Medicaid Managed Care: Use of Limited Benefit Plans to Provide Mental Health Services and Efforts to Coordinate Care
Published: 2013-09-30T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Medicaid is the largest payer of mental health services in the United States and Medicaid spending on such services is likely to grow. Some states provide mental health services to Medicaid beneficiaries separately from physical health care services through contracts with limited benefit plans, which are paid on a per person basis to provide a defined set of services. While using these plans to provide mental health services may control costs, it can also increase the risk that these services will not be coordinated with physical health care services. Coordinated care is important for Medicaid beneficiaries with mental illnesses because they are more likely than others to have ongoing health conditions. GAO was asked for information on states' use of Medicaid managed care. In this report, GAO examined the (1) extent that states provide mental health services through limited benefit plans, and (2) steps states and CMS have taken to facilitate the coordination of mental and physical health care services for adult beneficiaries enrolled in these plans.
GAO collected information on enrollment, payments, and services from the 13 states that contracted with limited benefit plans to provide mental health services to adult beneficiaries. GAO also selected 4 states based on, among other criteria, the number of beneficiaries enrolled in limited benefit plans. GAO reviewed documents from the 4 states and CMS, and interviewed officials to identify steps taken to coordinate care.
The Department of Health and Human Services provided technical comments, which GAO incorporated, as appropriate.
section_title: What GAO Found
paragraphs: Thirteen states reported that in fiscal year 2012 they paid a total of about $5.6 billion to limited benefit plans to provide mental health services to about 4.4 million adult Medicaid beneficiaries. States can enroll different populations--such as adults who are blind, disabled, or have developmental disabilities--in limited benefit plans, which could contribute to the variation in the number of adults enrolled and level of capitated payments made across the 13 states.
Four selected states--Florida, Kansas, Michigan, and Washington--took three steps to facilitate the coordination of mental and physical health care services:
1. incorporating care coordination requirements in limited benefit plan contracts;
2. implementing additional steps to coordinate care, such as policies that included incentives to coordinate care; and
3. monitoring limited benefit plans' implementation of care coordination.
GAO found that the Centers for Medicare & Medicaid Services' (CMS) did not take direct steps to facilitate care coordination, because its role is to oversee and provide technical assistance. In its oversight role, CMS reviewed and approved state submitted documents, such as contracts with mental health limited benefit plans, some of which contained care coordination requirements.

section_title: Letter
paragraphs: Medicaid, a joint federal-state program that finances health insurance  coverage for certain categories of low-income individuals, is the largest  payer of mental health services in the nation. Many of the 67 million  beneficiaries enrolled in Medicaid have mental health care needs.  Between 1998 and 2009, Medicaid spending on mental health services  increased from about $16.5 billion to $39.1 billion. Spending for mental  health services in Medicaid is likely to continue growing as millions of  individuals become eligible to receive Medicaid coverage under the  Patient Protection and Affordable Care Act.Medicaid beneficiaries sometimes experience challenges accessing   We previously reported that  mental health services.complex health care needs, accessing mental health services can be  especially problematic.
For some populations, such as individuals with  The Centers for Medicare & Medicaid Services (CMS), within the  Department of Health & Human Services, is the federal agency  responsible for overseeing the Medicaid program. Within broad federal  requirements, states administer the day-to-day operations of their  Medicaid programs and provide services to Medicaid beneficiaries  through a variety of health care arrangements. Some states have elected  to provide mental health services separate from physical health care  services through limited benefit plans, which are managed care  arrangements designed to provide a narrowly defined set of services.  Under limited benefit plans, states make capitation payments—a fixed  dollar amount per Medicaid beneficiary—for a specified set of services. Through the use of limited benefit plans, states seek to ensure a ready  source of providers, control costs, and improve quality of care through  better management of beneficiary needs. Separating mental and physical  health care services increases the risk that these services will not be  coordinated; yet, little is known about how states and health care  providers coordinate care for beneficiaries enrolled in limited benefit  plans.
