Strategies to Control Children's Mental Health Spending in Virginia

1. SLOWING THE GROWTH OF MEDICAID SPENDING IN VIRGINIASTRATEGIES DESIGNED TO CONTROL CHILDREN’S MENTAL HEALTH SERVICES EXPENDITURES

2. OVERVIEW OF PRESENTATION Flores - Virginia Senate Finance Committee - NASHP • Background • The issue • Growth in Medicaid spending on children’s community mental health rehabilitation services • The problem(s) • The solution(s) • Multi-year, multi-pronged strategies enacted to restrain the growth of spending • The results • Lessons learned

3. BACKGROUND Flores - Virginia Senate Finance Committee - NASHP • Three state agencies – Department of Medical Assistance Services, Department of Behavioral Health and Developmental Services, and Comprehensive Services Act (CSA) – fund children’s mental health services. • Non-traditional, community mental health services are “carved-out” of Medicaid managed care. • Forty community services boards (CSBs) and private providers provide optional mental health rehabilitative services under Medicaid State Rehab Option. • CSA pays for services to at-risk children, youth, and their families.

4. THE ISSUE: 735% GROWTH IN MEDICAID—FUNDED OUTPATIENT MENTAL HEALTH SERVICES Flores - Virginia Senate Finance Committee - NASHP

5. THE ISSUE Flores - Virginia Senate Finance Committee - NASHP • Over a ten-year period, Medicaid spending for non-traditional, community mental health services in Virginia grew substantially. • FY 2000 expenditures - $3.6 million • FY 2010 expenditures - $466.4 million • In four years, expenditures for three Medicaid-funded services for children – intensive in-home and therapeutic day treatment services, and mental health supports – increased from $86 to $335 million.

6. THE ISSUE Flores - Virginia Senate Finance Committee - NASHP • Intensive in-home services grew by 250 percent from FY 2006 to FY 2010. • Two to six month family preservation interventions for children and adolescents with or at risk of serious emotional disturbance, including individuals with intellectual disabilities. • Therapeutic day treatment has grown by 418 percent since FY 2006. • Services for children and adolescents. • Combines education and mental health treatment. • Evaluation; medication education and management; daily living skills; and individual, group, and family counseling.

7. THE PROBLEM Flores - Virginia Senate Finance Committee - NASHP • Inadequate oversight of program. • CMS ruling in 2005 led to influx of private providers of community-based services. • Regulation and oversight of services built around CSB delivery model. • Agencies unprepared for additional workload. • Licensing staff overwhelmed by expansion of other community-based service initiatives. • Prior-year administrative budget reductions never restored. • Strong utilization management and provider qualifications controls lacking. • Questionable marketing practices by private providers. • No independent assessment of children prior to services being provided.

8. THE PROBLEM Flores - Virginia Senate Finance Committee - NASHP • Impact of sister agency initiative overlooked. • CSA initiative designed to transition children and adolescents from residential to community care. • Demand for community-based care increased. • Costs shifted from CSA to Medicaid. • Other concerns. • Children unwittingly being labeled with serious mental health disorders by accepting service. • Unclear if appropriate services being provided. • Limited resources being diverted from other mental health service needs.

9. THE SOLUTIONSHORT-TERM -- BLUNT INSTRUMENTS Flores - Virginia Senate Finance Committee - NASHP • Rates reduced for therapeutic behavioral services* • Reduced rates for certain therapeutic group home and day treatment services between 3 and 5 percent • Rates reduced for intensive community treatment from $70 to $60 per hour • Rates reduced for psychiatric residential treatment facilities* • Reduced operating rates by 3 to 4 percent • Eliminated annual inflation adjustment * Partially restored reductions with FY 2011 FMAP extension.

10. THE SOLUTIONLONG-TERM -- SHARPER TOOLS Flores - Virginia Senate Finance Committee - NASHP • Prior authorization: Implemented restrictive requirements on services. • Provider Qualifications : Enhanced provider and staff qualifications. • Audits: Increased monthly audits, including compliance audits related to staff qualifications, treatment plans, and training as well as expenditures. • Marketing Rules: Implemented rules on marketing services similar to rules that apply to managed care organizations. • Independent Assessments: Examined changes to de-link clinical assessment from direct service provider.

11. LONG-TERM SOLUTIONINDEPENDENT CLINICAL ASSESSMENTS Flores - Virginia Senate Finance Committee - NASHP • Effective July 2011, the Commonwealth implemented the Virginia Independent Clinical Assessment Project (VICAP). • Under VICAP, children will be required to have an independent clinical assessment prior to the provision of children’s mental health rehabilitation services. • VICAP can recommend any mental health service based on the level of need; prior authorization still required. • Until now, providers have found and screened children for services. • Preliminary reports suggest the volume of services is down.

12. LESSONS LEARNED Flores - Virginia Senate Finance Committee - NASHP • Keep your eyes on the ball • Use data mining techniques to evaluate trend increases • Provide adequate staffing to ensure proper oversight/ make sure need is documented and communicated • Stay apprised of sister agency initiatives • Adopt advocacy groups as allies • Better coordinate behavioral health services • Take advantage of tight budget times to make difficult changes • Develop good working relationship with budget staff

13. Flores - Virginia Senate Finance Committee - NASHP Contact Information Joe Flores, Legislative Fiscal Analyst Senate Finance Committee 804.698.7483 jflores@sfc.virginia.gov

14. APPENDIX I Flores - Virginia Senate Finance Committee - NASHP • Intensive in-home services • Time-limited, usually between two and six months, family preservation interventions for children and adolescents with or at risk of serious emotional disturbance, including individuals with intellectual disabilities • Crisis treatment; individual and family counseling; life, parenting, and communication skills; case management activities and coordination with other required services; and 24-hour emergency response • Therapeutic day treatment services for children and adolescents • Combines education and mental health treatment • Evaluation; medication education and management; daily living skills; and individual, group, and family counseling