Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

JUNE GIBBS BROWN 

Inspector General 

JANUARY 2000 

OEI-04-97-00344 

MANDATORY MANAGED CARE 

Children’s Access to 

Medicaid Mental Health Services 
OFFICE OF INSPECTOR GENERAL 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 

amended by Public Law 100-504, is to protect the integrity of the Department of Health and Human 

Services programs as well as the health and welfare of beneficiaries served by them. This statutory 

mission is carried out through a nationwide program of audits, investigations, inspections, sanctions, and 

fraud alerts. The Inspector General informs the Secretary of program and management problems and 

recommends legislative, regulatory, and operational approaches to correct them. 

Office of Evaluation and Inspections 

The Office of Evaluation and Inspections (OEI) is one of several components of the Office of Inspector 

General. It conducts short-term management and program evaluations (called inspections) that focus 

on issues of concern to the Department, the Congress, and the public. The inspection reports provide 

findings and recommendations on the efficiency, vulnerability, and effectiveness of departmental 

programs. 

OEI's Atlanta Regional Office prepared this report under the direction of Jesse J. Flowers, Regional 

Inspector General, and Christopher H. Koehler, Deputy Regional Inspector General. Principal OEI 

staff included: 

REGION HEADQUARTERS 

Dwayne Grant, Lead Analyst Alan Levine, Program Specialist

Betty Apt Barbara Tedesco

Josiah Townsel Brain Ritchie

Janet Miller Joan Richardson

To obtain copies of this report, please call the Atlanta Regional Office at 404-562-7723. Reports are

also available on the World Wide Web at our home page address:

http://www.dhhs.gov/progorg/oei 
TABLE OF CONTENTS 

PAGE

EXECUTIVE SUMMARY ...................................................... 1

INTRODUCTION ............................................................. 4

FINDINGS

Access to Care is Limited ................................................. 8

Responsibility for Care is Fragmented ....................................... 10

States Attempt to Improve Coordination and Access ........................... 11

RECOMMENDATIONS ...................................................... 12

AGENCY COMMENTS ...................................................... 13

APPENDICES

A: Summary of First Year Contracts ........................................ 14

B: Agency Comments ................................................... 15

HCFA .......................................................... 16

SAMHSA ....................................................... 18

ENDNOTES ................................................................ 22
EXECUTIVE SUMM ARY 

PURPOSE 

To describe access to Medicaid mental health services under mandatory managed care for 

children with serious emotional disturbances. 

BACKGROUND 

States are increasingly converting their Medicaid programs from traditional fee for service 

models to managed care models. Nearly every State has implemented, or is planning to 

implement, mandatory managed care for Medicaid beneficiaries who require mental health 

services. These mandatory managed care contracts typically include services for both adults and 

children. 

We did not specifically focus our inspection on provision of mental health care to children. 

However, while completing our inspection on Mandatory Managed Care - Changes in Medicaid 

Mental Health Services (OEI-04-97-00340), we observed specific problems with children’s 

access to care. This report describes our specific observations related to access to mental 

health services by children with serious emotional disturbances. 

We used a case study approach for reviewing mandatory mental health managed care programs 

in seven States. We integrated, compared, and summarized documentary and testimonial 

evidence obtained from State Medicaid managed care offices and mental health departments. 

We also interviewed managed care organization officials, mental health providers, and 

stakeholders for children’s mental health. We did not validate the testimonial evidence, 

however, the views of program operators and stakeholders were generally similar and consistent 

with documentary evidence. Therefore, we believe their opinions provide useful insight into early 

managed care programs and the accessibility of services for children with serious emotional 

disturbances. 

FINDINGS 

Respondents said that providing mental health services to children with serious emotional disturbances 

can present unique challenges not typically found when delivering services to adults. These challenges 

are generally systemic in nature and have existed for years under traditional fee for service care. 

Although conversion to managed care does offer State Medicaid programs opportunities to improve 

mental health services for children, respondents told us that conversion can also intensify existing 

problems. When implementing mandatory managed care systems, States should be aware of obstacles 

that can interfere with access to mental health services for children. 

