Federal and State Legislative and Program Directions for Managed Care: Implications for Case Management

Ronald W. Manderscheid, Ph.D.

Marilyn J. Henderson, M.P.A.

Center for Mental Health Services, Division of State and Community Systems Development

Substance Abuse and Mental Health Services Administration, U.S. Department of Health and Human Services

The development and demise of national health care reform and the subsequent rapid expansion of managed behavioral health care have altered dramatically the role of outcomes in clinical service delivery and payment mechanisms. This paper provides an overview of managed behavioral health care and the role of practice guidelines and outcome measures in this context. Several current initiatives to develop outcome principles and measures are described. It is argued that to assure quality in the managed care context, the development of practice guidelines and outcome measures must be accorded high priority by the mental health and substance abuse community.

The context for the delivery of mental health and substance abuse care is changing dramatically as managed behavioral healthcare advances. More than 108 million persons are now covered by managed behavioral healthcare insurance plans, and 17 States have received Federal waivers to implement Medicaid managed behavioral healthcare programs. Both network and health maintenance organization arrangements are being set up for managed care, and a range of options is being used to contract with providers.

One major objective of this paper is to describe current and anticipated Federal and State legislative and regulatory activities that are relevant to managed care. For the Federal level, the specific objective will be to review developments with respect to insurance reform, the Medicaid and Medicare programs, and Performance Partnership Grants. For the State level, the specific objective will be to review developments that are designed to protect against the negative effects of managed care. These include specification of "essential community providers", definition of mandated benefits, development of licensure and accreditation procedures for utilization review firms, community rating of health insurance premiums, and definition of specialty providers as primary care providers. Although most States do not currently have such provisions in legislation or regulation, major efforts are being mounted to effect such changes.

A second major objective is to explore the implications of current developments in terms of several predictions about the future and to examine the likely future course of case management from this perspective. Managed care will continue to grow, particularly in the public sector, and many "carve out" programs will become "carve in" programs, except for persons with severe problems. Providers will organize network of care that will compete with managed care organizations for health care and utilization review business, and non-traditional health maintenance organizations will become a preferred vehicle for managing care.

Case management is most likely to continue as part of a "carve out" for persons with severe problems. Particular attention must be paid to the impact of Federal and State developments upon payment mechanisms. Case management must be defined operationally, and annual capitation rates must be set for different intensities of service delivery.

An opportunity exists to be creative, but action must be taken quickly if case management is to be successful.

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