State of Texas Behavioral Health System Analysis

1. State of TexasBehavioral Health System Analysis Presentation to the Texas Hospital Association Presented By: Joe Weber (PCG) July 9, 2012 www.pcghealth.com

2. Agenda • Overview of the Report • Phase I – Analysis of the Current Behavioral Health System • Phase II – Recommendations for System Redesign

3. Overview of the Report • Rider 71 of House Bill 1 of the Texas 82nd legislative session directed DSHS to contract with an independent entity “to review the state’s public mental health system and make recommendations to improve access, service utilization, patient outcomes, and system efficiencies.” • HHSC contracted with Public Consulting Group to conduct the study described in Rider 71 • DSHS also contracted with Joey Longley of Civic Initiatives to serve as a contract liaison to PCG • PCG’s efforts have been divided in to 2 main phases

4. Overview of the Report • Phase I: Complete a comprehensive programmatic and financial assessment of the current behavioral health system • Phase II: Provide recommendations for intermediate and long term system redesign • Develop recommendations focused on improved access, service utilization, patient outcomes, and system efficiencies as required by DSHS Rider 71, General Appropriations Act, 82nd Legislature, 2011. • Provide short term recommendations focused on system efficiencies. • Provide long term recommendations focused on the steps required to redesign the behavioral health system by January 2014, with consideration to health care reform, in the event that the Affordable Care Act is not repealed.

5. Phase I – Analysis of the Current Behavioral Health System • PCG conducted a study of the current public behavioral health system focusing on programmatic and financial components • An analysis was also completed on national best practices that could be implemented in Texas • The analysis completed during Phase I identifies strengths and weaknesses of the current system • A final Phase I report was released in late June 2012

6. Phase I – Analysis of the Current Behavioral Health System • Key Observations • A large number of Texans receive publicly funded behavioral health services • Texas ranks at the bottom of national rankings on substance abuse and mental health spending • The existing service delivery model is not adequately prepared for the implications of federal health care reform, if it is not repealed • The system of care is crisis driven instead of being more recovery focused • Texas has numerous informed and articulate advocates and providers • The Local Mental Health Authorities (LMHAs) are established organizations with substantial capabilities, program reach, and have the ability to attract local funding • LMHAs have significant cost variability, various levels of integration of behavioral and physical health care, and a geographic organization that may not be the most cost effective • The NorthSTAR program is well accepted in the Dallas area and has no wait list for services

7. Phase I – Analysis of the Current Behavioral Health System • Key Observations • The East Texas Behavioral Health Network is a good model for sharing services across geographical regions • The LMHAs and NorthSTAR have both been successful in reducing the costs of pharmaceuticals • DSHS has been successful in effectively utilizing recent additional funding provided by the Legislature to address critical needs for crisis stabilization services • The Resiliency and Disease Management (RDM) system has broad service packages and encourages statewide consistency • DSHS does not appear to have yet integrated its mental health and substance abuse programs • “Provider of last resort” has not been fully realized • Current performance measures are more volume based and need more focus on outcome based measurements and public data reporting by DSHS on the operation of its providers needs improvement

8. Phase I – Analysis of the Current Behavioral Health System • Key Observations • Consumers view a closed provider network for mental health services as limiting their freedom of choice • The lack of funding for supportive housing, transportation, and employment services is a barrier for families and adults • There is a shortage of providers and workforce challenges, notably substance abuse providers, psychiatrists, and therapists • Increases in forensic admissions within state hospitals has impacted availability of state hospital beds • Medicaid benefits are terminated for people in jail creating unnecessary stresses on the system • Spending on mental health and substance abuse services within county jails and by other law enforcement agencies is viewed as a symptom of an inadequate community based system of care • The allocation process for community mental health funds has not kept pace with population trends

9. Phase II – Recommendations for System Redesign • Phase II consists of three main tasks • Development of Specific Recommendations for Achieving System Redesign • Development of Action-Oriented Program and Financial Analysis • Creation of a Roadmap from Current System to Desired State: Final Report on System Redesign Recommendations • Seven Public Stakeholder Forums to present draft optionsfor system redesign were conducted between June 5 and June 14 • Forums took place in San Antonio, Austin, Harlingen, Houston, El Paso, Lubbock, and Dallas • Feedback from these forums will be considered in the development of final recommendations • Phase II is expected to be completed by September 2012

10. Phase II – Recommendations for System Redesign • Draft options for system redesign were grouped in to three general categories: • Service Delivery System Options • Governance and Oversight Options • Funding and Financing Options • Draft options included a description of the option and the issues the option is intended to address, potential benefits and limitations of the options, and the implications of the ACA on certain options that would be significantly impacted by the legislation

11. Phase II – Recommendations for System Redesign • Draft options for system redesign – Service Delivery System Options • Integrate mental health and substance abuse services through the LMHAs • Promote evidence based models of care across the state • Leverage local inpatient resources to serve acute care needs of local communities • Eliminate the existing carve out of the Medicaid rehabilitation and case management services for children or for both children and adults • Separate the authority and provider functions of the LMHAs and consolidate service delivery areas to promote greater efficiency while maintaining local control • Expand NorthSTAR to selected areas of Texas • Carve behavioral health services into Medicaid Managed Care Organization Contracts • Develop a specialty health plan for the Severely and Persistently Mentally Ill (SPMI) population for both physical and behavioral health care

12. Phase II – Recommendations for System Redesign • Draft options for system redesign – Governance and Oversight Options • Clearly define and more actively enforce the provider of last resort legislation • Consider rescinding the 1915(b) waiver submitted to Centers for Medicare and Medicaid Services (CMS) • Explore alternative models for the management and/or operation of inpatient services • Expand the definition of qualified non-physician practitioners to address workforce shortages • Implement a comprehensive public reporting process on the performance of mental health and substance abuse contractors • Redesign outcome measures to align them with national best practices • Revise the Resiliency and Disease Management (RDM) service packages similar to the efforts currently underway on the Child & Adolescent RDM service packages • Consider and encourage collaborative efforts like the East Texas Behavioral Health Network (ETBHN) in other areas of the state

13. Phase II – Recommendations for System Redesign • Draft options for system redesign – Funding and Financing Options • Rebase the existing allocations to align funding with current trends in population, income, and needs • Develop a tiered payment structure aligned with provider performance • Leverage opportunities presented by the Texas Healthcare Transformation and Quality Improvement 1115 Waiver • Investigate opportunities to repurpose state hospital campuses to upgrade facilities • Explore the feasibility of implementing a 1915(i) Medicaid state plan option

14. Additional Information on PCG's Study • Additional information regarding PCG’s study of the Texas public behavioral health system, including materials from all stakeholder sessions and the Phase I report can be found on the web at http://www.publicconsultinggroup.com/client/txdshs/ • Additional questions or feedback can be directed to PCG at txbhstudy@pcgus.com

15. Public Consulting Group, Inc. 148 State Street, Tenth Floor, Boston, Massachusetts 02109 (617) 426-2026, www.publicconsultinggroup.com