Managed care is "an organized system of care which attempts to balance access, quality, and cost effectively by using utilization management, intensive case management, provider selection, and cost-containment methods" (CSAT, 1995d). Despite the antipathy that many public sector health care providers feel toward managed care, those providers are actually striving toward the same ends using similar means as managed care organizations (MCOs). Many substance abuse treatment providers have been working within a managed care framework for decades, that is, looking at utilization data and developing a continuum of care. Substance abuse treatment providers, particularly those who use case management, have historically recognized the importance of connecting disparate services to meet the needs of clients.
Whatever treatment providers' attitudes toward managed care, they will have to learn to operate within its bounds. More than half the States are currently in the process of adopting some form of managed care to provide behavioral health care services, and more than one-third have received Federal waivers to implement Medicaid managed behavioral health programs, with other waivers planned or pending. Some experts predict that many substance abuse programs, already accustomed to scarcity of resources, will make a smooth transition to a managed care environment. However, many programs, particularly those that operate the least like businesses, may find this an extremely challenging time. The need to be accountable for outcomes, particularly in the face of a tax-conscious public, will undoubtedly increase in the managed care era.
To adapt to the world of managed care, treatment programs must assess how their services are currently delivered and identify which elements should be preserved and which should be modified. They also must have a firm grasp on how changes in Federal and State reforms will affect their current and future funding mechanisms.
Despite the promise of case management as an important adjunct to substance abuse services, it will not survive without empirical data that support its efficacy. Key decisionmakers must believe that case management is an integral component of treatment service before they will incorporate it into the funding structure. This is especially true of States choosing to offer services through managed Medicaid HMOs. It is also true for people who receive services through Medicare HMOs. (See Chapter 4 for a discussion of program evaluation and measuring outcomes.)
Controlling costs while providing care offers program administrators and case managers an opportunity to demonstrate case management's utility to a newly engaged managed care company. For example, clients with long-term or chronic conditions may be required to move from residential facilities to the community before some treatment providers believe they are ready. In this scenario, case management can prove its value by providing the clients with wraparound or supportive services to aid in a successful transition. As another example, outreach case management can help in the area of relapse prevention and aftercare and thus avert the need for high-cost services like inpatient treatment.
Managed care tools - clinical pathways, standardized assessments, and treatment protocols - can work well in a case management context. The challenge then lies in tailoring services to the unique needs of each consumer and avoiding "cookie cutter" services. Use of these tools can increase case management's attractiveness to program administrators who operate in capitated or other forms of shared-risk environments.
The true test is to develop a comprehensive case management system within a managed care framework with the inherent flexibility and resources necessary to eventually show tangible savings. Only then will an MCO be able to clearly justify case management as a reimbursable service.
The decision to include case management in the array of treatment services usually rests with a primary funding source or at the program level. As many traditional public sector providers overhaul their delivery systems to participate in managed care, they must recognize the importance of case management as a key element of effective treatment and communicate that to the funding source. If the primary source of funding (usually a State agency) expects or requires specific outcomes that go beyond sobriety or cost containment, then a program administrator must develop ways to measure those outcomes.
To undertake scientifically valid outcomes studies is beyond the reach of most treatment programs. Providers can, however, increase the chances of having case management activities reimbursed if they measure everything that helps the client, such as consumer-run support groups, drop-in centers, or "Compeer" programs, in which volunteers help clients maintain sobriety and manage other aspects of their lives. Keeping good records will allow managed care companies to determine exactly what's being provided - and what constitutes case management.
The multiple players involved in funding public substance abuse treatment have posed complex and ongoing problems for program administrators. Each funding stream has its own eligibility rules, service conditions, and reporting requirements, which frequently differ from those of other agencies supporting a program's operations. Case management services are no exception and have traditionally been funded through a variety of sources as well. These include
Block grants from Federal agencies
Medicaid, which included options that allow for non-medical services (e.g., the Medicaid Rehabilitation Option)
Medicare and Supplemental Security Income (SSI) for disabled clients
Migrant health funds
Private foundations and funds, such as United Way
State and/or local tax dollars
Private insurance
Far too often, the disparate mandates of these funders have exacerbated system and service fragmentation. Integration of funding streams has emerged as a strategy to meld services and provide continuity of care. Some States, in fact, have used Medicaid managed care initiatives as the catalyst for blending funding streams, particularly in full capitation models.