For purposes of this report, we define “limited benefit plans” as health plans that contract  with states on a capitated basis to provide mental health services to adult Medicaid  beneficiaries, which we define as individuals 18 years and older. mental and physical health care services for adult Medicaid beneficiaries  enrolled in limited benefit plans.
To determine the extent to which states provide mental health services to  adult Medicaid beneficiaries through limited benefit plans, we collected  and analyzed Medicaid enrollment and payment data for fiscal year 2012  from all of the 13 states that contracted with limited benefit plans to  provide mental health services to adult Medicaid beneficiaries on a  capitated basis. We identified these states by reviewing CMS’s most  recent Medicaid managed care enrollment report and interviewing CMS  officials, and sent the 13 states a data collection instrument we  developed. Additionally, we obtained information on how these states  collected the reported data and checks they performed to ensure  accuracy. Based upon states’ responses, we determined that data  collected were sufficiently reliable for our purposes.
To determine the steps that states and CMS have taken to facilitate the  coordination of mental and physical health care services, we interviewed  officials and reviewed relevant documents from selected states and CMS.  To obtain information on state actions, we selected four states—Florida,  Kansas, Michigan, and Washington—that varied in terms of (1) the  percentage of Medicaid beneficiaries enrolled in limited benefit plans  providing mental health services, (2) the size of their Medicaid programs,  and (3) geographic location. (See app. I for more information on program  characteristics of the selected states.) For these states, we collected and  reviewed relevant documents for fiscal years 2011 and 2012, including  state contracts with limited benefit plans, and findings from reviews  conducted on limited benefit plans. We also interviewed officials from the  selected states and external stakeholders, including the National Quality  Forum and the National Association for Mental Illness, to collect  information on the steps states have taken to facilitate the coordination of  mental and physical health care services. To determine the steps CMS  has taken to facilitate the coordination of mental and physical health care  services for adult Medicaid beneficiaries enrolled in limited benefit plans,  we reviewed relevant federal waiver applications, state contract review  results, and regional monitoring guidance. We also interviewed officials  from CMS’s central office and the four regional offices responsible for  overseeing the four selected states.
We conducted this performance audit from October 2012 to September  2013 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: CMS and states jointly administer the Medicaid program. States have  flexibility within broad federal parameters for designing and implementing  their Medicaid programs. For example, state Medicaid programs must  cover certain populations and benefits—known as mandatory populations  and benefits—but may choose to also cover other populations and  benefits—known as optional populations and benefits.choose different payment and delivery systems to provide benefits to  Medicaid beneficiaries, such as fee-for-service or managed care. Under a  fee-for-service system, health care providers claim reimbursement from  state Medicaid programs for services rendered to Medicaid beneficiaries.  Under a Medicaid managed care system, states contract with managed  care organizations to provide or arrange for medical services, and  prospectively pay the organizations a per person, or capitated, payment.  In turn, the managed care organizations pay providers, such as hospitals  and physicians, for services provided to Medicaid enrollees. States  contract with managed care organizations to provide a comprehensive set   Also, states may  of services to Medicaid beneficiaries; states may also contract with limited  benefit plans to provide a defined set of services, such as mental health  services. CMS reviews and approves states’ plans to implement their  Medicaid programs.
Medicaid is an important source of mental health services for millions of  vulnerable individuals. In 2009, an estimated 5.8 million adult Medicaid  beneficiaries, or 30 percent of all adult Medicaid beneficiaries, were  diagnosed with some type of mental illness. States that provide mental  health services through limited benefit plans establish these delivery  systems under Medicaid waivers. Sections 1115 and 1915(b) of the  Social Security Act allow the Secretary of Health and Human Services to  waive certain federal requirements, such as limitations on a state’s ability  to require certain beneficiaries to enroll in managed care. States that  provide Medicaid benefits through managed care arrangements, including  limited benefit plans, must comply with certain requirements, including  those requiring states to establish procedures to monitor managed care  program operations. Federal regulations require states to ensure that  managed care organizations coordinate mental and physical health care  services; however, states have the option to exempt limited benefit plans   States seeking to provide Medicaid services  from these requirements.through managed care waivers must submit an application to CMS and  obtain approval. Medicaid managed care waivers approved under   section 1915(b) of the Social Security Act—the most common type of  waiver states use to establish limited benefit plans to provide mental  health services to beneficiaries—are typically authorized for a period of  two years. At the end of the waiver period, the state can request an  extension of the waiver or submit an application for a new waiver.
