This is West Virginia's position on Managed Care, provided to us by Melody Urbanic of OBHS. This may not reflect the views of WV ADAPT. We will provide a responce to this position which can be found on this page in the near future.

Managed Behavioral Health Care in West Virginia

In West Virginia, as in many states, the gap between the number of persons with identified behavioral health needs and the resources that are available to fund these services has increased. In recent years, West Virginia has narrowed this gap by turning to Medicaid as a major source for funding. This dramatically impacted the state's ability to serve more people and expand the service base. However, two major challenges have been associated with the shift in funding source.

The first challenge is that the tremendous growth in behavioral health services has been a contributing factor to strains on the Medicaid budget. The second challenge relates to the use of state dollars to provide the state match for the Medicaid program; these dollars were previously targeted for other services including non-Medicaid reimbursable services. Since 1992, there have been various attempts to address these problems. These efforts included cutting rates for specific services (a short-term strategy adopted pursuant to recommendations of the 1996 Medicaid Crisis Panel), the institution of a clinically based prior authorization program (New Directions), and the development of a managed care program (long-term strategy).

In 1993, the state completed a functional analysis of managed care to determine how best to prepare the behavioral health system for implementation. The analysis indicated that outcome and satisfaction measures, practice guidelines, and an increased data analysis capacity needed to be developed. In 1994, the revision of the manuals for Medicaid case management, clinic and rehabilitation assisted in preparing for managed care while controlling costs in a more appropriate way than simple rate reductions. In 1995, outlier analysis was implemented, and teams were established to develop a universal grievance process and identify performance indicators. In 1995, the state was informed by the federal Health Care Finance Authority, that a Section 115 Medicaid Waiver would not be approved and there were serious issues related to the approval of a Section 1915(b) Medicaid Waiver. Due to these difficulties, the state elected to abandon seeking a waiver and determined that the efforts that had been made to prepare the behavioral health system for managed care would serve as a good framework for the actual managed care program. It was clear that the efforts to revise medical necessity criteria and implement utilization management strategies would need to be integrated with ongoing managed care planning. The revisions in the case management, clinic and rehabilitation manuals were identified as the most appropriate means to initiate movement toward care management.

Revision of the case management manual was completed in October, 1995. This publication defined medical necessity to include both diagnosis and functional impairment. Similarly, the revisions to the clinic and rehabilitation manuals, which are the focus of this summary, provide the basis for improving the method for determining medical necessity, as well as improving management of services by reducing over utilization.

In 1996, the West Virginia Department of Health and Human Resources (WVDHHR) implemented the New Directions Project as a means of appropriately targeting suitable resources for both state and Medicaid funded behavioral health services to the various populations the state is mandated to serve. In addition to being a policy and planning tool, New Directions is a utilization management system. Data is collected and utilized to make decisions about appropriate levels of care and the types and amount of services people should receive based on their level of functioning and type of disability. New Directions was designed to provide a sound preliminary base for West Virginia's managed care system.

For the past several years, West Virginia evaluated various managed care models and laid the groundwork for implementing care management. The current challenge facing West Virginia is the design and implementation of a managed behavioral health care system that preserves the public interest and mission, traditionally entrusted to government, while integrating this social mission with sound business policies and clinical best practices. While there is consensus on the overall vision for care management, there are a number of opinions about approaches that will meet the needs of the West Virginia system. The overall goal is the development of a fully capitated behavioral health system, which is clinically-driven, outcomes based and uses clear performance measures to evaluate system quality and consumer outcomes. While this is congruent with the overall vision of most care management programs, and while there is value in "beginning with the end in mind" the success or failure of care management lies in the planning and implementation of various phases that move the system toward a fully capitated, clinically-driven and outcomes based system.

The literature on managed care identifies four stages in managed care development. These stages are as follows:

First Stage: This is the developmental stage. During this stage a utilization management system is frequently used, initial cost savings are realized in areas of overutilization and in reduction of high cost service utilization and data collection is established. The financing mechanism is most frequently fee-for service, but rate bundling, prior authorization and service limits are implemented.

Second Stage: During this stage provider networks are formed, the phase-in process for capitation or case rates is identified and initial case rates or capitation rates are established and implemented.

Third Stage: Provider networks are strengthened and expanded. Capitation rates are refined and additional populations are phased in. Data collection is adjusted and performance evaluation is based primarily on system outcomes.

Fourth stage: In this final stage, full capitation is realized. System and consumer outcomes are identified and utilized in performance evaluation.

States that have implemented managed care in public sector services are generally in Stage 1 or 2. A few who have been engaged in care management for several years are in Stage 3. It is helpful to evaluate West Virginia's efforts to implement a behavioral health managed care system in the context of these stages.

