A new report by advocates for Michigan's public Medicaid behavioral health system estimates it has saved the state $5.3 billion over the past 18 years and would save an additional $7.4 billion through 2024 using their patient-centered and integrated care model.
They also contend rate increases for behavioral health systems were lower than Medicaid HMOs and state Medicaid programs during that period. A trade group for the HMOs contends that the comparison is unfair because the figures used for HMOs are national in scope rather than focused on Michigan.
The report comes as advocates of Michigan's public Medicaid mental health system plan to present a case for retaining the current $2.6 billion system. Gov. Rick Snyder has proposed to allow Medicaid HMOs, some of them for-profit companies, to manage both the physical health and behavioral health systems in a single managed care contracts. The decision right now is before the Michigan Legislature.
The study was conducted by the Michigan Association of Community Mental Health Boards' Center for Healthcare Research and Innovation. The MACMHB represents nearly 100 mental health programs, agencies and the state-funded mental health authorities known as prepaid inpatient health plans.
The MACMHB study found cumulative rate increases from 1998 through 2015 for mental health organizations were 72 percent. For Medicaid HMOs, based on national data, rate increases have totaled 118 percent during that period. The study did not include specific comparison data for Michigan's 11 Medicaid HMOs.
The cost savings assumes mental health organizations have lower overhead costs than the Medicaid health plans, which administer physical health and some mild and moderate behavioral health services.
The report also states that behavioral health organizations would save the state an additional $7.4 billion from 2015 to 2024 than under managed care. The cumulative projected savings of $12.7 billion over the entire 26-year study period is based on comparing rate increases of mental health programs in Michigan with Medicaid state programs on a national basis.
Bob Sheehan, CEO of the Michigan Association of Community Mental Health Boards, said the report's intent is to show how effective mental health organizations are in managing state Medicaid dollars. He acknowledged that Medicaid HMOs have some medical cost drivers that were not accounted for in the study.
"The report shows we have done a heck of a job in controlling costs since 1998," Sheehan said. "It shows how Medicaid rates have grown across the country. If Michigan Medicaid rates have grown like the rest of the country, (the state) would spend $5 billion more than today. (Medicaid HMOs) did not manage (care) as well as we did."
The MACMHB report also showed an average 6.7 percent annual commercial insurance rate increase over the 18-year study period, compared with a 6.6 percent Medicaid rate increase and 4 percent behavioral rate increase.
Dominick Pallone, executive director of the Michigan Association of Health Plans, said he is still reviewing the MACMHB report. He said his initial reaction is that he disagrees with most of the report. He said the major flaw of the study is that it compares national Medicaid rate increases instead of the much lower Michigan Medicaid rate increases.
"I would agree that managed care does indeed help to control costs for states," Pallone said in an email to Crain's. "However the study appears to compare behavioral health spending trends to hypothetical nonmanaged care (or fee-for-service) expenditures — and then attempts to compare to private insurance (making an apples to oranges comparison)."
Pallone said MACMHB's study shows an average 4 percent rate increase over 18 years for behavioral health services in Michigan. However, Michigan's Medicaid health plans averaged a 2.75 percent average increase between 1999 and 2003. He said he is researching more current data.
"A simple comparison would actually show that private health plans have been more cost-effective than public behavioral health managed care," Pallone said.
The mental health and Medicaid HMO associations have been at odds since early last year when Snyder's proposed 2017 state budget included a provision that could have allowed the state's managed care organizations to manage the $2.6 billion Medicaid behavioral health system. Currently, 10 prepaid inpatient health plans, which are operated by the public mental health system, manage the funding and contract with providers.
Mental health advocates strenuously objected to HMOs taking over the entire system and the issue has been contentious the past year.
Earlier this month, the Michigan Department of Health and Human Services issued a final report to the Legislature that outlines recommendations developed through a nine-month meeting process that involved health plans, mental health agencies, providers and families and clients. The report recommended pilot projects to test integration from the mental health agencies, but the 11 Medicaid HMOs, while allowed to submit proposals, were not considered as part of the main report.
Pallone and other Medicaid HMO executives have argued that health plans deserve to have a chance to prove they can do a better job at managing the bifurcated $8.9 billion medical and $2.6 billion annual behavioral health systems in Michigan.
A MAHP "minority report" last month concluded that "integrating these operations under a managed care system would allow for a case manager to ensure proper treatment of all issues, with a goal of improving services and avoiding unnecessary treatment."
Meanwhile, the MACMHB report says mental health organizations have unique expertise in "serving persons with complex needs that (spans) a wide range of health and human sectors (from psychiatry to housing supports, from peer-delivered services to inpatient psychiatry, from respite care to assertive community treatment, from home-based care to employment supports), far outside of the expertise of traditional managed care arrangements."
Sheehan said there are specific reasons how mental health agencies lower Medicaid managed care costs. They also are actively improving care coordination in more than 700 active pilot projects. He added that mental health agencies adhere to health care's Triple Aim: population health improvement, enhancing consumer satisfaction and lowering per person costs.
The MACMHB report contends mental health organizations lower costs by the following: "active management of comprehensive and closely aligned service and support provider networks and central community convener role; whole person orientation, impact of social determinants of health, and a person-centered planning approach" and care integration efforts.
"Mental health agencies say they've saved state billions under Medicaid" originally appeared in Crain's Detroit Business.