State and county mental health agencies are reexamining their traditional roles and relationships in response to trends that are dramatically affecting public mental health systems. Nowhere is this more true than in the 24 states that operate in whole or in part through county-based mental health agencies.¹

Because these 24 states are among the most populous in the nation, comprising a substantial majority of the U.S. population, the evolving relationship between state and county mental health agencies is of real significance to the public mental health system and to those who receive services through this system.

If states and counties do not work closely together, a " terrible mismatch of policy interests and objectives can occur," according to Charles G. Ray, M. Ed., president and chief executive officer of the National Council for Community Behavioral Healthcare. In his view the most important step in this evolving relationship is "having the right debate," which includes a frank and detailed discussion among state and county mental health officials and other key stakeholders about "who gets what, under what circumstances, for how long, and at what cost and with what outcomes." Answering these and other vital questions requires an understanding of the changing public mental health environment.

Major Trends

Among the trends that are having such a significant impact on public mental health services and systems are the explosive growth of Medicaid costs; the rise of managed care; devolution of authority from the federal government to the states and, in some cases, to the counties; the growing influence of consumers and their families; and the closing, downsizing and reorganization of state-operated psychiatric hospitals. These trends are reverberating in a number of critical areas throughout the public mental health system, requiring state and county mental health agencies to adapt to new realities while maintaining their historical commitment to the public’s welfare.

Medicaid

Medicaid costs have risen dramatically in recent years. In fact, between 1967 and 1995, the number of Medicaid recipients grew from 10 million to approximately 36.2 million. Costs for the federal-state health insurance program for low-income individuals, which have recently been rising at the rate of about 10 percent annually, are now expected to top $260 billion by the end of the century.² Although few mental health services were covered by Medicaid when it was originally enacted, the program has now become an essential source of revenue for the public mental health system, comprising nearly one-third of all funding for community-based mental health programs.³ Nonetheless, pressure to curtail rising Medicaid expenditures has prompted federal, state and local mental health officials to seek new ways to contain the growth of Medicaid costs.

Managed Care

To date, 37 states have requested "waivers" under sections 1115 or 1915(b) of the Social Security Act to implement managed care in state Medicaid programs and to control public health and mental health costs.⁴ Each of these states is experimenting with its own approach to managed care, creating a series of state-level laboratories for testing different strategies and structures. However, these state experiments are placing significant and sometimes unforeseen pressures on the relationship between state and county mental health agencies.

In states with county-based mental health service delivery systems, state mental health authorities have historically delegated certain responsibilities to county mental health agencies while retaining overall authority and responsibility for mental health services. The shift to managed care has prompted state and county mental health agencies to reexamine their relationship and responsibilities, including the assignment of legal and financial accountability and authority.

In some states, this reexamination has resulted in state mental health authorities assuming the primary responsibility for establishing standards and providing oversight while county mental health authorities have primary responsibility for managing and providing services. In other states the emerging role of private behavioral health organizations in the public mental health system is raising new questions concerning the role of counties in providing public mental health services. County mental health officials insist that they must be involved in the planning, development and implementation of managed care. "Counties need to have a place at the table when decisions are being made," asserts Robert C. Egnew, M.S.W., M.P.H., director of the Monterey County (California) Behavioral Health Division and past president of the National Association of County Behavioral Health Directors (NACBHD).

Devolution of Authority

The devolution of authority from the federal government to the states that began in the 1980’s is reflected in a variety of federal programs including mental health block grants, welfare reform and Medicaid waivers. This development has prompted states and counties to reevaluate and renegotiate their relationship in an effort to adjust to changing realities while maintaining a commitment to the public good. Shifts in authority from one level of government to another have raised questions about responsibility, accountability and governance in public mental health systems. In effect, county mental health agencies are pressing for—and receiving— increased authority and flexibility to develop and manage programs in order to respond creatively to the combination of greater need and fewer resources.

Consumer and Family Influence

The growing voice of consumers and their families has played a key role in determining how and where public mental health services are provided. Consumers and family members have been increasingly influential in changing the role of state psychiatric hospitals and developing community-based mental health services. Traditionally, consumers have played either an advisory or governing role on county-appointed boards of local public mental health authorities. The proximity of consumers and family members to services in the community has tended to provide a level of access and influence not generally available at the state level.

"Consumers regularly appear at board meetings of the county mental health authority to let us know their views about what works and what doesn’t," notes David Weibe, executive director of the Johnson County (Kansas) Mental Health Center and NACBHD’s current president. "This kind of local direct access to the governing authority creates a much more accessible and consumer friendly environment to address problem issues, compared with a state legislature or other centralized state authority."

Nonetheless, the implementation of mental health block grants and the introduction of managed care in public mental health systems has led to increased consumer and family involvement at the state level, in part through the activities of state mental health planning and advisory councils. In addition, 27 states have established a consumer affairs office within their state mental health agency. These offices serve as listening posts for consumer concerns, as advocates for consumers and their families within the policy-making apparatus and as educators of state mental health agency staff and others regarding the needs of consumers and families.