Most of the work done to date relates to the developmental stage. New Directions has established a data base which is being used to authorize Clinic and Rehabilitation services. The data collected can be used to answer the necessary questions about the system to refine eligibility determination and develop capitation rates. Over the last ten years, institutions have been downsized, and there has been a shift to the development of a sound community-based system and the development of local systems of care to serve those persons "most in need". The expansion of Medicaid services and the increase in qualified behavioral health service providers has created an increase in Medicaid expenditures and has led to a legislative oversight aimed at reductions in behavioral health expenditures and increased accountability.

The implementation of New Directions has helped to prepare the system for behavioral health managed care by providing a framework for utilization management that will be further developed into a managed care system. The core elements of the initial New Directions project were the redefinition of medical necessity and the establishment of a core data collection process that provided both demographic and clinical information that can be linked to service utilization and cost data. The outcomes from New Directions are as follows:

• A data base has been established which includes demographic, clinical and functional information about consumers. The data can be compared across disability groupings --persons with the same disability can be compared. In the initial waiver application, this was identified as one of the major problems with the data used.
• Overall, $19M has been reduced from billings for Clinic and Rehabilitation Services. While the actual billings for assessment increased as anticipated in State FY'97, the change in the definition of medical necessity and the requirement to assess consumers to establish medical necessity has had a major impact on reductions in other areas. Requiring an objective evaluation of functioning and clinical need before implementing services may serve to reduce utilization, even in a fee-for-service model, if the service cannot be clinically justified.
• There were 11,902 additional consumers evaluated in State FY '97. In addition to new persons presenting for behavioral health services this figure represents a number of consumers who were already receiving services but had either not been evaluated or were evaluated under another billing code. In the first instance, the evaluation is necessary to ensure that services are appropriate, in the second instance, the previous billing has now been shifted to Clinic Evaluation and should represent no increased cost to the system. While accountability has been improved access has not been affected.
• A data/billing link has been established that confirms that an eligible diagnosis and the appropriate assessments have been completed before billing is authorized and claims are paid. This ties the reporting of data to billing and has resulted in a) decreased overutilization; b) increased numbers of providers have improved data collection capabilities and gone to data stream reporting; c) reports have been developed that track claims and link claims to approvals.
• The requirements for assessment have added an administrative and documentation burden for providers. The data being collected is currently under review to ensure that only necessary demographic and clinical information is being collected. Expert Panels were convened to recommend which data elements are necessary to make a determination of eligibility. These elements will form a core of critical elements to be utilized to determine eligibility. One of the functions of an Administrative Services Organization (ASO) or Managed Care Organization (MCO) will be to review all cases of persons denied services, all persons found ineligible based on the formulas developed to determine eligibility and outliers (persons who receive low or high amounts of service).
• There were major concerns from providers that implementation of the initial phases of New Directions would "put providers out of business". There has been no decrease in the number of available providers since the initial implementation of New Directions so consumer access has not been impacted due to a reduction in available service providers.

The New Directions project has been an effort to prepare the system for Stage 2 of managed care. This stage includes the formation of provider networks, the development of contracts, identification of target populations and phase in strategies and the development of case rates or initial subcapitation or capitation rates. WVDHHR recognizes the need for further refinements in the New Directions initiative that focus less on utilization management and more toward development of case rates or capitation. However, recent reviews by HCFA, including the taking of a $2 million deferral, continue to underscore the need to further evaluate the appropriateness of utilization of certain services as well as the readiness of providers to meet the unique demands of managed care. Despite the impact of these issues, there are a number of areas of agreement that can be used as working principles in the development of the managed care system.

Based on the recommendations of various groups and an evaluation of system needs, the Department of Health and Human Resources is proposing a phase-in of behavioral health managed care that is based on the following system goals:

1) craft a West Virginia Behavioral Health Managed Care system that is built on the core provider system that is the cornerstone of behavioral health service delivery;

2) control total behavioral health expenditures;

3) improve the accountability and responsibility of providers (performance activities versus compliance activities);

4) the model meets immediate HCFA concerns and can facilitate the development of a more flexible financing strategy (capitation);

5) maintain core capacity throughout the process, preserve deinstitutionalization efforts, and expand community-based options without allegiances to preserving specific providers;

6) support provider efforts that improve managed care readiness and that move them to an ability to bear risk-- providers need at a minimum these core competencies: 1) utilization management capability; 2) clinical competency; 3) financial reserves; 4) data management capacity.

7) the system must be efficiently managed with the majority of dollars spent on direct care.

