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Office of Mental Health

New York Office of Mental Health
Ambulatory Restructuring Project Report

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Prepared by:
DMA Health Strategies
June, 2009

Table of Contents

Executive Summary
An Overview of New York’s Ambulatory Mental Health System
The Need for Change: Fragmentation, Lack of Accountability and Financing Challenges
Financing Models must Change
Recommendations:  A Framework for Change

Executive Summary
New York State’s public adult mental health system is exceedingly complex including Medicaid, State, county and other funding for a broad array of community based services.   It serves a huge number of individuals, the vast majority of whom have serious mental illness.  The total system funding is $5.6 billion, with $1.4 billion in ambulatory and clinic based services, approximately half of which is delivered outside of a clinic setting.  It faces a significant need for restructuring if it is to expand its recovery focus and achieve essential improvements in accountability and coordination. This need for systemic restructuring is made more urgent as a result of several proposed new federal Medicaid regulations. The rule changes threaten New York with the loss of up to $170 million in funding for the federal share of ambulatory, non-clinic services.

The compelling necessity of significant and far reaching change presents the State with a major opportunity.  Modifications can and must be made that will preserve some of the threatened federal funds and simultaneously strengthen the service delivery system.  This study documents the critical need for change, building upon the substantial and important work of the OMH clinic restructuring process, and having a more comprehensive scope.  It concludes by presenting several options for the State to consider as it moves forward.

The many stakeholders interviewed for this study agreed that the system has a number of problems, although they naturally differed in their perceptions of the details. Their consensus view was that:

  • The system’s excessive complexity reduces efficiency and increases service fragmentation;
  • Accountability is poor;
  • There is an over-reliance on inpatient care;
  • The State cost settlement process exhausts State, local and provider staff, has a multi- year backlog and does nothing to support recovery; 
  • Despite 5.07 Plan requirements, there is a need for a more systemic process to review the service system at a county or regional level, to identify areas for improvement or implement improvements through contracts with providers;
  • County and State staff lack data on performance of providers, utilization and outcome data on individuals served under deficit financing; and, finally,
  • Services are overly costly and unevenly distributed: expenditures per capita vary by more than 100 percent across regions. In other words, consumers’ access to care, rather than being uniform across the State, differs significantly as a result of where they happen to live.

Thus stakeholders generally agree on the following goals:

  • Increase the focus on recovery;
  • Reduce fragmentation of services;
  • Improve accountability and measure performance; and
  • Increase the emphasis on providing services in the community. 

To best achieve those goals, while recognizing that New York’s size, diversity and complexity preclude the possibility of finding one statewide solution, we recommend consideration of several options for system redesign, including the following:

  • Development of "recovery home" or "clinical home" models in which case managers coordinate care for, and bear responsibility for outcomes of, the consumers they serve.
  • Under Medicaid 1915(b) waiver authority, consider pilot managed mental health care approaches (such as organized delivery systems) that cover one or more counties, or;

Within any of the above structures, the State can and should implement or expand upon the following strategies, which will likely improve the system’s ability to meet consumers’ needs:

  • Person-centered planning
  • Disease management approaches

Note that these options are not mutually exclusive, but rather can work together to transform the mental health system.

In order to help finance the implementation of the chosen approaches, the State should consider methods such as the 1915(b) waiver authority and the 1915(i) State Plan Option, as well as revisions to the existing rate structure.

New York’s approach to reform must recognize that significant changes are underway in restructuring and re-financing clinic services.  Staging of change efforts must consider the capacity of providers to respond to and implement additional changes.

Transforming the system of care is a goal well worth seeking. It is our hope that this paper will provide a rational foundation that can support State officials and other stakeholders as they make critical decisions that will set the State on a new path.


Funding for New York State’s adult mental health system ranks second overall nationally and third on a per capita basis.  Some of the nation’s best mental health services research is funded through New York’s numerous medical schools and the Research Foundation for Mental Hygiene.  Westchester County has the highest per capita concentration of psychiatrists in the country.  New York providers have developed nationally recognized innovations, especially in the area of recovery oriented services; for instance the Clubhouse movement began in New York.  Moreover, most of the national leadership in managed care began their work in New York State. 

Given these strengths in research, clinical practice and administration, as well as the expenditure of significant resources, it may seem surprising to uncover profound dissatisfaction among many mental health leaders with the organization, structure, and financing of the State’s public mental health system. Yet that is what this study has found. The current financing approaches by Medicaid, the Office of Mental Health (OMH) and counties, consist of multiple "layered" strategies and rules that are unique to specific programs or populations.  The result, when taken together, is a "system" that is extremely complex and fragmented. 

While there have been previous efforts to reform the service delivery system in a systemic way, they have met with resistance from many stakeholders, compounding rather than solving the problems.  Not only does the system continue to be fragmented and to lack accountability, but care has suffered.  For example, an OMH and New York City (NYC) panel investigated several recent violent crimes in NYC.[1]  That investigation: "… revealed poor accountability and weak integration or communication among mental health, substance abuse and correctional services, even in instances where individuals were assigned the highest intensity community-based service…"

The panel’s findings underscore the urgent need for a more integrated, accountable and coordinated system of care in New York for adults with serious mental illnesses.

While inconsistent quality, fragmentation, lack of accountability and failure to focus on recovery provide more than enough reasons for change, revisions in the (Federal) Centers for Medicare and Medicaid Services (CMS) rules governing the Medicaid program have pressed the issue even harder.  Hundreds of millions of dollars in mental health funding are threatened by potential changes in the CMS rules governing Targeted Case Management and Rehabilitation Option services.  Despite their positive aspects, these changes threaten to undermine the current reimbursement methods for many of New York’s outpatient mental health services and require a fundamental redesign of the system.

As Commissioner Michael Hogan recently stated:

"We currently have an over-reliance on inpatient care…access to low cost services is limited, services are not comprehensive, and excellence can be missing."

To address these and other issues, OMH has undertaken a major planning and restructuring process. The present paper, which is part of that process, reviews the current structure, financing, service patterns and challenges of the adult non-clinic, ambulatory mental health services in New York State; it identifies barriers to change and proposes some restructuring options.  It draws on data obtained from OMH administrative data sets[2], information from several stakeholder meetings upstate and in New York City and interviews with selected providers across the State. 

Adult ambulatory care includes a broad array of services and programs, at the heart of which lie community mental health clinic services.  Clinic services were not included in the current project because in 2007 the Public Consulting Group (PCG) prepared a report summarizing the scope of services for Clinic, Continuing Day Treatment and Day Treatment programs licensed by OMH.  That report sparked a clinic restructuring process that has been underway for approximately two years.

The overall recommendation in the PCG report was that:

"What is needed is a complete overhaul of the current payment system. However, no changes to the reimbursement methodology for outpatient mental health services can be done without considering New York State’s overall health care policy goals."[3]

Therefore, this report, the PCG report and the work that followed the PCG report need to be considered together as elements in an overall review of the State’s mental health care system.

An Overview of New York’s Ambulatory Mental Health System

This section provides a more in depth overview and introduction to New York’s adult ambulatory mental health system[4].   We have excluded children’s services where possible from the analysis.

New York’s mental health system is programmatically and financially large.  The overall mental health system serves more than 688,000 individuals.[5] More than 544,000 of these are adults and more than 80 percent of these have serious mental illness.[6]

Funding for the public adult mental health system is also exceedingly complex including Medicaid, State, county and other funding for a broad array of community based services.   Total system funding is $5.6 billion (adults and children), with $1.4 billion in ambulatory and clinic based services. 

As a result of history, population, funding, and local priorities, the structure and content of mental health services vary considerably by region and county.

The Delivery System is Enormous and Complex

The adult mental health system in New York State consists of a complex array of programs, funding streams, and providers that are configured somewhat differently in each county.  The complexity and variability are influenced by many factors including:

  • Rural and urban differences that are as extreme as any found in the US – from New York City to Delaware County, from Monroe County to Chemung and Hamilton County.
  • The presence of State operated hospitals and community services.  State-operated hospitals and community based services are critical aspects of the service system and provide a significant portion of the community based services in communities where the psychiatric centers are located. 
  • County resources and priorities.  Counties have statutory responsibility for planning and system oversight.  Both counties and licensed providers have historically had a wide degree of latitude to develop services and programs that best meet local needs.  Additionally, many counties have put up their own funding for local priority programs.  As a result, there is a great deal of variation in the availability of and access to different services across the State.
  • Complexity and availability of State and local funds.  The system for financing public mental health services is extraordinarily complex; it includes Medicaid funding, county and State local aid funds, direct State contracts, and State hospital related services, including inpatient, ambulatory and prepaid mental health services. 
  • The incremental and aggressive refinancing of many services onto Medicaid has profoundly skewed priorities in a fashion that was not intended or anticipated.  This "over-Medicaiding" of the system has sustained and in many cases increased the utilization of Medicaid reimbursable services and reduced the financing and utilization of local and State supported services, regardless of priority.

The mental health system in New York includes dually licensed (OMH/DOH) Article 28 hospital operated services, Article 31 outpatient and residential programs, State operated outpatient programs, and non-licensed community mental health services.

The ambulatory mental health system includes all mental health services that are provided in the community, (i.e., not including inpatient hospital services and other 24 hour care facilities).  Approximately half of the ambulatory services are clinic based services.  The analysis in this paper focuses on the ambulatory services for adults that are delivered outside a clinic setting.  These services include (and we have reported on) expenditures in the following categories[7]:

  • Emergency Services:  Comprehensive Psychiatric Emergency Program (CPEP) and Crisis Intervention;
  • Day Rehabilitation Services:  Including Continuing Day Treatment (CDT), Intensive Psychiatric Rehabilitation Treatment (IPRT), Partial Hospitalization, Personalized Recovery Oriented Services (PROS);
  • Assertive Community Treatment (ACT);
  • Support - Care Coordination:  Case Management (Intensive, Supportive and Blended), Transition Management Services, and Bridger Services;
  • Support - General supports:  Including Outreach, On Site Rehabilitation, Transportation, Pre Admission Screening, Recreation, Respite, Consumer Service Dollars (Non ICM, SCM/ACT), Multi Cultural Initiative;
  • Support - Vocational supports:  Sheltered Workshops, Assisted Competitive Employment, Ongoing Integrated Supported Employment Services, Transitional Employment, and Affirmative Business/Industry and Work Programs;
  • Support – Self Help:  Advocacy Support Services, Psychosocial Clubhouses, Drop-In Centers, Self Help, Peer Advocacy and Alternative Crisis Support; and
  • Support - Other services

The Ambulatory System Serves Almost 458,000 People Each Year

New York’s public mental health system serves more than 688,000 people per year.  Of these individuals, 458,000 people are served in outpatient or ambulatory settings[8].

