Originally published by Crain's Detroit Business.
Michigan state health officials plan to add an additional layer of complexity this fall to projects designed to test integration of Medicaid behavioral and physical health by requiring the mental health agencies participating in the pilots to contract with a single statewide public behavioral health organization.
The change will require the inclusion of an estimated 61,000 people in the six-county pilot markets who are unenrolled in managed care plans.
Many behavioral health experts are concerned that placing people with Medicaid benefits in a statewide entity could be a first step in giving the management role to a single private managed care firm — the so-called privatization of publicly funded behavioral health services. That was one of the original goals of Gov. Rick Snyder's controversial budget language, known as the Section 298 boilerplate, proposed in early 2016.
"We understand there are concerns in the community about the pilots and demo," said Phil Kurdunowicz, a legislative analyst who is coordinating implementation of the Section 298 pilots in the Michigan Department of Health and Human Services. "We have ongoing engagement with stakeholders" that include patients, families and the community mental health agencies.
When Crain's first reported original Section 298 boilerplate in February 2016, mental health providers, advocates and families pushed back hard. Lt. Gov. Brian Calley called a timeout, the state Legislature held hearings and eventually came up with a plan to test integration under the guidance of MDHHS.
In a revised Section 298 boilerplate, the Michigan Legislature in 2017 modified Snyder's proposal by ordering three pilots and a demonstration program to test the concept. The goal of the tests is to determine whether care can be better coordinated and costs saved between physical health and behavioral health services under a managed care approach.
Currently, the state has two separate delivery systems for the $13 billion Medicaid program. Physical health for Medicaid patients is managed by a dozen health plans in a $9 billion prepaid managed care system. Behavioral health services are managed by 10 regional public authorities known as prepaid inpatient health plans, or PIHPs, in a $2.6 billion system. The PIHPs receive state Medicaid dollars for covered behavioral health services and contract with mental health agencies and their providers.
In March, MDHHS awarded contracts for three pilot programs to community mental health agencies in Genesee, Saginaw, Muskegon, Lake, Mason and Oceana counties, and authorized a demonstration project in Kent County. The agencies will contract with Medicaid HMOs and coordinate physical and behavioral health services. The pilots and demo begin Oct. 1.
While these community mental health agencies were selected by the state, the final contracts with the state will be held by the Medicaid HMOs. State funding for those enrolled in the health plans and receiving services from the agencies would flow through the health plans rather than the local PIHP.
But the MDHHS had a problem: What to do with about 25 percent of Medicaid beneficiaries who are not enrolled in a Medicaid health plan but do receive behavioral health benefits?
About 700,000 of the 2.5 million people receiving Medicaid benefits in Michigan are not managed by health plans, according to the state's last count in December. These unenrolled Medicaid recipients receive care through fee-for-service payment arrangements with doctors and hospitals.
Matt Lori, MDHHS senior deputy director, said department staff have been evaluating options the past several months to manage the specialty behavioral health benefits for the unenrolled Medicaid population in the pilot markets.
Lori said the 25 percent unenrolled in the Medicaid managed care program are "pretty expensive" and including them in the pilots is a first step toward a future possible integration of physical and behavioral health services.
"The bottom line with the pilots is we are trying to find some efficiency and savings and plow it back into the program," Lori said. "It is unfortunate it is so complicated. But we are at the point we need to make decisions and make the system work better."
Robert Sheehan, CEO of the Community Mental Health Association of Michigan, said behavioral health providers have grave concerns with the state's plan. So does Kevin Fischer, executive director of the National Alliance on Mental Illness, and Elmer Cerano, executive director of the Michigan Protection and Advocacy Service.
Sheehan said the state's plan "paves the way for giving this management role to a single private managed care firm."
Fischer said mental health advocates recommended a single statewide PIHP to manage the state's Medicaid behavioral health system.
"That recommendation was ignored by the Legislature because it didn't include the health plans," Fischer said. "The legislature has put MDHHS in this terrible position of trying to now make lemonade with rotten lemons. This is not fair to the people we serve, or the selected pilot sites."
In a recent letter to mental health stakeholders, Sheehan said that by adding the unenrolled Medicaid population to the pilot projects, the state "unnecessarily disrupts the operation of the current PIHPs, in those pilot regions, with no benefit to the enrollees nor the service delivery system."
Contracting with a single statewide PIHP does not help community mental health agencies in the pilot communities or those served in the behavioral health system and potentially weakens the existing system, Sheehan said.
"Such a change adds a new payer to the system in these pilot communities — one that was not intended by the budget boilerplate nor the CMHs selected for the pilots," he said in the April 5 stakeholder letter. "It simply adds another clouding variable to this effort and further erodes local control of the system."
