Policy Report: Civil Commitment Under
Medicaid Managed Care
Appendix
Case Study B
Colorado Medicaid Managed Care Contract
and Civil Commitment
Overview
Colorado began operation of its statewide
Mental Health Capitation and Managed
Care Program in August 1995 under a
Section 1915b waiver. The waiver was
renewed in March 1998 and will extend
until March 2000. The program is administered
by the Department of Human Services,
Mental Health Services, under a written
memorandum of understanding (MOU) with
the Department of Healthcare Policy and
Financing (the State Medicaid agency). All
adults and children who are enrolled in
AFDC/TANF, who receive SSI, or who are
dually eligible are mandated to enroll in the
program. A total of 238,570 individuals
were enrolled in fiscal year 1998.
Under the mental health waiver, eight
Mental Health Assessment and Service
Agencies (MHASAs) provide the services.
The MHASAs, which are at full financial
risk, are organized on one of four different
models:
Community mental health centers
(CMHCs) that operate independently as
MHASAs and are responsible for both
administration and service delivery.
- A CMHC consortium (Behavioral
Healthcare Incorporated [BHI]) that was
formed by three CMHCs when the State
combined their three service areas into
one managed care region. BHI serves as
a behavioral health managed care organization
(BHMCO), processing claims,
authorizing services, and credentialing
providers. BHI pays State hospitals a
capitated rate and negotiates fee-for-service
payments with both private
hospitals and providers.
- Partnerships between a BHMCO and
CMHCs. In these arrangements, typically
the CMHC provides mental health services,
triages patients, and makes referrals
for services not offered by the network.
The BMHCO provides management
information services, claims processing,
utilization review and management, and
other administrative services.
- A nonprofit HMO with an administrative
services organization (ASO) arrangement.
This is the newest model of the four and
is currently operating only in the Denver
area. It differs from the others in that the
State has contracted with a nonprofit
HMO (rather than a nonprofit CMHC)
that will subcontract with several of
Denver’s behavioral health care
providers. A private for-profit MCO will
be the ASO in this area of the State.
According to a recent report, the carve-out
plan in Colorado was able to realize a significant
expansion in community mental health
services by reducing the system’s reliance on
costly inpatient services (GAO, 1999). For
example, between fiscal year 1992–93 and
fiscal year 1995–96 (the year after the capitated
plan was implemented), the number of
clients receiving inpatient services decreased
from 3,046 to 2,058 and the number of
inpatient days dropped from 93,151 to
19,959. Not surprisingly, the inpatient
expenditures during this time dropped from
nearly $30.5 million to $9.7 million. At the
same time inpatient expenses decreased, the
expenditures on other services—including
supports within the community—significant-ly
increased. In fiscal year 1994–95, approximately
half (50.6%) of the State’s mental
health resources were spent on inpatient
services, while the remaining funds (49.4%)
were spent on all other mental health services.
A year after the implementation of the
Medicaid managed mental health plan, inpatient
services consumed only 17.2 percent of
the budget, while all other services received
some 82.8 percent of the resources
(“Colorado Mental Health Capitation Pilot
Program Final Report,” p. 3).
Thus, at the very least, Colorado’s
Medicaid managed care plan has helped shift
the locus of treatment in the State, from
inpatient settings (where consumers were
often court-ordered) to settings within the
community. The assumption behind this
change in the service delivery structure has
been that if the community supports are
enhanced, then consumers are more likely to
be able to maintain functioning in the community and therefore less likely to be civilly
committed to an inpatient facility.
Has the State addressed civil commitment in its
managed care contract?
The State of Colorado addressed the issue of
civil commitment extensively in its 1997
request for proposals (RFP). Although civil
commitment is not covered in the Medicaid
managed care contract per se, the terms of
the contract require bidders to abide by all of
the provisions of the RFP. The following provisions
related specifically to court-ordered
services under Medicaid managed care are
included in the 1997 RFP:
The contractor shall provide any and
all mental health services to an enrolled
client that are ordered by a court of
law. This includes inpatient hospital
services, when those services are of benefit
to the program, such as the State
Mental Health Institutes for clients
under twenty-one or over sixty-five.
The contractor may not under any circumstances
refuse to provide authorization
or pay for services ordered by the
court, even if the contractor determines
that the services are not clinically necessary
to treat a client’s covered diagnosis.
In the event the contractor believes
the services ordered are not clinically
appropriate or necessary, the contractor
is encouraged to work with the courts
and with any other involved agencies
…to revise the court order to include a
more appropriate plan of care.
