Maryland's Medicaid reform: design and development.

Abstract

A states reform their Medicaid programs with more emphasis on managed care systems, a key decision is how to configure the delivery of mental health services. This column provides an overview of the design and development of the Maryland system to manage publicly funded mental health services in conjunction with the state’s reform of Medicaid using the section 1115 waiver. The opportunities and challenges that this system presents are discussed. This paper was prepared after approval of the Medicaid 1115 waiver by the Maryland General Assembly and the Health Care Financing Administration (HCFA) and before implementation of the system. In April 1996 the Maryland General Assembly passed legislation that authorizes the state secretary of health and mental hygiene to implement a systemwide managed care program that places close to 80 percent of Medicaid beneficiaries in capitated managed care organizations for physical health care. HCFA approved the Maryland 1115 waiver proposal on October 30, 1996, and enrollment of participants began in June 1997. Features of the new program, called HealthChoice, are outlined in Table 1. The waiver culminates a series of managed care initiatives in the last five years to slow the growth of spending in the Maryland Medicaid program in the face of mounting fiscal pressures and changes in federal and state political leadership (1). Mental health services for beneficiaries eligible for the waiver plan are delivered through a carve-out arrangement for specialty mental health services as part of a new publicly managed mental health system. The reform extends beyond Medicaid to manage all public mental health funds under one unified system. The mental health carve-out is the only substantial services carve-out in HealthChoice. Furthermore, this model departs from the decision to integrate mental and physical health services in Maryland’s primary care physician gatekeeper program that began in 1991 (2). In the new system, eligible Medicaid beneficiaries receive medical, substance abuse, and primary mental health services from a capitated managed care organization. Because the carve-out does not include substance abuse services, it is not the same as a “behavioral health” carve-out that is common in the private sector and in some Medicaid managed care programs.