Dan Russell, CEO of Genesee Health System in Flint, one of the agencies selected for the pilot, said the MDHHS threw the pilot regions a curve ball by requiring them to contract with a public PIHP to manage the unenrolled Medicaid population.
"We didn't see it coming. We have a number of concerns and are still digesting it," he said. "They want us to exclude from the pilot the financial and clinical integration" of the unenrolled Medicaid population.
Russell said GHS already is negotiating with six Medicaid health plans in the pilot and working through the details of the 298 integration. "We are concerned about administrative burden and adding another layer onto that by contracting with a statewide PIHP," he said.
But he said GHS will make work however MDHHS wants to conduct the integration pilots.
"We have a history of being on the cutting edge, taking risks, and they usually pay off," Russell said. "We are the only agency that has a (federally qualified health center). We do things out of the box. If the state wants to do this, we want to be part of it."
Sheehan said the mental health agencies asked the state to allow them to manage the unenrolled Medicaid members instead of having to deal with a new PIHP in the market.
"This is just one more example of the department taking actions against the wishes of the system's stakeholders and without discussion with those stakeholders," Sheehan said.
Kurdunowicz said the department wants to address mental health organization concerns over the pilots. He said the department wants to find a way to improve providing specialty benefits to the unenrolled Medicaid population within the prepaid inpatient health plan program.
"The health plans have tried to enroll this population, but can't do it now (because of federal law). These people have very specific medical conditions that doesn't yet work in a managed care framework," Kurdunowicz said. Federal waivers would be needed to put the unenrolled into a managed care framework, he said.
For now, MDHHS is working with the three pilot programs and one demonstration project to help them prepare to test coordination of physical and behavioral health. Besides GHS, the others are Saginaw County Community Mental Health Authority, and a joint pilot with the Muskegon County Community Mental Health (HealthWest) and West Michigan Community Mental Health.
A fourth test site is a demonstration project in Kent County that is under development between Network 180, a Grand Rapids-based mental health agency, and Priority Health in Grand Rapids.
Dominick Pallone, executive director of the Michigan Association of Health Plans, which has been pushing for a larger role in the state's managed care integration efforts, said the Medicaid health plans are not interested in managing only behavioral health benefits.
"A health plan managing their behavioral health benefits and not their physical health benefits would not be integration," he said.
Pallone said the current dispute appears to be among the state, community mental health organizations and the PIHPs. However, he said he is surprised the state is not allowing the private behavioral health organizations to bid on the unenrolled Medicaid population. "I know they are interested in it," he said.
Under the current plan, MDHHS will issue a request for proposal in May to select one PIHP that would manage specialty behavioral benefits for the unenrolled population in the three pilot markets. MDHHS would select the PIHP in early summer and then it would contract for behavioral health benefits with community mental health agencies in the pilot for that market.
"We would have a newly calculated rate for management of the unenrolled population," Kurdunowicz said. "We would ensure the rates are actuarially sound and have risk corridors in there (additional rate to cover sicker-than-expected patients)."
But because this population is not enrolled in a Medicaid health plan, Kurdunowicz said it is not possible to integrate the behavioral health and physical health payments in the Section 298 pilots. In the three pilot sites, the total Medicaid population is 256,000, with 195,000 enrolled in Medicaid HMOs and 61,000 unenrolled.
"We need a managed care structure to do that and the (agencies) will be doing that" for all behavioral health patients in their region, he said. "The (mental health agencies) will be contracting with the HMOs and also this separate PIHP. The delegation of management services will be consistent" across all pilots.
Willie Brooks, CEO of Detroit Wayne Mental Health Authority, said that taking away funding from a local PIHP for the unenrolled population might not be a problem if the patients are not dislocated from their providers when the change is made. DWMHA is a PIHP and mental health provider agency.
"It depends on how the people shift over to the new" statewide PIHP, Brooks said. "If they shift, it won't be that bad. But the people we serve, it is difficult to get them to move to a new provider."
Brooks said DWMHA will not apply to the state to become the statewide PIHP. "It is not in our plans," he said.
Cerano suggested that the state doesn't mind if the pilots fail because they are catering to many in the state Legislature who want the health plans to manage the entire Medicaid system.
"We urged to state to take a breath and look at how to improve services — which just might reduce wasted costs," Cerano said. "One PIHP might work, but not a system based on profits that ignores people."
Kurdunowicz said the state wants the pilots to succeed, but acknowledged that the Section 298 pilots will be complicated to manage.
"There is no single silver bullet," Kurdunowicz said. "All the approaches had tradeoffs."