Mental Health and Substance Use Disorder Policy: Evolution, Context and Future Challenges

1. Mental Health and Substance Use Disorder Policy: Evolution, Context and Future Challenges CIMH Leadership Institute Patricia Ryan, Executive Director California Mental Health Directors Association Tom Renfree, Executive Director County Alcohol and Drug Program Administrators Association of California December 6, 2012

2. Historical Mental Health Milestones

3. Major Historical Mental Health Fiscal/Policy Milestones • 1969: Community Mental Health Services Act, Deinstitutionalization, Short/Doyle Act • 1991: Realignment 1991 • 1993: Medi-Cal Rehabilitation Option • 1995-97: Medi-Cal Specialty Mental Health Consolidation • 2004: Prop. 63 – Mental Health Services Act

4. Community Mental Health Services Act/Deinstitutionalization(1969) • The California Community Mental Health Services Act 1969 was a national model of mental health legislation that “deinstitutionalized” mental health services, serving people with mental disabilities in the community rather than in state hospitals.

5. Short-Doyle Act(1969) • The Short-Doyle Act was the funding mechanism intended to build the community mental health system. Legislative intent language called for funding to shift from state hospitals to community programs. • However, the state failed to distribute the full savings achieved through the closures of state hospitals to the community mental health system.

6. No Entitlement for Mental Health Services • Unlike services to persons with developmental disabilities, the mental health system in California was never conceived as an “entitlement.” • Mental health services were to be provided “to the extent resources are available.” • This essential difference built rationing of services into the framework of mental health service delivery…

7. Community Mental Health System in Crisis1970-1990 • Beginning with an inadequate funding base, state allocations to counties were severely diminished due to inflation throughout the 1970s and 80s. • In 1990, California faced a $15 billion state budget shortfall which would certainly have resulted in even more drastic cuts to mental health. • Community mental health programs were already near collapse and overwhelmed with unmet need. This crisis propelled the enactment of “Realignment.”

8. Realignment1991 • “Realignment” was enacted in 1991 with passage of the Bronzan-McCorquodale Act. • It represented a major shift of authority from the state to counties for mental health programs. • Realignment 1991 created a new dedicated revenue source for counties. • Instead of community mental health being funded by the State General Fund (and thus subject to the annual state budget process), new “Realigned” revenues would flow directly to counties.

9. 1991 Realignment • “1991 Realignment” refers to the realigning of the funding and responsibility for mental health services, social services and public health services • It represented a major shift of authority from state to counties for mental health programs • Three revenue sources funded 1991 Realignment • ½ Cent of State Sales Tax • State Vehicle License Fees • State Vehicle License Fee Collections

10. Realignment Funds Distributed by Formula • Annually, Realignment revenues were1 distributed to counties on a monthly basis until each county received funds equal to the previous year’s total. • Funds received above that amount were placed into growth accounts: Sales Tax and VLF. • Realignment “growth” funds were distributed annually, and the first claim on the Sales Tax Growth Account went to caseload-driven social services entitlement programs (IHSS and child welfare). • Any remaining growth from the Sales Tax Account and all VLF growth were then distributed according to a formula developed in statute.

11. Mental Health Programs Realigned from the State to Counties • All community-based mental health services • State hospital services for civil commitments • Mental health services for those in “Institutions for Mental Disease (IMDs),” which provide long-term psychiatric nursing facility care

12. Benefits of 1991 Realignment • A stable funding source for programs, which made a long-term investment in mental health infrastructure financially practical. • The ability to use funds to reduce high-cost restrictive placements, and to serve clients appropriately in the community. • Greater fiscal flexibility, discretion and control, including the ability to “roll-over” funds from one year to the next, enabling long-term planning and multi-year funding of projects. • Emphasis on a clear mission and defined target populations.

13. But Realignment Formula Flawed – Insufficient Growth for Mental Health • Under Realignment 1991, mental health received no Sales Tax growth from FY 2005/06 through FY 2010-11. • In Fiscal Years 2007/08, 2008/09 and 2009/10, mental health did not even make the prior year’s base. • FY 2009/10 and FY 2010/11, Mental Health Sales Tax revenues approximated the original baseline amounts from FY 1991/92. • FY 2010/11 VLF revenues were approximately the same as FY 2003/04 amounts.

