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Center for Substance Abuse Treatment. Comprehensive Case Management for Substance Abuse Treatment. Rockville (MD): Substance Abuse and Mental Health Services Administration (US); 1998. (Treatment Improvement Protocol (TIP) Series, No. 27.)
This publication is provided for historical reference only and the information may be out of date.
Comprehensive Case Management for Substance Abuse Treatment.
Show detailsThis material first appeared in the Center for Substance Abuse Treatment's Technical Assistance Publication (TAP) 16, Purchasing Managed Care Services for Alcohol and Other Drug Treatment: Essential Elements and Policy Issues.
Managed care has become a primary method of organizing and financing healthcare services in the United States, and the delivery of substance abuse treatment services is being significantly affected.
Introduction
A majority of the Fortune 500 companies and more than half of the health maintenance organizations (HMOs) now use managed care arrangements for purchasing substance abuse treatment. Thirty-six State Medicaid programs were using managed care approaches as of early 1993, and another 13 States planned to implement managed care programs by 1994 (U.S. General Accounting Office 1993). Several States have "carved out" substance abuse as well as mental health services for Medicaid recipients.
Publicly funded substance abuse treatment providers must adapt to meet the challenge of managed care, which will expand as the healthcare system changes in response to market forces and as healthcare reform discussions continue in Washington.
Purpose
The guide and checklist have been prepared to assist publicly funded treatment providers become more competitive in a managed care environment. The document is intended especially for use by treatment providers receiving financial support from State funds, Medicaid, and the Federal Substance Abuse Prevention and Treatment Block Grant.
Goals and Objectives
The goal of the checklist is to assist State substance abuse agencies and publicly supported treatment providers to design and implement strategies that will result in these providers being able to participate successfully in managed care programs.
Background
The readiness checklist was developed for the technical assistance program of the Center for Substance Abuse Treatment's Division of State Programs. It built upon the Managed Care Readiness Inventory developed in 1993 by the Oregon community mental health providers and the National Community Mental Healthcare Council.
The checklist was first used at a workshop on managed care issues for project directors, part of the Fall Training Institute of the Pennsylvania Office of Drug and Alcohol Problems. Attendees completed the checklist, and the presenter conducted an interactive discussion about the importance of the issues identified.
After this pilot effort, the checklist was refined during its use in workshops conducted in Oregon, Arkansas, and Tennessee. The guide was added to provide additional information and to help treatment providers use the checklist as a freestanding self-assessment instrument.
Ways To Use the Guide and Checklist
The checklist can be very effective as part of a workshop for treatment providers. Such a workshop would include substantial discussion of strategies for meeting the challenges of healthcare reform, changes in the organization and financing of health care, and the expanded use of managed care.
The guide and checklist can also be used:
- In meetings of regional or local networks of providers
- By providers or networks and their consultants
- By providers as a self-assessment tool
The checklist can be an important part of the development of an organization's strategic plan, as a treatment provider or service network decides how to improve service delivery and position itself for a more successful future.
Why Prepare for Managed Care?
The healthcare system is undergoing very rapid change in response to several fundamental economic forces.
- Healthcare expenditures consumed 13.2 percent of the Gross Domestic Product (GDP) of the United States in 1991 (Letsch 1993) and rose to more than 14 percent in 1993, which means that almost $1 of every $7 is spent for healthcare services.
- The growth rate of healthcare expenditures in 1991 was four times the growth rate of the national economy (Letsch 1993).
- Some experts estimate that national healthcare expenditures will reach 18 to 19 percent of the GDP by 1998.
- Medicaid expenditures, an important source of payment for substance abuse services, doubled between 1988 and 1992. By 1992, the $199 billion cost of Medicaid equaled the total cost of the Medicare program (Holahan et al. 1993).
- State Medicaid expenditures have grown until they are second only to the combined State costs of elementary and secondary education (Holahan et al. 1993).
High inflation in healthcare expenditures has led employers and States to seek ways to limit the growth of their insurance premiums, benefit costs, and Medicaid programs.
Substance abuse treatment services and costs increased during the 1980s for many reasons:
- Increased public acceptance of the need for care
- Increased benefit coverages in many health plans
- State activities to include substance abuse services in State Medicaid programs
- A rapid growth in inpatient hospital-based substance abuse and psychiatric units, supported by benefit plans that paid for inpatient treatment and a surplus of hospital beds
- Increases in State and Federal funding of community services, such as the Substance Abuse Prevention and Treatment Block Grant program
Some employers perceived that mental health and substance abuse treatment costs were "out of control" and that service delivery was fragmented. Claire Wilson, in a 1993 article on substance abuse and managed care, wrote: "The skyrocketing utilization and costs of substance abuse treatment during the last 10 years have alarmed corporate benefit managers" (Wilson 1993).