According to the 2007 Patient Characteristics Survey conducted by New York’s Office of Mental Health (OMH)[9]:

  • Approximately 59 percent of all consumers were receiving SSI/SSDI benefits;
  • Services received by those[10] with serious mental illnesses[11] were broadly distributed including:
    • 9.8 percent received some form of inpatient service;
    • 50.1 percent received clinic services; and
    • 25.5 percent participated in some form of non-residential community supports.
  • Those reported as not having serious mental illness received a more limited range of services:
    • 81 percent were served in clinic; and
    • 16 percent participated in non residential community support programs such as outreach and advocacy services.
  • For those adult consumers receiving ambulatory non-clinic services[12]:
    • 86 percent were reported to have serious mental illness;
    • 67 percent reported disability due to mental illness, while 20 percent reported a co-occurring alcohol or substance abuse disability;
    • Approximately 10 percent reported some kind of justice system involvement:  4.5 percent were State prisoners and 2.7 percent were parolees or probationers; and
    • Most received care through federally funded programs: 50 percent were eligible only for Medicaid; an additional 24 percent were dually eligible (Medicaid / Medicare); a very small proportion (fewer than 5 percent) had private insurance.  

The Need for Change: Fragmentation, Lack of Accountability and Financing Challenges

Ambulatory, non-clinic services include traditional Medicaid Services like case management and continuing day treatment as well as some services perceived to be the most "recovery oriented" in the State’s mental health system – advocacy and support services, self help, psychosocial clubs, and vocational support programs.

These services are not by themselves a "system," but are essential components of the overarching mental health system.  They drive recovery and provide the foundation for the coordination of care.  However, in recent years, sustaining State and local investments in these services has been increasingly difficult, defining appropriate service outcomes has been elusive, and no consensus exists on needed service models and capacities across the State.

There is, however, broad agreement on the need to change the system to better support recovery and to address financial pressures. More challenging are questions regarding what specifically to change and how to change it in order to foster improved services.  Numerous stakeholders from across the State offered input on these questions during the course of the project. Virtually all of them acknowledged that the system is fragmented and lacks accountability.  Not surprisingly, respondents’ roles and values influenced their perspectives. They cited the following types of barriers to effectiveness:

"The whole is less than the sum of its parts … Incremental improvement and services aren’t going to solve the problem."
  • Services are fragmented and care coordination is ineffective;
  • Case management doesn’t work; it needs to be reinvented;
  • The system lacks accountability to consumers and funding sources;
  • Treatment does not always have a recovery focus;
  • Regulations create barriers to efficient care;
  • There are gaps in the information available about services in the correctional system;
  • The system is overly reliant on inpatient services; and
  • Financial incentives are not properly aligned.

The sections that follow summarize the barriers reported, present data on the issues raised, and offer some recommendations that emerged during the discussions.

Services are Fragmented and Care Coordination is Ineffective

New York State is not alone in complaints about fragmentation in the health care system.  Most of us as healthcare consumers have experienced the problems.  We see symptoms of fragmentation in poor integration of care for individuals with multiple needs (e.g. health and behavioral health problems) and in high inpatient readmission rates.  Additionally, the New York mental health system has seen periodic well publicized crises, particularly in the New York City area.  As OMH Medical Director Lloyd Sederer’s report on Clinical Care noted:

"… we must address a core problem that was caused by New York’s approach to mental health – namely its extreme fragmentation of care, with no one responsible for the overall well being and recovery of people with mental illness."[13]

In response, that report made the following recommendations:

  • Promote county and provider-based recovery oriented innovation to serve defined recipient populations or specified geographies across all levels of care;
  • Introduce screening for and care management of high prevalence, high burden and high cost disorders in primary and mental health care, targeting opportunities where current practices do not meet quality standards and which present clear opportunities for improvement;
  • Shift to more person-centered planning (as in the Western NY Care Coordination Program); and
  • Develop specialized and more evidence-based practices for discrete populations (as in Wagner’s Chronic Care model[14]).

The recent violent incidents involving several individuals with mental illness in New York City sparked the City and State to convene a panel to review the cases and make recommendations.  The New York State/New York City Mental Health-Criminal Justice Panel found: 

"Poor coordination, fragmented oversight and lack of accountability in the mental health treatment system"[15]

As an initial step to fighting fragmentation, the Panel recommended establishing teams and better utilizing existing data to monitor the care being provided to high need adults and the programs that provide that care. 

Case Management needs Reinvention

A new, or reinvented, approach to case management should be part of the solution.  More than $152 million is spent on care coordination and $46 million on ACT.   But no stakeholders cited evidence of the efficacy of case management services and the literature is mixed as to whether traditional case management approaches (especially targeted case management or "service broker" approaches) are successful.[16]  According to many stakeholders, case managers frequently lack the training, technology and skills to effectively coordinate care for people in acute phases of their illnesses. 

For many consumers, their case manager is their "clinical home" And their one reliable relationship with the care system.  Case managers offer many consumers with serious mental illness their most important contact with the mental health system.  Consumers may receive multiple services such as medications, housing and vocational supports, and may participate in clubhouse or peer support programs.  The case manager coordinates these services through assessment, treatment planning, referral, and monitoring of services.  However case managers in New York, and in most states across the country, were reported by virtually all stakeholders to spend their time on a variety of more recovery oriented services including life skills training, counseling and sometimes providing assistance with transportation.  These would not be eligible for Medicaid reimbursement under the new Targeted Case Management rules.  Such services could be reimbursed under other Medicaid options, e.g. the rehabilitation option, if the relevant Medicaid state plan amendments can be constructed and approved.

Case Management Today

The current model of case management offers two levels of service intensity and a "blended" option. Reimbursement requires a minimum of two face to face contacts per month for adults receiving "supportive" case management and four face to face contacts per month for "intensive" case management.  Providers bill on a monthly basis for recipients who receive these minimum service levels.   Many consumers, however, need only telephonic contact, medication and peer support services unless they experience a setback, at which time they may need significantly more services. The reimbursement models therefore need to account for periodic variability in needs.  Case management reimbursement provides incentives to retain compliant clients who are reliably available for scheduled visits.  Stakeholders reported that many clients receive four visits each month when they do not need them so that providers can maintain their revenue levels.  Meanwhile, case management is often not available to individuals who experience acute problems because it requires pre-approval and the supply is limited.

New CMS Definition of Case Management

CMS defines case management as including "… services that assist eligible individuals to gain access to needed medical, social, educational, and other services… . (it) does not include the underlying medical, social, educational and other services themselves."[17]  In New York, case management activities are generally consistent with this definition.  They include functions such as assessment, service planning, referral, and coordination of care.  For instance, intensive case management is defined as "… services provided by a designated intensive case manager to promote managed care by coordinating all aspects of services needed by persons with a serious mental illness and enrolled for such services with a provider of services, for as long as necessary".   One of the differences that will have to be reconciled is that the CMS definition has some implicit time limits, while, as noted, New York rules make the service available "as long as necessary."

The System and its Providers are Not Accountable

Over the last two decades, as Medicaid has been used to significantly expand service capacity, discretionary financial support for mental health services by counties and the State has diminished as a percent of total funding.  Accompanying the increased dependence on Medicaid funding and the reduced State and county support has been a loss of program flexibility, county control and the ability to coordinate services across program types. It is clear from stakeholder interviews that this has reduced accountability - accountability to consumers, purchasers and taxpayers.

Absence of Coordination Sends Consumers to Emergency Rooms

"We have helped create a group of professional patients – save them from ourselves!"

No single organization is responsible for coordinating the care of many consumers with serious and chronic conditions who are receiving ambulatory mental health services in the community. When a consumer experiences a crisis, should the outpatient provider respond?  What is the role of the case manager in the evening?  What resources can be deployed to provide for some stability and supports during the crisis?  Far too often the only response to these issues is for the consumer to go to the emergency room.  Yet the emergency room is rarely equipped to provide for diversion and support services; instead, if a bed is available, the consumer may be admitted to the hospital. 

Increasing accountability of ambulatory providers to consumers or payers for clinical supports to prevent such a hospitalization might include the use of 24-hour response services, the adoption of advance directives, mobile response and the use of stabilization beds. As one example of the effective use of 24-hour response services, the Massachusetts Behavioral Health Partnership measures their emergency service providers for diversion rates and is beginning a re-procurement of the service to increase quality and cost effectiveness. Michigan’s county-based Prepaid Inpatient Plans create clear financial incentives for county and community staff to divert consumers from inpatient services where possible.

Providers are not Accountable

The system does not hold providers accountable for their performance or for the outcomes their consumers achieve.  Medicaid funded providers must meet certain service and quality standards as a part of their licensing.  Far too often these standards are focused on physical plant characteristics or staffing qualifications rather than on quality of care.  Even once providers are licensed, they experience little formal oversight of the services they provide. Regional offices of OMH and some counties monitor programs and services, but this monitoring consists mainly of licensing reviews, contract reviews or investigations.

Staff in county offices and OMH often lack the experience and tools needed for effective contract oversight.   State finance officials are reported to be several years behind schedule in the cost reconciliation processes and some providers have had to modify budgets for program expenditures that are several years old in order to avoid recoupment of funds.  As one person in our focus groups stated, "this is a sign of a truly broken system."

The agreements for COPs and CSP "add-ons" include terms governing provider performance and services to the uninsured. These include standards on access to services, timeliness of initial assessments, agreement to participate in annual planning with local government agencies, 24-hour coverage, etc.   These provisions were intended to reduce fragmentation and increase accountability but they have not been completely successful, and there is little public follow up regarding the terms of the agreements.  These provisions are not monitored routinely. 