Mandatory Managed Care - Children’s Access to Care 1 OEI-04-97-00344 
Access To Care Is Limited 

< Reductions of in-patient care for children was greater than that for adults. 

< Children’s out-patient services lag behind those for adults. 

< First year managed care contracts included limited provisions for children. 

Responsibility for Care Is Fragmented 

< Respondents were concerned about possible cost shifting. 

< Multiple State agencies have responsibility. 

States Attempt to Improve Coordination and Access 

< States have negotiated interagency agreements and reported improved coordination, but 

access to care by children is still limited. 

RECOMMENDATIONS 

Children’s mental health out-patient services have increased after implementation of mandatory managed 

care. However, children’s access to mental health services is still limited, and the provision of care is 

fragmented. While attempts by some States to reduce fragmentation seem promising, most respondents 

agree more needs to be done. Accordingly, we recommend that HCFA encourage States to: 

Specify services for children’s mental health care in managed care 

contracts. 

Children’s services appeared to be an afterthought in State’s first year managed care contracts. 

Providing more detailed specifications on services managed care organizations will provide will 

help ensure that children receive the specialized care they require. 

Develop interagency agreements to promote coordination of children’s 

mental health services. 

Better coordination of care and improved services for children were reported in States where 

agencies have established such agreements. Establishing closer working relationships also 

reduced cost shifting concerns among agencies. 

Mandatory Managed Care - Children’s Access to Care 2 OEI-04-97-00344 
AGENCY COMMENTS 

Both HCFA and SAMHSA commented on our draft report. 

HCFA concurred with our recommendation to encourage States to specify services for children’s mental 

health care in managed care contracts. They prepared draft Interim Review Criteria for Children with 

Special Needs. States that mandatorily enroll children in capitated plans will be required to respond to 

the criteria as part of the waiver process. 

Additionally, HCFA concurred with our recommendation to encourage States to develop interagency 

agreements to promote coordination of children’s mental health services. HCFA plans to highlight the 

importance of such coordination in their imminent Report to Congress on special needs of vulnerable 

populations enrolled in Medicaid managed care. 

SAMHSA commented that a number of our recommendations were useful, but expressed concern 

about drawing conclusions from what they believe is a study method that is not “scientific.” We wish to 

emphasize that we used a case study method for our inspection. In describing our methodology we 

included a detailed explanation of the advantages and limitations of our case study approach. The 

limitations we point out are similar to those described by SAMHSA. 

SAMHSA noted that the overall lack of consistent, detailed data was a possible major finding from our 

study. We agree. However, the problem is not limited to only children’s programs. It is an issue we 

deal with explicitly in a companion report that addresses both children and adult mental health care. 

That report is titled Mandatory Managed Care: Changes in Medicaid Mental Health Services (OEI04-97-00340). 

Additionally, SAMHSA expressed concern that we may not have adequately included the views of 

State mental health staff and stakeholders. As shown in our methodology, we considered input from 

such groups as highly important. To illustrate, we interviewed at least 37 State mental health staff and 

stakeholders. 

We made several technical changes suggested by SAMHSA. 

The full text of HCFA and SAMHSA comments are in Appendix B. 

Mandatory Managed Care - Children’s Access to Care 3 OEI-04-97-00344 
INTRODUCTION 

PURPOSE 

To describe access to Medicaid mental health services under mandatory managed care for 

children with serious emotional disturbances. 

BACKGROUND 

States are increasingly converting their Medicaid programs from traditional fee for service 

models to managed care models. As of June 1998, over 16.5 million Medicaid beneficiaries 

were participating in some type of managed care program. This represents over 53 percent of 

the Medicaid population.1 

Nearly every State has implemented, or is planning to implement, mandatory managed care for 

Medicaid beneficiaries who require mental health services. As of July 1998, 36 States have 

implemented mandatory mental health managed care programs.2 These mandatory managed 

care contracts typically including services for both adults and children. 

We did not specifically focus our inspection on provision of mental health care to children. 

However, while completing our inspection on Mandatory Managed Care - Changes in Medicaid 

Mental Health Services (OEI-04-97-00340) we observed specific problems with children’s 

access to care. This report describes our specific observations related to access to mental 

health services by children with serious emotional disturbances. 

