor to consider when evaluating the access afforded by a health plan. For example, driving 75 miles to access a physician tied into an extensive specialist referral network, telemedicine resources, and other amenities of a managed health plan might afford access to better care overall than driving 25 miles to a solo physician.

Nevertheless, the fear remains that geographic centralization will pose a threat to access in frontier areas. However, the risk seems to be less that managed care plans will remove frontier providers already on the scene than that plans will fail to improve access for frontier residents that must already rely on providers located far away. While increased inaccessibility through geographic centralization is a threat in managed plans, the situation can also be viewed as an opportunity to use evolving geographic distance-to-care standards to require plans to improve distance-to-care in frontier areas. Nevertheless, payers must take care that unscrupulous plans not use distance barriers -- either preexisting or newly imposed -- to lower frontier utilization.

Controlling the Quantity of Care: From Managing Utilization to Managing Care

Most discussions of managed care center on decreasing the costs of care, usually by decreasing the quantity of services provided. For a good overview of managed care techniques and approaches, see Mindon and Hassol (1996); and for the application of these techniques to child and adolescent services, see Lourie, Howe and Roebuck (1996).

It is important to remember, however, that care management strategies evolve over time. Behavioral health care has only been managed at the longest for just over a decade in a few markets. Therefore, to gauge the possible direction of this evolution it may be helpful to consider the evolution of care management approaches for primary health care, which have had significantly more time to develop.

The management of primary health care can be described as having moved through four stages: unmanaged, early management focused upon costs, horizontal integration, and vertical integration. The table below presents each of these stages, describing their care delivery system structure, financial implications, and impact on payers, providers and consumers:

	Unmanaged	Early Managed Care	Horizontal Integration	Vertical Integration
Care Delivery System Structure	Care delivered through an uncoordinated array of individual providers and facilities.	Pre-authorization used to control access to care on the front end; concurrent review used to control provider decisions; retrospective review used to ensure acceptable patterns of care delivery across providers.	Market consolidation among providers and payers with little impact on the delivery of care.	Integrated delivery systems seek to provide the full array of health care services beneath a single organizational umbrella, from inpatient to primary to preventative care through alliances between hospitals, practitioners, and managed care organizations.
Financial Impact	Unrestricted fee-for-service reimbursement leads to increased costs.	Competitive rate-setting and utilization review lead to cost reductions.	Modest savings as individual entities join forces for greater economies of scale.	Untested potential through comprehensive disease management approaches.
Impact on Payers	Little control over outcomes or costs.	Increased control of costs through expensive oversight.	Insurance companies and managed care organizations consolidate through affiliations, mergers and acquisitions.	Payers realize increased efficiencies and better outcomes through disease management strategies.
Impact on Providers	Freedom of practice and increased reimbursement.	Reimbursement and clinical autonomy diminish.	Individual providers begin to band together into groups.	Providers enjoy renewed clinical and administrative authority.
Impact on Consumers	With insurance, unrestricted access; without insurance, poor or no access.	Choices among providers and access to specialty services increasingly limited.	Have to cope with frequent changes in the names and sometimes the composition of their health plans.	Consumers enjoy better coordination of care and improved outcomes.

While many markets are still dominated by early managed care approaches, horizontal integration is increasing in many markets and more mature markets are beginning to experiment with vertical integration. With the advent of vertically integrated delivery systems, many have proposed an as-yet untested hope that the management of care toward improved consumer outcomes will usurp crass utilization management, allowing savings to be achieved instead through improved care.

The implication of these developments for behavioral health is the possibility that managed care can offer more than decreased costs and strict utilization controls. As managed care moves into new areas such as frontier mental health, it will be important to remember that strict utilization management is not the only option available. As noted earlier, frontier areas may find it easier to realize increased value for mental health dollars through enhanced access and care coordination rather than simply through decreased rates and shorter inpatient stays. This level of development is more in keeping with stage four integrated delivery system development rather than more primitive cost controls. Perhaps the question most pertinent to rural and frontier residents is whether managed care will ultimately focus upon restricted care or improved access to coordinated and comprehensive services.