Data on Care, Satisfaction and Outcomes are Lacking

Accountability requires accurate information on the care consumers receive, the timeliness of that care, utilization of services, and satisfaction with and the outcomes of those services.  Information is needed at all levels of the delivery system, by case managers, program management staff, counties and State administrators, to effectively coordinate care, manage staff and oversee contractor performance.  Currently, the only comprehensive data available for tracking access to and utilization of services come from the eligibility and billing data in the Medicaid program.  No comparable data are available for services Medicaid does not cover, or for individuals whose care Medicaid does not pay for.  While the State has made many improvements over the last decade in the accessibility of Medicaid data for research and reporting purposes[18], timely Medicaid claims data are not readily available to be used for oversight purposes by staff at the regional or county level. While OMH provides aggregate Medicaid utilization data to counties, county and OMH field office staff need training and support in the effective use of these data.  Data are not routinely provided at the individual consumer level to analyze episodes of care, practice patterns or consumer engagement in services. 

The System Has Little Information on Consumer Outcomes

Little is known about the outcomes of mental health services in New York State, and for that matter elsewhere in the country.  Although consumers are undoubtedly achieving improvements in their quality of life, and many are more able to live meaningful lives in the community, there is little data documenting those successes.  Providers, advocates and administrators have long disagreed about the nature and types of measures that should be used within the public sector.  Over the last several years, SAMHSA[19] has developed a set of National Outcome Measures based upon recovery principles.  Mental health measures include retaining a job, reducing criminal justice system involvement, finding stable and safe housing, increased access to services and reduced symptomatology.  Few states are able to report on any of these data across their system; some choose instead to report on small samples or demonstration projects.  States that do have particularly effective data and outcomes tracking systems include Ohio, Connecticut, Oklahoma, and Washington. 

In New York, administrative data on spending and the numbers of people served are available only for Medicaid funded services, and rarely for services supported by local assistance.  The latter services are not reimbursed on an encounter basis and lack standardized eligibility and enrollment procedures. There is no systemic approach to link enrollment and utilization data with consumer outcomes and satisfaction.  A one week snapshot of program recipients, the Patient Characteristics Survey (PCS), represents the primary source of data on the characteristics of New York’s mental health consumers.  The most recent PCS data available come from the survey done in 2007.

One key goal of a transformed service system is to increase consumers’ rates of competitive employment. Mental illness is a disabling condition and low employment rates are likely for people who have mental illness; this is used as an excuse by many in the system.  PCS data show that only 17.7 percent of adult consumers (18-64)[20] are now in competitive employment (with and without supports).  If, however, the system were designed to focus on increasing the numbers who are seeking employment and improving employment rates for those who want to work, vocational services funding might be used differently and CDT programs might be used to focus on pre employment and coaching efforts. It is not hard to imagine that, as a consequence, the competitive employment rate might go up significantly even in a bad economy.    

We do not know nearly enough about the actual outcomes of treating mental illnesses in the community. We need to support further research and yet also be prepared for small effect sizes.  The controlled studies we do have show marginal benefits over no treatment – improvement rates of approximately 10 percentage points. These types of changes and outcomes are enormously difficult to measure and the measurable changes often take a long time to be realized.  There is similar uncertainty about the effectiveness of new and existing drug treatments, the most widely researched area of mental health treatment. [21] 

Blurred County/State Roles Hamper Oversight

Accountability can only be achieved if clear roles and responsibilities are assigned to county and State officials.  The lines of responsibility and authority between State and county officials have, however, become blurred in recent years as the State has entered into more direct contracts with providers and county match requirements have been capped.  Most respondents reported that State oversight was limited to licensing compliance and the burdensome cost settlement process.   Counties seem to have few, if any, systemic processes in place to manage providers’ performance or encourage competition.

The county role as purchaser is sometimes "handicapped" when counties are also major providers of case management and community services.  To some extent this is also true of OMH.  While private organizations are increasingly the major service providers in NYC and to a lesser degree in other urban settings, counties are generally the dominant ambulatory providers in more rural areas.   Providers’ perception of the conflict between counties’ twin roles, as both purchasers and providers, has sometimes led to antagonism between county officials and providers. 

These conflicting roles have led many states to require counties to create separate organizational structures for purchasing and providing services.  Examples include Washington D.C., North Carolina, and Michigan.

  • Washington D.C. split up the Department of Mental Health and created two separate organizational entities.  DMH oversees the services delivered by the public Community Service Agency and by contracted providers.  
  • Michigan created specific requirements for organizations to manage specialty services.  In order to reduce conflicts, these rules encouraged counties to create or contract with Administrative Service Organizations to manage the Medicaid specialty services.  
  • North Carolina has tried to create the same differentiation at the county or regional level.  The Piedmont Behavioral Health Authority is an example of how this can work; other counties have not been as effective.

Improved Accountability Requires a Variety of New Activities

Accountability requires performance management activities, including routine and regular reporting by providers, monitoring by State or county officials, feedback to providers and quality improvement efforts.  Data and regular communication are keys to success.  As a recent report noted:

"… while planning, funding, licensing, and regulatory decisions are concentrated at the State level, the counties are charged with providing local services according to population needs and knowledge of evidence based treatments, available providers, and available resources.  Effective collaboration between OMH and county agencies is one of the best opportunities we have to improve services for consumers and their families."[22]

One strategy would be to implement performance contracting approaches.  Much has been written about this and the methods are promising but current State policies and State and county contracting methods would make this very hard to achieve.

It may also be possible to improve accountability by consolidating contracting and provider oversight under a lead agency, an organized health delivery system or a managed care organization.  One of the attractions of this approach for public officials is that it requires them to oversee only one (or a few) large comprehensive contract(s), reducing their burden and clarifying the lines of accountability.

There is a belief among many that managed care entities or private agencies are more capable of performing the necessary functions because they have greater flexibility in recruiting qualified staff, disciplining staff for non-performance, and they are less subject to legislative interference.  On the other hand, there have been situations in which managed care or private contractors have neither improved accountability nor reduced fragmentation.  Whether public or private sectors are responsible, the key to successful implementation lies with the quality and dedication of staff, oversight and supervision.

The System Lacks a Recovery Focus

"What helps a person recover? Reality is that a person needs a relationship with consistency. That will move the person through the system."

Achieving consensus on the need to transform our public mental health systems based upon recovery principles was a major accomplishment of the President’s New Freedom Commission.[23]  The gap between the current reality and the vision of the New Freedom Commission is significant in many public mental health systems; some have called it a chasm.[24]  Some of the key elements of a recovery oriented system include person centered care and service planning, peer operated services and peer supports.  These focus on helping consumers achieve their own goals for housing, meaningful work activities, and relationships;.

Many stakeholders we spoke to noted that the mental health system in New York was not recovery-oriented.  While there are a number of recovery-based services in operation, spending is dominated by inpatient, State hospital and clinic services that have a more medical focus.  Indeed, in 2004, roughly $2.9 billion or almost 53 percent of total spending in New York’s mental health system was devoted to inpatient services.

In community care, continuing day treatment services represent an approach that has been replaced in most states by alternatives that emphasize rehabilitation (like NYSPROS model or clubhouses).  Other states have also developed effective consumer operated "recovery centers".  Examples include Value Options consumer-operated centers in PA, NM, CO, and FL.  Tennessee, Alaska and California counties, and other states actively support and seek to expand the use of "Recovery Centers."  New York should consider how to transition many of the existing day services to those that emphasize "in-situ", or in the community, recovery and rehabilitation.

As a recent New York State report said so meaningfully, "Recovery is the process of gaining control over one’s life in the context of the personal, social and economic losses that may result from the experience of psychiatric disability. It is a continuing, nonlinear, highly individual process based on hope and it leads to healing and growth."[25]

One stakeholder pointed out that "relationships should be the foundation of care." However the New York system, including many of its regulations, makes it very difficult for individuals to maintain helping relationships as they recover.  The impact of regulations on consumer care is further discussed below.

Many professionals find the shift to a recovery focus not only challenging but profound.  It does not happen easily, nor does it happen overnight. After many years of trying to implement a recovery-focused system, the Western New York Care Coordination Program recognizes the continuous need to support and train professionals in person-centered planning practices. 

The slow adoption rates of evidence based or recovery-oriented practices, despite clear evidence and consensus on the need for change, suggests that adjusting the incentives in the system may be the only way to realize significant change. 

Regulations Present Barriers to Good Care

During the course of this review, the barriers created by licensing processes and requirements (not the people) became increasingly apparent.  The regulations regarding services, Medicaid billing and the use of State Aid are thorough and extremely comprehensive, but they are also complex. While seeking to eliminate or minimize duplication of services and double billing (goals which they presumably achieve), they also curtail consumer choice and create programmatic "silos." They increase fragmentation and inhibit consumers’ ability to move from one service to another. For example:

  • Separate treatment plans are required for different programs, which leads to unnecessary paperwork and a duplication of effort. 
  • In clinics, the requirement for treatment plan review every three months means that cases are often closed when people do not access services for more than three months.  If they return for a medication or other visit, the case must be reopened.   Cases don’t have to be reviewed in primary care when people are healthy unless they move or change physicians; why then do we need this frequency of review in behavioral health services? 
  • In the effort to transform, and to develop an alternative to continuing day treatment (CDT) programs for adults, OMH developed an innovative new program, Personalized Recovery Oriented Services (PROS).  However the challenge of providing highly individualized day services under Medicaid has led to what many providers reported to be very complex regulations and reimbursement rules that intimidated some providers. Many reported that they have decided to modify their CDT services to make them more recovery oriented rather than develop PROS.  However, the long-term viability of the CDT model is uncertain and improvements have been made to the PROS funding model.
  • Restrictions on billing for multiple services on the same day reduce access and increase travel costs.  For example, reimbursement rules will not permit consumers to receive medication treatment and therapy on the same day.
  • As a result of State regulations, consumers must often change case managers and therapists when they progress from one program to another.  If relationships are, indeed, the foundation of care, this requirement is likely counter productive.