Medicaid Eligible Children 

Children can qualify for Medicaid in several ways. Children are generally eligible for Medicaid 

benefits if they are under age 21 and their families’ income is low. Additionally, most States 

extend eligibility to children who have qualified for the Supplemental Security Income Children’s 

Program. States also generally include children that qualify under special home and communitybased waivers. 

Serious Emotional Disturbances 

Children, up to age 18, who currently or any time in the past year have had a diagnosable 

mental, behavioral, or emotional disorder that results in functional impairment which substantially 

interferes with or limits the childs role or functioning in family, school, or community activities is 

defined as seriously emotionally disturbed.3 

Mandatory Managed Care - Children’s Access to Care 4 OEI-04-97-00344 
An estimated 1 in 10 children are reported to have a serious emotional disturbance at any given 

time.4 In fact, the estimated prevalence rate of serious emotional disturbances for children is 

higher than the prevalence rate of serious mental illnesses for adults – about 9 percent for 

children verses about 6 percent for adults.5 

Some of the more commonly recognized disabling types of mental illnesses that effect both adults 

and children includes schizophrenia, bipolar disorder, major depression, obsessive-compulsive 

disorder, and panic disorder. Children with serious emotional disturbances may also be 

commonly diagnosed with attention deficit disorder, autism, pervasive development disorder, or 

Tourette's syndrome. 

METHODOLOGY 

State Selection 

We reviewed mental health managed care programs for seven States. They were Arizona, 

Massachusetts, North Carolina, Utah, Washington, Iowa, and Colorado. We selected all States 

(five) that had been under a mandatory managed care program for persons with serious mental 

illnesses for at least three years as of April 1997.6 We selected the remaining two States, Iowa 

and Colorado, at the request of HCFA. Although Iowa and Colorado had only been under 

managed care for about 2 years at the time of our inspection,7 HCFA staff said they were 

generally recognized as having innovative programs. 

All of the States surveyed, except North Carolina, included both adults and children in their 

mandatory managed care mental health contracts. North Carolina only contracted for the mental 

health care for children.8 For comparison purposes, we provided a general description of each 

selected State program in Appendix A. 

Document Review 

At each selected State, we reviewed key Medicaid and mental health program documentation 

showing program implementation, status, and access to care for children with serious emotional 

disturbances. To illustrate, we analyzed the first year managed care contract for each selected 

State. We also analyzed requests for proposals, managed care waiver requests, State progress 

reports, internal and external studies and reviews on program operations, beneficiary satisfaction 

survey results, complaint and grievance reports, in-patient and out-patient care data and reports, 

mental health program costs, and records on beneficiary utilization. 

We also conducted an Internet search to review managed care research involving children with 

serious emotional disturbances. Finally, we reviewed professional journals, studies and 

publications on State Medicaid programs and mental illnesses. 

Mandatory Managed Care - Children’s Access to Care 5 OEI-04-97-00344 
Interviews 

We interviewed 23 Medicaid managed care and mental health staff members in our survey 

States. From those officials, we obtained an understanding of how individual States 

implemented and operated Medicaid mandatory mental health programs. Finally, we obtained 

the views of State Medicaid and mental health staff on program changes for children with serious 

emotional disturbances. 

Also, we interviewed 16 managed care officials and mental health care providers, as well as 21 

mental health stakeholders 9 in our survey States. We obtained the views of both groups on 

program operations and children’s mental health services. We were particularly interested in 

their views on the accessibility to services for children after States converted to a mandatory 

managed care system. We selected managed care officials, mental health providers, and 

stakeholders based on recommendations from State Medicaid staff. 

Advantages and General Limitations 

We used a case study approach to analyze the access to services of children with serious

emotional disturbances under mandatory managed care. The advantage of this approach was

that it allowed us to get the benefit of first-hand experiences from State officials, managed care 

representatives, mental health providers, and stakeholders. Our methods have general

limitations in that the States or sites selected may not be typical, and we did not verify all 

testimonial information they provided to us. The information is also limited, because it reflects

operations that occurred over a 2 to 3-year period starting with each State’s first year contract. 

