Medicaid and CHIP Risk-Based Managed Care in 20 States. Experiences Over the Past Decade and Lessons for the Future.. Behavioral Health.


Study states have experimented with a variety of arrangements for behavioral health. For example, it is common to use a "partial carve-out." In that circumstance, a certain number of visits or inpatient days are included in the risk-based managed care contract, and the rest are carved out to a special plan or to fee-for-service. For example, in the state of Washington, 20 outpatient mental health visits may be covered by the MCO, and any use beyond that is carved out. In several states (e.g., California and Michigan) the behavioral carve out is diagnosis driven, with conditions that can be treated in a primary care office being carved in, but other more serious conditions (e.g., Serious Emotional Disturbance) being carved out to a limited-benefit behavioral health plan. The advantages of this are expressed by a state official below concerning children’s mental health needs.

If there are mental health needs that the plan physician determines may not be seriously emotionally disturbed (SED), the plan provides the service. If the child is SED, then they send the child to county mental health services. (State Official)

According to those with whom we spoke, carving in some mental health services can improve access to mental health services for those with mild and moderate conditions.

One of the major reasons for having SSI-related adults in managed care for mental health services is that there was such a paucity of access in fee-for-service. There was no access for people who didn’t have serious mental health needs. When we carved mental health in, that became one of the big winners. (State Official)

On the other hand, we heard the countervailing opinion that carving in mental health services could restrict access, especially for those with intensive needs.

I think that historically there has been concern with the plans’ ability to treat more vulnerable, high-intense behavioral health populations. There are some [local] facilities that feel that managed care and their process of authorizing and denying care is not conducive to these populations and their needs. They have lobbied very strongly for these populations to be carved out. (State Official)

This opinion is associated with political pressure by state and local authorities who are concerned that their behavioral health programs may lose clients and potential funding.

We’re trying to get over the political hurdles of those in the community who want to make sure all the dollars go to behavioral health authorities. (State Official)

The political will has not been there to expand behavioral health as a managed care model because the community mental health centers want to get fee-for-service patients. (State Official)

However, carving out behavioral health, especially when it is paid fee-for-service, is another factor in limiting a state’s ability to use risk-based managed care as a cost-control mechanism, according to study informants.

I want to put the incentive on the plan for them to manage people that are high cost and high need who are going in and out of hospitals and institutions. (State Official)

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