United States General Accounting Office

GAO Testimony

Before the Subcommittee on Public Health and Safety,

Committee on Labor and Human Resources, U.S. Senate

For Release on Delivery

Expected at 9:30 a.m.

Thursday, May 22, 1997

SUBSTANCE ABUSE AND

MENTAL HEALTH

Reauthorization Issues

Facing the Substance Abuse

and Mental Health Services

Administration

Statement of Marsha Lillie-Blanton, Associate Director

Health Services Quality and Public Health Issues

Health, Education, and Human Services Division

GAO/T-HEHS-97-135

Substance Abuse and Mental Health:

Reauthorization Issues Facing the

Substance Abuse and Mental Health

Services Administration

Mr. Chairman and Members of the Subcommittee:

We are pleased to be here today to assist the Subcommittee in its

deliberations on the reauthorization of the Substance Abuse and Mental

Health Services Administration (SAMHSA). SAMHSA, with an operating budget

of $1.9 billion in fiscal year 1996, is the Department of Health and Human

Services’ (HHS) lead agency for substance abuse and mental illness

prevention and treatment. The work of this agency has been deemed

critically important to our nation’s efforts to address and reduce the

problems related to substance abuse and mental disorders. My testimony

today focuses on SAMHSA’s role in (1) coordinating its efforts with federal

agencies involved in related research or services; (2) measuring the results

of its programs or activities, particularly in light of the fact that most of its

funds are used to support services provided by States and by local

grantees; and (3) monitoring the impact of the transition to managed

health care on individuals with mental disorders and substance abuse

problems.

The observations I present today are based on our past and ongoing work

at HHS as well as on conversations with SAMHSA officials and officials at

other agencies that are engaged in substance abuse and mental

health-related activities.

In summary, SAMHSA faces three important challenges in the current

environment. First, given the many different, yet related, federal agency

activities in the areas of substance abuse and mental health, it is especially

important that SAMHSA communicate and coordinate its efforts with

agencies involved in similar or complementary activities. Second, under

the Government Performance and Results Act (GPRA), SAMHSA will have to

show that its funds are used efficiently and effectively. This will present a

particular challenge for the agency because most of its funds are used to

support services provided by states and local grantees. Finally, the move

to managed care in the private and public sectors affords potential

opportunities for SAMHSA to improve the coordination of care, yet it has

risks, given the financial pressures to control costs and health plans

limited experience in setting capitation rates for mental health and

substance abuse services. These are issues that deserve SAMHSA’s careful

attention.

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Background It is estimated that 52 million Americans annually experience a mental

health or substance abuse problem and about half obtain treatment.1

 Many

factors, including perceptions of the need for treatment, account for many

people not getting care. In addition, insurance coverage has generally been

more limited for mental health than for physical health services. For this

reason, public sector (federal and state) resources have provided an

important safety net for individuals unable to afford the care available in

the private sector, and we now have a sizable public sector investment in

mental health and substance abuse services. Private sector resources (for

example, managed behavioral health plans) have grown, however,

particularly as more employers have offered mental health and substance

abuse benefits. Nonetheless, many Americans continue to face barriers in

obtaining access to mental health and substance abuse services.

In October 1992, the Congress established SAMHSA under Public Law

102-321 to strengthen the nation’s health care delivery system for

prevention and treatment of substance abuse and mental illnesses. Before

1992, the major federal substance abuse and mental health delivery

services and research activities were combined under one agency, the

Alcohol, Drug Abuse, and Mental Health Administration (ADAMHA). In the

1992 legislation, the Congress created SAMHSA to administer the services

portion of ADAMHA and transferred its research components to the National

Institutes of Health (NIH) to be carried out by the National Institute on

Alcohol Abuse and Alcoholism (NIAAA), the National Institute on Drug

Abuse (NIDA), and the National Institute of Mental Health.

Since 1992, SAMHSA’s budget has remained relatively stable at about $2

billion each year. Most of this amount has been in the form of block grants

to states and local governments. In fiscal year 1996, these grants totaled

$1.2 billion for substance abuse prevention and treatment services and

$275 million for mental health services. Combined, these block grants

accounted for about 80 percent of SAMHSA’s budget (see fig. 1). These funds

go directly to states and local organizations, which have broad discretion

in how best to use them, within federal guidelines. The remainder of

SAMHSA’s budget—$376 million in fiscal year 1996—supports program

management; data collection, analysis, and dissemination; and a wide

array of demonstration efforts through the Knowledge Development and

Application (KDA) program. The KDA program, as described in HHS’ fiscal

year 1998 budget, supports community organizations and other grantees

with funding for well-defined demonstrations and other efforts that help

1

Institute of Medicine, National Academy of Sciences, Managing Managed Care: Quality Improvement

in Behavioral Health (Washington, D.C.: National Academy of Sciences, 1997).