14. Realignment Growth for MH: Fiscal Year 2000/01 to 2010/11 Realignment Funding for Mental Health

15. Medi-Cal Mental Health Services Understanding the changes in California’s Specialty Mental Health Medi-Cal program since Realignment, and the interaction of Medi-Cal revenues with Realignment, is critical to analyzing the current structure and status of public mental health services in California…

16. Medi-Cal Mental Health ServicesHistory in California • The Fee-for-Service “clinic option” Medi-Cal program originally consisted of “physical” health care benefits, with mental health treatment making up only a small part of the program. • Mental health services were limited to treatment provided by physicians (psychiatrists), psychologists, hospitals, and nursing facilities, and were reimbursed through the Fee-For-Service Medi-Cal system (FFS/MC).

17. Medi-Cal Mental Health Services • Short-Doyle/Medi-Cal (SD/MC) started as a pilot project in 1971, and counties were able to obtain FFP to match their own funding to provide certain mental health services to Medi-Cal eligible individuals. • The SD/MC program offered a broader range of mental health services than those provided by the original FFS Medi-Cal program.

18. Medi-Cal Rehabilitation Option1993 • A CA Medicaid State Plan Amendment in 1993 added more services under the federal Medicaid “Rehab Option” to the scope of benefits, including: • Community based (non-clinic) services • Expanded service provider types • Additional service types • Expanded acute care model to include long term community care model

19. Medi-Cal EPSDT1995 • Early and Periodic Screening, Diagnosis and Treatment (EPSDT) represents an expansion of services resulting from a successful class action lawsuit against the state. • The state’s settlement agreement resulted in increased state responsibility for funding for Medi-Cal specialty mental health services for full scope Medi-Cal beneficiaries under age 21.

20. Medi-Cal Specialty Mental Health Consolidation1995-1998 • From 1995 through 1998, the state consolidated Fee-for- Service and Short-Doyle programs into one “carved out” specialty mental health managed care program, under a Medicaid 1915(b) “Freedom of Choice” waiver. • Counties were given the “right of first refusal” for taking on this new responsibility of managing specialty mental health care. • Under this system, all Medi-Cal beneficiaries were required to access their specialty mental health services through the county Mental Health Plan (MHP).

21. Medi-Cal Consolidation • General mental health care needs for Medi-Cal beneficiaries remain under the responsibility of non-specialty fee-for-service providers and Medi-Cal Managed Care plans. • DHCS fee-for-service maintains responsibility for all pharmaceutical costs for specialty mental health MHP beneficiaries.

22. Medi-Cal Consolidation • Upon consolidation, the state DHCS transferred the funds it had been spending under the FFS system for inpatient psychiatric and outpatient physician and psychologist services to county Mental Health Plans (MHPs). • It was assumed (by counties) that MHPs would receive additional funds yearly beyond the base allocation for increases in Medi-Cal beneficiary caseloads, and for COLAs. • Any costs beyond that allocation were to come from county 1991 Realignment revenues.

23. Medi-Cal Consolidation • In other words, the risk for this entitlement program shifted from the state to the counties…

24. California’s Current Medi-Cal Specialty Mental Health System • Under the provisions of our Medicaid Title 42, Section 1915(b) “freedom of choice” waiver, California’s county MHPs are considered prepaid inpatient health plans. • California’s MHPs are responsible for assuring 24 hour, seven day/week access to emergency, hospital and post-stabilization care for the covered psychiatric conditions for Medi-Cal beneficiaries.

25. California’s Medi-Cal Mental Health System • In addition, California has two approved state plan amendments (SPA) that increase the scope of outpatient, crisis and residential and inpatient mental health coverage provided to Medi-Cal beneficiaries when medically necessary, by the MHP. • California’s Approved State Plan Amendments: • Targeted case management for persons with mental illness. • Mental health services available under the Rehabilitation Option, broadening the range of personnel and locations that were available to provide services to eligible beneficiaries.

26. California’s Medi-Cal Mental Health System • Both federal and state code and regulation specify that there is to be a contract between the state and the MHP/PIHP specifying the conditions under which the managed care program will operate. • The regulations and contract also specify requirements for the coordination of health and mental health treatment between the county and the state contracted health plans, including that an MOU be in place between the county and each health plan specifying the process for timely referral and treatment.

27. Federal Financial ParticipationCritical to Counties • Federal Medicaid dollars (FFP) currently constitute the largest revenue source for county mental health programs.

