Policy Report: Civil Commitment Under
Medicaid Managed Care
Appendix
Case Study C
Iowa Medicaid Managed Care Contract and
Civil Commitment
Background
In March 1995, Iowa received a 1915b waiver
that allowed the State to create a managed
mental health plan (Mental Health Access
Plan) and a separate managed substance
abuse plan (Iowa Managed Substance Abuse
Care Plan). As of January 1999, these two
stand-alone plans were combined into the
Iowa Plan for Behavioral Health. The State
mandates enrollment of the Medicaid-eligible
population into the Medicaid carve-out plan,
and currently has an average monthly enrollment
of 180,000 individuals. The Iowa Plan
for Behavioral Health is contracted for the
entire State with one for-profit company,
Merit Behavioral Care of Iowa (MBC of
Iowa, or MBC). MBC has providers
throughout the State and bears full risk for
the plan.
The consensus among the Iowa interviewees
for this study is that the Iowa Plan
appears to be working well for the State’s
behavioral health consumers. Interviewees
and independent reviewers noted that one of
the key factors in the Plan’s success is that
the system is able to use the flexibility that is
possible under capitation to tailor mental
health services to the special needs of the
consumers. For example, MBC has helped to
create strong community supports, such as
crisis centers and outreach teams; fostered
the use of telemedicine in rural areas; and
even used funds to help severely disabled
consumers acquire needed household items.
Although the funding of these areas may be
unusual for a managed care company, such
interventions illustrate how contractors can
be flexible in designing individual treatment
plans while remaining at financial risk for
their choices (GAO, 1999).
MBC benefited from the expansion of
these nontraditional community services
because of the concomitant decrease in the
need for costly inpatient services. In Iowa,
the carve-out reduced the percentage of
expenditures for inpatient psychiatric care
from 51 percent under the previous fee-for-service
(FFS) program to 26 percent for
inpatient care in the first year of the Iowa
Plan. Moreover, under capitation, 21 percent
of expenditures—nearly $9 million—
went for community services that were not
previously covered under Medicaid FFS programs
(GAO, 1999). MBC reported that
such enhancements of the community service
system—including the contractor’s establishment of a community reinvestment fund—
has reduced the need for both court interventions
and expensive inpatient treatment.
Since Merit Behavioral Care of Iowa
began its Statewide coverage, there have
been two versions of the Medicaid managed
care system. The initial waiver (resulting in
separate mental health and substance abuse
plans) was approved in 1995 and renewed in
1997. A waiver that brought the mental
health and substance abuse plans together
replaced this arrangement in 1999. Because
the State has gone through multiple iterations
of contract development, it thus offers
an interesting example of development over
time. It was evident from our discussions
with individuals in this State that the current
managed care contract was the result of an
ongoing learning process. Through several
rounds of contracting, the State Medicaid
Agency and MBC were better able to realize
what an effectively structured managed
behavioral health care contract should contain,
as well as what language should be
avoided. Because they had taken advantage
of the opportunities to refine the contractual
relationship, no changes were deemed necessary
or were being planned for the next wave
of contracting.
Has the State addressed civil commitment in its
managed care contract?
Of the several States we examined in this
study, Iowa appears to have given the greatest
amount of consideration to the issue of
civil commitment under Medicaid managed
behavioral care. While this issue was
addressed under the two 1995 carve-out
plans, the 1999 Iowa Plan for Behavioral
Health is more detailed and comprehensive
than its two predecessors. Some of the most
recently adopted provisions include an agreement that Merit automatically will cover the
cost of a 5-day emergency mental health
evaluation for enrollees; the expansion of the
concept of “medical necessity” so that the
criteria are more appropriate for this population
of consumers; and the inclusion in the
contract of incentive-based performance indicators
that encourage MBC to decrease the
use of court interventions. These provisions
and related contract language are discussed
in greater detail below.
Interviewees report that these provisions
are the result of strong relationships between
the State Mental Health Authority, State
Medicaid Agency, Merit Behavioral Care,
and various stakeholder groups. These relationships
have allowed for continual dia-logue
among system participants leading to
ongoing improvements to the terms of the
contract. In addition, MBC has invited and
convened roundtables for various groups of
stakeholders, clinicians, judges, and consumers
to offer feedback about the mental
health system. By using such mechanisms,
the State can readily identify new problems
with the civil commitment process and stake-holders
can collaborate in the development
of a workable solution.
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?