Care coordination is broadly defined as the integration of patient care  activities between two or more providers involved in a patient’s care with  the goal of facilitating the appropriate delivery of services. Activities to  coordinate mental and physical health care services include sharing  information—such as medical records, test and lab results, and  prescribed medications—across providers and care delivery sites. States  and limited benefit plans can implement specific care practices with the  purpose of facilitating communications and the sharing of information.  Care coordination is particularly important for Medicaid beneficiaries with  mental illnesses because they are more likely to have other medical  conditions requiring ongoing physical health care services than  beneficiaries without mental illnesses. For example, in 2003, 14 percent  of all Medicaid beneficiaries had a costly medical condition, such as  diabetes and heart disease; however, among adults who were receiving  mental health services, 21 percent had such medical conditions.
section_title: Enrollment, Payment, and Scope of Services Varied Across All 13 States Using Limited Benefit Plans for Mental Health Services
paragraphs: Across the 13 states that contracted with limited benefit plans to provide  mental health services to adult Medicaid beneficiaries, the enrollment  levels, total payments, and services provided varied. States can enroll  different adult populations—such as individuals who are blind, disabled,  or have developmental disabilities—in limited benefit plans, which could  contribute to variation in the number of adults enrolled, as well as the  level of capitated payments states made to these plans.reported that about 4.4 million adult Medicaid beneficiaries were enrolled  in limited benefit plans, about 48.6 percent of all adult Medicaid  beneficiaries in the 13 states. The number of adults enrolled in these  plans ranged from about 93,000 beneficiaries in Kansas to over   1.1 million beneficiaries in Pennsylvania. (See fig. 1.) Across these    State officials  13 states, the percentage of adult Medicaid beneficiaries enrolled in  limited benefit plans ranged from about 10.7 percent in Florida to about  93.0 percent in Colorado. (See app. II for more information on enrollment  in Medicaid and limited benefit plans in the 13 states.)
Capitated payments to limited benefit plans providing mental health  services to adult Medicaid beneficiaries also varied across the 13 states  in fiscal year 2012. State officials reported that capitated payments to  these plans totaled about $5.6 billion, or about 9.0 percent of total  Medicaid payments for all adult beneficiaries in these 13 states. Capitated  payments to these plans ranged from about $86.5 million in New Mexico  to almost $2.0 billion in Michigan. As a share of total Medicaid payments  for adult Medicaid beneficiaries, capitated payments to limited benefit  plans providing mental health services ranged across the 13 states from  1.3 percent in Florida to 21.9 percent in Michigan (see fig. 2). (See app. III  for more information on Medicaid payments in the 13 states.)
States also reported variations in the scope of services provided by  limited benefit plans to adult Medicaid beneficiaries in fiscal year 2012.  Specifically, 3 states contracted with limited benefit plans to provide only  mental health services, while 10 states contracted with limited benefit  plans to provide both mental health services and services for substance  use disorder. Two of these 10 states—Oregon and Utah—contracted with  some plans to provide only mental health services and contracted with  other plans to provide both mental health services and services for  substance use disorders. (See table 1.)
section_title: Selected States Generally Took Three Steps to Facilitate Coordination of Care, and CMS Reviewed Waivers and Contracts
paragraphs: The four selected states we studied generally took three steps to facilitate  the coordination of mental and physical health care services, but specific  activities varied. CMS’s efforts to facilitate the coordination of mental and  physical health care services focused primarily on reviewing states’  federal waiver documents and contracts with limited benefit plans.
subsections: section_title: Four Selected States Took Steps to Facilitate the Coordination of Mental and Physical Health Care Services
paragraphs: The steps that selected states—Florida, Kansas, Michigan, and  Washington—generally took to facilitate the coordination of mental and  physical health care included (1) incorporating care coordination  requirements in the contracts with limited benefit plans; (2) implementing  additional steps to coordinate care; and (3) monitoring limited benefit  plans’ implementation of care coordination.