As States gain more freedom to allocate Medicaid dollars as they see fit, the prospect of increased flexibility in services offered at the program level improves. Programs that can account for funds received in terms of positive client outcomes will be better able to structure their service mix in response to clients' specific needs rather than to the dictates of funding agencies removed from the service delivery level.
Managed care is frequently used as a vehicle for integrating funding streams and for fostering collaboration among health care providers. For example, many managed care organizations establish (or will only contract with) integrated provider networks that
Offer a full range of services
Extend coverage over a wider geographical or population area (thus increasing the number of potential enrollees and sharing the financial risk among more providers)
Maximize efficiencies in areas like management information systems
When providers are organized in such a manner, administrative service organizations are engaged to handle a wide range of business duties for the network.
Blended funding approaches, especially those that give providers the necessary freedom to make clinical decisions while still holding them fiscally accountable, can preserve and support the case management function as an integral facet of modern substance abuse treatment. Capitation or enrollment rates based on genuine costs associated with providing treatment and "stop-loss" clauses that cover such contingencies as reimbursement for longer or more intensive treatment than anticipated may help satisfy the providers' desire for flexibility and the payer's demand for fiscal responsibility.
Substance abuse treatment services are treated in different ways depending on which overarching health care delivery model is implemented by the State or by the managed care organization(s) contracted to provide behavioral healthcare. The two models currently prevailing are the carve-in model and the carve-out model.
The carve-in model integrates physical (e.g., traditional medical services) and behavioral (e.g., mental health and substance abuse services) health care and is often the model chosen to manage a State's Medicaid population. Although the purchaser of services may elect a carve-in approach, frequently the MCO may elect to carve out behavioral health care by contracts with managed care organizations. This is because behavioral health care tends to be the most expensive cost center of treatment within an integrated, managed care model of treatment. The carve-in model generally appeals to providers because many individuals with mental illness and substance abuse problems also have serious physical health problems. Integrating the two also underscores the notion that since body and brain are part of the same system, mental illness and substance abuse are bona fide health problems.
However, in such a model, case management is often administrative in nature and involves clinical oversight and activities such as utilization review and prior authorization procedures. The primary care physician functions as the case manager or gatekeeper who assesses the range of services the client needs and, ideally, refers him to network providers who offer specialty services. This happens when the physician is ill-equipped to provide the often labor-intensive, client-specific case management functions needed to successfully manage the client/member.
This model for behavioral health care has two major drawbacks. First, primary care physicians may underdiagnose substance abuse problems, especially in populations such as women (in whom depression is often diagnosed but seldom tied to substance abuse) and the elderly. Lack of knowledge or the desire to hold down costs also may lead to underutilization of services, with consumers denied access to needed care.
Second, since the course and overall treatment costs of behavioral health problems are less predictable than many physical health problems, the ability to establish firm enrollment or capitated rates is difficult. If rates are too low, the problem of inadequately treating or excluding those most in need of costly or long-term care (e.g., clients needing residential treatment) becomes a legitimate concern. When services are subcontracted, skimming may become a problem. In this situation, the opportunity exists to cost-shift "difficult" clients to subcontractors who receive only a percentage of the capitated rate. Not only are funds insufficient to provide proper treatment when this happens, but the subcontracting provider's resources are strained to the maximum.
In carve-out arrangements, behavioral health care is considered distinct from other physical problems and is handled either as a separate contract or is intentionally excluded from a managed care plan. If behavioral health care is carved out and handled as a separate managed care account, it is possible to develop capitation or enrollment fees specifically tailored to this population. Carve-outs also provide States with a mechanism to monitor and control the use of substance abuse or mental health funds and some assurance that those problems are being addressed. Ideally, carve-out managed care organizations will have expertise in substance abuse services or will work jointly with providers who possess that expertise. In all cases, State officials must develop specific contract language to carefully define their responsibilities (CSAT's Technical Assistance Publication Purchasing Managed Care Services for Alcohol and Other Drug Treatment offers suggestions for assessing managed care approaches and structuring effective contracts for managed care services.)
