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Self-Managed Care: The most cost effective managed care

By Daniel B. Fisher, M.D., Ph.D.

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Health care reform, at a state level, is increasingly turning towards managed care as a mechanism to contain costs. Managed care provides opportunities for the empowerment of consumers, because the most cost-effective care is self-managed care which draws on the power of each individual to direct their own healing. Western medicine has increasingly emphasized the need for people to rely upon experts and technology to cure them. This increasing paternalism plays a major role in increased health care costs because it robs people of their inherent power to heal, thereby expanding the reliance on experts and technology. In contrast, the facilitation of self-managed care fulfills both the empowerment goals of the consumer movement and the cost-containment goals of managed care. An excellent description of what we mean by self-managed care is found in the Declaration of the World Health Organization in 1978:

"People have the right and the duty to participate individually and collectively in the planning and the implementation of their health care."

Managed care can also mean risks of consumer/survivors being shut out of decisions. In an effort to open opportunities for greater participation in the policies being changed, I will now describe ways in which consumer/survivors can participate in health care reform on a collective level. Consumer/survivor participation in policy formation greatly assists individual healing because the services are in tune with c/s needs and it symbolizes a system supportive of empowerment.

Future of Medicaid being Debated at the Federal Level:

During the next several months, the pace of state change is slowing while the Administration and Congress debate the future of the Medicaid Program. If you feel that the federal government should continue to ensure that people with psychiatric disabilities are covered by Medicaid and the federal government needs to retain oversight of the program, as the administration wants, let the Administration, your congressperson, senators, and governor know this. If, on the other hand, you feel disability determination and oversight should be left up to each state to decide under MediGrants, as presently proposed by Congress, let your elected officials know that too.

Two Major Paths to State Medicaid Managed Care:

Below is an outline showing two main routes states and counties are taking to Medicaid managed care in efforts to cut costs. Shown on the left, below, is the route by which the state or county mental health authority gains control of the Medicaid funding stream thereby retaining control of mental health policy. In those cases, consumer/survivor pressure should continue to be applied to the mental health authorities to influence mental health policy. On the right below, is the route by which a state Medicaid Authority retains control of Medicaid funding after the waiver and thus gains increased control of mental health policy. In those states the consumer groups need to realize that the game has been moved to a new table. To continue to participate in mental health policy in those states, consumer/survivors need to establish means of influencing the Medicaid Authority and managed care company's decisions directly. This point will be illustrated next by looking more closely at Massachusetts.

Presently a majority of state and counties, however, have not decided which model to follow. In those states, consumer/survivor groups should get involved in committees that are deciding on waivers and which route to follow. In New York, consumer/survivors are included in such committees. If you are not sure where your state is in this process of change, contact your state or county mental health office of consumer relations or planning.

Massachusetts as an Example of a State Medicaid Authority Gaining Control of Mental Health Policy:

In 1991 Massachusetts obtained a 1915b Freedom of Choice waiver from HCFA which allowed the state to restrict the choice of providers and to set many of the other rules for its Medicaid program. Without significant consumer or Department of Mental Health participation, the state decided to have its Medicaid branch start setting its mental health policy, Medicaid developed an RFP seeking a private, managed care organization (MCO), to administer the Medicaid Mental Health/Substance Abuse Program. In 1992 Mental Health Management of America (MHMA) won the bid. In 1993 the state quietly created a new entity, the Division of Medical Assistance, to specifically oversee its Medicaid programs. In recent years there had been significant consumer involvement in policy formation by the Department of Mental Health, with no involvement of consumers in Medicaid policy. In 1994 consumer/survivors, under the auspices of the National Empowerment Center, started a Consumer Advisory Council to our Division of Medical Assistance's mental health program. That council helped us have some input into the new RFP which came out in the Fall, 1995. The new RFP signals an ever greater shift of power because Department of Mental Health's money and authority for crisis and acute inpatient services are being transferred to DMA. Five national managed care companies submitted bids. After significant petitioning, consumers were allowed to form an advisory review board. Consumers reviewed a portion of each bid, giving recommendations to five primary reviewers. DMA will soon announce which MCO will be the winner of the $200 million plus annual contract.

We have gone into some detail about the process of health care reform in Massachusetts because this state is being looked to as a model many other states want to follow. After all MHMA did save the state millions of dollars, mainly by restricting inpatient detox and psychiatric admissions. However, there has not been a comprehensive evaluation with significant consumer participation of the process and its impact on people's long-term recovery.

Advice for Consumer/survivor participation in State Health Care Reform:

  1. Find out what stage your state or county has reached in health care reform. Find out if your state or county is going with a Medicaid Authority or Mental Health Authority.
  2. Find out where the important decisions are being made and by whom (often only a few people) and lobby for c/s participation in those decisions.
  3. Form a committee of consumer/survivors interested in playing a role in health care reform, and connect that committee to a statewide c/s group.
  4. Strengthen your state and or regional c/s group. The larger the group you represent the greater your influence.
  5. Emphasize the cost-effectiveness of self-help, peer support, and voluntary consumer-run community based alternatives to professionally-run, involuntary, institutional care (we are summarizing the effectiveness of these alternatives and would appreciate your sending any information on the cost-effectiveness and quality outcomes of peer support and consumer-run alternatives to traditional care).


Mental Health Authority (MHA) retains control of MH Policy (Oregon, San Mateo County, California)

State obtains a 1915b or 1115 waiver from the Federal Government (Health Care Financing Administration, HCFA)

State designates the state or county Mental Health Authority as entity to administrator Medicaid MH funds

State or County MH Authority assumes the role of managed care org. and directly contracts with providers under capitated or fee for service arrangement.

Medicaid Authority and private managed care companies gain control of MH Policy (Massachusetts., Iowa, Tennessee)

State designates State Medicaid Authority as the entity to administer Medicaid MH funds

State Medicaid Authority develops Request for Proposals (RFP's) which managed care org. (MCO) bid on; the winning MCO contracts with the state under capitation; then the MCO contracts with providers (state or county MH Authority plays secondary role)