The four states’ contracts with limited benefit plans included general  provisions regarding the types of entities that health plans are required to  coordinate with in order to manage beneficiaries’ health care needs.  Additionally, each state’s contracts specified the particular coordination  activities the limited benefit plans were required to perform.
All four states required limited benefit plans to coordinate mental and  physical health services with a broad range of providers and other  entities. Each state required its limited benefit plans to coordinate with  physical health care providers and community organizations, mental  health providers, and the state’s Medicaid agency.
All four states required some coordination with physical health care  providers and community organizations. For example, in Michigan, in  addition to coordinating with beneficiaries’ primary care providers,  limited benefit plans were required to coordinate with public and  private community agencies that provide social support and other  non-health care services to individuals with mental illnesses.
States’ contracts also required limited benefit plans to coordinate with  a wide range of mental health providers that were part of the plans’  network of providers, including mental health providers and case  managers that provide ancillary services. For example, Washington  required its limited benefit plans to coordinate with social workers to  ensure that they shared information on health care needs and  services.
States also required health plans to coordinate with other state  departments and agencies whose clients include Medicaid  beneficiaries. For example, Florida required its limited benefit plans to  have agreements with state agencies responsible for serving the  homeless to ensure coordination and avoid duplication of services. In  Kansas, the state required limited benefit plans to coordinate with  other state agencies, along with local and regional agencies whose  clients included Medicaid beneficiaries. Michigan required its limited  benefit plans to coordinate with the criminal justice system, including  police/sheriffs, court personnel, and attorneys.
All four states’ contracts with limited benefit plans required the plans to  undertake specific activities to facilitate coordination of mental and  physical health care services. These required activities generally fell into  the following categories: sharing information and establishing  communications between providers and across care settings; identifying  patients’ mental and physical health care needs and creating individual  care plans; and developing measures and collecting data on coordination  of care.
All four states required limited benefit plans to implement mechanisms  to share information or standardize communications between  providers and across care settings. For example, contracts in Florida,  Michigan, and Washington required limited benefit plans to develop  written plans or agreements outlining when, and in some cases how,  care will be coordinated between mental health, primary care, and  other providers. Kansas’ contract required all limited benefit plan  network providers to request a standardized release of information  form from each beneficiary to allow providers to coordinate with  primary care physicians and other treatment team members.
All four states required limited benefit plans to identify beneficiaries’  health care needs, including mental and physical health care needs;  develop individual care plans for beneficiaries’ to address all needs  identified; and update these care plans on a regular basis. One part of  the individual care plan development and updating process included  coordinating with primary care and other providers as needed, and  making appropriate referrals. For example, Washington’s contract  required limited benefit plans to create and then update these plans  every 180 days, identify patient mental and physical health care  needs, ensure coordination between systems that are meeting  patients’ needs, and require providers to make appropriate referrals to  health care providers when medical concerns are identified.
Two of the four states required limited benefit plans to collect and  submit data to monitor care coordination. For example, Kansas  required limited benefit plans to collect data from network providers  and enrollees to monitor care coordination; and Florida required  limited benefit plans to collect information on follow-up services  enrollees received within seven days of discharge from all inpatient  facilities for a mental health diagnosis.
Officials from all four states reported taking additional steps beyond  contract requirements to encourage coordination and further integration of  mental and physical health care. For example, in 2012, officials from all  four states reported that their state implemented Medicaid policies  allowing providers to bill for two services, such as mental and physical  health care services, in one day for the same beneficiary. In doing so,  limited benefit plans can work to integrate and improve access to care by  providing mental and physical health services at the same location and  allowing both providers to receive reimbursement for services furnished  on the same day. Since 2012, officials from two of the four states reported  that they have taken steps to further integrate mental and physical health  care services. Officials from Kansas reported that in January 2013 the  state stopped providing mental health services through a limited benefit  plan and implemented a comprehensive managed care arrangement  providing both mental and physical health care services to Medicaid  beneficiaries, and officials from Florida reported that the state is taking  steps to implement similar arrangements in 2014.