The answers to these problems do not lie in creating new regulations.  In many ways, that has been New York’s solution to date; and while necessary for Medicaid billing the result has not increased accountability or reduced fragmentation.  The process of changing regulations to make needed improvements is too burdensome and time consuming to be effective.  It also increases the administrative costs of the system.  The answers lie in creating clear lines of accountability in local provider systems for the organization, administration and oversight of the system for most of the consumers.

Information is Limited on the Mental Health Treatment of Individuals in the Correctional System

National estimates are that the prevalence of serious mental illness in prison and jail is more than three times that in the general population[26].  New York State has a comprehensive and elaborate system of services in State correctional facilities.  However, little is known systemically about treatment of mental illnesses in jails.  Many in our prisons and jails have undiagnosed mental illness and others go untreated or have no access to medications.  Most studies have found that the correctional system has a limited capacity to handle serious illness and acute episodes without resorting to physical and/or chemical restraints.  While there are excellent criminal justice and diversion programs in some communities, there is a general consensus that many people with mental illnesses end up in the criminal justice system simply because other alternatives are non existent. This is particularly likely in rural areas.  New York State should continue to promote diversion of non violent mentally ill offenders to supervised treatment using the sequential intercept model[27].

Inpatient Utilization is More than Twice the National Average

Stakeholder meetings and feedback from many consumers and advocates reported excessive reliance on inpatient services. Though utilization varies significantly by location, in 2001-2002 New York State had more than twice the national average of psychiatric inpatient days per thousand in State and general hospitals.[28]In 2007, overall daily inpatient bed use in New York State was 60 per 100,000 individuals[29]

At its peak in 1955, New York had more than 90,000 people housed in State-operated psychiatric centers.  In 2008, the State psychiatric center census was approximately 4,800 beds reflecting significant drops in utilization.  In comparison, general hospital bed capacity was approximately 5,700; private psychiatric hospital bed capacity was 1058[30].

While some of the above data are old, the conclusions of everyone we spoke with were the same; the system remains too reliant upon inpatient services. 

Recent efforts to continue reducing psychiatric inpatient use at State-operated psychiatric centers have had limited effect thus far.  Utilization of State operated psychiatric center beds is of concern both because of the long length of stay of these individuals, the high capital costs required to renovate the facilities, and because inpatient care in State-operated psychiatric centers is not eligible for federal match.  OMH efforts to increase accessibility and reduce overuse have shown promise.  This should be continued and closely monitored.

Private inpatient expenditures (Article 28 and 31) represent a significant portion of mental health spending.  In 2004, State-operated inpatient expenditures were $1.197 billion and expenditures for private psychiatric hospitals, residential treatment facilities (RTFs) and Article 28 hospitals were $1.695 billion, a total of almost 53 percent of total mental health expenditures[31]. New York State should develop inpatient reimbursement methods that set goals for access to care while reducing incentives for long lengths of stay. 

OMH should also engage in a dialogue with local communities about the needs, models and effectiveness of the outpatient services provided by staff of the State psychiatric centers.  With well over 2500 FTEs devoted to community care, this resource must be carefully prioritized.

As the data on regional variation in inpatient care demonstrates (see Attachment F), the demand for inpatient services is highly elastic; it is influenced by a large number of external factors rather than being determined by the nature of the illness itself.  Outside NYC, inpatient spending ranges from 19 percent to 29 percent of total Medicaid spending.  In NYC, however, a startling 51 percent of total Medicaid spending occurs in inpatient settings.  Most attribute the high use of inpatient services to the lack of available housing (people with no place to go cannot be discharged).  NYC Medicaid penetration rates for inpatient services are below average suggesting that length of stay and rates are the factors contributing to the very high costs of inpatient.  However, the availability of community services, the effectiveness of case management and access to housing supports also play a huge role in reducing the demand for inpatient services.  While CPEP services are an important vehicle to divert consumers from inpatient care, New York State should explore alternatives to acute inpatient services that can be accessed prior to admission to a CPEP.

Financial Incentives are Not Properly Aligned

"We can’t assume integration just because one agency has all the pieces. We have created the impediments through all the discrete regulatory standards. We get nervous about shared space, shared staff, shared treatment plans and services on the same day."

The mental health system operates relatively "risk free" in New York, from a financial perspective (no capitation payments and limited use of case rates).   Because the system uses fee-for-service and grant-based financing in all but a few demonstration initiatives, the provider’s incentive is to maintain high rates of Medicaid encounters and to minimize the number of consumers funded by State and county grants.  As a result, some providers are reported to hold onto consumers as their needs improve, rather than helping them move to less intensive levels of care. 

The significant county variation in the services and financing of the mental health system is a direct result of the historical role that counties have had in funding services, particularly the county match requirements for Medicaid.  The county Medicaid match is now capped, however, and so county risk for excess Medicaid spending is limited.  But counties are not just purchasers of service.  They (and the State in the psychiatric centers) are also service providers that have employees on payroll and need revenue to support their operations.  Thus, complex and competing incentives drive the relationships among the State, counties and providers. 

The one area of the Medicaid system where there is some risk is in the health maintenance organization (HMO) benefit.  However, the risk is minimal for Medicaid managed care plans because their liability has been capped at 20 outpatient and 30 inpatient visits.  This cap encourages Medicaid managed care organizations (MCOs) to transfer high cost recipients over to the public fee-for-service system.  While there are some safeguards in place to protect against this cost shifting, any policy changes must take it into account.

For SSI eligibles, the mandatory enrollment that is taking place across the State excludes mental health services but will increase pressure on the MCOs and public mental health system to coordinate health services for consumers with serious mental illness.

If the general premise is accepted that to truly change practice patterns financial incentives should be placed as close to providers as possible, then vertically integrated provider systems[32], also known as organized delivery systems (ODS), might be one solution.  Many areas, however, may not have the provider capacity or scope of services necessary to develop them.  Another approach might involve the development of county or regional "systems of care." Many states with county mental health programs have shifted the risk down to the county or regional level in order to encourage the development of such systems.  Examples include California, Washington, Colorado, Florida, Michigan and Pennsylvania.  Wherever the risk is placed, the system’s financing model should encourage movement between levels of care, and ultimately to less costly levels.  These various options are discussed further in the recommendations section of this paper.

Financing Models Must Change

Based on numerous interviews and our analysis of the data, (see appendices B, E, F, G) it is clear that changes are needed in the financing and regulation of New York’s public mental health system.  Many of these changes have been needed for the last decade.  They have been made more urgent by continuous changes to federal CMS regulations and the fiscal challenges facing the State, counties, and providers.

Medicaid add-ons to clinic reimbursement like Community Support Program (CSP) and Comprehensive Outpatient Program (COPs) payments also need to be eliminated.  Documentation for treatment and rehabilitation plans need to be clearer to comply with new CMS rules and avoid audit recoveries.  The local assistance distribution and reconciliation process needs review. 

In sum, changes are needed in the way providers are organized, financed and deliver services.

Medicaid Reimbursement Rules are in Flux 

New York’s non-clinic ambulatory Medicaid reimbursement is currently based on unit billing, per diem payments or monthly rates, depending on the service.  Proposed changes in federal Medicaid rules and changing interpretations of existing rules may require New York State to change how it defines and pays for these services. (These proposals are currently being reviewed by the Obama administration.)

As noted above, changing Medicaid regulations constituted one of the motivations for this review of ambulatory services.   Previous efforts over the years to restructure the financing and delivery systems have not succeeded.  Now, however, the 2005 Deficit Reduction Act (DRA)and other proposed and enacted revisions to CMS rules mean that system change is essential.  These changes place over $170 million in federal funding for Targeted Case Management, CDT, ACT and numerous other services at risk.  The temporary federal moratorium on the implementation of these regulations gives New York an opportunity to restructure its systems of care in a thoughtful manner[33]

Several key provisions in the Deficit Reduction Act and the new CMS rules may have a significant impact on New York’s federal revenue.  These include:

  • Changes in Targeted Case Management and Rehabilitation Option rules to require new billing procedures for services using approved CPT and procedure codes. New York has perfected the science of bundled rates.  If the regulations are enacted as they stand, many of the rates and reimbursement methods for CDT, Targeted Case Management and others services will need to be revised. Rates need to be unbundled.
  • Requirements that Targeted Case Management activities be limited to: 1) assessment; 2) the development of a treatment plan; 3) referral for services; and 4) monitoring of the plan.  Documentation of covered activities will likely need to be more specific for case managers in the treatment plans and case records.  Because the value of "case management" is driven by personal relationships, a person-centered approach and timely interventions, New York must find a way to retain the value of our current case manager services under a financing approach that complies with the new regulations.
  • Rehabilitation Option rules clarify what Medicaid will cover and how the services must be documented and billed.  Under the proposed rule, there must be a specific written Rehabilitation Plan that identifies the covered services, their goals and the specific conditions they are designed to address.  These are to include recovery goals, involve the individuals and families, and provide a timeline for the services and when they will be reviewed.  The timeline must not be longer than one year.  These rehabilitation plans, including their required level of specificity, documentation and periodic review, impose additional requirements on mental health providers. 

Services Affected by New Federal Rules

Medicaid rules for reimbursement of services and the changes needed under new rules are summarized in table 4 below: 

Service and Description Brief Summary of Current Reimbursement Methods Changes Needed
Case Management (ICM, SCM, Blended) Case management services are reimbursed with a fixed regional monthly fee.  Payment is based on the level of service provided (Intensive, Supportive and Blended).  Clients must receive a minimum number of face-to-face contacts per month (two or four) for providers to receive payment.  Number of contacts varies based on level of case management provided. Shift to billing in discrete service units; services limited to assessment, treatment planning, referral and monitoring of services.
Assertive Community Treatment (ACT) ACT services are reimbursed with a monthly, fixed fee per client.  Clients must receive a minimum number of face-to-face contacts per month for provider to receive payment. Potentially this service will have to shift to an encounter driven system with team members responsible for their own billing.  Service documentation will have to be clearly linked to a rehabilitation plan.
Continuing Day Treatment and Partial Hospital There are regional fees based upon 3 regions.  Hourly fees for Partial Hospital and half day/full day fees for CDT.  The payments are based upon the cumulative visits and hours for consumers in each program.  For CDT, the average hourly payments are lower for providers that provided more service hours per client per month (volume adjustments).  Visits are for direct, collateral and group collateral visits. The service is billed in hourly increments; however selected CDT services may have to be unbundled to specifically identify rehabilitation services.  Service documentation will have to be clearly linked to a rehabilitation plan.  Partial Hospital rates will have to be reviewed but do not involve rehabilitation option rules, since they are hospital based services.  The need to document progress toward rehabilitative goals and move away from long term "maintenance" treatment will further drive change.
IPRT Regionally determined hourly fees for non-state operated Intensive Psychiatric Rehabilitation Treatment (IPRT). Service documentation will have to be clearly linked to a rehabilitation plan.
Personalized Recovery Oriented Services (PROS) PROS are reimbursed using 5 different monthly rates determined by a combination of program participation and service frequency.  These are accumulated for the day and then the month to determine the monthly rate that is paid.  A minimum of two PROS units are required each month for the monthly base rate. Service documentation will have to be clearly linked to a rehabilitation plan. Monthly billing may have to be unbundled to specifically link to services.
Comprehensive Psychiatric Emergency Program (CPEP) CPEP services are reimbursed according to a statewide fee schedule Current services meet medical necessity criteria. Changes are not likely to be necessary.

