Pitfall of blended funding: Non-Medicaid eligibles may lose out
Blended Funding Pitfalls
December 31, 1996
Montana’s plan to blend Medicaid mental health dollars with other public mental health funding also is being attempted in several others states, including California, Utah and Massachusetts.
If done well, the blending approach can offer several important advantages:
• it allows for better coordination of all mental health services, both for Medicaid eligibles and non-eligibles;
• it reduces the potential of cost-shifting from Medicaid contractors to other state- or locally operated programs; and
• it ensures, at least in principal, a greater equality between services received by Medicaid beneficiaries and those received by others in the public health system.
Blending funds does pose dangers, however. Perhaps the most major is that people who were previously able to get services through community mental health centers and other local providers may find themselves shut out from services altogether under the more rigorous, means-tested standards set under a blended system.
People getting "bumped"
Lucille Pritchard, director of state reform for the National Mental Health Association, cites Arizona as an example of this problem, noting that "lots of people are getting bumped out because of the way (the state is) defining emotionally
disabled."
According to Ms. Pritchard, large numbers of uninsured also have been cut off from mental health services in Tennessee since the implementation of TennCare’s behavioral health carve-out. The uninsured and working poor were previously able to get mental health services from community mental health centers on a sliding scale, but a shrinking pool of state dollars has left no money to provide reimbursement for these people, she says.
Even in most blended systems, the state hospitals have not been included in the managed care plan. In a paper prepared for the National Alliance for the Mentally Ill, John Petrila, a University of South Florida professor, cautions that failure to include the state hospital(s) in the managed care plan can encourage providers to shift costs by "dumping" patients into the state
institution.
States face several other stumbling blocks in seeking to implement a blended system, including determining who will be responsible for managing it, the state, counties, or an outside contractor.
In Iowa, most of the state’s 99 counties have been reluctant to give up their responsibility for providing mental health services to non-Medicaid eligibles to the for-profit contractor handling the Medicaid population, arguing in some cases that they can provide the services more efficiently themselves.
In California, the state has chosen to give the counties more responsibility for mental health, rather than less, by blending mental health services at the county level. The counties assumed inpatient responsibility for mental health two years ago and are now assuming outpatient responsibility for both Medicaid and non-Medicaid eligibles.
Robert Egnew, president of the National Association of County Behavioral Health Directors, says the California program has done "extremely well," saving a "a significant amount of money and improving access on the outpatient side."
Contact Mr. Egnew at 408-755-4509; Ms. Pritchard at 703-684-7722; and Mr. Petrila at 813-974-9301
Pitfall of blended funding: Non-Medicaid eligibles may lose out
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