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Policy Report: Civil Commitment Under
Medicaid Managed Care

Summary of Findings from the Case Studies

This chapter presents findings from the four case study States—Wisconsin, Colorado, Iowa, and Minnesota. These States were selected based on the relative comprehensiveness of information elicited from interviewees. This level of detail included verification of the State profiles from the Substance Abuse and Mental Health Services Administration (SAMHSA) “Managed Care Tracking System” Web site; administrative data about civil commitment or inpatient hospitalization; and interviewee participation in the development of current contract language, as well as their recall of experiences that shaped the current contract provisions. In addition, States selected had different experiences in developing contract provisions (highlighted in Table 1).

The brief summaries that follow describe the relevant contract provisions in each of the four States. More detailed descriptions of contract development and stakeholder perspectives can be found in the expanded case study presentations in the Appendix.

Iowa Medicaid Managed Care Contract and Civil Commitment

In March 1995, Iowa received the 1915b waiver that allowed the State to create the Mental Health Access Plan and the Managed Substance Abuse Care Plan. Since January 1999, these two plans have been combined into a single behavioral health carve-out, the Iowa Plan for Behavioral Health. The current plan’s contract with one for-profit company, Merit Behavioral Care of Iowa, serves the entire State.

The Iowa contract indicates a number of provisions that address civil commitment under Medicaid managed care. While the issue was addressed under the two 1995 carve-outs, the current plan’s provisions are even more detailed and comprehensive. Under the 1999 contract, court-ordered inpatient treatment may occur in a community-based hospital or in a State psychiatric hospital. The contractor must pay for all court-ordered services provided in a community- based hospital and that fall within the contractor’s utilization review guidelines. Institution for mental disease (IMD) treatment costs are the responsibility of the counties. To prevent the managed care organization (MCO) from shifting treatment costs to the counties, total county expenditures for IMD care were capped at pre-managed care levels. Any excess costs must be assumed by the MCO.

The contractor and State officials concluded that the traditional definition of “medical necessity” was too narrow to address the needs of the enrolled population. They agreed to expand the definition to one of “psychosocial necessity.” Under this definition, treatment decisions must take into consideration the enrollee’s clinical history, the potential for services/supports to avert the need for more intensive treatment, and any unique circumstances that may make particular services inaccessible or inappropriate for an enrollee (e.g., availability of transportation, absence of natural supports). The MCO also is required to employ two court liaisons to educate and coordinate service planning with judges.

The contract specifically requires coverage for certain community support services, such as Intensive Psychiatric Rehabilitation, Assertive Community Treatment, mobile crisis and counseling, peer support services, and supported community-living. Interviewees reported significant enhancements to the community support system under the Iowa Plan. Novel approaches included creation of crisis centers and outreach teams, the use of telemedicine in rural areas, and even the use of funds to help severely disabled consumers acquire needed household items. The contract includes 40 different measures, some with financial incentives, to foster desired performance. One of these measures monitors the balance between community-based and inpatient treatment. All of these efforts—including the contractor’s establishment of a community reinvestment fund—reportedly have reduced the need for court interventions as well as for expensive inpatient treatment.

The provisions and incentives in the most recent Iowa contract aim to limit the use of court orders for individuals who have a mental illness. None of the interviewees reported observing a noticeable change in the use of civil commitment. Stakeholder representatives anticipated no imminent contractual changes.

Colorado Medicaid Managed Care Contract and Civil Commitment

In 1995, Colorado received a Section 1915b waiver for a Medicaid mental health carve-out, the Mental Health Capitation and Managed Care Program. Enrollment in the statewide program is mandatory for all adults and children who are eligible for Aid to Families with Dependent Children/ Temporary Assistance for Needy Families (AFDC/TANF), who receive Supplemental Security Income, or who are dually eligible. Enrollee services’ costs are managed by one of eight contractors (known as Mental Health Assessment and Service Agencies [MHASAs]) that are at full financial risk. The terms of this waiver were renewed in 1998 and expired in March 2000.