Table 4 - Ambulatory Reimbursement Methods

As is evident, the reimbursement methods differ significantly for the various services; each method was created in the effort to simplify billing, avoid cost shifting and contain costs.  Case management and ACT services are paid to providers through monthly bundled[34] rates, adjusted by level of service (contacts) during the month.  Case management is reimbursed under the targeted case management (TCM) rules of Medicaid.  ACT is an evidence based practice combining clinical, rehabilitation and case management services.  CDT is reimbursed under the clinic option.  CPEP services are reimbursed using encounter rates.  All of the services except perhaps CPEP are affected in some way by the new CMS regulations and will require restructuring or changes in billing procedures and documentation.

New York’s current Medicaid payments for clinic and Continuing Day Treatment include base rates (that generally vary by region) and certain supplemental payments ("add-ons") for Comprehensive Outpatient Programs (COPs) and for Community Support Programs (CSP).  These funds are used to pay for a variety of Medicaid ambulatory mental health programs and the methodology is part of New York State’s approved Medicaid State Plan.  There is universal agreement that these "add-on" payments need to stop.  They were a creative approach to increasing federal revenue for the mental health system, but Medicaid rules and policies under the DRA have specifically targeted these kinds of payments for elimination. The Clinic Restructuring process currently underway is recommending a method of eliminating COPs payments and making adjustments in the methodology for other clinic services to help compensate for the loss of COPs.  A similar process is needed for CSP payments to Clinics, IPRT, Partial Hospital and Continuing Day Treatment providers. 

Community Support Program (CSP) Payments

The supplementary payments known as Community Support Program (CSP) payments, are intended to provide clinic, CDT and Day Treatment (for children) providers with supplemental funding to support the greater needs of individuals with serious mental illness (SMI) in the community.  These payments are "added to the Medicaid rate of certain OMH outpatient programs in proportion to the amount of community support program State and local assistance previously replaced by CSP.  This Medicaid revenue is regulated in 14NYCRR Part 588" [35]

Certain clinic and continuing day treatment programs receive CSP supplemental Medicaid rates for services they provide according to a provider specific formula that is based upon the amount of State Aid a provider received in 1997-98 and their Medicaid eligible population at that time.  The rate is adjusted by the volume of services provided by each organization.  Table 5[36] summarizes the range of CSP supplemental rates.

CSP Rates

  Min. Avg. Max.
CDT $11.10 $53.38 $170.73
Clinic Treatment $0.62 $42.45 $300.00
Day Treatment $4.24 $25.70 $117.47

*Minimum rates and averages do not factor in zeros

Table 5: CSP Rates

These supplemental payments, developed in the late 1990s, provide more than $50 million[37] a year in annual support to clinic providers for their non clinic outreach and related activities.  Each provider has a threshold cap for CSP revenue.  Providers must track receipts and set aside CSP revenues in excess of the threshold in a reserve account for recovery by OMH in the cost settlement process.  Because CSP rates are bundled and are not directly linked to services, CSP payments will have to be revised under the new CMS regulations. 

Local Assistance is Essential to Protect the Safety Net but Accounting and Reconciliation Methods are too Complex

"The requirement to revise budgets from years past is irrational and a symptom of a broken system"

State and county non Medicaid funding, known as Local Assistance funding, support services that are either: 

  • Not Medicaid reimbursable because they are not considered "medically necessary" (for example, advocacy, some housing and vocational services); or
  • Medicaid covered services delivered to individuals who are not eligible for Medicaid (such as CDT or case management services to adults whose income is above the Medicaid threshold in New York).  Counties vary in the extent to which they provide this type of coverage.

Local assistance supports many recovery oriented and innovative services. These services have generally been funded through a mix of State Aid and county contributions.  Both funding categories have increasingly been constrained.  Providers receive funds primarily through county contracts.  The contracts are either direct contracts for specific services or "deficit funding" for programs.  Deficit funding fills gaps in financing after all other revenue is received.  Providers receiving these funds are subject to annual budgeting requirements, revenue reconciliation, and cost settlement provisions with the State. 

Across all mental health services in 2007, local assistance totaled $488 million almost half of which ($200 million) covered ambulatory non-clinic services (CFR Data).  According to CFR data, approximately $66 million in deficit funding, compared to $117 million in Medicaid funds, is received by programs for the care coordination services covered by this study (case management, ACT, transition management and bridger services). These same care coordination programs also report almost $12.7 million in losses for the most recent operating year.

The funding methods for these State and county contracts are very complex.  Until recently, counties had the responsibility both for providing the local share of the Medicaid State match (about half) and for the local share of deficit funding for providers.  Counties supported this through their own tax levies. The county role in financing has changed somewhat as counties’ obligations for the Medicaid match have been capped and a number of new services have been funded through direct State contracts.  These changes have added to the complexity of funding streams and fragmentation of programs. 

State procedures for budgeting, cost reporting and settlement of deficit funding contracts further compound the complexity of the system.  The rules governing budgeting and cost reconciliation processes require providers to prepare annual budgets, make revisions during the year, and undertake cost settlements with the State.  The settlement process has been taking several years to finalize – even in the best of situations.  A careful study of the costs and benefits of the reconciliation process would be important to determine whether the amount of the recovered or reallocated funds justifies the administrative costs of the process.  Numerous stakeholders and State staff reported on the inefficiencies and ineffectiveness of these procedures.

Recommendations:  A Framework for Change

"We need a system that is transformative; that facilitates recovery, improves accountability and is consistent with federal standards"

The need for change is clear.  Maintaining the status quo is not an option.  As this paper has explained, changing interpretations of Medicaid rules will likely require significant modifications to several programs such as unbundling of rates, new service definitions for some services, revisions to State and provider billing systems, and a clearer focus on rehabilitation plans and monitoring of these plans. 

These dramatic adjustments have the potential to stress an already fragile system while doing nothing to reduce fragmentation or change the underlying dynamics in the system.  Making changes that reduce fragmentation, increase accountability and lead to a stronger, more recovery oriented system, will require vision, consensus, commitment and coordinated action.

Stakeholders made numerous recommendations during the interviews and in the focus groups.  Some of the most salient are outlined in Attachment H.  These formed the basis for the recommendations outlined below. Indeed, the recommendations in this paper touch in one way or another on most of the recommendations of stakeholders. 

The overall recommendations are grouped in four general areas: Case Management, Programmatic, Organizational and Financial.  Many of these are interrelated; for instance, implementing Recovery Homes (see definition below) will require changes in financing and, under certain conditions, will require a 1915(b) waiver, similar to Primary Care Case Management programs.  The general areas are:

  • Case management redesign must include changes in rates and improved documentation;
  • Program and management recommendations include the implementation of Recovery Homes, person centered planning and performance contracting;
  • Organizational changes include building local or regional systems of care, implementing Organized Delivery Systems, and disease management strategies;
  • Financing options include changes in TCM and rehabilitation rates, 1915(b) waiver approaches and 1915(i) state plan options.

These options are related and they are not mutually exclusive; they provide a framework for thinking about different strategies that counties as well as the State could consider. 

Case management redesign

Providers and other stakeholders report that in addition to assessment, treatment planning and referral services, case managers often provide life skills, service navigation, escort, life coach services and targeted interventions designed to increase motivation and engagement with services and community supports.  These functions may have to be unbundled from the case management procedure code in order for providers to meet Medicaid requirements.  Thus, the new CMS rules will require redefined services, increased levels of documentation by providers and changes in billing and rates.

It is essential to develop a system that is capable of providing several levels of care coordination so service can vary based on acuity of the illness, natural supports, housing, vocational situations, and other factors.  Coordination of care is most important during transitions between services and during acute phases of care.  For example, during:

  • The first three weeks following hospital discharge;
  • Changes in housing; and
  • Changes in treatment. 

It is much less important during periods of stability.  This kind of flexible response capacity requires technologies, specialization of staff and functions that most case management services do not have access to.

The specialization of staff, the use of clinical guidelines and the intensity and nature of contacts between staff and consumers should be flexible enough to respond to these different levels of need.  The functions that should be considered include administrative case management, targeted case management and disease management strategies. 

To reduce fragmentation and increase meaningful coordination of care, elements of each of these three types of care coordination should be adopted.  For instance, although New York counties provide little, if any, administrative case management service as defined above, the case monitoring recommendation of the Mental Health /Criminal Justice Panel seem to call for just these services.  Similarly, the use of clinical guidelines, technology support, and consumer education and self-management approaches that are found in disease management are important tools for the State to use to reduce regional and inter-county variation and improve outcomes.  These tools would help to reduce practice variation and maximize the use of available resources.

Program Recommendations

New York State should consider expanding the use of what we have called "Recovery Homes" and person-centered planning.  Each is discussed further below.

Recovery Homes

A "Recovery Home" is similar in many ways to a Primary Care Case Management (PCCM) model in Medicaid though, like the Medical Home concept, Recovery Homes are intended to be more comprehensive and provide more than just PCCM gate-keeping (service authorization) services. Recovery Home clinicians would authorize and coordinate all behavioral health care services and many aspects of physical health care for people with chronic conditions.  These clinicians must have a health information system that allows them to track compliance with clinical guidelines, follow up on referrals and monitor health status.  They would anticipate consumers’ needs and use consumer and person centered planning tools that encourage self management of the chronic illness. A Recovery Home approach can be implemented as a part of several different financing options.