Case management in a carve-out model is likely to remain a service function, particularly if the responsibility for behavioral health care is delegated to the public sector. Given the trends in behavioral health care, the public sector might be advised to learn from the example of the proprietary, more precise matching of clients and service packages through management information capabilities, some aspects of utilization review procedures, and the development of clinical pathways. These efforts also help providers use their resources wisely and ensure that appropriate and cost-effective services are available to individual consumers. Unfortunately, this method lacks integration with the physical medicine side of treatment, which can lead to ineffective case management and duplication of services by the behavioral health provider and the primary care physician.
To adjust their current operations to meet new demands, programs need to assess their systems, appraise their readiness to operate in a managed care environment, and position themselves and their case management services in a competitive market by identifying market niches and preparing for increased staff licensing and accreditation.
As discussed in Chapter 1, case management assumes different forms depending on its setting and organizational context. Before integrating with managed care, program directors and administrators need to understand how case management is practiced in their program. Administrators must identify potential buyers of case management services and must stay abreast of plans to integrate Medicaid with public funds and efforts to secure private vendors to manage public behavioral health care services.
Administrators also need to ascertain exactly who their program is serving, the nature and the range of clients' problems, and the gaps between what the program offers and what clients need. They must be able to articulate how these gaps are hindering the successful execution of their programs' mission.
With the blending of systems via managed Medicaid and Medicare, providers are now forced to compete directly with each other. Eventually, all services now delivered by traditional community providers will be delivered within a managed care framework. Currently, many public sector providers of services to people under Medicaid managed care guidelines (for managed care companies) are providing administrative and clinical case management services for a "fixed," "blended," or "bundled" rate. That rate is a small piece of the pie that comprises the total per-member capitation payment the provider receives and usually is not assigned a specific dollar value.
As a first step in organizational assessment, administrators must clearly define the case management model(s) being used in the program. At the agency level, community needs and available resources must be reviewed. Often case management services are subsumed under the general category of "the costs of doing business." Under managed care, it is important to know precisely what services are being offered, what they cost, and what outcomes can reasonably be expected. Case management must be scrutinized both as a stand-alone activity and as part of a total package of services potentially available to consumers. The importance of auditing the costs and revenues associated with various services cannot be over-emphasized, particularly if a system is moving toward a capitated or shared-risk paradigm. Case management, whether a direct service or administrative function, must add value and provide cost benefit to justify its inclusion in the total array of services.
Clinical case management must demonstrate direct or indirect benefits above those that consumers can expect from traditional services. The gatekeeping function in administrative-level case management limits the discretion and treatment planning authority of a substance abuse professional. Offsetting this disadvantage, ideally, are two systemwide advantages: reduced costs by denying unnecessary services and by providing support for people in the community so that they do not need more expensive residential or inpatient care, and better clinical decisionmaking. The gatekeepers' decisions are based on established clinical pathways and protocols - the goals of this standardization being improved care as well as lowered costs.
Reimbursement for the case management aspects of treatment may come from one or all of the following sources:
Private managed-care organizations (MCOs)
Fee-for-service clients
Private payers such as corporate employee assistance programs, foundations, and grant funding
Volunteer and local sources
Courts and criminal justice funding
Social service providers (e.g., child welfare)
User taxes and State and federally appropriated funds
Providers should understand exactly how these funding streams are integrated or separated, as well as the inherent flexibility in their use. Such knowledge will help design a case management program and will also help in advocacy efforts to shape State policy on funding streams.
It is equally important for providers to understand how case management is defined in their State's managed care contract, if at all. What specific activities are considered case management and are they reimbursable? If they are reimbursable, are there limits on the number of billable units per consumer? Is there a finite pool of funds available on a fee-for-service basis? Given the melding of clinical and fiscal functions at the provider level, it is also critical to consider who benefits from case management and who does not. What is a reasonable length of time to offer services to a consumer? It is imperative that program staff grapple with these questions to best allocate available resources.
In some cases, conversion to managed care must be accomplished in as little as six months after the enactment of legislation or by corporate decree, so providers must assess their readiness to make this transition rapidly and effectively.