We are aware that State Medicaid managed care systems have continued to evolve with each

new contract and waiver, and that program structure in our surveyed States may be quite

different today from their initial managed care contracts.

The differences in program data reported by States, and the general lack of available children’s

data limits our ability to generalize across State programs. Each State Medicaid program

collects and reports data differently. To illustrate, one State distinguished between services

provided to children with serious emotional disturbances and children with less serious problems,

while another State did not. Another State did not distinguish between care provided to adults

and children when providing utilization data.

We integrated, compared, and summarized documentary and testimonial evidence obtained from

State Medicaid managed care offices and mental health departments. We also interviewed

managed care officials, mental health providers, and stakeholders for children’s mental health. 

We did not validate the testimonial evidence, however, the views of program operators and

stakeholders were generally similar and consistent with documentary evidence. Therefore, we

believe their opinions provide useful insight into early managed care programs and access for

children with serious emotional disturbances.

Mandatory Managed Care - Children’s Access to Care 6 OEI-04-97-00344 
Companion Reports 

This report is our third on mandatory managed care and Medicaid mental health services. 

The first report is titled Mandatory Managed Care - Changes in Medicaid Mental Health 

Services (OEI-04-97-00340) It provides an early look at the changes that mandatory managed 

care had on State Medicaid mental health services for persons with serious mental illnesses. The 

report highlights program changes that affected both adults and children. 

The second report is titled Mandatory Managed Care - Early Lessons Learned by Medicaid 

Mental Health Programs (OEI-04-97-00343). It highlights common program characteristics 

and implementation practices as guidance to other States that plan to convert to mandatory 

managed care. 

_____ ____ ____ _____ 

We did our field work between May 1997 and July 1997. While conditions regarding mental 

health services in managed care settings may have changed since then, our report reflects 

conditions and patterns of care in the first few years of converting fee for service programs to 

managed care. Wherever possible we have updated our background information. We 

conducted the inspection in accordance with Quality Standards for Inspections issued by the 

President’s Council on Integrity and Efficiency. 

Mandatory Managed Care - Children’s Access to Care 7 OEI-04-97-00344 
FINDINGS 

Respondents said that providing mental health services to children with serious emotional disturbances 

can present unique challenges not typically found when delivering services to adults. These challenges 

are generally systemic in nature and have existed for years under traditional fee for service care. 

Although conversion to managed care does offer State Medicaid programs opportunities to improve 

mental health services for children, respondents told us that conversion can also intensify existing 

problems. States should be aware of the obstacles that can interfere with access to mental health 

services for children when implementing mandatory managed care systems. 

Access To Care Is Limited 

Reductions of In-patient Care for Children was Greater Than That for Adults 

Utilization of in-patient services have generally decreased under managed care for all 

populations. However, the reduction of in-patient services for children has been the most 

dramatic. For example, one State reported that children utilizing in-patient care was down 

almost 40 percent, as compared to a decrease of 2 percent by adults for the same period. 

Another State reported a 30 percent decrease in psychiatric hospital admissions for children, as 

compared to a decrease of about 6 percent by adults during the same period. 

Because detailed data was almost non-existent, we could not determine the actual extent to 

which access to needed in-patient services had been decreased. Generally, the only available 

data was satisfaction surveys and grievance files, but they generally did not reveal the large 

decrease of in-patient care as a problem. However, the results of the data may not be reliable 

indicators on accessibility of in-patient care. 

Stakeholders in five of the seven surveyed States believed that managed care organizations were 

making it more difficult for children to be admitted into psychiatric hospitals. They said while inpatient care was often difficult under fee for service, the new managed care organizations 

implemented even more narrow criteria for hospital admission. Due to the more restrictive 

admission criteria, stakeholders said that children must go too far into a crisis situation before 

hospitalization is authorized. Stakeholders complained that approval and denial of hospitalization 

is often based only on what the clinicians observe during their evaluation. They said the clinicians 

do not consider what the parents and others observed in the hours or days proceeding their 

evaluation. 