England and Vacarro (1991) identified 21 percent increases in 1990 healthcare expenditures to employers/purchasers as the impetus behind managed care, despite cost containment efforts spanning more than a decade. They said: "Mental health and chemical dependency services, with reported cost increases of up to 60 percent per year, are a prime target for managed care."
These perceptions also were shared by some insurance carriers and HMOs, forcing payers to seek ways to coordinate care and control costs. The result is greater use of HMOs, preferred provider arrangements, increased competition, and - for substance abuse and mental health services - the development of behavioral health managed care organizations (MCOs).
These firms have expanded rapidly in the last 10 years, with the three largest MCOs each reporting more than 10 million persons enrolled, a total of almost 40 million persons for these three firms alone (Oss 1994).
A survey conducted in January 1994 determined that more than 102 million Americans, 45.9 percent of those with health insurance, are enrolled in some type of managed behavioral healthcare program (Oss 1994). The survey did not separate managed care for substance abuse from mental health services; however, almost all behavioral MCOs use an integrated approach. There were:
- 20.0 million in employee assistance programs (EAPs)
- 6.6 million in integrated managed behavioral health/EAPs
- 20.5 million in risk-based behavioral health network programs
- 15.0 million in nonrisk-based network programs
- 37.0 million in stand-alone behavioral health utilization review programs (Oss 1994)
What Is Managed Care and How Is It Changing?
Managed care approaches, such as utilization review and second opinions, have been in place for more than a decade for medical-surgical insured health benefits. Their general purpose is to assure payers that consumers receive the appropriate level of care and that excessive, inappropriate, or unnecessary care is not delivered or reimbursed. These practices arose to regulate the functioning of the fee-for-service system, where financial incentives tend to encourage the delivery of more health services and more expensive procedures.
Another way to define managed care is by the organizational structures used to deliver treatment. Health maintenance organizations are "managed care," because clinical management and financial incentives exist within staff HMOs and independent-practice model HMOs to encourage preventive care and to reduce cost increases.
Feldman and Goldman (1993) indicated that the behavioral health managed care industry "arose as a response to the economic imperatives of spiraling unmanaged mental health and substance abuse costs. In light of escalating costs, payers were essentially faced with two alternatives-cut benefits (which many have done) or manage them so as to control costs and ensure quality."
In addition to concerns about costs, purchasers identified several quality-related problems:
- Overuse of hospitalization
- Purchase of services without any indication of clinical effectiveness-making it difficult to identify good care and good providers
- Incentives in traditional benefit plans to use hospitalization rather than outpatient alternatives
- Fragmented service delivery and the lack of coverage for case management services in traditional indemnity plans (England and Vacarro 1991).
Without a doubt, the industry has grown rapidly. In general, it has gone through three major phases since the mid-1980s.
- The first generation of MCOs managed access to health care, with a primary focus on utilization review (UR). Access was controlled by limiting benefits and requiring significant co-payments to contain costs. MCOs also introduced such administrative barriers as preadmission certification.
- The second generation of managed care focused on managing benefits. MCOs added fee-for-service provider networks, selective contracting, and treatment planning to the UR function.
- The current generation of MCOs focuses on managing care, performing utilization management instead of utilization review-with a greater emphasis on treatment planning, delivery of the most appropriate care in the most appropriate setting, and moving patients through a continuum of services.
Managed care organizations expect development of a fourth-generation product in which they manage outcomes as part of an integrated services system, moving both public and private patients through a full continuum of treatment services (Waxman 1994).
The impact on treatment providers over the last 10 years has been dramatic. Hospitals that deliver substance abuse care have reduced staff and closed units or have integrated their inpatient care for substance abuse within psychiatric units. Many hospitals have expanded ambulatory substance abuse services. Community agencies have scrambled to learn about managed care and to become members of MCO provider panels.
These changes are likely to continue as the managed care industry increases its focus on Medicaid recipients, State and local governments, and services to other public clients.
How Do Managed Care Organizations Select Treatment Providers?
