New research published in this month's Journal of Psychiatric Services shows that relatively few publicly funded support services for people with chronic mental illnesses are covered by managed care plans.

This finding is significant because managed care entities are becoming more pervasive in the public mental health sector. Having adequate estimates of mental health expenditures is therefore critical as decisions are made about the type and amount of service to authorize, note the authors.

For example, psychiatric rehabilitation services including community support, residential care, and vocational services made up nearly half the annual total mental health expenditures for the chronically mentally ill in Wisconsin. The average per patient spending was $4,469, in contrast to $6,526 for clinical services.

By not providing these services, managed care plans would reduce overall expenditures, but "the ability of clients to lead stable lives in the community would be significantly compromised," the authors warn.

The goal of the study was to examine expenditures for comprehensive mental health and substance abuse services for a large number of people with severe mental illnesses. The results provide a benchmark for evaluating managed public mental health systems, especially the allocation of resources for services, state the authors.

The researchers examined 1,890 patient records in 10 county-based nonmetropolitan public health systems in Wisconsin in 1989 and 1990. Funding for mental health services came from local public sources, Medicare, and Medicaid.

About half the patients were covered by Medicaid. The average age was 44, and the average time spent in the public mental health system was seven years.

The primary diagnoses were schizophrenia or schizoaffective disorder (64 percent of the patients), bipolar disorder (11 percent), and major depression (11 percent).

The results showed that the average mental health service expenditure per patient was $10,995 for one year. That amount adjusted for inflation was $13,992 in 1994, the authors note.

The type of psychiatric rehabilitative services most frequently used included nonmedication counseling (50 percent) and community support (47 percent). Twenty-three percent of patients used vocational services, and 15 percent used residential services.

The most expensive services reflected in the original amount were inpatient care including nursing homes ($5,116); community options such as counseling, day treatment, and evaluation ($1,650); residential services ($1,365); and community support ($833), note the study.

Residential services including supervised housing and adult family home care accounted for 12 percent of the total expenses. Vocational services accounted for 6 percent, averaging $622 per year per patient.

Expenditures for outpatient services averaged $3,893 per patient, or 35 percent of the total. Average expenditures for residential, vocational, and outpatient services (54 percent) exceeded the average expenditures for hospital and institutional care (47 percent).

"Such expenditure patterns reflect service use in a state with a reputation for having a well-established community-based system and for spending a substantial portion of its mental health dollars on community-based services," state the authors.

Moreover, residential care is used frequently to help clients and their families cope with a crisis or avoid admission to institutional settings.

Such spending patterns also "reveal the important role of social and rehabilitation services, a role that must continue in managed care arrangements if they are to provide adequate services for people with severe mental illnesses," emphasize the authors.

"Managed care plans need to move beyond medically based definitions and limitations in identifying appropriate services for this population."

(Psychiatric News, May 16, 1997)