Update on Maryland’s Public Mental Health System

By Brian Hepburn, M.D.

[Winter 2003; Vol. 29, No. 2; Pg 1, 12-14]

The Mental Hygiene Administration (MHA) is the division within the Maryland Department of Health and Mental Hygiene responsible for overseeing the delivery of public mental health services in Maryland. Its duties include formulating a State mental health plan for needed services; establishing eligibility criteria for State funding of local mental health programs; establishing the qualifications of staff and quality of professional services of eligible programs and providers; defining the populations that receive priority in accessing services; and establishing eligibility for receiving mental health services from the Public Mental Health System. MHA also operates eight State psychiatric hospitals, including one forensic hospital, and three residential treatment centers for children and adolescents. Consumers, family members, providers and other stakeholders are an integral part of MHA’s strategic planning process. Since 1991, Core Service Agencies have assisted MHA in the management of the system at the local level.

Prior to FY 1998, much of MHA’s focus was on planning for the needs of adults with serious mental illness and children and adolescents with severe emotional disturbance. The most readily available services for adults were outpatient mental health services and psychiatric rehabilitation services. Service development for children and adolescents lagged behind that of adults, and was mostly concentrated in the realm of outpatient mental health services.

MHA administered State general funds for mental health services, as well as some federal grant funds. MHA administered, however, only a portion of the State and federal Medicaid (MA) dollars, specifically money paid for services under the Medicaid clinic, rehabilitation, and targeted case management options. Federal and State funds for other mental health services were under the Medicaid Administration’s management. Among these MA services are: care received in the psychiatric units of acute care hospitals, individual psychotherapy, and psychotropic medications and concomitant laboratory tests. Mental health services not included in the State Medicaid Plan and services provided to individuals without insurance (“Gray Zone” individuals now referred to as Medicaid ineligible), who met financial and psychiatric eligibility for services, were funded through grants. Based upon the Core Service Agencies’ budgetary requests, MHA transferred funds that were contracted with local providers to provide mental health services for residents in their jurisdictions.

this grant, or contract, based system presented limitations and problems. Consumers were limited in their “freedom of choice” of providers of service, and they were limited to “catchment areas” to obtain services. In addition, prior to FY 1998, under the Medical Assistance Program, many MA eligible individuals were enrolled in Health Maintenance Organizations or the Maryland Access to Care Program. These programs placed restrictions on consumers as to where they received services and required them to obtain referrals for their mental health care. Additionally, in the grant system, it was difficult to accurately monitor and evaluate the number and types of services provided, and to ensure what services were actually being provided for each consumer.

The PMHS was designed as an alternative to participating within the Health Choice Managed Care Organization. Maryland’s 1115 Wavier provided a mental health "carve out," and offered the opportunity for the State and Core Service Agencies to manage the care for mental illness in the public sector within one system. It allows for mental health services, beyond those provided by primary care physicians, to be provided to all Medicaid enrollees. MHA selected Maryland Health Partners (MHP), a statewide administrative service organization, to provide oversight of access, utilization management, claims processing, management information, and evaluation services. There was no incentive for the denial of care. The services funded through this new fee-for-service system are: mobile treatment, targeted case management, respite, crisis management, supported employment, and vocational services, as well as day treatment, inpatient services, and psychiatric and rehabilitation services.

The overall goals for the newly implemented system were to improve access to care, improve utilization review, improve data gathering, and streamline the claims systems within a consumer-centered system. All Medicaid providers were encouraged to participate in the PMHS. The fee-for-service system provided the benefits of the coordination of “managed care,” while preserving access to an array of services, flexibility, and increased consumer choice.

Today, there are more providers of mental health services in the PMHS than prior to 1997. There have been jurisdictions where clinics have moved to other sites or transferred ownership, and there have been a few closures. However, the net change has been an increase in the number of clinics. There has also been a dramatic increase in the number of rehabilitation programs. In addition in 1997, the State of Maryland was granted an Institution of Mental Disease waiver. This change meant that individuals could receive their inpatient services in a private psychiatric hospital or in an acute psychiatric unit in a General hospital and be reimbursed by Medicaid. The waiver has created access to a large number of psychiatric beds that were not available in the old public mental health system.

There has been an increase from 63,964 to 87,257 in the total number of individuals receiving services within the PMHS between FY 1998 and FY 2002. Children and adolescents receiving services have increased from 23,591 to 36,220 between those same years. The number of individuals receiving outpatient services has increased from 61,111 to 83,200 between FY 1998 and FY 2002. During that same period, the number of individuals receiving rehabilitation services has increased from 9,319 to 18,613. Additionally, the number of admissions to inpatient facilities (non-State hospitals and non-RTC), paid for by MA, has increased from 7,090 to 7,632 during those same fiscal years.

