Improving the Coordination of Services for Adults with Mental Health and Substance Use Disorders: Profiles of Four State Medicaid Initiatives. Executive Summary


Medicaid beneficiaries with mental health and substance use disorders (SUDs) require an array of physical, behavioral health, and other supportive services. Access to preventive health care, housing, and social services is particularly challenging for this population (Perese 2007). In the absence of comprehensive coordinated services, these individuals often receive costly inpatient and emergency care and experience negative social and health outcomes, including homelessness and premature mortality. Medicaid beneficiaries with serious mental illnesses in particular are among the most costly Medicaid beneficiaries, due in part to higher rates of emergency department utilization and inpatient hospitalizations (Kronick et al. 2009; Durden et al. 2010).

Historically, the financing and delivery of physical, behavioral health, and other supportive services have been fragmented (New Freedom Commission 2003). Within Medicaid programs, physical and behavioral health services have often been provided through different financing arrangements with inadequate coordination across state and local agencies and managed care plans. In many states and communities, housing supports and other social services are delivered through various providers who have difficulty coordinating care with physical and behavioral health providers. Some states, however, are undertaking efforts to improve the coordination of care for Medicaid beneficiaries with behavioral health conditions at the state and local levels. Such strategies are being implemented in the context of other delivery system reforms, including Medicaid eligibility expansions, which may increase pressure on states to provide care for newly eligible populations with mental health and SUDs.

As delivery and payment systems evolve, policymakers, managed care organizations (MCOs), providers, and other stakeholders need information on how states are financing and delivering coordinated services for Medicaid beneficiaries with mental health and SUDs. To provide such information, the Office of the Assistant Secretary for Planning and Evaluation within the U.S. Department of Health and Human Services contracted with Mathematica Policy Research to conduct case studies to describe the financing arrangements and delivery system mechanisms that four states are using in their efforts to improve the delivery of comprehensive coordinated care for Medicaid beneficiaries with behavioral health conditions. These states are implementing the following strategies:

  • Illinois: The state Medicaid program is supporting regional care coordination entities that include behavioral health and housing providers to implement in-person care coordination models. The state hopes that MCOs will ultimately contract with these new entities to provide more intensive care coordination for individuals with chronic behavioral health conditions.

  • Louisiana: The state expanded the scope of Medicaid mental health and substance abuse benefits and contracted with a single statewide managed behavioral health organization (MBHO) to administer all specialty behavioral health services. These changes are intended to ensure that a single entity is responsible for the coordination of services, including housing supports.

  • Massachusetts: As part of its capitated payment to a MBHO, the state Medicaid program reimburses care coordination support for chronically homeless individuals in permanent supportive housing. The state is hoping to expand this program to other MCOs.

  • Tennessee: The state Medicaid program has integrated physical health, mental health, and substance abuse benefits within its managed care contracts; MCOs now operate on an at-risk basis for these services along with long-term care services.

These state programs involve different funding mechanisms and rely on diverse strategies to organize and deliver care, with each program reflecting its unique state and local environment. Given their different contexts and target populations, some of these strategies are being implemented within existing Medicaid delivery systems and billing structures; others involve more substantial system reforms. Despite the structural differences of these strategies, the study identified several common themes across states:

  • These states are moving toward greater reliance on Medicaid managed care entities to coordinate care, which has involved expanding and integrating benefits at the health plan level and creating reimbursement mechanisms that support in-person care coordination. When moving to managed care, states have had to consider ways to minimize disruption of provider billing processes and ensure that service definitions and eligibility criteria support access to ongoing comprehensive coordinated care. In some states, these issues continue to present challenges.

  • In-person care coordination provides a critical service to individuals with serious mental health and SUDs. Medicaid benefits in these states include reimbursement for case management and other in-person supports (such as Assertive Community Treatment) for beneficiaries with the most serious needs. Stakeholders in these states, particularly providers, noted that telephonic care coordination alone does not provide a sufficient level of support for this population.

  • These initiatives recognize that the success of their strategies depends on the strength of provider buy-in and local partnerships, and have taken steps to foster local collaborations. Stakeholders stressed that smooth implementation of care coordination strategies requires strong communication among providers, MCOs, state agencies, and consumer organizations.

  • Stakeholders in these states stressed the importance of data-sharing to inform care coordination decisions at the provider level and to identify opportunities for quality improvement. The availability of data and capacity of providers and other stakeholders to use data for care coordination and quality improvement varies widely across states. Some states, particularly those with managed care arrangements, have more robust data to track service utilization and monitor quality. In other states, data-sharing between providers and/or other entities is more limited, due in part to the lack of common data platforms.

  • All of these strategies include efforts to bridge behavioral health services with housing supports. These states are taking steps to foster relationships between behavioral health and housing providers and state agencies. They are also either encouraging or requiring Medicaid managed care plans and provider networks to develop and reimburse care coordination or case management strategies specifically focused on beneficiaries with housing needs.

  • Although some of these strategies are relatively new and continue to evolve, the stakeholders involved are generally optimistic that these efforts will improve the accessibility, quality, and outcomes of care while reducing costs. Stakeholders, particularly provider organizations, noted the importance of reimbursement for care coordination or in-person case management, and identified data-sharing between providers, health plans, and state agencies as critical to the success of their initiatives.

These case studies provide a snapshot of states' activities in a rapidly changing health care system. Although this study could not assess the impacts of these strategies on service utilization, costs, or other outcomes, policymakers, MCOs, and other stakeholders may wish to further consider the key components of these programs in efforts to improve the coordination of care for Medicaid beneficiaries with behavioral health conditions. Further monitoring and research focused on these programs is necessary to examine long-term outcomes and identify any specific mechanisms that may facilitate or impede success.

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