The contractor also is encouraged to
work cooperatively with the judicial,
child welfare, and other systems, as
appropriate, to try to impact the
appropriateness of court orders upfront.
By working cooperatively with
judges and other officials about the
availability of appropriate alternatives,
the contractor may be able to [reduce]
incidences where a court orders a service that the contractor believes is not
clinically appropriate or necessary.
When a request is made to the contractor
by a health or human services
agency…to provide psychiatric evaluations
that are needed for a court proceeding,
but have not been specifically
ordered by the court, the contractor
shall provide evaluation services that
are clinically appropriate for the client.
The contractor shall use criteria developed
jointly by the contractor and the
county department to determine the
appropriate evaluation services. The
contractor is not required to provide
evaluation services that are requested,
but are not appropriate for the client.
Additional issues related to civil commitment,
such as the IMD exclusion and definitions
of medical necessity, are addressed in
other areas of the RFP. These issues are discussed
in greater detail in the pages that follow.
Does the contract clearly specify whether and under
which circumstances the MCO is responsible to pay
for court-ordered (services)? What was the rationale
for including this provision?
As noted in the response to the previous
question, the 1997 RFP for the Colorado
Medicaid Managed Mental Health Care
Plan is explicit about the contractor’s fiscal
responsibility for court-ordered services. As
one State Medicaid representative summarized
it, “[The contract] says you’ve gotta
do it and pay for it even if you don’t think
it’s necessary.” When asked to discuss the
rationale for the development of that language,
he offered that court-mandated treatment
was a benefit under fee-for-service and
the State wanted to ensure that it remained a
covered benefit under the managed care
plan. Although the MCOs now bear the risk
for such services, the interviewee noted that
they have an opportunity to reduce the risk
by working with the courts to find less costly
alternatives to hospitalization. Thus,
although the RFP provisions may not affect
the frequency with which courts mandate
treatment for mental health consumers in
Colorado, civilly committed consumers theoretically
should receive a more appropriate
level of care under the terms of the contract
because of the encouragement of dialogue
and cooperation between the courts and
contractors.
Does the contract clearly specify where court-ordered
hospitalization will take place and whether the MCO
is responsible to pay for IMD care? If so, how is it
addressed and what led to the adoption of the
provision(s)?
The contract does not specify where court-ordered
treatment takes place, only that a
court may mandate that treatment occurs.
Historically, most court-ordered evaluations
and treatment took place in the State hospitals
(IMDs). These hospitals were often far
from the consumers’ communities, sometimes
upward of 150 miles, and the care they
provided was costly. With the movement to a
managed care arrangement, a system was
developed wherein the State allocates and
pays for a certain number of IMD beds to
each MHASA. If an enrollee requires inpatient
services and the allocated beds are full,
the MHASA is then responsible for the cost
of the enrollee’s inpatient treatment, whether
that treatment occurs in an IMD or a community
hospital. By establishing these provisions,
the State thereby reduced the incentive
for the contractors to cost-/client-shift
through the use of civil commitment. The
interviewees noted that there is a push for
judges to work closely with providers and
contractors in order to match consumers
with appropriate levels of care.
Does the contract address issues related to what
services will be deemed medically necessary and
how this determination will occur? Why were the
particular provisions adopted?
The 1997 RFP for the Medicaid managed
care contract does address how medical
necessity will be determined, but does so in a
manner that is “pretty general,” according to
the State Medicaid agency representative.
Section 37 (“Covered Diagnoses”) of the
RFP reads as follows:
The contractor shall provide all mental
health service necessary to treat a diagnosis
that is included in the Mental
Health Capitation and Managed Care
Program. For clients who have both a
covered and a non-covered diagnosis
under the Program, the contractor shall
provide all necessary services to treat
the covered diagnosis, whether this
diagnosis is the primary diagnosis or a
secondary diagnosis. Substance abuse,
alcoholism, mental retardation, and
organic brain syndrome are not considered
psychiatric illnesses under the
Colorado Medicaid Program and the
contractor will not be responsible for
treating these illnesses.
This provision is augmented by Section 38
(“Mental Health Services”), which reads as
follows:
The contractor shall provide all necessary
mental health services to all
Medicaid clients enrolled in the Mental
Health Capitation and Managed Care
Program. All clinical services shall be
provided by qualified staff, and shall be
appropriate for the client’s age and
diagnosis. Clinical services also shall be
culturally appropriate, as necessary.