Under the terms of the contract, 5-day inpatient
mental health evaluations (i.e., emergency
commitment) are always paid for by
MBC of Iowa and are considered medically
necessary without review. The managed care
company will cover the treatment under an
extended civil commitment order if the treatment
both meets the criteria for medical
necessity and is offered by a network
provider. There are exceptions that will be
discussed below. These provisions were put
into place through Letters of Commitment
between the State Medicaid Authority and
MBC under the 1995 contract, but were
included as an integral part of the 1998 RFP.
According to the State Medicaid representative
who was interviewed, the inclusion of
civil commitment within the managed care
contract was intended to control inpatient
utilization rates. Prior to the implementation
of Medicaid managed care, she noted, an
individual who was court-ordered for a mental
health evaluation might wait in an inpatient
facility for up to 30 days before that
evaluation was completed. If the evaluation
indicated the need for further treatment, then
the consumer might be ordered to an additional
90 days of inpatient treatment. “There
was a desire to get that type of utilization
under control, and also a desire to be
responsive to the needs of our clients and to
the needs of the courts in Iowa,” she stated.
Contracting such services to the MCO
appeared to be the most expeditious means
of getting these utilization patterns under
control.
The representative from MBC acknowledged
that, indeed, the company had accepted
risk for evaluation periods in an effort to
control costly inpatient utilization. Because
of the historically long evaluation periods
(and the associated high costs), MBC established
that it would pay automatically for a
5-day evaluation stay in an inpatient facility.
She noted, however, that cost considerations
were not the sole reason behind the company’s
willingness to cover this expense.
Originally, the representative said, Merit
Behavioral Care had agreed to pay for any 5-day mental health evaluation that occurred
in a community hospital, but not any that
took place in a State hospital. This provision
was intended to benefit the consumer,
because, the MBC representative notes, “the
closer you can keep people to their home
communities, the better off they are.” Not
only would the evaluating physicians have
easier access to the consumer’s support network,
but also the consumer’s life would be
less disrupted by receiving ongoing treatment
in his or her home community. “Iowa is not
a large state,” she said, “but at the same
time there is a distance between some of our
counties and where our mental health institutions
are. Once you transport that client
[to a State hospital] for a mental health evaluation
it is more likely that they just may
stay there.”
The contract ultimately required MBC of
Iowa to pay for any 5-day mental health
evaluation, regardless of where it occurred.
The managed care contractor accepted this
provision in an effort to discourage the use
of the courts as a way to gain access to services
for consumers. The representative made
this statement:
People were concerned that because we
were managing care that we would
deny services. There was a tendency to
think that the only way to get services
was through court action and so we
had to demonstrate that no, that was
not the case.…The more you can have
it be voluntary and have people agreeing
that they need treatment, your success
rate is likely to be greater.
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)?
Under the Iowa Plan, court-ordered hospitalization
can take place either in a hospital
that serves the community or in State psychiatric
hospitals, the latter of which meet the
Medicaid IMD criteria. The managed care
contractor must pay for any court-ordered
services that are provided in a community
hospital and that are within the contractor’s
utilization review guidelines. The counties in
Iowa are responsible for IMD treatment
costs. Because the State wanted to avoid the
possibility of the MCO shifting costs to the
counties, however, the 1995 contract (and
the current contract for the Iowa Plan)
included a provision that counties cannot be
required to make higher IMD payments than
they paid prior to the implementation of the
managed care plan. Merit Behavioral Care’s
representative said the following:
[This provision] was set up so that there
could not be cost-shifting or the perception
of cost-shifting. And what they
look[ed] at was how much a county had
paid to mental health institutions prior
to managed care. If that county…spent
more than that amount, we [MBC]
would pick it up and we would pay for
those costs over and above that. And
that was a way to insure to the counties
that we had no incentive to cost-shift to
the counties by Court Orders to mental
health institutes.
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 Iowa Plan contract is quite explicit
about the criteria for determining the medical
necessity of a particular behavioral
health service. Substance abuse services must
meet what are termed “service necessity” criteria
in Iowa, and all mental health services
are required to meet the criteria for “psychosocial
necessity.” The contract notes that
this “is an expansion of the concept of medical necessity and shall mean clinical, rehabilitative,
or supportive mental health services
which meet” the standard criteria for medical
necessity, but also require “consideration
of
- the enrollee’s clinical history, including
the impact of previous treatment and
service interventions;
- the services being provided concurrently
by other delivery systems;
- the potential for services/supports to avert
the need for more intensive treatment;
- the potential for services/supports to
allow the enrollee to maintain functioning
improvement attained through previous
treatment;
- unique circumstances which may impact
the accessibility or appropriateness of
particular services for an individual
enrollee (e.g., availability of transportation,
lack of natural supports including
a place to live); and
- the consumer’s choice of provider or
treatment location.”