Behavioral health managed care organizations (MCOs) work for self-insured businesses, HMOs, insurance carriers, unions, State Medicaid agencies, and others. Prior to deciding which providers to select, they first listen to their customers.
Some payers will dictate the qualifications of substance abuse treatment providers. These payers may require hospitals for residential care and require licensed professionals for outpatient treatment. Increasingly, MCOs are recommending that less expensive yet well-qualified community providers be included on the "provider panel." This enables MCOs to lower costs and to offer a more complete range of services.
The selection criteria of MCOs cover several areas:
- Access to care and a provider's response time; i.e., the availability of inpatient and residential beds as needed, and access to outpatient services based on:
- Emergencies: immediate access
- Urgent services: 1-2 days
- Routine services: 4-6 days
- Minimal delays for patients transferring from one service to another, particularly within a single provider
- Administrative and clinical responsiveness
- Use of brief, problem-centered clinical approaches rather than long-term rehabilitative approaches
- Positive practice profiles; i.e., providers who are pragmatic, innovative, team-oriented, consumer-oriented, case management-oriented, and outcomes-oriented
- Cultural competence
- Willingness to arrange for related social services as needed, e.g., housing or job placements
What Strategies Should a Treatment Provider Consider?
The specific strategies that a substance abuse provider adopts will depend on the level of readiness of the provider and the State and local managed care environment.
The provider should develop an individualized plan that is specific to the circumstances and locality. The first step can be to complete the readiness checklist and consider potential change strategies within the organization. Providers may find it necessary to make changes in their clinical and management services in order to become more attractive to MCOs and other payers.
Short-range strategies
Short-range strategies could include:
- Strengthening relationships with businesses through relationships with EAPs
- Maximizing Medicaid reimbursements and positioning the provider organization to expand its participation in Medicaid as managed care arrangements are implemented
- Becoming a preferred provider for several managed care organizations
Longer range strategies
Longer range strategies to be considered might include:
- Determining the extent to which the provider organization will address a broad client group by delivering a range of services or by focusing on one or more niche markets, i.e., specialty services for a limited population
- Joining or forming a regionally integrated substance abuse and/or behavioral health service network, which can seek preferred provider and other contracts
- Marketing to primary care medical group practices and multipractice physician groups, which have an increasingly critical "gatekeeper/service manager" role in healthcare reform
- Marketing directly to payers, such as HMOs, insurance carriers, and self-insured businesses
- Integrating fully into the healthcare system by becoming part of a physician-hospital organization or an arm of a large physician group practice.
Use the following checklist [see Exhibits] to assist you in developing your agency's individualized plan for future challenges.
Managed Healthcare Organizational Readiness Checklist
Following is a managed care readiness checklist [see Exhibits] for publicly funded substance abuse treatment service providers, a vital segment of the health services system. The checklist is intended:
- To identify a program's strengths and weaknesses in specific areas, and
- To enhance a strategic planning process that will assist your organization to prepare for success in a managed care environment.
Use of the checklist will help treatment providers anticipate the skills that will be needed to prosper in a changing healthcare system.
Use of the checklist cannot substitute for an onsite assessment. However, it is likely to generate productive thought and discussion.
It is not necessary to have a perfect score to secure a contract with a managed care firm for private or public patients. In general, the better prepared your organization, the more likely it is that you will be selected to provide services.
Twelve areas are assessed:
- Adult services
- Adolescent services
- Service characteristics
- Quality assurance and utilization management
- Managed care and employee assistance program experience
- Management information system
- Staff and staff training
- Organizational relationships
- Board and management
- Marketing
- Fiscal analysis
- Business office
There are survey questions for each area. In addition, there is a summary at the end of the checklist.
Please answer each question using a whole number, i.e. 1, 2, 3, 4, or 5. One is the lowest score, while 5 is the highest score. Use the following scale [see Exhibits] for your response.
Summary of Answers
This section allows you to generate a score for each area. Add together the individual response scores for the questions in each of the 12 sections. Then divide the total by the number of questions in that section to generate a composite score for the section. Enter the composite score on the 1 to 5 scale at right.
