DEPARTMENT OF HEALTH & HUMAN SERVICES 
Health Care Financing Administration  
 Center for Medicaid and State Operations 
7500 Security Boulevard 
Baltimore, MD 21244-1850 
June 7, 1999  
Dear State Medicaid Director:  
Mental illness affects millions of Americans, many of whom rely on Medicaid to cover their health 
and mental health care needs. In recognition of the White House Conference on Mental Health, I am 
writing to provide information about several issues related to mental health services.  
Developments in Mental Health Treatment  
Assertive Community Treatment (ACT) programs have been used to serve persons with serious and 
persistent mental illness for a number of years. Programs based on ACT principles employ 
interdisciplinary treatment teams, shared caseloads, 24-hour mobile crisis teams, assertive outreach 
for treatment in clients' own environments, individualized treatment, medication, rehabilitation and 
supportive services. Assertive Case Management (ACM) programs which incorporate shared 
caseloads also provide this array of individualized, community-based services.  
The evidence base for a variety of treatment and service interventions for persons with 
schizophrenia, including ACT and ACM, has recently been reviewed by the Schizophrenia Patient 
Outcomes Research Team (PORT), with support from the Agency for Health Care Policy and 
Research and the National Institute of Mental Health. With respect to persons with schizophrenia 
who are at high risk for discontinuation of treatment or for repeated crises, the PORT team concluded 
that:  
"Randomized trials have demonstrated consistently the effectiveness of these programs [ACT and 
ACM] in reducing inpatient use among such high-risk patients. Several studies also support 
improvements in clinical and social outcomes. These studies suggest that both ACT and ACM are 
superior to conventional case management for high-risk cases ( Schizophrenia Bulletin, 1998)."  
States should consider this recommendation in their plans for comprehensive approaches to 
community-based mental health services. Programs based on ACT principles can be supported under 
existing Medicaid policies, and a number of States currently include ACT services as a component of 
their mental health service package. Consumer participation in program design and the development 
of operational policies is especially key in the successful implementation of ACT programs.  
Consumer Directed Care  
Advance directives are becoming an increasingly important tool for consumers of mental health 
services to articulate their decisions about treatment, and to guide treatment when they can not make 
these decisions themselves. Current Medicaid rules (42CFR 431.20, 434.20, and 489.100) require 
that States develop and provide current information about State laws that deal with advance 
directives. We urge all State Medicaid programs to work with their State mental health authorities to 
ensure appropriate attention to mental health issues in their advance directives policies, and to 
consider how these policies are operationalized in Medicaid program services.  
Pharmacy  
Finally, I would like to underscore that Federal statutory requirements noted in my February 12, 
1998 letter about new medications for schizophrenia apply to services that States carry out via  contract. When there are prior authorization requirements for prescription medicines, including the 
new generation of drugs for schizophrenia, prescription requests must be responded to in 24 hours. In 
emergency situations, there must be provisions for dispensing at least a 72 hour supply of the 
requested drug.  
I appreciate your attention to these important mental health updates. If you have questions or would 
like further information, please contact Peggy Clark (410-786-5321). If you are interested in finding 
out more about ACT programs, the mental health authority in your state would be a good resource. 
Additionally, consultation and technical assistance are available from the Center for Mental Health 
Services, Substance Abuse and Mental Health Services Administration (Michael English, 301-443-
3606).  
Sincerely,  
/s/  
Sally K. Richardson   
Director  
 
cc:  All HCFA Regional Administrators  
All HCFA Associate Regional Administrators for Medicaid and State Operations  
Lee Partridge  American Public Health Services Association  
Robert Glover  National Association of State Mental Health Program Directors  
Joy Wilson  National Conference of State Legislatures  
Matt Salo  National Governors' Association