According to the State Medicaid representative,
the contracting parties began to look
at an expansion of the “medical necessity”
criteria in the 1995 mental health and substance
abuse carve-outs, but codified these
new criteria under the terms of the 1999
Iowa Plan contract. She noted, “The concept
of ordering somebody to a 30-day locked
mental health ward just kind of had to give
way to ordering somebody to an appropriate
level of care.”
Similarly, the representative from MBC
noted the clinical importance of expanding
treatment criteria beyond the traditional
“medical model”:
The State started managed care for
mental health [on] March 1, 1995, and,
in that particular contract,…authorization
for services was based on medical
necessity criteria.…It was not too long
into the program when it became very
evident that just basing decisions on
medical criteria was really not going to
be very workable for the population
that we were serving.…So we started
expanding the definition for authorizations
to what we call psychosocial
necessity.19
While MBC of Iowa readily agreed with
these expanded criteria, the State Mental
Health Authority recognized that not every
managed care contractor was likely to recognize
the need for a broader standard for this
population. Thus, in order to ensure that
future contractors (should MBC lose the bid)
abide by these standards, the expanded criteria
were included in the RFP for the 1999
contract.
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 Iowa Plan requires that certain community
support services be a covered benefit
for enrollees. Among the services listed are
Intensive Psychiatric Rehabilitation,
Assertive Community Treatment, mobile
crisis and counseling, peer support services,
and supported community-living services. In
addition, performance indicators are included
in the 1999 contract to track the extent
to which MBC is helping consumers remain
in the community rather than in inpatient
facilities. For example, one incentive-based
performance indicator tracks “community
tenure,” the standard for which is that “the
average time between hospitalizations shall
not fall below 60 days.” A second standard
that is simply being monitored by the State
under the 1999 contract tracks “the
instances when a higher level of service
was required [because of] lack of needed
community-based services....”
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?
The cost of “psychosocially necessary”
court-ordered services and 5-day evaluations
are included in MBC’s capitation rate under
the Iowa Plan. From interviews with stake-holders
around the State, we learned there
are no incentives in the Plan that might
encourage the use of civil commitment.
However, (as discussed above) there are specific
provisions in the 1999 contract—as well
as performance incentives in the Iowa Plan—
aimed at reducing the use of civil commitment
of people with mental illness.
How do stakeholders believe these contract
provisions (or lack thereof) have affected the use of
civil commitment within each system?
The individuals interviewed were unable to
offer us any specific details as to what
impact the contract provisions in the Iowa
Plan (or its predecessors) have had on the
use of civil commitment in the State. One
individual believed that the contract “had an
effect on it,” but added, “it’s not an easy,
quick thing to describe.” When asked about
any trends in inpatient admission rates or
lengths of stay, she replied, “We do monitor
that closely, but I can’t rattle numbers off
the top of my head. I don’t know that I
could distinguish between a court-ordered
and a non-court-ordered inpatient stay.” In
point of fact, the majority of interviewees
were unable to offer any commentary at all
on the correlation between the Medicaid
managed care contract and civil commitment.
Thus, one could reasonably conclude
that, at the very least, the Iowa Plan has not
generated a noticeable change in the use of
civil commitment of people with mental illness.
Indeed, given the various provisions
and incentives in the 1999 contract, it
would appear that this State has taken great
care to limit the use of court orders in providing
behavioral health consumers with
needed services.
Are there anticipated changes to future managed
care contracts to limit the use of civil commitment?
What experiences have prompted these potential
modifications?
None of the interviewees mentioned any
anticipated modifications to future
Medicaid managed behavioral health care
contracts, although the possibility of
amending the 1999 contract was not ruled
out. Indeed, it was made clear to us that
the language in the Iowa Plan resulted from
lessons learned through previous contracts
and that the contracting process “must be
seen as an evolution.” Since the adoption
of Medicaid managed care in Iowa, elaborate
mechanisms have been established
throughout the State for stakeholder dialogue
and feedback to MBC of Iowa. These
mechanisms may lead to future contract
changes. Experiences around civil commitment
and service delivery under the current
contract, however, were unremarkable
enough to our interviewees that no changes
were anticipated.
19 At about the same time as Iowa was expanding its
definition of “medical necessity,” other institutions
were promoting similar efforts to bring the medical
necessity standards more in line with the unique
needs of the target population (see, for example,
Bazelon Center, 1998).
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