There is a general understanding that existing providers, particularly those that provide statutorily mandated services (e.g. the fourteen CBHC's, or a sufficient number of behavioral health providers to meet access standards and maintain capacity for core services) must be included as the core of provider networks to employ their knowledge of local service systems. There is also agreement that an ASO (Administrative Services Only) contractor should be engaged to assume certain responsibilities within the system and help the system prepare, both at WVDHHR and provider level, for the subsequent phases of care management. Less agreement exists on how the contract with the ASO should be structured and what the responsibilities of the ASO should include. The West Virginia Department of Health and Human Resources has reviewed current public sector managed care models that can best meet the immediate goal of dealing with the recent deferral taken by HCFA and stabilizing Medicaid expenditures, while still supporting the ultimate goal of a clinically driven system based on best practices, with an emphasis on positive consumer outcomes. Further steps toward that goal include a behavioral health care management system that is data based, with predictable and reasonable costs, shared risk and demonstrated accountability. After accounting for the strengths and weaknesses of the various models reviewed, WVDHHR has chosen to pursue a model that would have the Department contract with an Administrative Services Organization (ASO) to meet the immediate goals of the Department and to transition this model, over time, to one where the ASO contracts with a provider network, bears risk, and ultimately transitions a substantial portion of its' role to a sustainable provider network. The details of the ASO contract and the transition process have yet to be enumerated and will be worked out in collaboration with the provider and consumer communities over the coming months.

In all phases of the development and implementation of managed care input will be solicited from various stakeholders. Input needs to be structured in order to ensure that any bid processes will not be compromised. Recommendations of the Governor's Cabinet Council on Health and Human Resources, Committee on Behavioral Health and the New Directions Quality Council will be used to form a new committee to make recommendations related to the development of Behavioral Health Managed Care and specifically, the RFP for engaging an ASO. Composition of this group will be representative of consumers, family members and parents, providers, and various disability groups impacted by behavioral health managed care.

Based on an evaluation of the immediate short term needs, the current system status, and the long term system goals the following model has been proposed for Behavioral Health Managed Care in West Virginia:

Model: The model in Phase I is based on the design of the State contracting with an ASO. Utilization Management will be continued and refined and recommendations regarding Provider Network feasibility and configuration will be completed. It is anticipated that the contract will be a 2 or 3 year contract with annual review and an option for up to two years renewal if necessary. The target date to engage the ASO is July, 1999.

Roles and Responsibilities:

Administrative Services Organization (ASO):

• Perform utilization management functions including but not limited to: review of initial eligibility determination, prior authorization review and approval, ongoing retrospective reviews and review of all denials, outliers and requests for redetermination. The ASO will utilize an identified data set to make these determinations and prepare required reports.
• The ASO will assist the State in making the necessary modifications to the New Directions assessment package and in the identification of critical fields to be used in the Version 6.0 forms
• The ASO will provide compliance monitoring for providers and technical assistance to improve compliance with Medicaid requirements, particularly documentation requirements
• The ASO will work with the State and stakeholder groups to analyze cost and clinical data to set performance standards, clinical standards and rates.
• The ASO will assist the WVDHHR in improving providers' internal processes, initiate a provider profiling process, improve providers' managed care readiness and train providers.
• In the latter stages of the Phase 1 contract, the ASO would make recommendations to the State regarding potential provider network configuration for Phase 2

State:

• The State will continue to do monitoring functions related to HCFA compliance (SUR Unit activity)
• The State will work with the ASO and stakeholder groups to analyze cost and clinical data to set performance standards, clinical standards and rates.
• The State will continue to maintain the data base required to make eligibility determinations, to complete state and federal reports and to make policy decisions related to funding.
• The State's contract with the ASO is based on a management fee with penalties and incentives built into the contract and the contract is monitored on an ongoing basis
• The State continues contracts with current providers and inserts performance requirements and penalties that mirror the requirements for the ASO as much as possible

Providers:

• Provider contracts will include performance and clinical standards and targets that reflect as closely as possible the targets for the ASO.
• Providers will utilize data to develop utilization management systems on-site that link assessment with decisions about appropriate levels of care and the types, amounts and costs of services consumers receive based on their level of functioning and type of disability
• Providers will have improved data collection capabilities (data stream reporting) and will have developed reports that track claims and link claims to billings.

-Outcomes

- State contracts with an ASO for Utilization Management functions

-The Utilization Management system is used to improve Clinical Best Practices, Performance Measures, Outcome Measures, and Provider capacity, building the competencies necessary to bear risk in a managed care environment.

-During this period there will be an assessment of the need for the realignment of the services system, recommendations regarding the configuration of provider networks and the impact of any new realignment of regions, catchment areas or other changes to reduce the possible negative effects on consumers, and recommendations for phase-in of subsequent phases of managed care.

Model: This phase includes the development of provider networks and the initial contracting with networks. The State continues to contract with the ASO.

Features:

-Continue contract with ASO but emphasize development of provider competencies

-Begin development of provider networks and provide incentives for provider networks in contracts

-Continue contracts with individual providers

-Mirror performance requirements of ASO in provider contracts and add management and competency requirements to improve providers ability to bear risk

Model:

ASO contract is moved to provider networks. State contracts with provider networks/ASO to purchase managed care functions.

Features:

- Phase out ASO contract- Contract with Regional Provider Networks who contract with the ASO

-Risk is assumed by the MCO

-Regional Provider Networks may contract with individual providers to ensure that required service array is being delivered

-Begin capitation for Adult MI and SA population

The Department of Health and Human Resources is committed to the development and implementation of a model for managed care with the initial phase being implemented by July 1, 1999.