Further, stakeholders in all States were concerned that children were being removed from 

psychiatric hospitals too quickly. They generally believe however, that out-patient care provides 

a better treatment environment for children and that in-patient care was relied upon too heavily 

under the fee for service system. 

Mandatory Managed Care - Children’s Access to Care 8 OEI-04-97-00344 
Controlling access to expensive in-patient services and substituting less expensive out-patient 

services is a standard managed care practice. It reduces managed care costs. It is also 

generally regarded by Medicaid staff as being a more effective and appropriate treatment than 

in-patient care. This is particularly true for children because family involvement can play an 

important role in treatment plans. 

Children’s Out-patient Services Lag Behind Those for Adults 

State Medicaid representatives and stakeholders told us that under fee for service, children’s 

access to mental health out-patient services was below that for adults. Under mandatory 

managed care, State representatives noted that the gap between adults and children’s care still 

exists despite the addition of several new alternative out-patient children’s services such as: 

respite care, family support services, in-home treatment, and school based programs. 

All State Medicaid representatives reported that out-patient programs have expanded under 

mandatory managed care. However, the number of children that access services are still 

generally below the level of access for adults. For example, one State reported that the 

percentage of adult enrollees accessing out-patient services was over twice that for children 

(123.7 per 1000 vs 54.8 per 1000). Another State reported that about 6 percent of eligible 

adults accessed out-patient services, while only about 3 percent for eligible children accessed 

out-patient services. 

Part of the problem stemmed from the lack of available services. To illustrate, prior to managed 

care, some State Community Mental Health Centers did not even offer children mental health 

services. Further, when implementing mandatory managed care States generally implemented 

program improvements in the adult system before expanding them to the children’s system. 

Finally, under mandatory managed care, States generally did not emphasize children’s programs 

in their first year managed care contracts. 

First Year Managed Care Contracts Included Limited Provisions for Children 

In the six States that provided mandatory managed mental health care to both adults and 

children, State first year contract request for proposals included few provisions that specifically 

addressed children’s care issues. Typically, care for children was addressed by adding the 

contract language “and children” to care areas generally designed for adults, and by included a 

short paragraph stating that managed care organizations will provide services to children. 

Mandatory Managed Care - Children’s Access to Care 9 OEI-04-97-00344 
Responsibility for Care Is Fragmented 

Respondents Concerned About Potential Cost Shifting 

Medicaid representatives in five of the seven surveyed States expressed a concern that placing 

mental health services under a capitated (flat fee) payment arrangement would increase the 

incentive for managed care organizations to shift care to other State agencies, such as the 

juvenile justice, child welfare, or education system, in order to reduce costs. They said that 

when multiple State agencies provide overlapping services to the same population, and such 

agencies have their own independent budgets, cost shifting is a strong possibility. Several State 

representatives told us that it was not uncommon for one agency to accuse another of “dumping” 

children on their agency, especially those children requiring long-term care. 

We did not specifically determine an adverse impact on children resulting from cost shifting. 

However, several State representatives said it could happen. To illustrate, State child welfare 

agencies often provide mental health treatment under Medicaid fee for service to children they 

have placed in residential treatment centers. In that State, the State Medicaid representatives 

expressed concern that managed care organizations would attempt to refer children to the 

residential treatment centers to reduce their in-patient psychiatric care costs. Medicaid staff in 

another State were so concerned about the likelihood of cost shifting that they convened a 

monthly committee to review the issue. 

The data in one State tended to collaborate the concerns about cost shifting. The data showed 

that the number of placements in residential treatment centers increased about 5 percent over 

what was expected under fee for service prior to conversion to managed care. However, the 

data was inadequate to determine the causes of the increase. 

Multiple State Agencies have Responsibility 

A variety of State and Federal children’s programs have evolved over the years. In our survey 

States a minimum of five agencies were responsible for providing various levels of mental health 

services to children. These programs include the health system, education system, social 

services, substance abuse, and juvenile justice system. Children with serious emotional 

disturbances have complex needs, and could require services from one or all of the State 

programs. However, no one program or system has the responsibility and expertise to 

coordinate or meet all the needs of the mentally ill, particularly when that person is a child. 