28. Community Mental Health Services Funding

29. Mental Health Services Act (Prop. 63)2004 • The MHSA (Prop. 63) created a 1% tax on income in excess of $1 million to expand mental health services • Approximately 1/10 of one percent of tax payers are impacted by tax • Two primary sources of deposits into State MHS Fund • 1.76% of all monthly personal income tax (PIT) payments (Cash Transfers) • Not just millionaires • Annual Adjustment based on actual tax returns • Settlement between monthly PIT payments and actual tax returns • Funds now distributed to counties monthly based on unspent and unreserved monies in State MHS Fund at end of prior month

30. MHSA: What Is it? • Purpose is to reduce the long-term adverse impact of untreated mental illness • Intent is to expand mental health services • Recovery/wellness • Stakeholder involvement • Focus on un-served and underserved • Focus on effective services and cost-effective expenditures

31. MHSA Is Community-Driven “The most important change that the MHSA brought forward is to bring the voice of the person receiving services and the families – across ethnicity – to the center of the conversation rather than at the margins of the conversation.” (Dr. Marvin J. Southard, Los Angeles County Mental Health Director)

32. Mental Health Services Act

33. California’s Substance Use Prevention &Treatment Services: History and Context

34. California’s Public Substance Use Disorder System • In California, the public system of care for the prevention and treatment of SUD is overseen by a single state agency (which until July of 2013 is the State Department of Alcohol & Drug Programs), but is administered by counties, which either provide services directly or (in most cases) contract with private providers for services. • Public treatment of SUD has been predominantly provided in separate specialty services programs, some of which are based on social-model recovery (i.e. 12-step), and others which offer medication-assisted treatment (i.e. methadone maintenance).

35. California’s Public Substance Use Disorder System • SUD treatment is typically provided by staff members who are state-certified but not professionally licensed. • Traditional sources of funding for public SUD services: • Federal Substance Abuse Prevention & Treatment Block Grant. • FFP for Drug Medi-Cal • State General Fund (now Realignment funding) for: • Drug Medi-Cal Match • Perinatal Services • Drug Court Treatment Programs • Drug Medi-Cal (D/MC) was originally a set of benefits within Short-Doyle Medi-Cal. The two systems separated in the late seventies, but still today are linked in the billing process at the state level.

36. California’s Public Substance Use Disorder System • At the state level in California, Drug Medi-Cal is a fee-for-service Medi-Cal specialty carve out. Services reimbursed by D/MC must be medically necessary and provided by or under the direction of a physician. Specific benefits are the following: • Narcotic Treatment Program (NTP) – Outpatient treatment primary utilizing methadone • Outpatient treatment utilizing the long-acting narcotic antagonist Naltrexone • Outpatient Drug Free – Mostly group counseling and some limited individual counseling • Day Care Rehabilitative – Intensive outpatient treatment, including group and individual counseling, eligibility for which is limited to pregnant and postpartum women and, as an EPSDT benefit, to children under 21. • Perinatal Residential – Residential treatment provided to pregnant and postpartum women in facilities of 16 beds of less, not including beds occupied by children. (Room & board must be paid for by revenue other than D/MC.)

37. Substance Use Disorder Services Funding (2011)

38. Federal Medicaid Rules Section 1902 of the SSA specifies the basic Medicaid requirements. With few exceptions, the following rules must hold for the Drug Medi-Cal program administration: • Comparability of Services • Services to be comparable for eligible individuals – equal in amount, scope, duration for all beneficiaries in a covered group; services to categorically needy cannot be less in amount, scope, duration than those provided to medically needy groups.

39. Federal Medicaid Rules • Statewideness: • Benefits offered to any individual must be available throughout the state. • Choice of Providers: • An individual mayobtain Drug Medi-Cal services from any institution, agency, pharmacy, person, or organization that is qualified to perform the services (i.e. D/MC-certified). • In California, if a certified D/MC provider is not given a contract by a specified county, that provider is guaranteed a direct contract with the state. DHCS can access the county’s realignment funds in the BH subaccount to finance the direct contract.

40. Sobky v. Smoley A Class action lawsuit filed in 1992 (Sobky v. Smoley) found the state in violation of provisions of federal Medicaid law relating to statewideness, comparability of services, and reasonable promptness. The lawsuit was concerned primarily with the availability of narcotic treatment services, but the principles of federal law apply to Medi-Cal benefits generally.

41. Other SUD Issues • Treatment of SUD has largely evolved outside of the mainstream healthcare system, and has been predominantly provided in separate specialty services programs, only some of which offer medication-assisted treatment. • Because substance abuse as a disease has been viewed with suspicion and disapproval, funding streams that have been developed for other systems have not been developed for SUD services. • The CA SUD treatment system has benefits that are so limited that they do not allow practitioners to provide best practices or evidence-based services, and the reimbursement rates are so low that it is often difficult to find providers.