Summary of Answers
Summary of Answers | ||||||||
---|---|---|---|---|---|---|---|---|
Total | Divide By | Composite | Weakest Position | Strongest Position | ||||
Adult Services Comprehensiveness | _______ | 6 | _______ | 1 | 2 | 3 | 4 | 5 |
Adolescent Services Comprehensiveness | _______ | 6 | _______ | 1 | 2 | 3 | 4 | 5 |
Service Characteristics | _______ | 12 | _______ | 1 | 2 | 3 | 4 | 5 |
QA and UM area | _______ | 10 | _______ | 1 | 2 | 3 | 4 | 5 |
Managed Care an EAP area | _______ | 5 | _______ | 1 | 2 | 3 | 4 | 5 |
MIS area | _______ | 7 | _______ | 1 | 2 | 3 | 4 | 5 |
Staff and Training | _______ | 4 | _______ | 1 | 2 | 3 | 4 | 5 |
Organizational Relations | _______ | 3 | _______ | 1 | 2 | 3 | 4 | 5 |
Board and Management | _______ | 6 | _______ | 1 | 2 | 3 | 4 | 5 |
Marketing | _______ | 6 | _______ | 1 | 2 | 3 | 4 | 5 |
Fiscal Analysis | _______ | 7 | _______ | 1 | 2 | 3 | 4 | 5 |
Business Office | _______ | 3 | _______ | 1 | 2 | 3 | 4 | 5 |
All scores | _______ | 75 | _______ | 1 | 2 | 3 | 4 | 5 |
This approach will show you the areas in which your organization is well prepared for managed care participation, the areas in which additional work may be needed, and the areas of relative weakness where immediate remedial activities can be targeted.
It may also be helpful to inspect the variations in the scores among the various persons in your organization who complete the checklist. You may find a range of answers and perceptions on a specific question or within one or two sections. It might be illuminating to note the differences, for instance, between management, board members, and clinical staff.
Common Questions and Answers
There were several common questions asked by treatment providers who attended workshops in which the checklist was used. This part of the guide gives answers to a few of those questions.
QUESTION: Do I have to pay attention to these managed care issues? I have contracts with the State and revenue from fees, so won't my organization survive intact?
ANSWER: Economic forces are leading to the use of managed care approaches by almost all payers. If you have secured a "niche market," where it is unlikely that other organizations will compete with you, then you may be in a unique situation where the payers will continue to buy your service. However, organizations that deliver basic outpatient and residential substance abuse care cannot ignore managed care.
QUESTION: My organization delivers residential treatment. Should I add outpatient services or otherwise diversify?
ANSWER: Managed care organizations frequently shift services from hospital inpatient to community residential facilities. A second strategy of MCOs is to then shift the location of care from brief residential services to intensive outpatient or outpatient care as quickly as possible. The best strategy would be to offer all needed services and plan to shift the balance between services as referral patterns and MCO practices change.
QUESTION : What staff qualifications do managed care firms require for outpatient services, and are graduate degrees a necessity?
ANSWER: There is considerable variation. Staff qualifications are frequently determined by the payer rather than the MCO. Some MCOs require State-licensed practitioners, while others accept all staff working within a licensed or State-approved program.
QUESTION : How cost competitive is managed care? Will I be asked to accept reimbursement rates below my cost?
ANSWER: Most MCOs attempt to secure discounted rates. It is important to know your costs and establish a level below which you will not negotiate. It is also important to be aware of the costs and rates of your competitors, in order to be able to judge the marketplace.
QUESTION : Will managed care require my organization to change our clinical practices?
ANSWER: As you market your services, carefully consider the types of services that managed care organizations want. Most will favor brief and focused counseling models, with rapid step-down to less intensive levels of care.
You may have to modify your service practices in order to secure and maintain business.
QUESTION : My staff are concerned about losing clinical control of our services to a gatekeeper or case manager. Is it necessary to give up clinical control if I get a contract?
ANSWER: It's best to think of working with an MCO as a partnership where you exchange information about clients and determine a plan of treatment together. Most MCOs watch the length of treatment episode very carefully, either through a case manager or by reviewing your organization's practice patterns (based on the analysis of your organization's paid claims).
QUESTION : We don't do outcome studies. How can I begin to focus on the impact of treatment?
ANSWER: Implementing a consumer satisfaction survey is a good place to begin. It can provide feedback on access, staff, the most (and least) valuable components of services, and the value of care to clients and family members.
QUESTION : Will it be necessary to create new alliances, join networks, establish joint ventures, or merge with another organization to be successful?
ANSWER: It depends on your local situation and your organization's goals. There are many new relationships currently being established to improve the likelihood of doing well as the healthcare system changes. You may find arrangements that strengthen your organization clinically and managerially. No organization should rule out considering these options.
How Can We Design an Action Program for Change?