The model builds on Wagner’s Chronic Care Model[38] for the integration of services to disabled and other individuals with chronic needs. Wagner’s model has been widely tested with positive outcomes and there are numerous states developing similar approaches for behavioral health care coordination.  Wagner’s model identifies six fundamental areas of practice that need change: 1) increasing self management;  2) improving decision support; 3) redesigning the delivery system for increased accountability; 4) implementing a patient registry or clinical information system; 5)improving the organization of health care; and 6) involving local communities in the change process. 

In a Recovery Home, individuals meeting "enrollment" criteria select a primary mental healthcare provider or organization as their primary provider, their "Recovery Home."  Enrollment should target those individuals who require a more intensive level of coordination – these might be people currently eligible for targeted case management.  They would have access through that "Recovery Home" to a core set of services such as medication, individual, family or group treatment, case management and peer support services.  Consumer education, self-management skills, employment and life skills would also be taught through PROS or a similar service. Care would be tightly coordinated among service providers.  Most likely, each of these "homes" would be a mental health clinic or a comprehensive ambulatory provider in partnership with a clinic.  The current functions of targeted case management would be embedded in, or integrated with, the Recovery Home provider. 

The Recovery Home would be responsible for developing the treatment and rehabilitation plan, referring the consumer to appropriate services and monitoring the outcomes of those services and making any needed adjustments to the plan.  A key principal would be "one person, one plan;" this single treatment plan would cover all services the enrolled individual receives.  Performance would be measured.  Reimbursement could be on a fee-for-service basis, using a supplemental monthly enrollment rate (similar to PCCM approaches), or it could be through more complex monthly case rates.

Person Centered Planning and Self Direction

Person centered planning principles should be at the heart of New York’s system redesign.  They constituted a cornerstone of the recommendations of both the President’s New Freedom Commission[39] and the Institute of Medicine’s (IOM) "Crossing the Quality Chasm"[40] reports.  The proposed CMS Rehabilitation Option rules also specifically mention and recommend the implementation of services that are recovery oriented and that are governed by a person centered plan (PCP).  The proposed regulations state:

We are proposing to require in §440.130(d)(3)(iii) that the written rehabilitation plan include the active participation of the individual (or the individual’s authorized health care decision maker) in the development, review, and reevaluation of the rehabilitation goals and services. We recommend the use of a person centered planning process. Since the rehabilitation plan identifies recovery oriented goals, the individual must be at the center of the planning process. (emphasis added)[41]

Perhaps the best example of the implementation of Person Centered Planning in New York is the multi year effort of the Western New York Care Coordination Program that is being implemented in a number of counties in Western and Central New York.  In fact, their effort is arguably the most comprehensive and most mature attempt in the country to alter treatment and treatment planning.  Managers of that program are keenly aware of the challenges involved and time it takes to make these kinds of transformative changes.

Self-directed care (SDC) extends the practices of person centered planning to include the management of a budget.  SDC is "a method of delivering services that is based on giving each consumer control of an individual budget with which to purchase goods and services to meet his or her needs. It is frequently also referred to as consumer direction …"[42]  In addition to being cited by the President’s New Freedom Commission and the IOM’s Crossing the Quality Chasm report for behavioral health services, self directed care has been at the heart of two recent regulatory changes from CMS.  These include the new rules for what are referred to as 1915(i) state plan amendments and 1915(j) rules for the implementation of self directed personal care assistance.

PCP differs from SDC since the latter generally enables the consumer to "direct" funds toward more flexible services than may be available through state plans.[43]  Use of PCP can be increased within existing financing structures and also through waivers and other rule changes that would be required under Medicaid.  In some sense, PCP is the first step in pursuing self direction; it is necessary but not sufficient.  While it helps fulfill the aims of the IOM’s Crossing the Quality Chasm series, it involves huge changes in providers’ culture and practice.  According to recent research supported by the Office of Mental Health, and reviewed for this paper, the Western New York Care Coordination Program has demonstrated some promising results.[44] 

CMS has actively encouraged the pursuit of self-direction through its Home and Community Based waivers, Independence Plus waivers and the new state plan amendment option enacted through the Deficit Reduction Act (DRA).  CMS defines self ("participant") direction as the following:

Participant direction of waiver services means that the waiver participant has the authority to exercise decision making authority over some or all of her/his waiver services and accepts the responsibility for taking a direct role in managing them.  Participant direction promotes personal choice and control over the delivery of waiver services, including who provides services and how they are delivered.

Many stakeholders, particularly consumers and consumer advocates, expressed considerable interest in the development of SDC in New York State.  While it is not a panacea, SDC could be an option for consumers receiving continuing care services and supports.  It can be implemented with considerable flexibility using state deficit funding or pursuant to CMS guidelines under 1915(b) waiver or 1915i state plan amendment authority[45]. The State should consider using pilot grants to spark and spread the development of these programs.

Organizational Options

Build Local or Regional "Systems of Care"

A single statewide solution is neither optimal nor a very viable approach in New York State.  The State is too large and too diverse.  The data on regional service penetration and utilization suggest the need to develop new, more coordinated, systems of care, building upon the existing base of services, providers and practice.  A comprehensive local or regional planning process that is informed by data and that drives service delivery is needed.  The State’s 5.07 planning process provides a useful framework for this; the plans should address the need for services and gaps in these services.  Service effectiveness and opportunities for efficiencies should be documented in the planning process.  However, planning is necessary but not sufficient. Systems need the ability and willingness to change the allocation of funding and/or utilization when new funds are not available.

One approach that might work is the use of a single regional entity or system of care to coordinate the implementation, financing and delivery of services provided to consumers.  This entity could be a governmental (county) or a private organization.  Generally such initiatives operate under a 1915(b) waiver of freedom of choice, enabling consumers to be enrolled in the entity, permitting selective contracting of providers and providing a structure for financing through a capitation or case rate methodology.  They require mandatory enrollment and are a carve-out approach.

In many states, regional care coordinating entities work within a single county’s geographic boundary and are contracted by the state to provide a full or partial (e.g., ambulatory care only) array of services to enrolled consumers. Some counties may be able to assume this role themselves; in other areas counties should work together to jointly share resources, as the Western New York Care Coordination Program has done.  Counties in Pennsylvania, Florida, Washington State, Colorado, Michigan, California, and regions in Arizona and elsewhere demonstrate how systems of care can be implemented directly by a county, by a county with an administrative service organization or through a private organization.  The feedback from consumers and advocates in most of these states has been very positive; the notable exception might be Florida, which has had a number of funding and structural changes.

Once fully operational, each regional system of care entity would contract with the state and then administer subcontracts with a network of service providers.  It would finance and deliver services that meet state and local standards, addressing most of the Program and Management recommendations described in the previous section.  Financing from the state could be on a financial risk or non risk basis.  Developing capitated or case rates based upon historical costs might avoid some of the rate setting and regulatory issues associated with changes to the case management and rehabilitation option regulations.

Use Organized Delivery Systems (ODS)

Medicaid rules permit the development of so-called Organized Delivery System (ODS) for the provision of health services.  These are legal entities that contract with the state to provide a comprehensive array of services[46].  A waiver is not required if consumers have a choice of providers and enrollment is voluntary.  A 1915(b) waiver of freedom of choice is required, however, if enrollment is mandatory.  The ODS option is optimal in an urban setting where the scale is sufficient to allow competing providers to enroll consumers.  With sufficient scale for enrollment and relatively low cost barriers to entry, an ODS could be implemented without a waiver.  Most areas find that a waiver is preferred to ensure that the ODS will have sufficient enrollment to break even on its required administrative costs.

New York officials should consider developing standards and a performance contracting strategy for ODSs.  Requirements should include the provision of a full array of ambulatory services with an emphasis on recovery services.  Services should build on the foundation of the Recovery Home concept described above; the ODS could in fact provide the centralized clinical record that would enable the individual provider to track consumers’ services and progress.

The contract needs to include provisions regarding the ODS’s responsibilities for oversight of the provider network, reporting standards and performance incentives.  The ODS should include fully integrated ambulatory and specialty services provided either by their own staff or through subcontractors.

Reimbursement to ODSs is generally on a prepaid, capitated or case rate basis though it can be through fee-for-service methods also.   Initially, the ODS should exclude inpatient and emergency services; however, performance incentives should be developed to reward reduced hospital usage and cover the costs of the increased community services that consumers need.  Incentives should also be developed for the coordination of physical health services. 

Disease Management Strategies

CMS defines disease management as "a direct service offered either through a managed care organization, a primary care case manager, or individual practitioners. It is a coordinated package of care comprised of preventive, diagnostic and/or therapeutic services to a specific group of individuals who have, or are at risk for, a chronic illness or condition and does not include the same components to meet the definition of case management."[47] 

The State should consider using disease management strategies in rural areas. In areas that offer voluntary enrollment, the State might encourage use of disease management programs for consumers who do not choose to enroll in either a Recovery Home or an ODS.  Disease management could be used to guide professionals and paraprofessionals in the treatment of individuals with serious mental illness to support review of care plans and to improve access to consumer education and service referrals.  The approach could be structured to incorporate many of the functions envisioned in the "case monitoring organization" recommended by the Mental Health/Criminal Justice Panel.[48]

Disease management in Medicaid has generally been initiated for chronic physical conditions such as diabetes, congestive heart failure and asthma.  Many disease management firms have also included depression as one of the conditions "managed," but these efforts have generally been aimed at the primary care physician rather than at the specialist.   APS Healthcare has developed some small programs in the Wyoming and Georgia Medicaid agencies, but in general little has been done to address schizophrenia, bi-polar disorder or other serious mental illnesses.  While few state Medicaid agencies have implemented programs aimed at individuals with SMI, these programs potentially have great importance to state Mental Health Authorities such as OMH

Reimbursement could be through some form of case rate, or blended per diem rate, or the State could contract with the organization using a non risk administrative service contract.  Most disease management programs do not include the assumption of risk for other services, though they are likely to have performance incentives if certain targets are met. 