Psychiatric Hospital Closings, Downsizing and Reorganization

The trend during the past several decades to close, downsize and reorganize state-operated inpatient psychiatric hospitals has resulted in a decisive shift in the relationship between state and county mental health agencies. Where state hospitals were once the primary providers of public mental health services, counties and communities now play a pivotal role. Still quite unclear are the relationships between state hospitals and community programs, particularly with regard to control of state hospital utilization and resources in a managed care environment.

The movement of individuals into the community has increased pressure on community-based mental health systems to provide a comprehensive range of services to a growing consumer population. This, in turn, has led to questions concerning reinvestment of funds saved through hospital closings, downsizing and reorganization; the ability of funds to follow patients from the hospitals to the community; and county contracting for the use of state hospital beds.

Challenges to the State-County Relationship

Of particular relevance to the relationship between states and counties is the effect the trends noted above are having on decisions regarding accountability, financial risk, reinvestment of savings and development of performance indicators and outcome measures.

Accountability

States and counties have historically shared responsibility for providing public mental health services. Consumers, family members and other stakeholders bring their concerns directly to state and county governments. In addition, state and county governments can be held legally and financially accountable for shortcomings in the system.

The entrance of private managed care firms into the public mental health arena has raised new questions concerning accountability: Which responsibilities remain with the states and which with counties? Which can be delegated to private managed care organizations? Managed care contracts are not always clear about the entity or level of government that bears ultimate responsibility for ensuring the quality of services. Yet it seems clear that although state and county mental health authorities can delegate the management of mental health services to private managed care organizations, the responsibility for governance and, ultimately, the protection of the public welfare must remain with state and county mental health authorities.

Financial Risk

Counties entering the Medicaid managed care market are being asked to assume greater financial risk for the services they provide, similar to that assumed by private managed care organizations. If costs are higher than anticipated, county funds would be expected to make up the difference. Many county officials are wary of being placed in this position. Some state-county partnerships are addressing this concern by enabling counties to assume risk in stages or through risk-sharing arrangements.

However, managed care experts caution that counties may not have the financial resources and operational flexibility to assume risk and effectively manage it on their own. "Like states, counties may not be able to adapt the makeup of their workforce to meet constantly changing needs the way that private managed care organizations can," notes Colette Croze, M.S.W., health care consultant to the National Association of State Mental Health Program Directors (NASMHPD). She also emphasizes that as with private managed care organizations, counties will need to have reserve funds to help them through periods when expenses are greater than current income. "Counties must evaluate their ability to assume the role of risk-based care manager, in addition to competently discharging the governance authority, which they must retain," Ms. Croze says.

Another factor in determining whether a county can assume financial risk is population size. A county must have a large enough group of "covered lives" to balance the relatively low number of consumers who require high-cost services with the larger number of those who require moderate- and low-cost services. Counties are increasingly forming regional alliances to create large enough covered populations to reasonably assume this risk.

Reinvestment

No clear consensus has emerged among states and counties about how to "reinvest" savings in mental health budgets resulting from the adoption of managed care strategies and from hospital closings, downsizing and reorganization. State and county mental health officials may hope to use these savings to improve community-based mental health services. Nonetheless, governors, state budget officers and legislators often require that savings be returned to states’ general funds, where they may be expended for programs unrelated to mental health. A number of state and county mental health officials say they hope counties will be permitted to use savings resulting from managed care to improve community-based services; however, this expectation often exists as an unwritten understanding rather than as a contractual requirement.

Performance Indicators and Outcome Measures

Accountability requires the ability to evaluate performance and outcomes. In recent years, the emphasis in mental health services assessment has shifted from solely monitoring the "process" of service delivery (e.g., number of services provided, number of individuals served) to assessing the impact of services on consumers’ lives, including level of functioning and satisfaction. Evaluating performance and outcomes is also viewed as a mechanism for enhancing competition among providers and promoting consumer choice in a managed care environment. For example, a number of states (e.g., Indiana, New York, Rhode Island) are developing and using "report cards" to help consumers choose managed care mental health service providers. The key issue for states and counties is to ensure the availability of data that promote high-quality services and consumer choice without inundating county mental health agencies with paperwork and hindering their ability to meet the service needs of their communities.

Continuing the Dialogue

In response to challenges arising during this period of change, state and county mental health officials have recognized the need to maintain continuous and productive discussions on a broad range of issues. One example of such efforts is a series of meetings held during the past several years for members of the National Association of State Mental Health Program Directors, the National Council for Community Behavioral Health Care, the National Association of Counties and the National Association of County Behavioral Health Directors. The National Technical Assistance Center for State Mental Health Planning facilitated such a discussion at a meeting held in January 1997 in Washington, D.C., and issued a summary report on the role of states and counties in the design and implementation of managed care in public mental health systems.

Meetings such as these as well as other efforts to expand the dialogue between states and counties are essential if the public mental health system is to meet the challenges of curtailing costs while improving services and safeguarding the public trust.

¹NASMHPD Research Institute, Inc. (July 1997). "State Mental Health Agency Operation and Funding of Community-Based Mental Health Services," State Mental Health Agency Profile System Highlights 5. Alexandria, VA: NRI.