Improved Quality Through Increased Accountability

While the effort to measure the impact of mental health care has reemerged at levels that rival even the hey-day of community mental health in the 1970s, research has yet to shed much light upon the concerns raised by managed care. Managed delivery systems may bring opportunities such as improved quality of care, increased organization and coordination within systems of care, more integrated care (primary and mental health), and renewed attention to the outcomes of care. Case study research has shown that managed care for general health care has worked well in some rural and frontier areas, in particular making health care more affordable. Although the study found managed care's effect upon the quality of care difficult to determine, it reasoned that realigned provider incentives and increased accountability could very well increase quality. Also, studies have found "positive potential" in managed care principles compatible with the development of comprehensive systems of care, especially for children and adolescents. While it seems clear that managed behavioral health care has effectively reduced costs across the board and even improved access in some areas; access has decreased in some locales. Overall, findings regarding the effect of managed behavioral care on quality and the relative strengths of different models of managed care remain inconclusive.

One should not be fooled into thinking, however, that the major, or in many cases even a primary, motivation for proponents of managed care is improved quality. Currently, there are no accepted standardized measures of quality and plans compete primarily on the basis of price. However, the opportunity exists to change this balance. Improved tracking systems and more flexible computer databases offer the potential of increased accountability not simply for cost but also for quality. In particular, this is an opportunity that must not be lost for persons in frontier areas and others who currently receive a disproportionately low share of the behavioral health care dollar. It may be a unique chance to hold health plans accountable for the care they provide in the frontier.

A host of performance indicator and outcome measurement approaches are currently emerging from development into more widespread practice. Performance indicators seem to be gaining wider use than outcome measures, as consensus seems to have been more easily reached about the hallmarks of effective performance as opposed to the measurement of the overarching outcome goals that they seek to achieve. The primary measures are summarized below:

Performance Measure	Key features
Mental Health Statistics Improvement Program (MHSIP) Consumer Oriented Mental Health Report Card	Jointly developed by under a federal government initiative (CMHS) by a group of mental health consumers, advocates, public sector payers and researchers Looks at the domains of access, appropriateness, outcomes and prevention Distinctive in its emphasis on the experience of the consumer of services and consumer related concerns such as negative treatment outcomes, as well as its relevance for public sector issues Its major drawback lies in its imposition of a significant data collection burden, perhaps as a result of its focus on issues not generally tracked currently
American Managed Behavioral Healthcare Association (AMBHA) PERMS 1.0	Developed by AMBHA, the industry association for organizations that manage behavioral health plans Maximizes efficiency in performance indicator measurement through a heavy reliance on data sets already collected by managed care organizations Measures variables in the domains of access, satisfaction and outcome Oriented toward the private commercial behavioral health care market; contains little content pertinent to public system concerns
Institute for Behavioral Healthcare performance indicators	Primarily oriented toward payer concerns While it stipulates indicators to be measured, it does not provide specific methods for their measurement, therefore limiting standardized comparison Looks at factors pertinent to frontier areas such as geographic convenience, the percent of beneficiaries receiving services, complaints and grievances Its primary definition of outcome centers on decreased service utilization
National Commission for Quality Assurance (NCQA) HEDIS	Developed by the organization which has historically accredited managed care organizations such as HMOs and has recently begun to move to accredit managed behavioral health care organizations Very focused upon the process of care delivery and the development of adequate quality improvement and assurance mechanisms and poised to gain wide acceptance through NCQA's history as an approved accrediting entity

Standardized measures such as these could help frontier health care advocates first identify the differences in service delivery that currently exist for frontier residents and second use the standards over time to hold plans accountable for rectifying these differences. Measures that can help define these differences more clearly could help draw attention to the needs in these locales.

This underscores a key guideline that should govern performance measurement in frontier areas. Specifically, behavioral health plans should analyze utilization and other performance patterns by separating the data for frontier areas from data for more populated areas. Ensuring that sub-populations within plans are examined separately for differential experiences has been put forward in standards for the care of other minority groups. Others have specifically suggested the separate measurement for frontier residents of data pertaining to satisfaction, service utilization, access and grievances. Failure to analyze data from frontier areas separately can lead to various mistaken interpretations. For example, if satisfaction overall is 90%, it may wash out higher rates of dissatisfaction in frontier areas overlooked unless disaggregated.