Tools and surveys can help administrators do a readiness review by providing a clear picture of what models they are using and how they fit in the changing environment. One such tool is the Managed Healthcare Organizational Readiness Guide and Checklist reproduced in Appendix C. This and similar tools can help agencies evaluate their current operations within each of the following areas
In the managed care environment, programs will have to function as businesses and therefore must position themselves and their case management services in a competitive market (Brokowski and Eaddy, 1994). By focusing on the establishment of a market niche like the treatment of special populations (e.g., drug users, criminal justice clients, older adults, clients with HIV and AIDS), an agency can be a player in the transition to managed care. In addition, issues such as staffing, pricing, and salaries can be revisited within the market framework.
Despite its inefficiencies, the public system of behavioral health has more experience and expertise than private programs do in caring for the most seriously disabled populations and in providing services that focus on their everyday life problems, such as employment and housing. Since this chronically needy clientele is least likely to be covered by private employer health plans, it offers a natural market niche for public-sector service providers.
Providers who serve Medicaid and Medicare recipients will see an increase in commercial business as a result of managed care contracts but will primarily be paid indirectly. MCOs will become the main source of revenue for the providers, as opposed to the local or state government. Medicaid and Medicare revenues will flow from the government to the managed care company to the service provider. High-volume providers, who are successful at delivering high-quality, cost-effective services may even find themselves acquired by the managed care company.
State and Federal governments, in anticipation of the changing public sector system, have been disseminating resources to help publicly funded treatment providers survive and compete in a marketplace dominated by managed care organizations. The Federal Government is also currently designing programs and projects via the Center for Substance Abuse Treatment (CSAT) and the Center for Substance Abuse Prevention (CSAP). The National Leadership Institute Coordinating Center (NLICC) will provide resources, technical assistance, and materials to assist public sector providers in making the internal changes necessary to compete.
One of the most controversial aspects of case management is the issue of licensing. Many believe that case managers should have earned at least a master's degree. Others argue that some of the best addictions counselors have received their education through overcoming their own substance abuse.
While both viewpoints - and the many in between - are valid, managed care will increasingly require higher levels of education as case management becomes a common ingredient in its mix of services. Case management functions were performed by paraprofessionals in the 1980s and early 1990s. Today, however, credentialing standards of managed care organizations and other providers require that case management be performed by people with master's degrees in social work or education. All case managers may need to earn advanced degrees to perform reimbursable case management in the near future.
Provider profiling and performance reviews of individual practitioners are commonplace in managed care systems. Because data drive so many managed care decisions, any outlier, whether the cost of one consumer's care or the performance level of an organization or professional, is likely to prompt a closer look. It seems likely that, as managed care organizations gain greater influence in the substance abuse world, there will be an increased demand for more professionally trained treatment personnel and for provider organizations to gain accreditation from national organizations such as the Joint Commission on Accreditation of Healthcare Organizations (JCAHO), the Rehabilitation Accreditation Commission (CARF), Community Mental Health Services (CMHS), SAMHSA, or the National Committee for Quality Assurance (NCQA).
The profound changes in reimbursement patterns have sent shock waves through the substance abuse treatment field. And change clearly will persist. Payers and those who allocate resources will continue to demand that the efficacy of services be demonstrated. On the programmatic level this will necessitate evaluating each service component and determining how it contributes to overall objectives. Programs must articulate their service expectations and decide what kinds of training and experience a practitioner must have to successfully deliver them.
What is needed now is more research on case management. Several promising lines of research, presented in Chapter 4, suggest that certain forms of case management activities improved client outcomes, resulting in fewer employment problems, increased income, longer treatment retention, and diminished drug use. Other studies focusing on a criminal justice population suggest far-ranging benefits. However, the applicability of those studies to the population outside prison and jail has yet to be established.
This research should be undertaken in a variety of settings and should address issues that demonstrate the efficacy of case management activities. What approaches work best for what populations in which kind of setting? While such questions are typically investigated by university researchers through demonstration projects, the research community must work with community-based programs in this case. It will require hands-on experience to fully understand how case management functions, what benefits it achieves for program clients, and how much it costs to provide this service. Case managers must be able to follow their clients from pretreatment to aftercare to determine if treatment and services have succeeded. Quantifying its benefits is the most compelling argument for case management.
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