Arkansas Medicaid Payment Reform Update

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Arkansas Medicaid Payment Reform

As some of you know, I’ve been attending the payment reform core workgroup meetings since early 2012, representing the Arkansas Psychological Association, and the interest of psychologists in the State.  The workgroup meets regularly and serves as consultants to DHS in the design of the “episodes of care” packages and in the reforming of Medicaid payment structures. Below are ten summarizing points that will hopefully explain the upcoming changes in medicaid. There are still many unanswered questions, but this is my understanding of what is being proposed.

1. In a nutshell, Arkansas Medicaid is completely revamping the way it reimburses, the rates it reimburses, and services that are billable through Medicaid. It is exploring national averages for payments and offering payment for many services that it currently does not reimburse but that research suggests are effective, such as psycho-education.

2. The intent of Medicaid’s reforms is to create a Medicaid behavioral health system that rewards higher quality of care while reducing cost. The proposed system will create three new entities that will help manage and coordinate the mental health needs of Medicaid patients. Many of these processes and functions are still being defined. The new entities include Patient Centered Medical Home, Behavioral Health Home, and Independent Assessors. In their own roles, each entity will be responsible for ensuring that patients get quality care and that providers communicate with each other. (see the diagram below)

3. Medicaid is switching from a “fee for service” model to “episodic payment packages” for its more expensive mental health problems. In this switch, providers and agencies who treat patients more efficiently than the average, will receive a share of the financial gain. Those who’s average cost per client group (grouped by diagnosis) is higher than the state average will share in the financial risk.  As you may know DHS has already implemented an episodic payment structure for ADHD, and has designed packages for ODD, and Comorbid ADHD / ODD. ArPA was involved in the design of all three models. Last I heard, the ODD and Comorbid packages were held up in congress. My view of these three models is that the ADHD model will probably work sufficiently. It provides ample range of services and may be financially beneficial for a lot of providers, but is slightly restrictive in the amount of funds allowed for treatment. The ODD and Comorbid packages are generous in the services offered and designed to reflect what research suggests is good treatment for these conditions, such as family therapy, teacher consultation, parent education, and parent training.

PCMH and BHH System4. Starting in July of 2014 Medicaid patients will be assigned to a Patient Centered Medical Home, or PCMH, who will be reimbursed not only for providing medical services but also for managing and coordinating services provided by other clinicians, such as psychological or speech therapy.  The PCMH will most likely be the patients current PCP.

5. All patients will maintain their PCMH while still receiving outpatient care to private practices, local clinics, or community health centers, but hopefully with increased communication between providers, since the PCMH will be reimbursed for coordinating care. The PCMHs will function like case managers and will be reimbursed at a rate between $1 and $30, for each patient per month.

6. Mental health services will be divided into three tiers of available services to be reimbursed by Medicaid.  Tier 1 will include the vast majority of patients seen for mental health services. Tier 2 will include those with higher levels of severity and Tier 3 will be those with the greatest need for services.  At each Tier, Medicaid patients will have access to all the services available in the previous Tiers and then additional services, such as residential treatment, respite and therapeutic communities for those in Tier 3. (See the diagram below)

Three Tier Structure7. All Medicaid patients will have access to Tier 1 services without prior authorization. Those needing more services than allowed for Tier 1 will progress to Tier 2 and will have to be evaluated by an Independent Assessor, and an Independent Care Plan will be created. The Independent Assessment will be conducted by a contracted organization who provides assessment only, no treatment.  The assessment will measure functional impairment, not diagnostic clarification. Medicaid will release the proposal and seek bids for this new entity, “Independent Assessor.”

8. Most community providers will function under Tier 1. Tier 1 services include individual therapy, group therapy, marital/family therapy, multifamily group therapy, psychoeducation, mental health diagnosis, interpretation of diagnosis, substance-abuse assessment, psychological evaluation, psychiatric assessment, and pharmacological management. No prior authorization needed, although the services will have a limit. The larger organizations, with hospitals, day treatment, and substance abuse treatment, will likely be Tier 2 and Tier 3 sites.

9. All patients, regardless of Tier, will have access to Crisis Services and hospitalization. Although hospitalization will put in place an immediate referral for the Independent Assessment, placing them in Tier 2 or 3, and assigning them to a Behavioral Health Home (BHH), which will function like a mental health-specific care coordinator. At such time, the patient will have a PCMH to coordinate medical needs and BHH to coordinate mental health needs. DHS will release criteria for agencies to apply for BHH status.

10. The DHS committee charged with making reforms remains open to ideas, concerns and discussions. They have a large team at DHS and an outside organization, the McKenzie Group on the project. They hold public forums for anyone interested in attending, in addition to our core workgroup meetings and other focus groups among stake-holders.

For additional information see Arkansas Payment Improvement Initiative:
Adam H. Benton, PhD