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promote strategies to reduce drug use by youth and increase the

knowledge base about issues such as managed care and early childhood

problems.

Figure 1: Amount of SAMHSA’s Total

Budget Authority Devoted to Block

Grants, Fiscal Years 1993-96

Most of SAMHSA’s $1.9 billion budget—75 percent in fiscal year 1996, or

$1.4 billion—funded substance abuse prevention and treatment services.

SAMHSA’s drug abuse budget authority, although sizable, represented only

about one quarter of the federal government’s drug abuse prevention and

treatment budget in fiscal year 1996 (see fig. 2).2

 The Department of

Veterans Affairs devoted a similar level of resources, while the

Department of Education, the next largest supporter of these services,

provided about half the level of funding of the other two agencies. Over a

2

The federal government’s drug abuse prevention and treatment budget is prepared by the Office of

National Drug Control Policy (ONDCP). SAMHSA’s budget authority in ONDCP’s budget is

$1.084 billion for fiscal year 1996. This amount excludes SAMHSA funding for alcohol-only programs.

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dozen other agencies with varying roles and responsibilities share in

funding similar or related activities under their respective missions, goals,

and objectives.3

Figure 2: Agencies’ Share of Federal

Funding for Drug Abuse Prevention

and Treatment, Fiscal Year 1996

13.2% • Department of Education

24.3% • Department of Veterans Affairs

24.4% • SAMHSA

•38.1%

Other Departments/Agenciesa

Notes: Total funding is $4.4 billion. Funding for alcohol-only prevention and treatment programs is

not included.

aOther agencies include the Departments of Defense, Justice, and Labor.

Source: ONDCP, The National Drug Control Strategy, 1997: FY 1998 Budget Summary,

(Washington, D.C.: ONDCP, Feb. 1997).

Coordination Is

Important to Program

Results and More

Efficient Use of

Federal Funds

Given the number of federal agencies with related responsibilities in the

area of mental health and substance abuse services, SAMHSA is presented

with a particular challenge as well as an opportunity to coordinate

activities and promote the development of effective linkages. While we

recognize that ONDCP has lead responsibility for coordinating federal drug

abuse supply and demand reduction activities, SAMHSA, nevertheless, has

responsibility for coordinating its efforts with agencies involved in similar

or complementary activities.

3

Drug and Alcohol Abuse: Billions Spent Annually for Treatment and Prevention Activities

(GAO/HEHS-97-12, Oct. 8, 1996).

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The relationship between SAMHSA and the NIH institutes that once were a

part of ADAMHA is an important partnership to maintain. The NIH research

institutes support the development of new knowledge and technologies in

prevention and treatment of substance abuse and mental illness. Linkages

between researchers and practitioners are critical for new research

initiatives to be grounded in real world problems and for new

programmatic initiatives to reflect current knowledge in the field. Since

one of SAMHSA’s major goals is to support the application of innovative

treatment and prevention approaches, working with the research institutes

to identify projects that could serve as models for innovation is very

important. There are probably many such opportunities for collaboration

across agencies.

SAMHSA also has the opportunity to work with agencies such as the

Departments of Veterans Affairs and Justice that serve populations in

which mental health and substance abuse problems are great. Despite the

value of such relationships, we found that in the past, SAMHSA, along with

NIDA and NIAAA, had no process to link its expertise with that of the Indian

Health Service (IHS),4

 an agency that serves a population in which abuse of

alcohol and other substances is a major problem. We recommended that

IHS and the other HHS agencies work together to develop a plan to address

substance abuse-related problems among Indian populations. In 1996, HHS

developed and implemented such a plan, which should help it strategically

allocate limited federal resources to address a major public health

problem in IHS service areas.

Emphasis on

Accountability for

Meeting Program

Goals Is Essential

Another major challenge for SAMHSA is to measure how well its programs

are working. Given that most of SAMHSA’s dollars are distributed to states

through its block grant program, the agency faces the additional challenge

of balancing the flexibility it affords states to set priorities on the basis of

local need against its own need to hold the states accountable for

achieving SAMHSA’s goals. While this may have always been a daunting task,

the passage of GPRA in 1993 now requires SAMHSA, along with other federal

agencies, to show that the use of their funds is yielding results.5

Under GPRA, every major federal agency—and, in many cases,

organizations within each agency—must now answer some basic

4

Indian Health Service: Basic Services Mostly Available: Substance Abuse Problems Need Attention

(GAO/HRD-93-48, Apr. 9, 1993).

5

Managing for Results: Using GPRA to Assist Congressional and Executive Branch Decisionmaking

(GAO/T-GGD-97-43, Feb. 12, 1997).

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questions: What is our mission? What are our goals, and how will we

achieve them? How can we measure our performance? How will we use

performance information to improve? GPRA forces federal agencies to shift

their focus from such traditional concerns as staffing and activity levels to

a single overriding concern: results.