In the request for proposals (RFPs), included in the Colorado Medicaid managed care contract by reference, the contractors’ responsibility for civilly committed enrollees is well defined. The MHASA must provide all mental health services ordered by a court, without exception, even if it does not believe the services are necessary. To manage its risk, the contractor is encouraged to work with the judiciary and clinicians to determine the most appropriate level of care for each individual.

“Medical necessity” has also been broadly defined in the Colorado contract to reduce the contractor’s ability to deny payment for costly services. Under the terms of the agreement, “the contractor shall provide all mental health services necessary to treat a diagnosis that is included in the Mental Health Capitation and Managed Care Program.”¹² The contractor, thus, is compelled to treat an enrollee whom the court determines has a mental illness. The only contractor decisions pertain to the level of care deemed appropriate to address the individual’s diagnosis.

The 1997 RFP required that services based in the community, such as partial-day programs and psychosocial rehabilitation programs, are available to enrollees on the first day of the contract. The contractor also was “expected” to offer such nontraditional services as respite care, consumer drop-in centers, “warm lines” (peer-run phone lines, on which a concerned consumer can call another consumer to discuss issues), early intervention services, peer counseling, and other support services. The contract has no reinvestment requirements aimed at enhancing community supports for the Medicaid-eligible population. However, the State has realized significant expansion in community mental health services by reducing reliance on inpatient services (GAO, 1999). In fiscal year 1994–95 approximately half (50.6%) of the State’s mental health resources were spent on inpatient services. One year after the implementation of the mental health carve-out, inpatient services used only 17.2 percent of the budget; all other services received 82.8 percent of the resources (“Colorado Mental Health Capitation Pilot Program Final Report,” p. 3). Interviewees regarded this development of strong community- based services as critical to reduction of civil commitment of individuals with mental illness to inpatient settings.

Interviewees reported observing no increase in the use of civil commitment under the Medicaid managed mental health plan, a finding consistent with the State’s concerted effort to reduce the contractors’ incentive to use civil commitment procedures. No changes currently are anticipated in the next round of contracting for the mental health carve-out plan in Colorado.

Minnesota Medicaid Managed Care Contract and Civil Commitment

In 1985, the Health Care Financing Administration approved the Minnesota Prepaid Medical Assistance Program (PMAP), a three-county demonstration project that used prepaid managed care plans to deliver health services to certain Medicaid enrollees, including families with children and the elderly. In 1995 under a 1115 waiv-er, the PMAP was extended to 27 counties in the State. The State is currently developing a five-county Demonstration Project for People with Disabilities, a long-term managed care plan featuring a behavioral health carve-out that is scheduled to be implemented in July 2000.

In the original PMAP contract, fiscal responsibility for a civilly committed enrollee was not addressed. This oversight reportedly resulted in a difficult relationship between the contracting parties. The SMHA and the counties, for example, believed that the contractors were using various mechanisms (including the IMD exclusion and private insurance law provisions) to shift responsibility for high-cost clients to the State and counties. Conversely, the health plans complained that they were not being notified when commitment petitions were filed for their enrollees. Because they had no input into an enrollee’s treatment plan, the contractors said, they had little opportunity to actually manage the costs of care.

In recent years, several statutes have been adopted in an effort to clearly delineate the parties’ roles and responsibilities for civilly committed enrollees. First, through the 1995 1115 waiver, a new PMAP contract provision allowed the health plan to use IMD services for enrollees only if the plan assumed fiscal responsibility for those services. The provision’s goal was to eliminate the IMD exclusion as a cost-shifting mechanism. In addition, two statutes were enacted to clarify the definition and determination of “medical necessity.” In 1997, the Minnesota legislature adopted a minimum statewide definition of medical necessity for mental health services, criteria that could not be overridden by a Medicaid contractor’s more stringent parameters. Legislation was also adopted in 1999 that prevented a health plan from denying the medical necessity of treatment simply because it was ordered by a court of law.¹³ This provision does not require the contractors to pay for all court-ordered services, but does prohibit them from refusing to pay for treatment simply on the basis that the court ordered it. A final statute was adopted in 1999 requiring the counties to seek health plan input during the prepetition screening process. The overall result of these amendments has been to minimize opportunities for cost-shifting to ensure effective cost management by the contractor, and, ultimately, to ensure that individuals in Minnesota with a mental illness receive the appropriate level of care.