Challenges for Providers

Managed care developments bring many changes for the mental health care provider. These can be grouped into system level and individual practitioner challenges.

System Level Challenges. Foremost among the system challenges facing care providers in frontier areas are credentialing difficulties. This includes the lack of adequate policies defining just who counts as a mental health professional in managed health care plans, as well as the appropriate uses for those providers who are counted. Managed care plans generally develop credentialing guidelines defining which professionals can be reimbursed by the plan (i.e., which providers can be members of the provider network) and which cannot (i.e., the remaining providers). By restricting the available pool of providers to those that meet the plan's guidelines (which are generally more restrictive than state guidelines for holding a license as a mental health professional), credentialing standards pose the risk of compounding mental health workforce shortages when applied to frontier areas.

The argument that frontier areas and other special needs groups should be excepted from credentialing standards has generally been rejected, perhaps for the better given the concern that frontier areas not be relegated to second-class status. Strategies to respond to this in rural plans include the development of specific reimbursable roles for mid-level providers, more flexible reimbursement for mid-level providers, and competency-based credentialing procedures. One positive approach has been to grant a grace period to providers that fall below minimum requirements, allowing a period of time in which providers can bring themselves up to par. An alternative approach that might better serve those frontier providers for whom no amount of time would be enough to pass muster would be for health plans to develop alternative credentialing standards. Such standards have already been put forward for mental health providers in other specialized niches such as rehabilitation workers or Washington State's standards for Minority Mental Health Specialists.

Individual Practitioner Challenges. Managed care also changes the work life of the individual practitioner. Advantages for rural physicians include development or preservation of their market share and assistance from managed care organizations in complying with non-clinical requirements. Other advantages include the enhanced back-up provided by the resources of an organized system of care, including referrals, informatics, technology, and managed relationships with other facilities, as well as increased efforts to expand telephonic and other telemedicine capacities as managed care organizations seek to augment the capacity of individual providers.

Disadvantages include loss of control over certain aspects of clinical practice and the feeling of cultural difference from the managed care organization, especially if it is located in an urban location far from the frontier practice. Other challenges include concerns about job security, declines in income, changes in professional identity including loss of status and autonomy, and financial conflicts of interest. Most mental health providers have experienced a loss of autonomy, especially through frequent treatment plan reviews and frugal authorizations, often even for outpatient care. However, plans are increasingly moving away from costly utilization management strategies and toward network management techniques that more closely align the care practices of individual practitioners with the care models of the health plan. This allows, in some cases, for the delegation of outpatient care management responsibility to the individual provider.

In negotiating these new challenges, providers need to avoid several pitfalls often found in managed care contracts. Among the most notorious are gag clauses that seek either to prevent clinicians from disclosing to their clients their financial arrangements with the managed care organization or in some cases from recommending services that the plan does not cover. Related to this and similarly problematic are contracting arrangements that allow the dismissal of clinicians without cause or without appeal to a neutral clinical authority.

Also problematic are the use of incentives that create conflicts with patient care such as bonuses for low utilization or at-risk arrangements that reward clinicians for providing less care. It should be kept in mind, however, that all financing arrangements create financial incentives of some sort for clinicians. Fee-for-service arrangements created the incentive to over-utilize. This fact was not missed by many consumer advocates who see the move away from fee-for-service reimbursement as a way to decrease the use of restrictive interventions such as involuntary hospitalization. It might be pointed out that the necessity for clinicians to put the needs of their clients over their own financial self-interest is a long-standing concern in the fields of medicine and mental health. No matter what the financing arrangement, clinicians should continue to seek support through peer- and self-imposed ethical standards. However, the more egregious managed care practices that reward clinicians for decreased care should be simply avoided.

Also worthy of scrutiny is the bias in most if not all managed care settings toward brief psychotherapy and an accompanying move away from long-term, psychoanalytically- or insight-oriented psychotherapy. Psychotherapy in managed care plans increasingly amounts to little more than brief, focused and supportive psychotherapy, behavioral and cognitive-behavioral therapy, and greater reliance on medication. Such moves seem to be due less to research findings than to the financing practices of the managed care plan. Clinicians would be wise to balance managed care pressures toward briefer treatment with research findings and their own clinical experience.

