Early Intervention Financing and Resources: Final Report. Executive Summary


Background and Motivation

The objective of this project is to study the implementation of coordinated specialty care services in NAVIGATE, the active treatment intervention in the National Institute of Mental Health's (NIMH's) Recovery After an Initial Schizophrenia Episode (RAISE) Early Treatment Program (ETP). The focus of this project is on the important issues of financing coordinated specialty care services for first-episode psychosis within communities. The report discusses some of the implications of the Affordable Care Act (ACA) for these financing concerns. ASPE expects to disseminate the practical lessons of the RAISE initiative, so that early psychosis services can be implemented throughout the United States in the event that their effectiveness has been established by the RAISE study.

RAISE is intended to transform behavioral health services, as recommended by the President's New Freedom Commission on Mental Health (2003). Schizophrenia, with its associated disabling symptoms and poor prognosis, has long challenged the mental health service system to provide humane and effective services. Recently, the finding that outcomes in schizophrenia may not be uniformly negative over time has sparked a new emphasis on “recovery” and with it a more hopeful expectation that with proper treatment, individuals with schizophrenia can function in their communities, by participating in work, school, and social relationships. (New Freedom Commission on Mental Health, 2003) Furthermore, this degree of social inclusion and symptomatic recovery is thought to be more likely if treatment occurs early in the course of the illness. (McCoy, Patton, and Goldman, 2010)

The RAISE initiative is a test of the practical implementation of an integrated set of evidence-based services delivered early in the course of psychosis, the hallmark of the onset of schizophrenia. There is a strong evidence base for many services in clinical use for treating psychosis, but they are not routinely available in practice. Medications, family psycho-education, skills training, and supported employment all have been demonstrated to be effective in treating psychosis and schizophrenia.

The RAISE study will assess the effectiveness of a menu of evidence-based services when marshaled together in real-world, community settings early in the course of schizophrenia, when psychotic symptoms first appear. NAVIGATE is a multi-component intervention delivered in a team approach. The components include Individual Resilience Training, supported employment and education (SEE), family psycho-education, and individualized medication management. NAVIGATE participants are individuals aged 15-40 years old who have a first psychotic episode of any duration, so long as they have taken antipsychotic medication for a cumulative period of no longer than six months. The specific set of eligible diagnostic categories is determined using the SCID in a centralized assessment process. Individuals with schizophrenia, schizo-affective disorder, schizophreniform disorder, brief psychotic disorder, and psychotic disorder, not otherwise specified may be included, and those whose psychosis is deemed secondary to a general medical condition, such as significant head trauma or a neurological disorder, are excluded from NAVIGATE and the ETP study.

Interventions are offered to prospective patients within a shared decision-making framework. Thus, participants do not necessary receive every NAVIGATE service, but only those selected to facilitate personal recovery goals. The hypothesis is that early team-based treatment with evidence-based services can prevent disability and improve long-term functional outcomes in people with first-episode schizophrenia.

From the beginning of the RAISE initiative, the project has focused on implementing first-episode services in real-world community settings, rather than academic medical centers. NIMH hoped that a practical clinical trial of the magnitude, visibility, and scientific rigor of RAISE ETP would lead to the rapid implementation of evidence-based, first-episode services throughout the United States, should the RAISE ETP intervention prove effective. Other countries, such as the United Kingdom, Canada, and Australia, have implemented such services on a widespread basis, but they have been neither implemented nor evaluated extensively in the United States. Those other countries all have universal health insurance and cover the services, even some non-traditional supportive services, within their public mental health systems. Policymakers in the United States may need to see evidence of the effectiveness of first-episode services when delivered in typical community settings in the United States prior to supporting their wide-scale adoption. To speed the likely implementation of first-episode psychosis treatment services, the original RAISE request for proposal required that the proposed RAISE study sites use mainstream and readily available funding mechanisms in ecologically valid service systems and their community clinics and mental health centers. The project was launched prior to the passage of the ACA, and some provisions of the health reform law have implications for first-episode services.

One of the main financing challenges of RAISE is related to the historic link of Medicaid eligibility to Supplemental Security Income (SSI) disability status, prior to health care reform. It is expected that most of the early psychosis patients will not qualify for SSI, as they are not expected to be significantly disabled at this early phase of their psychotic illness, and so they are not likely to be on Medicaid. (Some individuals in the early stages of psychosis may have qualified for SSI on the basis of a general medical condition or a disabling mental disorder prior to a first psychotic episode. Some individuals in the midst of a first psychotic illness long enough to qualify for SSI could be eligible for the ETP, if they did not receive antipsychotic medication for more than six cumulative months.) The SSI disability requirement for eligibility for Medicaid will become less of an issue in 2014, when implementation of health care reform will increase Medicaid enrollment of non-disabled individuals through the so-called Medicaid expansion. Meanwhile, some participants in NAVIGATE will be able to remain on their parents' health insurance for longer because of the ACA; others will have more opportunities for private insurance coverage without fear of being disqualified based on psychosis as a pre-existing condition.