According to the State Medicaid representative,
the rationale for adopting this broad
approach was to discourage any tendency
among the managed care contractors to
underserve consumers (i.e., denying services
on the basis of failure to meet medical
necessity) in an effort to retain revenues as
profits. Thus, the contractor’s choice is not
whether or not to treat an enrollee whom
the court determines has a mental illness,
but rather to determine the level of care that
is deemed appropriate to address the consumer’s
diagnosis.
Does the contract require the types of community
support services necessary to maintain client
functioning? Are there other provisions intended to
ensure the availability of adequate community
supports?
The Medicaid Managed Mental Health Care
contract in Colorado limits the MHASAs to
a 5-percent profit and requires that all
monies in excess of that 5 percent be reinvested
into community support programs for
non-Medicaid consumers. There are no reinvestment
requirements aimed at enhancing
community supports for the Medicaid-eligible
population. The 1997 RFP, however,
does require that on the first day of the contract,
the contractor have in place such services
for the community as partial-day programs
and psychosocial rehabilitation
programs. In addition, Section 40
(“Additional Services”) of the RFP
“expects” the contractor to offer such non-traditional
services as respite care, consumer
drop-in centers, “warm lines,” early intervention
services, peer counseling, and other
support services. As with other managed
care arrangements, this array of services
serving the community is regarded as integral
to helping consumers to maintain functioning
in the community and thereby precluding
decompensation and the need for a
civil commitment order.
Does the capitation rate include the cost of court-ordered
services? Is there some form of incentive in
the contract that would encourage the use of civil
commitment?
As noted previously, the capitation rate does
include the cost of court-ordered services.
There is no provision in either the contract
or the RFP, however, that clearly would
encourage the use of the civil commitment
procedure. Indeed, both the contract and
the RFP have been structured in order to
discourage the use of civil commitment to
shift clients/costs from the contractor to
the SMHA. Even if a consumer is civilly
committed, the plan must pick up the costs
of all treatment (except for allocated IMD
beds, as discussed previously). This provision
prevents the MHASAs from using civil
commitment as a way to remove high-cost
clients from their caseload.
How do stakeholders believe these contract
provisions (or lack thereof) have affected the use
of civil commitment within each system?
The State of Colorado has collected some
limited quantitative data on how many
Medicaid eligibles have been court-committed
to inpatient facilities since the
advent of Medicaid managed care. Because
of the lack of clear baseline (i.e., premanaged
care) data, however, we have relied
in this report on stakeholder perceptions.
Overall, individuals reported no readily
identifiable adverse consequences. For
example, an individual from the State
Mental Health Services Division offered
the following statement:
I don’t think [managed care] has
had any impact on [the use of civil
commitment]. I think it’s been about
the same.…We changed our law last
year…to include a couple of other
people who could take out holds,18
and people thought that would really
increase [the use of holds and civil
commitment]. We don’t have this year’s
or this past fiscal year’s data, but I
haven’t been hearing complaints from
agencies saying that there’s been a lot
of inappropriate holds….So I don’t
really think it’s had much of an impact.
Similarly, the individual from the State
Medicaid Agency offered this positive
perspective:
In general it has led to better education
by the criminal justice system and the
child welfare system of the mental
health system and better collaboration
and cooperation and in most cases
more appropriate treatment.…There
were some bumps in the road to begin
with, [but] uniformly now [the
Directors of Social Services] say that
the availability of service and the quality
of service and the coordination of
care is significantly better under managed
care than it was under fee-for-service.
And there’s a much broader
range of services available, which was
our intent to begin with by going to
managed care.
Such perspectives are perhaps not surprising,
particularly given the State’s concerted
effort to include provisions in the managed
care contract that aimed to reduce the MCOs’
incentive to use civil commitment procedures.
Are there anticipated changes to future managed
care contracts to limit the use of civil commitment?
What experiences have prompted these potential
modifications?
Interviewees did not suggest any significant
overhauls of the Medicaid managed mental
health care contract in the next RFP, noting,
“It’s more tweaking around the edges than it
is significant changes in the overall system.”
Most of the “tweaks,” in fact, were not
around the content of specific contract provisions,
but in their form. The representative
from the State Medicaid agency stated the
following:
Previously we encouraged people to
have school-based services. The new
RFP requires school-based services.…
Previously we encouraged memorandums
of working relationships with
juvenile justice. The new RFP is going
to require memorandums of understanding
with those entities.…We found
that permissive language was not adequate
to get the job done.
The language of the new contracts will
not assume that the contractors will provide
desired services for consumers, but rather,
will mandate what services the health plans
should provide.
18 The new categories of individuals who could file
commitment petitions on mental health consumers
included licensed professional counselors and mar-riage
and family counselors.
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