Feasibility of Expanding Self-Directed Services to People with Serious Mental Illness. Executive Summary


Self-directed care (SDC) is an innovative program model for persons with disabilities, in which participants control an individual budget and are empowered to customize their own service plans in accordance with their preferences. The SDC approach has been used extensively to serve individuals with long-term service and support needs, including those with physical disabilities or intellectual disabilities. However, it has been used only minimally in programs that serve individuals with chronic mental health conditions. During the past decade, a few SDC programs for clients of state public mental health systems have been implemented on a trial or continuing basis in some states. Experience with these programs has led policymakers in some states to consider offering SDC to persons with a serious mental illness as a standard component of their state Medicaid plans. Although proposals to implement mental health SDC more widely within Medicaid is supported by many mental health system stakeholders, critical questions remain regarding how to successfully implement SDC programs for mental health care consumers in Medicaid.

In 2003, there was only one mental health SDC program in the United States. Since then, mental health SDC programs have been formed in at least seven other states. Although this initial phase of pilot and demonstration programs has yielded important information about mental health SDC, these programs were generally not designed for large-scale implementation within Medicaid. To make SDC a practical service model for large numbers of Medicaid beneficiaries with mental health disabilities, the mental health SDC program model will likely have to evolve and become more standardized, and new administrative infrastructure and training supports may be necessary.

The passage of the 2010 Affordable Care Act (ACA) removed key regulatory barriers to financing mental health SDC programs using Medicaid. The ACA created new state Medicaid plan options, which will allow states to offer recipients supportive services within a framework of person-centered planning and individual budgets. These provisions substantially expand states' options for implementing SDC programs in their public mental health systems. The extent to which states will utilize these new options to create streams of financing for SDC programs is still uncertain.

A key argument in favor of the SDC approach is that it has potential to offset prevalent sources of consumer dissatisfaction with mental health care, including restrictions on choice of providers and services, fragmentation of services and providers, inconsistent involvement of consumers in shared clinical decision-making, and inconsistent adoption of recovery oriented services and practices. The greater control SDC offers in relation to planning one's own care may help align service plans with consumers' preferences and could encourage more programs and providers to adopt a recovery orientation. SDC also offers consumers greater flexibility to pay providers and purchase goods and services that usually could not be purchased in a traditional Medicaid plan or other health plan. This greater flexibility allows a re-allocation of some mental health spending from traditional to non-traditional mental health care goods, services, and providers. This re-allocation could encourage greater innovation in mental health service delivery, as innovative services and programs could obtain reimbursement directly from SDC participants. Innovative programs and services would consequently not be subject to the usual approval processes of insurers and managed care companies, processes which may impede innovation.

On the other hand, greater consumer decision-making authority over spending and greater flexibility in paying for non-traditional goods and services, two core features of the SDC approach, raise potential complications for mental health SDC programs. Key issues for mental health SDC programs include how to sustain programs' fiscal solvency and the integrity of public mental health care financing; how to engage persons who have relatively more severe mental health conditions in SDC programs and how to sustain their program participation; and how to sustain or improve participants' satisfaction with public mental health care, as well as the quality of mental health care they receive. In particular, mental health SDC programs will need to:

  • Conduct outreach and establish enrollment procedures that support participation by a broad range of consumers who may want to consider SDC.

  • Provide adequate education about SDC and decision-making supports to participants, some of whom may have decisional impairments and variable service needs.

  • Provide adequate education about SDC to clinicians and other related clinical and administrative staff.

  • Provide adequate staff training and administrative support, which may require additional information systems and other administrative infrastructure.

  • Have adequate infrastructure, administrative capacities, and procedures to respond rapidly and flexibly to changes in SDC participant status resulting from mental health crises, changes in physical health, or changing life circumstances.

  • Protect participants from coercion or exploitation and protect them from harm during acute psychiatric episodes.

  • Ensure that the quality of mental health care is maintained or improved.

  • Establish reasonable standards around approvable purchases.

  • Monitor participants' spending and maintain programs' total costs (i.e., variable plus fixed costs) at acceptable levels.

Another factor that should be considered for the implementation of SDC is that prior research studies and demonstration program evaluations offer only limited information regarding the clinical benefits, budgetary consequences, and implementation issues surrounding mental health SDC programs. One conclusion that is well substantiated by prior research studies is that most clients favor SDC compared to traditional mental health care. However, empirical data regarding the impact of SDC on quality of life, long-term clinical outcomes, and cost savings are largely unavailable. Small sample sizes across pilot sites, data quality issues, and weak evaluation designs have hampered prior assessments the impacts of SDC. Moreover, large-scale implementation of SDC raises some practical issues around organization and financing of SDC programs that did not arise in earlier evaluations of small programs. For instance, large-scale implementation may require a significant culture change among traditional service providers, specialized accommodations for long-term consumers of behavioral health services, and considerable upfront investment in infrastructure development and training for both providers and consumers.

Offering persons with serious mental health conditions the opportunity to manage some of their health care dollars will move mental health care consumers, providers, and program administrators alike into new and perhaps unfamiliar territory. Consequently, successful large-scale implementation of SDC will require some re-engineering of existing partnerships among public mental health administrations, payer systems, clinicians, consumers, and case managers or financial managers. In addition, a flexible administrative infrastructure that is responsive to shifts in consumer mental health status may be critical to the long-term success of mental health SDC. Although similar issues have been navigated in prior, small-scale implementations of pilot and demonstration mental health SDC programs, larger-scale implementation of SDC within Medicaid may result in a greater degree of logistical and regulatory complexity around clinical care coordination, budgetary oversight, consumer participation, and training. As a result, further experimentation by states with the implementation of mental health SDC programs on a larger scale could yield critical lessons for the planners of future SDC programs.

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