The main research questions of this project concern the financing of the multi-element intervention for first-episode psychosis. Overarching questions focus on embedding these services within the context of usual treatment settings in the United States, including community mental health centers and outpatient clinics. Financing is a key element of successful implementation, as reflected in the findings of the earlier ASPE studies on financing the services in the RAISE intervention (Patton, Ratner and Salkever, 2010) and RAISE-related services such as supported employment (Karakus, Frey, Goldman, Fields and Drake, 2011).

The study employed a range of qualitative research techniques, including document review, key informant interviews, and case study methodology. After discussions about what might be learned from visits to the sites, Westat researchers suggested sites that varied in terms of geography, payer mix, and organizational auspices. At that point, NIMH staff identified five sites for case studies. They were sites that had been able to implement the NAVIGATE services and participate in the research components of the randomized controlled trial. The sites were diverse in their geographic location and in their approaches to implementing NAVIGATE.

Once site selection was complete, the focus of the site visits and other qualitative analysis (taken from interviews, discussions and document reviews) was on the financing of the components and their combination into a team approach to early intervention services.

The main focus of the site visit interviews was on the ability to finance the intervention, which is a combination of services. Some are typically covered by traditional health insurance (e.g., medications, medication visits to a physician, family therapy, individual therapy), and others are non-traditional services such as SEE, which often are not covered by health insurance. Even Medicaid, the health insurance program with the benefit structure most likely to cover NAVIGATE services, does not cover all components of these non-traditional services.

Policy Implications and Lessons Learned

Site visits were completed to NAVIGATE projects in five locations: Denver, CO; Denville, NJ; Eugene, OR; Lansing, MI; and Springfield, MO. Detailed reports are presented in the full report.

The following observations emanate from the site visits and conversations with RAISE investigators and staff:

Each site has developed a creative solution to financing NAVIGATE services. As expected, each site used health insurance to pay for each of the NAVIGATE services for insured participants, other than SEE, which was only partly covered for those individuals who were Medicaid beneficiaries. For participants who were uninsured, the sites used other public resources to cover all NAVIGATE services. These tactics will generalize to locations with some of the same characteristics for behavioral health care financing. While the tactics are somewhat idiosyncratic, they do offer lessons for other future sites who wish to offer early intervention services to emulate.

Some specific observations:

  • The site at the Mental Health Center of Denver has a capitated Medicaid arrangement to pay for all behavioral health services, which the site uses to pay for the full range of RAISE NAVIGATE services and treatments. This arrangement began in the 1990's throughout the State of Colorado, and it covers all Medicaid mental health services, not just those for treating first-episode psychosis.

  • The PeaceHealth site in Eugene, OR is affiliated directly with a Federally Qualified Health Center (FQHC). The revenues for any behavioral health encounter at the FQHC are generous enough that the costs of care are covered and even permit a cross-subsidy for individuals whose coverage does not include the full cost of their care and treatment.

  • The St. Clare's Health System site in Denville, NJ has sufficient funds from state and local behavioral health services grants and annual contracts to cover the costs of NAVIGATE services.

  • The Burrell Center in Springfield, MO also funds the NAVIGATE services with state behavioral health funds through a contract with the Department of Mental Health. For those who qualify, Medicaid funds were matched to state funds in a Purchase-of-Service arrangement that covers some services, such as supported employment, which has very limited availability in Missouri.

  • The site at the three-county Community Mental Health Authority in Lansing, MI uses Medicaid to pay for many of the behavioral health services for those who are qualified, and many of the participants remain on their parents' health insurance, which is now easier and lasts up to age 26 because of the ACA provisions. Many of the services are not covered by private insurance plans, and even Medicaid does not cover all services, so the site uses state and local behavioral health funds for “bad debt” to cover some services. Michigan also has an evidence-based practices implementation initiative, which covers supported employment services.