The information you gained from completing the readiness checklist is a good start. There are several steps in classic organizational planning. The action planning steps are to:
Assess Your Current Position
- Assess your organization's strengths: What do you have going for you, and what should you be sure to maintain and/or expand?
- Assess your organization's limitations: What areas need improvement, and what is your realistic capability to address these areas internally?
- Assess the opportunities emerging in the marketplace: What are the commercial and public managed care developments in your State and locality?
- Assess the competition and other challenges: What threatens your plans, how quickly will you need to implement changes, and what are your competitors planning which will impact on your future?
Develop an Achievable Plan
- Establish clear long-range goals: What changes are needed in the organization's mission and long-range targets, if any?
- Chart 1-2 year objectives: What are the priority actions that will make the greatest difference as you penetrate the managed care market?
- Develop targets: What are the numerical targets and the schedule to be used for each priority action?
- Involve the staff and board: What steps must be approved and accomplished by the various actors, and what are the resource requirements?
- Consider strategic partnerships: What new organizational relationships will strengthen your ability to reach your objectives, and what scarce skills or resources are essential to success?
Implement the Plan
- Assign the tasks: What are the expectations for all of the key persons and organizational units?
- Coordinate the work: Manage the process and make the needed adjustments in day-to-day activities.
Check Progress and Adjust the Targets
- Review achievements against the objectives: What was accomplished and what were the deviations from the plan?
- Reassess the environment: What has occurred in the business environment, with Medicaid managed care, in healthcare reform, or in your local service system that will impact on your success?
- Change the strategic plan: What better strategies have been identified and how should the plan, targets, or timetable be modified based on your experiences?
Summary and Conclusion
This guide and checklist were developed for the Center for Substance Abuse Treatment (CSAT) to assist States and publicly funded substance abuse treatment providers to succeed in a managed care environment. The objectives are to increase managed care participation by expanding knowledge, assessing readiness through use of the checklist, and encouraging effective action planning.
Remember, the checklist will be helpful but should not be the only tool your organization uses to prepare for managed care participation. Providers should attend workshops, read, share ideas with colleagues, and participate in State association activities.
Treatment providers seeking additional assistance should contact their State authority or CSAT's Quality Assurance and Evaluation Branch within the Division of State Programs.
References
- England, M.J., and Vacarro, V.A. Health Affairs. 1991
- Feldman, S., and Goldman, W., eds. New Directions for Mental Health Services: Managed Mental Health Care. 1993.
- Holahan, J.; Rowland, D.; Feder, J.; and Heslan, D. Health Affairs. 1993 [PubMed: 8244231]
- Letsch, S.W. Health Affairs. 1993
- Oss, M.E. Open Minds: The Behavioral Health Industry Analyst. 1994.
- U.S. General Accounting Office. Medicaid: States Turn to Managed Care to Improve Access and Control Costs. 1993.
- Waxman, A.S. 1994.
- Wilson, C.V. New Directions for Mental Health Services: Managed Mental Health Care. 1993. [PubMed: 8289780]
Additional Readings
- Ansoff, H.; DeClerk, R.; and Hayes, R., eds. From Strategic Planning to Strategic Management. 1976.
- Bryson, John M. Strategic Planning for Public and Nonprofit Organizations. 1988.
- Center for Substance Abuse Treatment, Division of State Programs. Managed Care and Substance Abuse Treatment: A Need for Dialogue. 1992.
- Center for Substance Abuse Treatment, Division of State Programs. Reports on the Meetings of the Center for Substance Abuse Treatment (Executive Summary); September 9-10, 1993 Kansas City, Missouri; January 12-13, 1994 Cincinnati, Ohio; and February 24-25, 1994 Phoenix, Arizona. 1994.
- Harwood, H.J.; Thomsom, M.; Nesmith, T. Healthcare Reform and Substance Abuse Treatment: The Cost of Financing Under Alternative Approaches-A Final Report. 1994.
- Join Together: A National Resource for Communities Fighting Substance Abuse. Health Reform for Communities: Financing Substance Abuse Services. 1993.
- Koteen, J. Strategic management explained. Strategic Management in Public and Non-profit Organizations. 1989.
- Appendix C - Managed Healthcare Organizational Readiness Guide and Checklist: Sp...Appendix C - Managed Healthcare Organizational Readiness Guide and Checklist: Special Report By James B. Bixler, M.S - Comprehensive Case Management for Substance Abuse Treatment
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