During 2011 and 2012, all four states we studied conducted a variety of  reviews that were either directly focused on the coordination of mental  and physical health care services or assessed such coordination as part  of broader reviews. States conducted monitoring through five different  types of reviews, the use of which varied by state.
Desk reviews are state Medicaid agency evaluations of documents  and reports that plans, including limited benefit plans, submit. States  generally conduct these types of reviews at their Medicaid offices. All  four states reported that they conduct some form of desk review of  reports and data related to the coordination of mental and physical  health care services received under limited benefit plans. The states  did not issue reports on the findings of these desk reviews.
External quality reviews (EQR) are federally required reviews  conducted by independent organizations, called External Quality  Review Organizations (EQROs), with expertise in assessing the  quality of and access to care provided by managed care plans.  Federal law requires EQROs to annually review Medicaid managed  care plans, including limited benefit plans that provide inpatient  services. These reviews assess limited benefit plans’ strengths and  weaknesses with respect to quality, timeliness, and access to health  care services provided to Medicaid beneficiaries. All three states in  which limited benefit plans were subject to these reviews—Florida,  Michigan, and Washington—had EQRs conducted that included an  assessment, in either 2011 or 2012, of limited benefit plans’  compliance with care coordination contract requirements. In  Michigan, the EQR findings did not include any specific results on  care coordination in 2011, but found that the state and limited benefit  health plans were in compliance with managed care requirements and  contractual agreements. In Washington, the EQR findings in 2011  questioned the effectiveness of one limited benefit plan’s intervention  to increase the quality of care coordination, including the validity of the  methods used to assess care coordination. In Florida, officials  reported that the EQR is conducted annually in conjunction with two  process improvement projects. One limited benefit plan in this state  participated in a project that examined the documentation of services  in an effort to improve communication and coordination of services  between physical and mental health providers in limited benefit plans.  This project is still ongoing.
Internal onsite reviews are reviews conducted by the state Medicaid  agency at providers or managed care plan offices, or at locations  where Medicaid beneficiaries receive services. Three of the four  states—Florida, Michigan, and Kansas—conducted onsite reviews  during the 2011 through 2012 time period. Florida officials reported  that the state conducted onsite reviews annually to evaluate limited  benefit plans’ administrative and clinical compliance, including care  coordination. Some of these reviews identified needed improvements;  for example, in a 2012 review of one limited benefit plan in Florida, the  state found that the plan needed to establish a process for providing  Medicaid beneficiaries immediate access to psychiatric services upon  their release from a jail or juvenile detention facility to ensure  prescribed medications were available. Michigan officials reported that  their reviews occurred biennially and, in part, assessed limited benefit  plans’ capacity to coordinate physical and mental health services for  Medicaid beneficiaries. Some of these reviews identified needed  improvements; for example, in a 2011 review of one limited benefit  plan, the state was unable to find evidence of communication and  coordination between a psychiatric hospital and a Medicaid  beneficiary’s primary care physician or health plan and recommended  that the limited benefit plan devise a coordination plan. In 2011 and  2012, Kansas conducted an onsite review of the one limited benefit  plan that state contracted with to examine plan guidelines used to  identify and authorize the coordination of care for beneficiaries with  high needs, including those with certain mental health diagnoses. In  regard to care coordination, the state found that the limited benefit  plan met its contractual requirements and had an acceptable process  to identify Medicaid beneficiaries with high physical and mental health  needs, and provided these beneficiaries with ongoing care  coordination between their mental health providers and other  providers and entities delivering treatment and service. State  reviewers also found that the plan had coordinated its activities with  other social service, disability, and welfare systems, including the  state’s criminal justice and disability agencies.