Specifically, GPRA directs agencies to consult with the Congress, obtain the

views of other stakeholders, and clearly define their missions. It also

requires agencies to establish long-term strategic goals as well as annual

goals linked to the strategic goals. Agencies must then measure their

performance according to their goals and report to the President and the

Congress on their success. In addition to ongoing performance monitoring,

agencies are expected to identify performance gaps in their programs and

to use information from these evaluations to improve programs.6

GPRA requires that federal agencies develop strategic plans for a period of

at least 5 years and submit them to the Congress and the Office of

Management and Budget (OMB) no later than September 30, 1997. These

plans must identify the agencies’ long-term strategic goals and describe

how the agencies intend to meet these goals through their activities and

resources. GPRA also requires agencies to submit an annual performance

plan to OMB that links the strategic goals in their plan to managers’ and

employees’ daily activities. This plan should include the annual

performance goals for the agencies’ programs as listed in their budget, a

summary of the resources to conduct these activities, the performance

measures that will gauge the progress toward those goals, and a discussion

of how the performance information will be verified.

Recognizing this challenge, HHS is transforming its SAMHSA block grants into

Performance Partnership Grants (PPG). Under PPG, an arrangement

between the state and federal governments will be negotiated that

identifies specific objectives and performance measures in terms of

outcomes, processes, and their capacity to be achieved over 3 to 5 years.

This appears to be a promising strategy because it gives states greater

control over their funding decisions while encouraging them to accept

greater accountability for results.

One of the many difficulties in implementing PPGs, however, will be

developing and reaching agreement with individual states on their

measures of performance. A panel of experts, convened by the National

6

Executive Guide: Effectively Implementing the Government Performance and Results Act

(GAO/GGD-96-118, June 1996) and Managing for Results: Using GPRA to Assist Congressional and

Executive Branch Decisionmaking (GAO/T-GGD-97-43, Feb. 12, 1997).

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Services Administration

Research Council at the request of HHS, was asked to recommend a set of

performance measures for ten public health areas of concern that states

and the federal government could use to negotiate PPG agreements and

monitor performance. Included in these areas of concern are substance

abuse, mental health, chronic disease, and sexually transmitted diseases.

The panel’s final report on this first phase of its work is expected to be

released by mid-June 1997. A final report on the second phase of the study,

which will include recommendations for improving state and federal

surveys and data systems, is expected to be released by the end of

calendar year 1998. Consequently, implementation of PPGs will occur later

than fiscal year 1998, as earlier projected.

Issues in the

Transition to Managed

Behavioral Health

Care

Another challenge facing SAMHSA is its role in restructuring public sector

mental health and substance abuse services, given the growth of the

private sector managed behavioral health care industry. The forces driving

the move to managed care for physical health services are also in

operation in the mental health specialty sector. Employers’ concerns

about the high costs of mental health and substance abuse services have

prompted them to adopt a number of managed care strategies. According

to HHS, about 60 percent of Americans with private insurance were

enrolled in a managed behavioral health plan in 1995. Similarly, the public

sector, through the Medicaid program—which is administered by the

Health Care Financing Administration (HCFA)—has looked to managed

care to improve access to a comprehensive range of services while also

reducing costs. As states have enrolled increasing numbers of Medicaid

beneficiaries in managed care plans, they have found themselves having to

make choices about payment and care arrangements for mental health

services. While some states are integrating behavioral health and physical

health services into a single managed care program, others are either fully

or partially carving out mental health benefit packages under separate

contractual arrangements.

The move to managed care, particularly when driven by pressures to

control costs, has raised concerns about access to and quality of mental

health and substance abuse care. Managed care has the potential to

improve access to a comprehensive range of benefits for a population with

multiple and chronic behavioral health care needs; yet it also has risks,

given financial incentives to limit costs and the health care system’s

limited experience in setting capitation rates for services needed by this

population. People with mental health and substance abuse problems may

need a combination of different types of care, such as outpatient services,

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inpatient hospital care, and long-term institutional or residential care.

SAMHSA has established an Office of Managed Care, which funds a project

that is monitoring the impact of the transition to managed care on public

mental health and substance abuse providers and the people served. In

addition, SAMHSA is supporting a number of managed care policy and

demonstration grants that focus on specific issues or populations, such as

people who are homeless or seriously mentally ill or who live in rural

communities. Knowledge gained through these efforts should be useful in

working with HCFA to develop oversight and performance standards for

Medicaid’s move to mental health managed care. Given the major

transitions occurring in health care delivery and financing of physical and

mental health services, it will be important for SAMHSA to continue to give

attention to developments in the field.

Mr. Chairman this concludes my statement. I will be pleased to answer any

questions you or Members of the Subcommittee might have.

Contributors For more information on this testimony, please call Bernice Steinhardt,

Director, Health Services Quality and Public Health, (202) 512-7119.

(108332) Page 8 GAO/T-HEHS-97-135
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