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The state Medicaid agencies may also be liable for services that managed care companies do not provide.
"A major challenge state Medicaid agencies face as a purchaser of managed care systems is translating Medicaid coverage into commercial language and operations," state the authors of the study, which was funded by the federal Substance Abuse and Mental Health Services Administration (SAMHSA).
The researchers found that state contracts varied widely in applying federal Medicaid coverage principles to managed mental health and substance abuse services. For example, some state contracts explicitly permit private insurers to impose coverage exclusions that may be below the levels required by federal and state law.
Medicaid law requires that services be sufficient in amount, duration, and scope for the "reasonable" achievement of their purpose. However, several states have developed standards of medical necessity that appear to allow managed care companies to make narrower determinations, notes the report.
A case in point is Medicaid's Early Prevention Services and Diagnostic Treatment (EPSDT) program, which provides psychosocial rehabilitation and case management services for disabled children and adults including those with chronic mental and emotional illnesses.
"These services may not meet the managed care company's criteria for medical necessity because they do not simply restore functioning after an injury or acute illness," said Eric Goplerud, Ph.D., associate administrator for managed care in SAMHSA's Office of Administration.
Services ordered by courts, schools, or other agencies would be unlikely to meet medical necessity criteria unless the contract specifically requires them, states the report.
Because the federal Medicaid sufficiency standard is broader than the medical necessity standard, the state Medicaid agency would be legally responsible for providing psychosocial and other services covered under its Medicaid plan, note the researchers.
Courts are unlikely to impose the responsibility on a managed care company, however, if the contract is silent on this issue. Under contract law, the state Medicaid agency, as the purchaser of managed care systems, is responsible for clearly articulating its expectations in the contract, states the report.
Goplerud noted several state contracts were "silent on important issues, including medical necessity, certain enrollment procedures, provider network and systems, and quality assurance."
However, behavioral health care carveout contracts were more likely to address these issues in some detail than did general managed care contracts, said Goplerud. For example, five out of nine behavioral health care contracts reviewed expressly prohibited managed care companies from dropping individuals for "noncompliant" behavior.
Researchers also reviewed 36 general service contracts covering primary and behavioral health care services, notes the report. The "comprehensive-risk" contracts were evaluated in late 1995 from 36 states and the District of Columbia.
Researchers also found that managed care contractors generally were given wide discretion in developing their own service networks without regard to specific providers or classes of providers.
Most states also permitted their general service plans to initiate dropping certain individuals who engage in "noncompliant" behavior. However, these individuals may be at higher risk for mental and substance abuse disorders, notes the report.
Goplerud mentioned that SAMSHA is collaborating with the Health Care Financing Administration and state and local purchasers to develop "legally informed" guidelines and standards for Medicaid contracts with managed care systems. The guidelines are expected to be released in the fall.
SAMSHA is also working on developing a technical assistance manual for providers who may contract with managed care organizations. That is expected to be released this summer.
(Psychiatric News, June 6, 1997)