The dramatic increase in utilization has been primarily by MA recipients. There was only been a 5% increase in the non-MA individuals entering the PMHS from 15,166 to 15,936 between FY 2000 and FY 2002. The growth during that same time for the MA recipients was from 61,584 to 71,321. Between 1999 and 2002, the Children’s Health Insurance Program expanded its eligibility criteria up to 300% of the Federal Poverty Level resulting in the addition of over 100,000 individuals eligible for MA services. The percentage of the total MA individuals using PMHS services is 12.5%. This penetration rate has held constant since 1998. Therefore, any increases in the MA enrollment will impact on the growth and utilization of the PMHS services. This accounts for much of the growth in the PMHS.

Some of the outpatient mental health clinics (OMHC’s) have had financial difficulty in the new PMHS. There was a two-year transition for clinics in ‘98/’99 to help clinics adjust to the new system. There are now over 90 OMHC’s operating in over 150 sites around the State. (In 1998 there were 72 OMHC’s.) However, several clinic’s have either gone out of business, changed ownership or moved to a new location. Reasons for the closures or change of ownership include : (1) A continuation of the move from public to private sector that started in the early 1990s. (2) A large hospital closed (it could not maintain itself because of changes in the private inpatient insurance managed-care arena) that had 4 clinics under it. Those clinics were transferred to other ownership. (3) Several clinics closed because of low volume of patients. (4) Several clinics closed because they said the payment was inadequate to cover their services. (5) Clinics with high volumes of Medicare patients have difficulty because Medicare pays so poorly.

Despite the fact there are more clinics and more individuals getting services in clinics than ever before, MHA continues to be concerned regarding the financial viability-- the clinics are the backbone of the PMHS. In order to preserve continuity of care, the reimbursement rates for services have been increased by over 50% for children and by over 30% for adults over the past five years. The reimbursement rates for physician services in the clinics were increased in July, 2002 to further improve the stability of the clinics. Health Management Consultants, Inc. submitted a report on the rates for services in the PMHS in January 2003, and the results will be considered over the next several months.

As mentioned above, a major problem for the OMHC’s is the Medicare issue. In some jurisdictions, Medicare makes up over 30% of the individuals served. Medicare has a 37.5% exclusion on most mental health services, so clinics often collect less than 62.5% of the Medicare allowable charge. These are often individuals that are among the most severely ill. The basic Medicare parity problem for mental health services needs to be resolved at the Federal level.

Over the last few years, the budget for MHA has been an annual problem. There has been slow recognition of the fact that the budget has grown as a result of the growth of the number of Medicaid recipients. This year the PMHS is fortunate that Governor Ehrlich has put additional money in the MHA budget to cover the deficit that is the result of the projected growth in the system. The current projections allow for covering a $30 million deficit in 2003, and a $36 million deficit in 2004. If the actual growth is greater, there could still be a deficit.

There are increasing concerns regarding the consolidation/closure of State hospitals. The number of beds operated in the State hospital system has decreased from 4,390 to 1,300 from the years 1982 to 2001. The hospitals have moved to smaller areas within each campus as the remainder of the campus has been used for other, non-hospital related, functions. The MHA has taken a position of maintaining the current bed capacity, but not of maintaining all the current hospitals. The State hospital beds make up 50% of the psychiatric inpatient capacity for the State and a decrease in the State hospital beds will have an adverse effect on the system as a whole, including emergency rooms.

Last year, during the Legislative Session, there were concerns related to the MHA deficit. There was a legislative mandate to move uninsured (Gray Zone) individuals to grants. In July, 2002 residential rehabilitation and psychiatric rehabilitation services were moved to grants for the non-MA population. However, this has been unpopular with individuals and practitioners in the PMHS. MHA is scheduled to move outpatient services for the uninsured to grants within the next six months. There will be discussion in the current Legislative Session to review other options. The goal of the legislation was to control growth in the PMHS. There may be alternatives to grants (i.e. putting a cap on services) which may be more acceptable to the stakeholders in the PMHS. These options will be proposed, but if the legislature does not agree with the alternatives, MHA will have to proceed with moving outpatient services to grants for the uninsured.

The PMHS is an improvement over the previous mental health system. However there are still have many problems to resolve. There has been an increase in access for individuals within the PMHS, there has been a dramatic increase in the growth of the number of individuals receiving services in the PMHS, there is better data, and the payment system has encouraged more practitioners/providers to participate in the system. The PMHS remains focused on being a consumer-centered system. The goal is to have a high quality, clinically-focused system that is fiscally responsible. The PMHS wants to ensure the provision of quality services for all individuals with mental illness. However, there are numerous problems, which continue and need to be resolved--i.e., stabilization of the OMHCs and the lack of parity in Medicare payments. The system has been overwhelmed by a dramatic increase in utilization and, unfortunately, the money is not in the budget to pay for universal access. There is a monthly meeting involving members of MPS and myself to review concerns about the Public Mental Health System. Please feel free to participate in the meeting or to inform the MPS leadership of your concerns. Members of the Maryland Psychiatric Society continue to be valuable stakeholders in this process, and we look forward to your continued participation in improving the PMHS.