The role of the frontier mental health provider is also likely to change. It has long been argued that the answer to the shortage of professionals in rural and frontier areas rests in the redesign of the delivery system, not simply in attempts to attract more individual workers. Delivery system reforms such as service integration (between primary and mental health care) have been suggested as the key to the long-term effectiveness of managed care in general and in rural areas in particular, given the shortage of mental health providers in such areas. It is likely that such strategies will also be needed in frontier areas.

Recommendations

As managed care increasingly moves toward risk-shifting strategies such as capitation, frontier stakeholders must be careful not to allow such risks to be shifted to the consumer through excessively reduced care expenditures. Toward this end, the table below presents some key recommendations for the major stakeholder groups in frontier areas:

State Mental Health Authorities in Frontier States

Design Requests for Proposals (RFPs - the documents specifying the requirements for public mental health care purchases) with frontier areas in mind. Do not simply look at the state as a whole; remember that there are special populations within the state that merit special consideration.
Learn to write good contracts. States in general and mental health departments in particular have formerly not had to write contracts governing such large expenditures for such softly defined products.
Begin to use risk corridors and other strategies to ensure that plans do not unduly profit and that providers do not take on so much risk as to endanger the public mental health safety net. Given the difficulty in separating profit and administrative costs, some states have moved to setting limits for combined profit and administrative expense, creating the twin benefits of limited profit and minimized administrative expenses.
Ensure a market for frontier health care by pooling funding for frontier areas with that for more populated locales. This will create a population base large enough and inclusive enough of traditional delivery system excesses in urban and suburban areas so as to motivate managed care organizations to come into frontier areas.

Advocates for Frontier Health Care

Advocate for frontier-sensitive RFPs, sound contracting, risk corridors, limits to profit and administrative expenses and the pooling of funding for frontier areas with more populated suburban and urban areas so that your state governments will be more likely to do the right thing.
Demand the development of quality standards and advocate for their standardization and application to frontier populations. Also advocate for their relevancy to frontier concerns such as geographic access.
Support the effective use of these standards by insisting that payers monitor them separately for frontier beneficiaries and hold plans accountable for any deficiencies.
Advocate for increased use of outcomes in contracting and provider selection. The most important thing is what health care systems accomplish for the people they serve.

Frontier Providers

Start planning for managed care now, as the "hope" that rural and frontier areas will remain a safe-haven from managed care practices is fast eroding. Knowledge of managed care itself is an important first step.
Diversify and specialize. The more things that you do well and the better you do them, the more competitive you will be in a managed care market.
Move into management roles. Why not have care managed by clinicians sensitive to frontier concerns?
Move toward more efficient models of care. Brief treatments and time-efficient models may not respond to all mental health needs, but they are fast emerging as necessary components of contemporary clinical practice.
Organize for economies of scale and increased leverage within managed systems of care. Providers should also consider integration across professional boundaries.
Organize for advocacy through local organizations and the National Association for Rural Mental Health.
Beware of problematic clauses in managed care contracts and feel free to seek legal advice before signing.

Mental Health Consumers

Influence the design of managed behavioral health care systems through local and national organizations.
Advocate for increased emphasis on self-help as a cost-effective way to provide care.
Expect less restrictive service alternatives and use new grievance and complaint procedures and the incentives tied to them to demand less restrictive care alternatives.
Be wary of less service and vigilant for the risk that too few services be provided. As with overly restrictive services, the primary means for avoiding under-service are grievance and complaint processes.

References

Beeson, P. G. (1994). Rural mental health in an era of reform: A key issues focus group meeting. Rockville, MD: Center for Mental Health Services and National Association of Rural Mental Health.

Lourie, I. S., Howe, S. W., & Roebuck, L. L. (1996). Lessons learned from two behavioral managed care approaches with special implications for children, adolescents, and their families. Rockville, MD: Center for Mental Health Services.

Mindon, S. & Hassol, A. (May, 1996). Final review of available information on managed behavioral health care. Rockville, MD: Center for Mental Health Services.

Managed Behavioral Health Care in the Frontier