Responsibilities for the different children’s programs fall under different State agencies, all with 

different budgets and priorities. They tend to work independently which has caused a 

fragmented system of care for children. For example, State representatives told us that while 

State mental health agencies have program staff and resources to furnish mental health services 

Mandatory Managed Care - Children’s Access to Care 10 OEI-04-97-00344 
to children, they generally must wait for referrals from other agencies. State mental health 

agencies do not have daily contact with children that other agencies such as school and juvenile 

justice systems do. However, while the schools and juvenile justice systems have daily access to 

children, they do not typically have staff and resources to address their mental health needs. 

Also, if a State mental health agency observed social and developmental issues while providing 

mental health services to a child they typically had to refer the child back to the school system, 

or social services agency. 

Without coordination of care among multiple State agencies, stakeholders said that children 

often become proverbial footballs, being passed back and forth between systems. They said 

that this passing back and forth between agencies typically results in children not receiving 

needed mental health care. Further, often just determining which agency is responsible for 

providing care is difficult, at best, because of the multiple physical and social needs of child with 

serious emotional disturbances. 

States Attempt to Improve Coordination and Access 

States have undertaken a variety of strategies to increase agency cooperation. Some of the 

State strategies are highlighted below. 

One State passed legislation requiring agencies to work together. This initiative has 

resulted in State law that requires the health, education, and court system to work 

together to provide better services to children. 

Two States are testing programs that establish one case manager and one agency to 

represent all children’s service systems. The pilot programs are designed to minimize 

costs, increase access to available and needed services, and reduce duplication of 

multiple case coordination. 

Other States have established voluntary agreements between children’s agencies, and 

committees to assist with program integration. 

In all cases where an interagency agreement or committee was established, stakeholders and 

State officials reported better coordination of care and improved services. However, State 

Medicaid staff said that coordination and access problems still exist, despite the interagency 

agreements. 

Mandatory Managed Care - Children’s Access to Care 11 OEI-04-97-00344 
RECOMMEND ATION 

Children’s mental health out-patient services have increased after implementation of mandatory managed 

care. However, children’s access to mental health services is still limited, and the provision of care is 

fragmented. While attempts by some States to reduce fragmentation seem promising, most respondents 

agree more needs to be done. Accordingly, we recommend that HCFA encourage States to: 

Specify services for children’s mental health care in managed care

contracts. Children’s services appeared to be an afterthought in State’s first year managed

care contracts. Providing more detailed specifications on services managed care organizations

will provide will help ensure that children receive the specialized care they require.

Develop interagency agreements to promote coordination of children’s

mental health services. Better coordination of care and improved services for children

were reported in States where agencies have established such agreements. Establishing closer

working relationships also reduced cost shifting concerns among agencies.

Mandatory Managed Care - Children’s Access to Care 12 OEI-04-97-00344 
AGENCY COMMENTS 

Both HCFA and SAMHSA commented on our draft report. 

HCFA concurred with our recommendation to encourage States to specify services for children’s mental 

health care in managed care contracts. They prepared draft Interim Review Criteria for Children with 

Special Needs. States that mandatorily enroll children in capitated plans will be required to respond to 

the criteria as part of the waiver process. 

Additionally, HCFA concurred with our recommendation to encourage States to develop interagency 

agreements to promote coordination of children’s mental health services. HCFA plans to highlight the 

importance of such coordination in their imminent Report to Congress on special needs of vulnerable 

populations enrolled in Medicaid managed care. 

SAMHSA commented that a number of our recommendations were useful, but expressed concern 

about drawing conclusions from what they believe is a study method that is not “scientific.” We wish to 

emphasize that we used a case study method for our inspection. In describing our methodology we 

included a detailed explanation of the advantages and limitations of our case study approach. The 

limitations, we point out, are similar to those described by SAMHSA. Our goal was to take advantage 

of the early experience of some States to guide implementation of other States who are using a managed 

care approach for mental health services. We are confident that our readers will interpret our findings in 

the context of the methodology which we described. SAMHSA’s thoughtful comments will also help 

our readers avoid the pitfalls of over generalization. 

