May 7, 1999

After months of protests and accusa-tions, Montana's governor and Magellan Behavioral Health, the nation's largest mental health care carveout company, have agreed to terminate Magellan's multiyear contract to manage the mental illness treatment of the state's Medicaid recipients and others with severe mental illnesses.

The contract covered about 20,000 Medicaid recipients in the vast but sparsely populated state and about 5,000 other individuals with chronic or serious mental illnesses.

Disputes between Magellan and many of the psychiatrists and mental health clinicians in Montana over missed or delayed payments and possible facility closures led to protests in which clinicians, patients, and mental health advocates demanded that the legislature and governor end Magellan's right to oversee this care.

In mid-February complaints led to a vote by the state legislature calling on Governor Marc Racicot to terminate the agreement with Magellan within 180 days. Lawmakers wanted the contract replaced with a regionally based system that would return more local control to administrators and clinicians.

With Racicot eventually signaling his agreement with the view of the state legislators, he, the state Department of Public Health and Human Services, and Magellan officials inked an agreement on March 26 stating that Magellan's contract would come to an end on June 30. Until then Magellan will continue to pay Medicaid claims and manage mental health services.

Magellan blamed much of the payment problem on the computer system it inherited from the previous contractor, a firm Magellan bought last year, as well as on severe winter weather and personnel problems in the Missouri office where claims payments are processed.

A Magellan Behavioral Health official, C. Richard Orndoff, said after the termination agreement was decided that Magellan had "worked hard over the last year to propose solutions to the challenges presented by this ambitious program. We realize, however, that this outcome, while unfortunate, is inevitable given current resistance [among Montana officials] to making significant program changes."

Noel Drury, M.D., president of the Montana Psychiatric Association and one of the most vociferous of the protesters, told Psychiatric News that after months of disruption and uncertainty, "it is a tremendous relief that Magellan will soon be departing. We have fought to take back local control of the mental health system for the good of public rather than having to leave the system in the hands of a powerful out-of-state company."

To help them decide on a system to replace Magellan's traditional managed care approach, the members of the Montana Psychiatric Association (MPA) last month took APA up on an offer of help in devising an alternative it could recommend to state lawmakers.

Sam Muszynski, director of the APA Office of Healthcare Systems and Financing, helped the MPA organize a retreat at which health policy reform expert Robert Cole, Ph.D., helped Montana psychiatrists identify policy priorities for a revamped Medicaid managed mental health care system. Participants at the two-day retreat in early April, which was held in Helena, included 20 facility administrators, state health officials, advocacy group representatives, and MPA officers. Several state legislators were also able to attend, since, though they meet only for two months every other year, the retreat fortuitously fell in the middle of their 1999 legislative session. These lawmakers will eventually decide how Montana's Medicaid program for the mentally ill will be structured.

Cole guided the retreat participants as they compared and evaluated public managed care models that have worked well in other states and decided on the values and principles they wanted to incorporate into a new system for their state.

On the second day of the retreat, he helped the group formulate a Policy Advocacy Agenda, which is intended, Cole said, to build "a broad and strong statewide consensus that will sustain deliberate action for constructive approaches to accountability contracting over the next few years." This agenda describes the values that the different mental health and consumer advocate constituencies thought crucial for a public managed mental health care program, stressing in particular the need to implement reforms slowly and incrementally and ensure that programs are community based rather than directed in a "top-down" manner.

The agenda also described priorities for action and a three-year implementation agenda.

Muszynski told Psychiatric News that the "outcome of the retreat was extremely positive. The state will not be issuing an RFP for a managed care contractor to replace Magellan. Instead, officials have indicated that they will explore their Medicaid options in an incremental fashion, as recommended by the coalition formed as a result of the retreat."

Cole, whose doctorate is in social welfare policy, works on child and family mental health issues at the Washington Business Group on Health. He is also a consultant to APA's State Medicaid Initiative Advisory Committee, chaired by former APA president Mary Jane England, M.D., whose mission is to create a technical assistance document for district branches to use in addressing Medicaid managed care and child health insurance issues.

Commenting on the direction the state is now headed in the wake of the Magellan failure, Drury said that mental illness is "all about human suffering, so the humans who suffer should have considerable power to determine what they need to relieve their suffering." -K.H.