Certain functions that are generally included in disease management programs might also be eligible for reimbursement as administrative case management under Medicaid. These would include identification of high cost or high risk individuals, case review, telephonic support to providers and oversight of the treatment plan. 

Financing Options

Accomplishing any or all of the modifications outlined above will require changes in the way the State and counties purchase Medicaid and general fund services.   Rates and reimbursement methods will need to change for several current Medicaid services.  The COPs and CSP clinic add-ons will need to be eliminated and changes will be needed in the monthly rates currently billed for targeted case management and ACT.  In addition, IPRT rates may have to adapt to billing in different increments more closely tied to service encounters.  All of these changes will require more careful attention to treatment planning and documentation. 

If the system were to adapt to these regulatory changes without other more fundamental changes, it would be reasonable to estimate that New York would initially experience a $170 million loss of federal Medicaid match.  Many programs would likely close and there would likely be increases in hospitalization rates and the use of more restrictive services.   Although New York is not the only state confronting this problem, it is probably unique in its use of the COPs and CSP add-ons.   Little is known about the magnitude of the problems other states anticipate. 

There are a number of Medicaid financing options available that are consistent with the recommendations proposed for consideration in this paper and that might minimize the lost revenue. Fully describing and discussing the advantages and disadvantages of each of these approaches is beyond the scope of this paper and will require more detailed analysis and planning.  However, there are two that are important to consider at this time.

1915(i) State Plan Amendment

The Deficit Reduction Act (DRA), P.L. 109-171, was passed by Congress and signed by the President on February 8, 2006.  The law creates new options under the Medicaid program that allow states greater flexibility to furnish community based services.  For example, Section 6086 of the DRA gives states the ability to provide home and community based services (HCBS) to elderly individuals and people with disabilities without receiving a waiver or demonstrating the cost neutrality generally required under a 1915(b) or 1115 waiver.  Services approved under this option are intended to help individuals delay or avoid institutional stays or other high cost out-of- home placements.  The initiative has become known as a 1915i State Plan Amendment (SPA).

Section 6086 gives states, at their option, the opportunity to offer HCBS to elderly individuals and people with disabilities who have incomes up to 150 percent of the federal poverty level (FPL).  A state need only amend its Medicaid plan to provide any of the services now covered under HCBS waivers.  There is no need to document current Medicaid institutional costs, which helps to avoid the problems created by the IMD exclusion[49].  Section 6086 expands the populations eligible for HCBS waivers: adults from ages 22 through 64 who have a mental disorder are now covered.

Only Iowa and Nevada have an approved 1915(i) SPA.  Iowa’s new benefit will provide statewide HCBS case management services and habilitation services at home or in day treatment programs that can include such things as support in the workplace.

Some states see the 1915(i) as an opportunity to contain program expenditures by limiting the number of individuals that can participate.  In addition, the 1915(i) also provides consumers with the opportunity to self direct their care–an opportunity that is not afforded for regular state plan services.

However, some states have expressed concerns regarding eligibility for the 1915(i) program such as:

  • Limited eligibility.  Individuals must be Medicaid eligible and have incomes less than 150 percent of the FPL.  States that have expanded their eligibility for children beyond 150 percent are particularly concerned that the 1915(i) will exclude many children who need these services.
  • Limited benefit package.  CMS will only allow a 1915(i) to cover the statutory services discussed above.  States have indicated that the additional statutory services do not meet the needs of the target population.  For instance, many statutory services such as adult day health, personal care and homemaker services are not relevant for children.  Other statutory services, such as rehabilitation, day treatment and clinic services can be included as regular state plan services and do not require a 1915(i). 
  • Cost of implementation.  Implementation requires the development of a costly independent assessment and treatment planning process. 
  • Ability to target intended recipients.  The eligibility criteria for the 1915i program must be based upon financial need rather than on diagnoses or illness.  As a result those need based criteria must be carefully defined. 

These last two issues may create problems for many states seeking to implement the program, including New York.  In the end, the 1915(i) option is likely to be part of but not the entire solution.

In addition, and of particular concern, the submission of a 1915(i) application may "open up" for CMS review the current state’s Medicaid plan for rehabilitative services.  CMS is currently reviewing many states’ Medicaid rehabilitative services plan.  Based on this review, CMS is requesting that certain services that do not appear to be rehabilitative (e.g., group home services) be removed from the plan.  In addition, CMS is reviewing the states’ rate setting methodologies for rehabilitative services and is requiring that all rates for rehabilitative services be reimbursed in 15 minute increments.  This is hugely problematic for services that are currently priced on a monthly or per diem basis. 

1915(b) Freedom of Choice Waiver

CMS allows states to develop and operate waivers to implement managed care delivery systems, or otherwise limit individuals' choice of providers under Medicaid.  States may request Section 1915(b) waiver authority to operate programs that impact the delivery system for some or all of the individuals eligible for Medicaid in a state.  Under a 1915(b) authority, states are permitted to waive "state wideness", comparability of services, and freedom of choice. Section 1915(b) waiver programs may be implemented in regions.  Recipient eligibility must be consistent with the approved state plan.  States also have the option to use savings achieved through managed care to provide additional services to Medicaid beneficiaries.  Some 1915(b) waivers create voluntary programs and some have the option for fee for service or managed care.  Every Medicaid recipient should have a choice of at least two providers.

There are nearly 100 1915(b) waivers in operation with most states having one or more.  There are four types of 1915(b) Freedom of Choice waivers:

  • 1915(b)(1) mandates Medicaid enrollment into managed care;
  • 1915(b)(2) utilizes a "central broker;"
  • 1915(b)(3) uses cost savings to provide additional services; and
  • 1915(b)(4) limits the number of providers for services.

States that have 1915(b) waivers often contract with a Prepaid Inpatient Health Plan (PIHP) or a Prepaid Ambulatory Health Plan (PAHP) to implement and administer their managed care programs.  A PIHP is an entity that provides, arranges for, or otherwise has responsibility for medical services, including the provision of inpatient or institutional services for its enrollees.  A  PAHP does not provide or arrange for (and is not otherwise responsible for) the provision of any inpatient hospital or institutional services for its enrollees. 

PIHPs and PAHP s often receive pre-paid capitation payments or other payment arrangements for providing services to enrollees.  PIHPs and PAHP s are generally private companies; they may be for-profit or non-profit.  However, some PIHPs and PAHP s are administered by state or local governments.  This can include county operated plans if the funding flows from the state through the county as in Pennsylvania.  Behavioral health PIHPs and PAHP s are either developed as "carve-ins" (behavioral benefits are included with physical health plan benefits), "carve-outs" (a separate contract is developed for behavioral benefits) or a combination.  Any 1915(b) waiver model in NY will have to be some form of combination, since TANF MCO benefits include limited mental health benefits (20/30 rule).

The use of pre-paid capitation payments based upon historical costs could help the State retain some of the federal support that would come unbundled otherwise – historical costs under the approved plan can be included in a the capitation rate.  A 1915(b) waiver would allow the State to reinvest savings into the mental health system.  However, under CMS rate setting rules for the 1915(b), savings can only be reinvested in services that are part of the current state plan in order to be included in future capitation rates.  This is an important distinction: while savings can be used to pay for services not currently approved in the state plan, future rates will be established on the basis of utilization of state plan approved services.  This will result in lower capitation rates in future years of the 1915(b) waiver.

States that have implemented 1915(b) waivers have generally had two sometimes competing goals: increasing the effectiveness of services, and controlling expenditures for behavioral health services.  In their waiver applications, states must provide information to CMS on their goals for maintaining or increasing access to services, while maintaining or reducing costs. They must also outline their strategies for achieving these goals.  The solution to this apparent conflict lies in increasing access to outpatient and support services while reducing the use of inpatient, residential and other costly services.

Implementing managed care with a 1915(b) waiver of freedom of choice may provide some challenges for New York State.  The history of New York’s Special Needs Plans may make any future waiver approach difficult to implement.  The split in mental health benefits between the limited benefit in managed care plans (20-30) and the more comprehensive benefit available to those with serious mental illness is another confounding factor.  Nonetheless, managed care waivers can provide OMH with a great deal of flexibility to design a delivery system that is less fragmented and more accountable, while improving outcomes and controlling costs.


The keys to reducing fragmentation and increasing the effectiveness of care in New York’s mental health system include the improvement of care coordination activities, increased focus on recovery, improved data systems, increased accountability through contract oversight and performance management, redesign of the overall financing system, and increased focus on improving outcomes.  These have been the vision for the mental health system in New York for years, but the needed changes have been elusive.  The crisis brought on by the new CMS regulations and the dissatisfaction with the status quo provides a window of opportunity transform the system. Consensus on the need for change, as we heard from all the stakeholders interviewed, is essential to moving forward. 

As this paper has documented, consumers in different regions vary dramatically in their access to and utilization of services. Each region is starting from a different place in the reform of its system.  If transformation of our mental health system is ultimately about changing practice, the solutions must be adapted to current local practice and to the strengths of the local delivery system.  No single approach is optimal statewide; New York must develop strategies that build on the expertise of local staff, their organizations and county officials, and that allow the flexibility for local innovation. 

Solutions must be regional because many counties lack adequate scale for most reform efforts.  The success of Western New York counties in increasing access to services, keeping costs low, reducing inpatient rates and increasing care coordination services suggests that their regional approach to coordinating care and developing person centered planning should continue.  Other counties may want to follow a similar approach. The ideal approach for New York City, given the large number of recipients, the role of hospital systems and the scale of services should probably be the development of recovery homes or some form of ODS that can be chosen by consumers and include a comprehensive array of services with enhanced performance measurement and monitoring. 

Care monitoring and disease management strategies should be adopted for individuals who do not enroll in one of the other options and for localities that do not undertake or participate in any larger reorganization.  The financing system needs to be adapted to suit these different options.  Changes in the existing rules will be necessary for those recipients or counties that do not enroll or participate in the changes.  For them, there are likely to be reduced levels of federal support and restrictions on the availability of services. 

