OVERVIEW OF PRESENTATION

1. SLOWING THE GROWTH OF MEDICAID SPENDING IN VIRGINIASTRATEGIES DESIGNED TO CONTROL CHILDREN’S MENTAL HEALTH SERVICES EXPENDITURES

2. OVERVIEW OF PRESENTATION Flores - Virginia Senate Finance Committee - NASHP • Background • The issue • Growth in Medicaid spending on children’s community mental health rehabilitation services • The problem(s) • The solution(s) • Multi-year, multi-pronged strategies enacted to restrain the growth of spending • The results • Lessons learned

3. BACKGROUND Flores - Virginia Senate Finance Committee - NASHP • Three state agencies – Department of Medical Assistance Services, Department of Behavioral Health and Developmental Services, and Comprehensive Services Act (CSA) – fund children’s mental health services. • Non-traditional, community mental health services are “carved-out” of Medicaid managed care. • Forty community services boards (CSBs) and private providers provide optional mental health rehabilitative services under Medicaid State Rehab Option. • CSA pays for services to at-risk children, youth, and their families.

4. THE ISSUE: 735% GROWTH IN MEDICAID—FUNDED OUTPATIENT MENTAL HEALTH SERVICES Flores - Virginia Senate Finance Committee - NASHP

5. THE ISSUE Flores - Virginia Senate Finance Committee - NASHP • Over a ten-year period, Medicaid spending for non-traditional, community mental health services in Virginia grew substantially. • FY 2000 expenditures - $3.6 million • FY 2010 expenditures - $466.4 million • In four years, expenditures for three Medicaid-funded services for children – intensive in-home and therapeutic day treatment services, and mental health supports – increased from $86 to $335 million.

6. THE ISSUE Flores - Virginia Senate Finance Committee - NASHP • Intensive in-home services grew by 250 percent from FY 2006 to FY 2010. • Two to six month family preservation interventions for children and adolescents with or at risk of serious emotional disturbance, including individuals with intellectual disabilities. • Therapeutic day treatment has grown by 418 percent since FY 2006. • Services for children and adolescents. • Combines education and mental health treatment. • Evaluation; medication education and management; daily living skills; and individual, group, and family counseling.

7. THE PROBLEM Flores - Virginia Senate Finance Committee - NASHP • Inadequate oversight of program. • CMS ruling in 2005 led to influx of private providers of community-based services. • Regulation and oversight of services built around CSB delivery model. • Agencies unprepared for additional workload. • Licensing staff overwhelmed by expansion of other community-based service initiatives. • Prior-year administrative budget reductions never restored. • Strong utilization management and provider qualifications controls lacking. • Questionable marketing practices by private providers. • No independent assessment of children prior to services being provided.

8. THE PROBLEM Flores - Virginia Senate Finance Committee - NASHP • Impact of sister agency initiative overlooked. • CSA initiative designed to transition children and adolescents from residential to community care. • Demand for community-based care increased. • Costs shifted from CSA to Medicaid. • Other concerns. • Children unwittingly being labeled with serious mental health disorders by accepting service. • Unclear if appropriate services being provided. • Limited resources being diverted from other mental health service needs.

9. THE SOLUTIONSHORT-TERM -- BLUNT INSTRUMENTS Flores - Virginia Senate Finance Committee - NASHP • Rates reduced for therapeutic behavioral services* • Reduced rates for certain therapeutic group home and day treatment services between 3 and 5 percent • Rates reduced for intensive community treatment from $70 to $60 per hour • Rates reduced for psychiatric residential treatment facilities* • Reduced operating rates by 3 to 4 percent • Eliminated annual inflation adjustment * Partially restored reductions with FY 2011 FMAP extension.

10. THE SOLUTIONLONG-TERM -- SHARPER TOOLS Flores - Virginia Senate Finance Committee - NASHP • Prior authorization: Implemented restrictive requirements on services. • Provider Qualifications : Enhanced provider and staff qualifications. • Audits: Increased monthly audits, including compliance audits related to staff qualifications, treatment plans, and training as well as expenditures. • Marketing Rules: Implemented rules on marketing services similar to rules that apply to managed care organizations. • Independent Assessments: Examined changes to de-link clinical assessment from direct service provider.

11. LONG-TERM SOLUTIONINDEPENDENT CLINICAL ASSESSMENTS Flores - Virginia Senate Finance Committee - NASHP • Effective July 2011, the Commonwealth implemented the Virginia Independent Clinical Assessment Project (VICAP). • Under VICAP, children will be required to have an independent clinical assessment prior to the provision of children’s mental health rehabilitation services. • VICAP can recommend any mental health service based on the level of need; prior authorization still required. • Until now, providers have found and screened children for services. • Preliminary reports suggest the volume of services is down.

12. LESSONS LEARNED Flores - Virginia Senate Finance Committee - NASHP • Keep your eyes on the ball • Use data mining techniques to evaluate trend increases • Provide adequate staffing to ensure proper oversight/ make sure need is documented and communicated • Stay apprised of sister agency initiatives • Adopt advocacy groups as allies • Better coordinate behavioral health services • Take advantage of tight budget times to make difficult changes • Develop good working relationship with budget staff

13. Flores - Virginia Senate Finance Committee - NASHP Contact Information Joe Flores, Legislative Fiscal Analyst Senate Finance Committee 804.698.7483 jflores@sfc.virginia.gov

14. APPENDIX I Flores - Virginia Senate Finance Committee - NASHP • Intensive in-home services • Time-limited, usually between two and six months, family preservation interventions for children and adolescents with or at risk of serious emotional disturbance, including individuals with intellectual disabilities • Crisis treatment; individual and family counseling; life, parenting, and communication skills; case management activities and coordination with other required services; and 24-hour emergency response • Therapeutic day treatment services for children and adolescents • Combines education and mental health treatment • Evaluation; medication education and management; daily living skills; and individual, group, and family counseling