SAMHSA noted that the overall lack of consistent, detailed data was a possible major finding from our 

study. We agree. However, the problem is not limited to only children’s programs. It is an issue we 

deal with explicitly in a companion report that addresses both children and adult mental health care. 

That report is titled Mandatory Managed Care: Changes in Medicaid Mental Health Services (OEI04-97-00340). 

Additionally, SAMHSA expressed concern that we may not have adequately included the views of 

State mental health staff and stakeholders. As shown in our methodology, we considered input from 

such groups as highly important. To illustrate, we interviewed at least 37 State mental health staff and 

stakeholders. 

We made several technical changes suggested by SAMHSA. For example, we clarified Appendix A to 

show services that were excluded from risk by managed care organizations during their first year 

contracts. 

We present full text of HCFA and SAMHSA comments in Appendix B. 

Mandatory Managed Care - Children’s Access to Care 13 OEI-04-97-00344 
APPENDIX A 

Summary: First Year Medicaid Managed Care Mental Health Contracts

State Date 

Start 

Type 

Waiver 

Type of MCO Coverage Area 

Initial 

Covered 

Excluded for 

Services 

MCO Risk 

AZ Jan 

1992 

1115 Non-profit, public sector, 

CMHCs* 

Adults 

and 

Children 

Statewide 

CO Aug 

1995 

1915(b) Most areas non-profit, public 

sector CMHCs. 

Two rural areas - partnership 

between public sector 

CMHCs and private, forprofit companies 

Adults 

and 

Children 

6 test 

areas. 

Excluded 

largest 

metro area 

State hospital 

& drugs 

IA Mar 

1995 

1915(b) one private for-profit 

company for whole State 

Adults 

and 

Children 

Statewide State hospital 

& drugs 

MA Jan 

1992 

1915(b) one private for-profit 

company for whole State 

Adults 

and 

Children 

Statewide State hospital 

& drugs 

NC Jan 

1994 

1915(b) Non-profit, public sector 

CMHCs 

Children 

Only 

11 

counties, 

approx 

25% of 

state 

Outpatient 

care 

UT Jul 

1991 

1915(b) non-profit, public sector 

CMHCs 

Adults 

and 

Children 

8 of 11 

areas. 

80% of 

Medicaid 

population 

State 

Hospitals 

WA Jul 

1993 

1915(b) Non-profit public sector 

system 

Adults 

and 

Children 

6 of 14 

areas. 

66% of 

Medicaid 

population 

In-patient 

care 

* Community Mental Health Centers

14
APPENDIX B 

Agency Comments 

Health Care Financing Administration (HCFA)

Substance Abuse and Mental Health Services Administration (SAMHSA)

15
16
17
18
19
20
21
ENDNOTES 

1. National Summary of Medicaid Managed Care Programs and Enrollment, Medicaid Managed care 

Enrollment Report, Health Care Financing Administration, June 30, 1998 

2. State Profiles on Public Sector Managed Behavioral Health Care and Other Reforms. Managed 

Care Tracking System, Substance Abuse and Mental Health Services Administration, July 31, 1998 

3. Federal Register, Volume 58, Number 96, May 20, 1993 page 29425 

4. Prevalence of Serious Emotional Disturbance in Children and Adolescents. Mental Health, United 

States, 1996. Center for Mental Health Services, Substance Abuse and Mental Health Services 

Administration, 1996 

5. ibid 

6. Oregon and Tennessee have been under managed care for a minimum of three years, but did not 

phase in their seriously mentally ill populations until January 1995 and July 1996 respectively. 

7. Iowa implemented March 1995. Colorado implemented July 1995. 

8. In February 1999, North Carolina requested to withdraw its 1915(b) waiver extension of the 

Carolina Alternatives Program. The State proposes to move all recipients back to a fee for service 

system on or before June 30, 1999. 

9. For the purpose of this report, stakeholders include family members of children with serious 

emotional disturbances, and State and national mental health organizations representing children with 

serious emotional disturbances. The organizations include such groups as the National Alliance for the 

Mentally Ill, The America Psychiatric Association, and The Federation of Families for Children’s 

Mental Health. 

22