Stakeholders suggested that the incidence of commitment orders has steadily increased since implementation of the original PMAP contract. The probable cause of the apparent trend, however, is open to question. Some providers and consumer advocates believe the increase to have resulted from Medicaid managed care. Representatives from the SMHA, however, noted that the effects of a number of contemporaneous policy changes in the State cannot be isolated. The absence of valid quantitative data on the frequency of civil commitments, combined with the simultaneous implementation of multiple policy changes, makes it impossible to determine with accuracy how Medicaid managed care has affected the use of civil commitment in this State. What is clear is that the experiences with the PMAP contract have clarified the health plans’ responsibility for enrollees who are civilly committed. These contract provisions reportedly will be extended to the Demonstration Project for People with Disabilities.

Wisconsin Medicaid Managed Care Contract and Civil Commitment

Wisconsin’s Medicaid HMO program is an integrated plan, implemented statewide in 1994 under a Section 1915b waiver. Under the terms of the plan, the State Medicaid agency contracts with 19 health maintenance organizations (HMOs) that receive full capitation payments for all medical services covered by Medicaid.¹⁴ Wisconsin also received a 1115 waiver in 1998 to implement BadgerCare, a statewide integrated plan serving uninsured and underinsured families. Enrollment in either plan is mandatory for all qualifying adults, children, and families. Five additional Medicaid managed care plans in the State target specific subpopulations of Medicaid eligibles. Enrollment in any of these five is voluntary.

Despite enrollee and administrative variations, interviewees reported that civil commitment–related provisions of the different contracts are identical. In each plan, mental health services incorporated into the capitation rate include inpatient care, IMD services for individuals under 21, crisis services, mental health support (e.g., community support programs, targeted case management), pharmacy services, rehabilitation services, residential care (e.g., in-home therapy), and outpatient services. In addition, all MCOs must assume financial responsibility for civilly committed enrollees; they cannot refuse to pay for court-mandated treatment simply because it was ordered by a court of law. The one exception to this mandate is the recently passed Chapter 980 legislation, requiring sexual offenders to be committed indefinitely to an inpatient mental health facility following their prison sentences. By law, treatment costs associated with these individuals are the State’s responsibility.

Because the Medicaid IMD exclusion is not mentioned in any of the contracts, an MCO in Wisconsin is not required to assume any responsibility for adult IMD care. Although this creates an incentive for the contractor to civilly commit enrollees to a State psychiatric hospital, interviewees did not observe any change in the use of civil commitment in the system.

The definition of “medical necessity” was reported to be a point of contention between managed care contractors and State agency representatives. Although many States have made significant changes to the definition to avoid interpretive complications, Wisconsin opted to use a standard Medicaid “medical model” definition for the covered population. Interviewees reported significant conflict in this area, particularly since the narrow definition afforded MCOs significant latitude to deny payment.

The Wisconsin Medicaid managed care contracts specify the types of community-based services covered under the plans, but they do not state explicitly that the MCO must make these services available to enrollees. Perhaps not coincidentally, community support systems in Wisconsin were described as having limited service capacity; Community Support Program waiting lists extend up to 3 years. However, interviewees drew no connection between contract provisions and waiting lists, nor did they report any apparent effect on the civil commitment use in Wisconsin. No significant changes were anticipated in any of the Wisconsin Medicaid managed care contracts.

¹² Diagnoses not covered include substance abuse, alcoholism, mental retardation, and organic brain syndrome.

¹³ A provision in private insurance law allows insurers to automatically deny payment for services provided on the basis of a legal decision. Some MCOs have carried this practice into the Medicaid managed care contract and applied the provision to civil commitment orders.

¹⁴ Two noted exceptions are prenatal care coordination and common carrier transportation.

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