In a dramatic and unprecedented move, the federal government has removed the care of poor, mentally ill people in New Mexico from the purview of the managed care industry.

In late October the Health Care Financing Administration (HCFA), the federal agency that oversees the Medicaid and Medicare programs, announced that because of multiple problems it was ending its support of the managed care–run Medicaid program for people who need mental health treatment.

New Mexico’s Medicaid mental health service system appeared near collapse, according to a report by the Bazelon Center for Mental Health Law in Washington, D.C. The legal center spearheaded a coalition of groups inside and outside of the state whose goal was to reverse what they viewed as the sorry state of the program known as Salud! as the time approached for HCFA to decide whether to renew the Medicaid waiver. The waiver allowed the state to turn to managed care to run its Medicaid mental health program.

The coalition was able to enlist a powerful ally, U.S. Senator Jeff Bingaman (D-N. Mex.), in its efforts. Bingaman convinced HCFA to send a team to his state to listen to complaints about the Medicaid managed care program from patients and clinicians.

The Bazelon Center and its partners identified serious problems with extremely low utilization rates compared with the rest of the country, lack of case management, lack of intensive services for children, inadequate use of antidepressant medication, and excessive administrative costs that led to reductions of more than 30 percent in the rates paid to providers and facilities.