Medicaid Managed Care for Persons with Severe Mental Illness in New York: Challenges and Implications Michael Birnbaum Director of Policy, Medicaid Institute United Hospital Fund June 5, 2008 Funded by the New York State Department of Health

2 The Medicaid Institute at the United Hospital Fund provides information and analysis explaining New York’s Medicaid program, with the goal of helping all stakeholders redesign, restructure, and rebuild the program. “The Institute’s mission is to shape sound health policy and practice so that Medicaid can meet its most important challenges: covering more low-income New Yorkers, better managing patient care, reforming payment systems, providing effective long-term care, and improving program administration.” James R. Tallon, Jr. President United Hospital Fund

3 A cornerstone of New York’s health insurance system  Medicaid provides insurance to 4.1 million low-income New Yorkers.  1.6 million children  1.5 million (non-elderly, non-disabled) adults  Over 1 million elderly or disabled beneficiaries  Medicaid funding sustains nearly one-third of New York’s health care economy.  Medicaid accounted for $44.7 billion in payments to health care providers and plans in New York in Note: Medicaid enrollment is from June 2007; categories do not sum to total due to rounding. Source: United Hospital Fund analysis of NYS DoH enrollment reports; CMS NHE and 64 data.

4 Source: United Hospital Fund analysis of NYS Department of Health enrollment reports: March 1997 – March Managed care enrollment:

5 Managed care penetration Source: United Hospital Fund analysis of NYS Department of Health enrollment reports: April 2007.

6 Managed care: 60% of enrollment and 14% of spending Note: Medicaid spending is from FFY Enrollment is from December Source: UHF analysis of New York State Department of Health enrollment reports and CMS 64.

7 Disabled and Elderly (SSI) Medicaid beneficiaries in New York City N = 600,000 (2006) (Prior to 2006 ) (2007)

8 Medicaid Institute analysis of beneficiaries with SPMI  Analysis of beneficiaries’ spending, service use, and diagnostic patterns using the Medicaid paid claims file.  Data provided by New York State Department of Health  Research and statistical programming by Center for Health and Public Service Research, New York University  SSI adults (18-64) with SPMI in FFS Medicaid as of December 2004 and facing mandatory managed care.  Cohort identified using DOH algorithm, based on utilization thresholds for mental health services.  Slightly different population than those meeting a clinical definition of SPMI.

9 Those with the most severe mental health conditions  SSI adults with SPMI most often have :  Major depression  Bipolar disorder  Schizophrenia  Other psychosis  Some combination of the above

10 Rates of select chronic conditions: SSI adults with SPMI Note: Data are from 1999 through Cardiovascular conditions include coronary heart disease, congestive heart failure, and hypertension. Source: Birnbaum M. and L. Powell. Medicaid Managed Care for Persons with Severe Mental Illness: Challenges and Implications. Medicaid Institute at United Hospital Fund, Bottom 80% Next 15% Top 5%

11 Prevalence of other significant health conditions: SSI adults with SPMI Note: Data are from 1999 through Substance abuse conditions include alcoholism and drug addictions. Source: Birnbaum M. and L. Powell. Medicaid Managed Care for Persons with Severe Mental Illness: Challenges and Implications. Medicaid Institute at United Hospital Fund, 2007.

12 Primary care visits in a one-year period: SSI adults with SPMI Note: Data are for CY Shares may not sum to 100 percent due to rounding. Source: Birnbaum M. and L. Powell. Medicaid Managed Care for Persons with Severe Mental Illness: Challenges and Implications. Medicaid Institute at United Hospital Fund, 2007.

13 Outpatient mental health visits in a one-year period: SSI adults with SPMI Note: Data are for CY Shares may not sum to 100 percent due to rounding. Source: Birnbaum M. and L. Powell. Medicaid Managed Care for Persons with Severe Mental Illness: Challenges and Implications. Medicaid Institute at United Hospital Fund, 2007.

14 Outpatient prescription drugs: SSI adults with SPMI Note: Data are for CY Shares may not sum to 100 percent due to rounding. Source: Birnbaum M. and L. Powell. Medicaid Managed Care for Persons with Severe Mental Illness: Challenges and Implications. Medicaid Institute at United Hospital Fund, 2007.

15 Hospital admissions in a one-year period: SSI adults with SPMI Note: Data are for CY Shares may not sum to 100 percent due to rounding. Source: Birnbaum M. and L. Powell. Medicaid Managed Care for Persons with Severe Mental Illness: Challenges and Implications. Medicaid Institute at United Hospital Fund, 2007.

16 Hospital admissions in a one-year period – a closer look: SSI adults with SPMI Note: Data are for CY Shares may not sum to 100 percent due to rounding. Source: Birnbaum M. and L. Powell. Medicaid Managed Care for Persons with Severe Mental Illness: Challenges and Implications. Medicaid Institute at United Hospital Fund, 2007.

17 Less concentrated Medicaid spending  There are very few low-cost SSI adults with SPMI.  The rule does not apply.  The lowest-cost 80 percent accounts for 46 percent of the cohort’s total spending.

18 Note: Costs are for CY 2004 and are not annualized for full-year enrollment. Source: Birnbaum M. and L. Powell. Medicaid Managed Care for Persons with Severe Mental Illness: Challenges and Implications. Medicaid Institute at United Hospital Fund, Birnbaum M. and J. Billings. New York’s SSI Beneficiaries: the Move to Managed Care. Medicaid Institute at the United Hospital Fund, Comparison of per capita Medicaid spending: SSI adults (Bottom 80%) (Next 15%) (Top 5%)

19  For lower-cost SSI adults with SPMI—the bottom 80 percent—two-thirds of Medicaid costs are already driven by services that would be a cornerstone of any intervention aimed at curbing spending.  Outpatient mental health services  Outpatient prescription drugs  Inpatient hospital account for only a small share (13%) of their Medicaid costs—leaving a very small target for spending that is “potentially avoidable.” Where can the Medicaid savings come from?

20 Patient profile: lower-cost beneficiary Ms. F

21 Mr. A Patient profile: ultra-high cost beneficiary

22 Services delivered through FFS for MMC enrollees:  Outpatient mental health  Inpatient mental health  Includes stays in general hospitals with MH diagnosis  Outpatient substance abuse  Inpatient substance abuse  Outpatient prescription drugs Key services are carved out of New York’s managed care benefit for SSI enrollees, including those with SPMI. Note: One substance abuse service, detoxification, is carved-in for SSIs.

23 Average per capita spending by service area: SSI adults with SPMI Note: Costs are for CY Source: Birnbaum M. and L. Powell. Medicaid Managed Care for Persons with Severe Mental Illness: Challenges and Implications. Medicaid Institute at United Hospital Fund, 2007.

24  Current policy limits MMC plans’ ability to coordinate care and may undermine incentives to reduce hospitalizations.  Most spending remains outside managed care  State cannot assess MMC plan performance  Achieving cost savings and providing high-quality coordinated care will require a strategy beyond the two existing options:  MMC with significant carve-outs  Fee for service Challenges and opportunities