Independent assessments are federally required reviews through  which states operating Medicaid managed care programs under  section 1915(b) waivers must evaluate and maintain data regarding  the cost-effectiveness of their programs, the effect of the programs on  beneficiaries’ access to services, and the quality of services provided  under the program. At a minimum, a state is required to conduct an  independent assessment for its first two waiver periods. Of the four  states, Kansas was the only state required to conduct an independent  assessment during the time period of our review because it began  providing mental health services through a contract with a limited  benefit plan under a waiver in 2007. Kansas’ 2009 assessment found  that a small percentage of Medicaid beneficiaries enrolled in the  limited benefit plan received care coordination, and recommended  that the state should increase the share of beneficiaries receiving  these services. The 2011 assessment found improvement in the  state’s care coordination. Specifically, the report noted that the state  expanded and enhanced its care coordination activities in an effort to  increase the share of Medicaid beneficiaries in the limited benefit plan  whose care was coordinated.
Focused care coordination studies examine a state’s coordination of  mental health and physical health care services. Michigan was the  only state to conduct a focused care coordination study of limited  benefit plans during the time period of our review. The study, which  was conducted by an independent organization under contract,  examined Medicaid utilization patterns to assess whether care  coordination occurred. While the report did not draw specific  conclusions on whether care coordination occurred or make  recommendations to the state, it did indicate that Medicaid  beneficiaries with serious mental health diagnoses had more  emergency room, ambulatory visits, and inpatient admissions than  other groups.
section_title: CMS Reviewed State Waiver Applications and Contracts with Limited Benefit Plans
paragraphs: GAO found that CMS did not take direct steps to facilitate the  coordination of mental and physical health care services for adult  Medicaid beneficiaries enrolled in limited benefit plans because its role is  to provide oversight of, and technical assistance to, the states in carrying  out their Medicaid programs. In its oversight role, the agency reviewed  and approved state-submitted managed care waiver applications and  contracts with limited benefit plans providing mental health services,  some of which contain care coordination provisions. Federal regulations  require managed care plans to coordinate mental and physical health  care services and identify persons with special health care needs.  However, states providing health care services through limited benefit  plans may exempt these plans from these requirements. States  requiring limited benefit plans to comply with these requirements must  include these details in their waiver applications and assure that plans  comply with these rules. CMS officials told us that the agency reviews the  waiver application’s care coordination provisions as part of its broader  review of states’ waiver applications. The officials added that CMS also  reviews the results of EQRs of states’ programs, and provides final  agency approval for contracts between states and limited benefit plans.  Beyond these activities, CMS officials indicated that their role was to  provide technical assistance to states, as needed; for example, when  states are designing their programs.
CMS’s regional offices also provided oversight of states’ contracting with  limited benefit plans; however, none of their activities directly assessed  care coordination provided by limited benefit plans. In the four regional  offices we studied, we found that the number and frequency of regional  office reviews of limited benefit plans varied. Regional officials we spoke  to cited several activities ranging from periodic managed care calls with  states, to comprehensive and focused onsite and desk reviews to ensure  limited benefit plans met all federal managed care requirements. Officials  in one region explained that CMS generally conducted additional regional  office reviews on limited benefit plans that were newer or raised special  concerns.
section_title: Agency Comments
paragraphs: The Department of Health and Human Services reviewed a draft of this  report and provided technical comments, which we incorporated as  appropriate.
We are sending copies of this report to the Secretary of Health Human  Services and other interested parties. In addition, the report is available at  no charge on the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-7114 or yocomc@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made major contributions to this report  are listed in appendix IV.
section_title: Appendix I: Summary of Selected States’ Use of Limited Benefit Plans to Provide Mental Health Services, Fiscal Year 2012
section_title: Appendix II: Adults Enrolled in Medicaid and Limited Benefit Plans Providing Mental Health Services, Fiscal Year 2012
section_title: Appendix III: Total Medicaid Payments and Capitated Payments to Limited Benefit Plans for Adults, Fiscal Year 2012
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Tim Bushfield, Assistant Director;  Shaunessye Curry; Kristin Ekelund; Sandra George; and Drew Long  made key contributions to this report.