As the announcement of the President’s New Freedom Commission report states:

"Overall … the system is not oriented to the single most important goal of the people it serves the hope of recovery. Many more individuals could recover from even the most serious mental illnesses, if they had access to treatments tailored to their needs, to supports and to services in their communities. State-of-the-art treatments, based on decades of research, are not being transferred from research to community settings. Meanwhile, many outdated and ineffective treatments are currently being actively supported. The barriers to effective mental health care can and must be overcome …"

New York has the opportunity now to create the kinds of changes envisioned by the President’s Commission. 


Attachments – Table of Contents

Attachment A – Data Used for this Report
Attachment B - How Are Mental Health Dollars Distributed in New York State?
Attachment C - CFR Definitions
Attachment D - Total CFR Expenditures by Service and Category
Attachment E - CFR Expenditures by Regions
Attachment F - Regional Variation in Utilization and Spending by Service
Attachment G - Medicaid Adult MH Regional Adult Spending Per Recipient
Attachment H - Selected Stakeholder Recommendations

  1. New York State/New York City Mental Health – Criminal Justice Panel: Report and Recommendations, June 2008
  2. Data for this report was drawn in May from the Consolidated Financial Report (CFR) database (including 2007 or the most recently filed financial statements from providers) and from Medicaid claims for calendar year 2007. For a more detailed discussion of the data used for this report please see Attachment A
  3. Public Consulting Group, "Provider Reimbursement System".  New York Office of Mental Health, June 2007.
  4. The term "ambulatory" mental health system is defined further below but includes all services provided in the community, outside of hospital or 24 hour facilities.  It includes clinic and an assortment of "non-clinic" services.
  5. "Statewide Comprehensive Plan 2006-2010: 2008 Update" New York State Office of Mental Health, October, 2008, p.1.
  6. 84% of adults served in the mental health system 18 through 64 years of age and 78% of older adults (ages 65 +) have serious mental illness.
  7. See Attachment C for CFR definitions of the 39 different ambulatory, non-clinic services.
  8. These data were obtained from the 2008 Update to 2006-2010 Statewide Comprehensive Plan for Mental Health Services, New York State Office of Mental Health.
  9. Because individuals often receive more than one type of service, these percentages are duplicated.
  10. Note that these percentages also include children with serious emotional disturbance. The data did not separate these age groups.
  11. The OMH Patient Characteristics Survey definition of serious mental illness includes a current mental illness diagnosis and one of the following:  SSI eligibility due to MI, extended impairment or low functioning or reliance on treatment and supports.  It is outlined at
  12. These data were from a special analysis of PCS data from adults receiving ambulatory, non-clinic services(B. Brauth communication on 8/12/08)
  13. Sederer, Lloyd I. et al., "OMH Assessment of Clinical Care, Professional Workforce, Research and Local Government Opportunities."  October 2007.
  14. Wagner EH, Austin BT, Davis C, Hindmarsh M, Schaefer J, Bonomi A. Improving Chronic Illness Care: translating evidence into action. Health Affairs. 20(6) 64-78. Nov-Dec 2001.
  15. New York State/New York City Mental Health – Criminal Justice Panel: Report and Recommendations, June 2008.
  16. See, for instance, Marshall M, Lockwood A, Green R, et al.: Case Management for People with Severe Mental Disorders (a Cochrane review). Oxford, England, Update Software (for the Cochrane Library),1998; and Ziguras, S J., Stuart, G.W.,  "A Meta-Analysis of the Effectiveness of Mental Health Case Management Over 20 Years," Psychiatric Services 2000, 51: 1410-1421.
  17. Centers for Medicare and Medicaid Services, "Technical Assistance Tool: Optional State Plan Case Management" (CMS – 2237 – IFC).
  18. E.g. the Aid to Localities Finance System
  19. US Substance Abuse and Mental Health Services Administration
  20. 2007 PCS Data: Those reporting competitive employment (with and without supports) divided by (the total clients served less unknown and those not in the labor force because they are retired, in jail, students, etc.)
  21. The Commission for Scientific Medicine and Mental Health, The Scientific Review of Mental Health Practice.  "Anti-Depressant Placebo Debate in the Media."  Accessed online at Leaving OMH site  Last accessed on 8/22/08.
  22. Sederer, Lloyd et al. Op. Cit.
  23. New Freedom Commission on Mental Health, Achieving the Promise: Transforming Mental Health Care in America. Final Report. DHHS Pub. No. SMA-03-3832. Rockville, MD: 2003.
  24. Institute of Medicine, Improving the Quality of Health Care for Mental and Substance-Use Conditions, Quality Chasm Series. The National Academies Press, Washington, D.C., 2006.
  25. 2007 Update and Interim Report to the 2006-2010 Statewide Plan for Comprehensive Mental Health Services, New York Office of Mental Health
  26. National GAINS Center (1997). The Prevalence of Co-occurring Mental and Substance Abuse Disorders in the Criminal Justice System. Just the Facts Series. Delmar, NY: National GAINS Center.
  27. For a description of the sequential intercept model see Munetz, Mark and Griffin, Patricia, ‘Use of the Sequential Intercept Model as an Approach to Decriminalization of People with Serious Mental Illness".  Psychiatric Services, 57: 544-549, 2006
  28. Statewide Comprehensive Plan for Mental Health Services 2004-2008, Appendix 5,  New York State Office of Mental Health, Table 2: 2001 Adult Average Daily Bed Usage.  Includes Article 28, 31 and State Psychiatric Centers
  29. Data calculated by OMH from DOH SPARCS, Medicaid, and OMH data sets.
  30. Data comes from OMH Concerts data system as well as OMH data on state operated inpatient beds.
  31. New York State Office of Mental Health Finance Group, Op Cit (New York Times Data)
  32. Vertically integrated delivery systems are provider systems that include a full array of services from outpatient and peer support services through Continuing Day Treatment, partial hospital and in some systems, inpatient services.
  33. In June 2008, in response to a veto-proof bill from the Senate and consistent with previous House language, President Bush signed a Congressional Moratorium on 6 Medicaid regulations, including targeted case management., rehabilitation services and school based services.  The moratoria are due to expire April 1 2009.
  34. A bundled rate is a rate that provides reimbursement for multiple services or multiple incidents of the same service within one rate.
  35. New York State Consolidated Budget and Claiming Manual.  Appendix A, Glossary, Section 25. May 2007.
  36. Public Consulting Group, Provider Reimbursement System, New York Office of Mental Health, June 2007.
  37. NY Office of Mental Health, Office of Financial Management, N. Brier by phone.
  38. Wagner EH, Austin BT, Davis C, Hindmarsh M, Schaefer J, Bonomi A. Improving Chronic Illness Care: translating evidence into action. Health Affairs. 20(6) 64-78. Nov-Dec 2001.
  39. New Freedom Commission on Mental Health (2003), Op. cit.
  40. Institute of Medicine (2006), Op. cit.
  41. Centers for Medicare and Medicaid Services, "Medicaid Program; Coverage for Rehabilitative Services, Proposed Rule. CMS 2261-P: RIN 0938-A081, Page 18.
  42. Alakeson, Vidhya.  "The Contribution of Self-Direction to Improving the Quality of Mental Health Services."  Office of the Assistant Secretary for Planning and Evaluation, DHHS. November 2007.
  43. For a good overview of both these practices please see Judith Cook (2005). "Patient Centered" and "Consumer Directed" Mental Health Services. Prepared for the Institute of Medicine, Committee of Crossing the Quality Chasm -- Adaptation to Mental Health and Addictive Disorders."
  44. Western New York Care Coordination Program: Results, July 2008.
  45. In addition CMS allows the implementation of self-directed care under 1915j authority, which covers personal care assistance services.  These services are of limited utility for mental illnesses however under NY’s existing state plan.
  46. Note that we have differentiated between Regional Systems of Care and Organized Delivery Systems to distinguish a single regional delivery system from the use of more than one delivery system operating in a region.
  47. CMS Technical Assistance Tool, Ibid.
  48. New York City/New York State: Mental Health/Criminal Justice Panel, op.cit.
  49. This is the exclusion of costs and reimbursement for individuals between the ages of 21 and 64 residing in Institutions for Mental Disease (IMDs). An IMD is any organization with more than 16 beds, licensed or operating as a psychiatric facility, or where more than 50% of the population has a primary diagnosis of mental illness.  The exclusion was specifically designed to exclude state mental health hospitals from Medicaid coverage.
  50. New York State Office of Mental Health, Finance Group. "Summary of State Mental Health Expenditures, Fiscal Years: 1995 to 2004" (New York Times Data)
  51. Ibid.
  52. Ibid.
  53. Note that CFR data includes all reported revenue and expenditures for different services.  We have not included services that are restricted only to children; however some services in Figure 1 (such as emergency and care coordination) include costs of services for children and adults. These numbers do not include expenditures by several hospital and DTCs that do not report expenditures on the CFR
  54. Based upon 2004 NY Times Data set
  55. Note: Hospital Inpatient claims include all private inpatient settings including Article 28 facilities who may not file a CFR.
  56. Medicaid only covers state hospital services for Medicaid eligible youth under 21 and individuals over 65 years of age. No services for children under 18 are reported.
  57. Note these CFR services are primarily adult services, but some cover adult and child services.  Medicaid spending reported in this study is for adults only.
  58. The Medicaid penetration rate is the unduplicated number of Medicaid recipients who received at least one mental health service in a year divided by the total unduplicated number of individuals who are Medicaid eligible in the population during the same year.
  59. As noted earlier, some CFR services include costs for providing services to both adults and children.
  60. Identification of the region is based upon the addresses of providers’ administrative offices and as a result does not align perfectly with service locations or with the county of residence for consumers.  This is unlikely to be a significant problem for most services, especially at the regional level.
  61. The Medicaid penetration rate is the unduplicated number of Medicaid recipients who received at least one mental health service in a year divided by the total unduplicated number of individuals who are Medicaid eligible in the population during the same year.
  62. Total Medicaid claims for each service category and region divided by the unduplicated number of individuals enrolled in Medicaid for the region.
  63. Total Medicaid claims for each service category and region divided by the number of individuals receiving those services in that region (note in these data that there may be some duplication of recipients with service categories if individuals received more than on e service code within the category)

Comments or questions about the information on this page can be directed to the Bureau of Financial Planning.