Other future sites wishing to offer services to individuals during a first episode of psychosis could use these tactics, where available, to supplement insurance payments for more traditional medically-oriented services such as medications, medical management visits, and psychotherapy. Implementing such financing tactics might require some technical assistance to community sites to learn to take advantage of local opportunities. It might also be enhanced by technical assistance to states to develop some of these options, such as Medicaid state plan amendments using Section 1915(i), use of FQHCs, or use managed care contracts with capitated financing and/or flexible benefits options.

These lessons would best generalize to sites that also have a small number of participants and would like to add first-episode clients to existing staff caseloads. Some of the RAISE NAVIGATE sites have a small number of early psychosis patients (fewer than ten), and the small numbers make it possible to cross-subsidize the care of these participants from a variety of funding sources. This tactic would work for other sites that admitted a small number of clients but would be more difficult for sites that had more clients and wished to form a specific team to serve primarily first-episode clients, primarily because of the start-up costs and the costs of caring for a large number of participants with limited resources or insurance. This will change to some extent with full implementation of the ACA,although not all NAVIGATE services will be covered in exchange insurance plans (e.g., supported employment) nor in some state Medicaid plans.

The provisions of the ACA already in place have assisted individuals experiencing a first episode of psychosis by permitting some to remain on parents' insurance plans until age 26 years and not lose eligibility for private insurance because of a pre-existing condition. The ACA Medicaid expansion will also provide coverage for many individuals who no longer have to wait until they qualify for SSI before becoming eligible for Medicaid. It is particularly important for promoting recovery from a psychotic illness to provide the types of intensive therapies more often available through Medicaid early in the progression of these diseases in light of some indications of lasting ill effects of these conditions and expected positive effects of early intervention.

Some policy lessons:

  • The sites have been very creative in using available financial resources above-and-beyond what is provided by the NIMH contract for supported employment. (Each of the RAISE sites receives funds from the NIMH RAISE contract to support five hours of time per week for an employment specialist.)

  • Sites were encouraged to file claims with public and private health insurance in cases where a participant had such coverage and when the service was covered by the insurance plan, as the site might ordinarily do for their clients who are not part of RAISE. Of course, some of the participants have no insurance, and some of the key services are not covered by insurance or only partially covered, such as supported employment and supported education, as well as case management and non-face-to-face meetings of staff team members.

  • Medicaid is the health insurance financing mechanism that is most likely to cover RAISE NAVIGATE services. However, there is considerable variation from state-to-state in terms of behavioral health benefits. Furthermore, many of the participants would not currently qualify for Medicaid unless they were low-income parents themselves, dependent children in low-income families or disabled -- or the state offers a state-only Medicaid program for individuals who are “medically indigent”. Most individuals who qualify for first-episode services are too early in the course of their psychotic illness and thus lack the substantial functional impairments necessary to qualify for SSI (and thus Medicaid) on the basis of disability, unless they have impairments other than psychosis that would disable them.

  • The Medicaid expansion of the ACA will change that eligibility limitation dramatically. Many individuals with first episode of psychosis, who are not disabled, will be able to qualify for Medicaid without qualifying for SSI. Medicaid has a benefit package in many states that is more likely to cover relevant behavioral health services when compared with typical insurance plans. The new expansion population will not necessarily receive the regular Medicaid benefits since states can base the benefit package on various benchmarks including the largest health maintenance organization and state employee benefits. However, some states may opt to offer the regular Medicaid benefits to the expansion population for administrative simplicity and some of the individuals in the expansion group may qualify for regular Medicaid as individuals with disabilities or special needs. In addition, Centers for Medicare and Medicaid Services has indicated that states can develop special benefit packages for targeted groups among the expansion population. This points to continued need for state, local and/or federal Substance Abuse and Mental Health Services Administration block grant funds to cover early intervention services. The ACA also permits states to include early intervention services, such as case management, assertive community treatment, and psychosocial rehabilitation, under the so-called Medicaid 1915(i) provisions, which do not require a waiver and instead may be established with a state Medicaid plan amendment. The 1915(i) benefits can also be targeted to specific subpopulations (e.g., those with first-episode psychosis and/or the expansion population). An important objective of treatment and services in first-episode psychosis is to prevent disability, and disability status under the SSI program will no longer be required to become eligible for Medicaid. This is particularly important for promoting recovery from a psychotic illness by encouraging affected individuals to participate in supported employment and work and not to apply for SSI prematurely, which might discourage a working and productive life.

  • The ACA has been helpful already in that some of the participants are able to pay for some services by remaining on their parents' health insurance up to age 26. They also will not be disqualified from obtaining private insurance due to a pre-existing condition, which happened frequently to individuals with a history of psychosis before the ACA.

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