42. Other SUD Issues • More than three-quarters of the funding for SUD treatment services comes from public sources, compared to less than half for all other health care. • Nationwide, state general fund spending for SUD treatment declined 3.8% between FY 2008 and FY 2009, and an additional 7.3% in FY 2010. In California, state funding for SUD services has been reduced by over 40% over the past 5 years. • Only about 40% of adults report that their SUD treatment was paid for by insurance, including Medicaid. About one-third either pay out of pocket or receive services free; the rest rely on other sources of payment.

43. Recent Mental Health/Substance Use Fiscal/Policy Milestones

44. Recent Mental Health/Substance UsePolicy Milestones • 2008: Federal Mental Health Parity (The Paul Wellstone/Pete Domenici Mental Health Parity and Addiction Equity Act) Passes • 2009: The Federal Affordable Care Act Passes • 2010: CA Receives Federal Approve for its 1115: A “Bridge to Health Reform” Demonstration Waiver • 2011: Realignment 2011/Public Safety Realignment

45. Federal Mental Health Parity2008 • MH & SU services must be provided at parity with general healthcare services, including in these areas: • Coverage restrictions (copayments, deductibles, etc.) • Lifetime limits/costs • Treatment limits (number of visits/days covered) • Parity applies to: • Large Employers • Medicaid Managed Care Plans • Health Insurance Exchanges for Individual and Small Group Policies

46. Federal Affordable Care Act (ACA)2009 • Employers with 50+ employees will be fined if they don’t offer health insurance. Small companies that offer coverage can receive tax credits. • Medicaid expansion in 2014 will be 100% federally funded to cover single adults up to 133 % of federal poverty • $14,404 individual income, $29,326 family of four income. • An estimated 16 million new people nationally, at least one-fifth of whom are likely to have mental illness and/or substance use disorder service needs. • The Congressional Budget Office estimates almost one-quarter of Americans who lack health insurance today will be covered under Medicaid over the next 10 years.

47. ACA: Essential Health Benefits for the Individual and Small Group Markets • California’s Governor Brown recently signed legislation requiring an individual or small group health care service plan contract or health insurance policy that is issued, amended or renewed in California on or after January 1, 2014 to at minimum include coverage for essential health benefits. • This coverage requirement applies to individual and small group plans/policies offered to consumers and small businesses both inside and outside of the California Health Benefit Exchange. • The legislation selects a Kaiser small group product as California’s reference (“benchmark”) plan.

48. Mental Health Benefits in the CA Benchmark Plan • According to the Evidence of Coverage (EOC) for the identified benchmark plan, coverage should include services and benefits for a broad range of mental health conditions, utilizing the mental disorder definition as supplied by the DSM-IV-TR. • According to the EOC, mental health services are covered “…only when the services are for the diagnosis or treatment of mental disorders. A mental disorder is a mental health condition identified as a mental disorder in the DSM-IV-TR that results in clinically significant distress or impairment of mental, emotional, or behavioral functioning.” • Coverage is not limited to a specific list of conditions or diagnoses.

49. Mental Health Benefits in the CABenchmark Plan • Outpatient Mental Health Services: • Individual and group mental health evaluation and treatment • Psychological testing when necessary to evaluate a mental disorder • Outpatient services for the purpose of monitoring drug therapy • Inpatient & Intensive Psychiatric Treatment: • Inpatient psychiatric hospitalization • Short-term hospital-based intensive outpatient care (partial hospitalization) • Short-term multidisciplinary treatment in an intensive outpatient psychiatric treatment program • Short-term treatment in a crisis residential program in a licensed psychiatric treatment facility with 24 hour/day monitoring by clinical staff for stabilization of an acute psychiatric crisis • Psychiatric observation for an acute psychiatric crisis

50. Substance Use Disorder Benefits in the CA Benchmark Plan • Inpatient Detoxification : Hospitalization for medical management of withdrawal symptoms, including room and board, physician services, drugs, dependency recover services, education and counseling • Outpatient Chemical Dependency Care: • Day treatment programs • Intensive outpatient treatment programs • Individual and group chemical dependency counseling • Medical treatment for withdrawal symptoms • Methadone maintenance treatment for pregnant members during pregnancy and for 2 months after delivery at a licensed treatment center approved by the Medical Group. *Methadone maintenance treatment is NOT covered in any other circumstances • Transitional Residential Recovery Services: Chemical dependency treatment in a nonmedical transitional residential recovery setting approved in writing by the Medical Group that provides counseling and support services in a structured environment.