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March 19, 1999
By Ken Hausman
Thousands of poor and seriously mentally ill patients in a vast area of northwestern Montana came within a few days of losing access to their outpatient psychiatric care last month.
The culprit that left these patients on the brink is one of the country's largest mental health care carveout companies, whose delays in sending reimbursement checks to psychiatrists and facilities have caused at least one mental health center to announce it would have to close for two weeks.
The treatment facility, the Western Montana Mental Health Center in Kalispell, has had to borrow so much money to remain open that it reached the end of its ability to tap its line of credit to pay its bills. The only option left was to shut its doors, said Noel Drury, M.D., the mental health center's medical director, and lay off 400 of its 426 employees. Only its emergency services were to remain in operation during the shutdown.
The mental health center relies on the Medicaid contract for about 80 percent of its annual budget and treats 40 percent of the state's most seriously mentally ill individuals.
Magellan Behavioral Health owed the facility about $2 million as of January, but paid about half of that amount in February, said Drury, who is also president of the Montana Psychiatric Association.
In addition to the sum owed to the mental health center, Drury told Psychiatric News that he is personally owed several thousand dollars for treatment he has delivered to state Medicaid recipients, a situation common to clinicians throughout Montana. Magellan, through its Montana Community Partners subsidiary, is supposed to pay claims within 30 days, he noted.
In mid-February, about a week before the planned shutdown, Magellan paid "most of what it owed" the facility. This sum was enough to pay staff and creditors, Drury said.
Calling this crisis "a prime example of the worst-case scenario of mismanaged care by a private managed care organization," APA President Rodrigo Muņoz, M.D., emphasized that the Montana case shows what problems can arise when "third party management of services, with no accountability, gets in the way of professional care-givers' delivering quality care to patients with medical conditions."
Magellan has a contract with the state to manage mental health care for about 20,000 patients on Medicaid and about 5,000 other people with severe mental illnesses. The contract was originally awarded to the managed care firm CMG in 1997, but that company was soon swallowed up by Merit Behavioral Health, which was in turn bought by Magellan.
Despite vows that it could substantially reduce the amount of state funds then being spent on treatment for poor citizens and those who are severely and persistently mentally ill, the system imposed by Magellan and its predecessors has added costs and bureaucracy and has not led to the promised savings, Drury stated.
With only about 800,000 citizens in Montana, it is far easier to reach state legislators than it is in more populous states, and it took but a short time for Montana lawmakers to get an earful about the public psychiatric treatment crisis from clinicians and patients. There is considerable momentum in the current legislative session for finding a way to terminate Magellan's Medicaid contract without putting the state at risk for a countersuit, Drury explained.
Steve Niemi, Magellan Behavioral Health's senior vice president, told the state legislature's joint appropriations subcommittee looking into the Medicaid contract problems that he was surprised to hear that one of the state's mental health centers was closing because of Magellan's reimbursement problems, according to a February 6 article in the Missoulian newspaper, and said that the January payments were lost in the mail. An angry State Senator Chuck Swysgood characterized the explanation as "a lame-ass excuse."
In an interview with Psychiatric News, Niemi explained that it took months to upgrade the computer "platform" Magellan inherited to a level where the system was capable of handling the claims processing and payout requirements in Montana. That was accomplished by July of last year, and since then payment mailings have improved dramatically, he said. About 90 percent of approved claims have been paid within the contract's 30-day requirement.
He acknowledged that in December the company fell short of its goal, and only 86 percent of approved claims were reimbursed within 30 days. He attributed the dropoff to staff's using leave before losing it at the end of the year, short staffing due to the holidays, and severe weather in St. Louis, where the processing system is located, which prevented some employees from making it to work.
"This all caught up with us," he said, but since then Magellan has added additional staff to reduce the likelihood of a recurrence.
Niemi insisted, however, that despite the problems, his company is committed to ensuring that the Medicaid contract succeeds. "The commitment is unwavering," he told the subcommittee.
The complaints against Magellan don't stop with the payment delays. Helena psychiatrist Nathan Munn, M.D., said he is distressed by the number of treatment requests the company rejects "when the need for services is obvious." For example, he explained, inpatient care for an acutely suicidal patient of his was turned down because outpatient care had not first been tried. He could not convince managers that this risk should not be taken.
Even when care is approved, clinicians must settle for "payment compromises below the agreed-upon rates," said Munn, who is president-elect of the Montana Psychiatric Association. The result is that several Montana psychiatrists have stopped taking Medicaid patients, overwhelming already burdened CMHCs.
Montana's Governor Marc Racicot is aware of the matter, thanks in part to a series of letters by Drury and other psychiatrists laying out the details of the crisis. Racicot has also met with mental health consumers and advocates and with mental health center administrators. While he has written to Drury indicating that he is troubled by the situation, he has yet to take a stand on the contract-termination issue.
Drury is not yet blaming the governor, though, for his reluctance to condemn a company that has disrupted the state's mental health system. The governor "has operated in good faith in dealing with Montana taxpayers and with Magellan. I believe he is waiting for the results of the [state legislature's] legal inquiry about canceling the contract before he takes a public stand," Drury said.
At a February 4 news conference, Racicot indicated that he finds the situation disturbing. "There is no more urgency we can attach to the situation than what we have already attached. . . . It is of extraordinary and grave concern to us."
The situation is "difficult," the governor pointed out, because Magellan reports that it has spent more on fulfilling its contract obligations than it has received from the state. Montana is paying Magellan about
$6 million a month under the Medicaid managed care contract.
Niemi told Psychiatric News, however, that the payments from Montana fall far short of meeting its costs. In the contract's first year, the company lost $15.7 million and continues to lose about $1 million a month, he said. As a result, Magellan is trying to negotiate lower reimbursement rates and plans to reduce its Montana staff.
On February 17 a rally to oppose Magellan's continued involvement in the state's Medicaid program attracted about 2,000 patients, family members, and clinicians. After speeches on the steps of the state capitol in Helena, dozens of the attendees met with legislators to urge them to resolve the crisis quickly.
Two days later, the Joint Appropriations Subcommittee on Human Services of the Montana legislature voted to terminate Magellan's contract in 180 days. Committee members decided to replace the statewide contract with regionally run programs that would allow more local control and are visiting such programs in other states. The governor warned, however, that Montana's public mental health system still faces a multimillion-dollar shortfall and that service cuts are likely.
Magellan "takes seriously the implications" of the subcommittee's vote, Niemi said, and is committed to "trying to manage the contract with the money afforded to us and will continue to do so." The contract, which includes seriously ill patients who are not eligible for Medicaid, is "a bold vision," he added, "but from day one the funds have not been there to fulfill the vision."
Until the problem is completely resolved, Drury has asked the governor to help resolve his plight "so that Magellan will not smother me, muscle me, or mismanage me out of my career design of caring for some of Montana's most anguished citizens," he said.
In a December letter to Racicot he explained that "psychiatrists and other clinicians stay away in droves from these 'foreign-controlled' programs not because we don't want to help Montana citizens out, but because we don't want to engage in highly stressful and risky volunteer work while the MCOs do the shake 'n' shimmy on our backs."