²Institute of Medicine. (1997). Managing Managed Care: Quality Improvement in Behavioral Health 128-129. Washington, DC: National Academy Press.

³Ibid.

⁴NASMHPD Research Institute, Inc. (July 1997). "State Involvement in Mental Health Managed Care," State Mental Health Agency Profile System Highlights. Alexandria, VA: NRI.

Faced with rising Medicaid costs and a variety of other pressures, state and county mental health authorities are increasingly experimenting with a range of approaches to managed care in an effort to reduce expenditures while keeping up with the increasing demand for mental health services. The question of how states and counties realign their roles and relationships in the new managed care environment is of particular importance in the 24 states that provide mental health services in whole or in part through a county-based mental health system.

This article examines the central issues that states with county-based public mental health systems encounter as they make the transition to managed care-the changing relationship between state and county mental health agencies, the advance of private managed care and behavioral health organizations into the public mental health sector, reassessment of lines of accountability among state and county mental health authorities and private entities, assumption of financial risk at the county level, reinvestment of savings and development of appropriate performance indicators and outcome measures.

These factors are examined by relating the experience of three states, Oregon, Pennsylvania and Utah, as they proceed with implementing managed care in the mental health arena.

These three states were selected for this article because each has a county-based mental health system; each went through a comprehensive planning and development process (two states’ managed care initiatives began by covering a portion of the state’s population.); and each has differing approaches to the relationship between state and county mental health agencies, the role of county mental health agencies and the emergence of private managed care organizations in the public mental health system. Together these states provide a cross section of the strategies being tried by states in the transition to managed care.

Identifying the Role of Counties

A central question in states with county-based mental health systems is what role counties will play in planning and implementing managed care. In Utah, 4 of the 10 community mental health centers that were originally county run have been transformed into private, not-for-profit entities that continue to manage public mental health services. Four additional community mental health centers, although still county run, have embraced managed care principles in order to participate in the prepaid, capitated plan for mental health services to Medicaid enrollees.

The states of Oregon and Pennsylvania have encouraged county mental health agencies to participate with private managed care and behavioral health organizations in the public mental health arena and, in doing so, have embarked on a route that will alter the traditional relationship between state and county mental health agencies as well as the historical role of counties as the primary providers of public mental health services.

The different avenues that these three states have taken are the product both of timing and philosophy. Utah’s largest community mental health center, Valley Mental Health, which serves fully half of the state’s population, made the transition to private, not-for-profit status in 1987, before the recent surge in Medicaid costs and competition in the health care marketplace. In effect, Utah created a mental health services "carve-out" a public mental health managed care program that operates separately from the managed care system for physical health—with county mental health centers serving as the primary managers and providers of public mental health services.

Meredith Alden, Ph.D., M.D., director of the Utah Division of Mental Health, points out that state mental health and Medicaid officials agreed that county mental health agencies, with their expertise in providing both mental health services and support services in areas such as housing and employment, were best suited to oversee public mental health services in the new managed care environment.

By contrast, Oregon and Pennsylvania began their transition to managed care more recently and are attempting to create a partnership of public and private sector mental health managers and service providers. After a two-year pilot program covering 25 percent of the state’s population, the Oregon legislature voted in 1997 to expand the public health managed care program, known as the Oregon Health Plan, to the entire state. Entities allowed to participate include health maintenance organizations, county mental health agencies and private behavioral health managed care organizations. In September 1997, the state selected a combination of private health maintenance organizations and county mental health agencies to provide county-level and regional behavioral health services under the statewide program.

Barry S. Kast, M.S.W., administrator of the Mental Health and Developmental Disability Services Division of the Oregon Department of Human Resources, predicts that county mental health agencies will continue to play a role in the Oregon public mental health system but not necessarily the role they have played in the past. Kast, for example, believes that the state might choose to contract directly with a private health maintenance or managed care organization to provide public health services to its members within a given geographic area. That private organization could, in turn, subcontract the behavioral health services component to a county mental health agency. "There is no reason to keep the exclusive arrangement between the county and state in the long run," Mr. Kast says. "The art of this is to build options."

Pennsylvania has recently initiated a managed care program under a Medicaid waiver covering the southeast region of the state, including Philadelphia County and four surrounding counties. The program is expected to expand throughout the state on a region-by-region basis over the next several years. County mental health authorities, which are under the purview of the county commission, have the opportunity to choose whether they will serve as the primary managed care organization in the county.

All five county authorities in the southeast region have chosen to take on this responsibility and have established, or developed a partnership with, private organizations to provide behavioral health services and share financial risk. Philadelphia County, which encompasses the city of Philadelphia, created a county-operated behavioral health organization. Two counties established individual contracts with existing private health maintenance organizations. The other two counties formed a joint mental health authority that subcontracted with a private health maintenance organization.

Reassessing Accountability

The rise of managed care has added a new dimension to the issue of accountability in the public mental health system. Traditionally, lines of accountability have been fairly straightforward: County mental health agencies are accountable to state mental health agencies, and both are accountable to the public.

However, the movement of private managed care and behavioral health organizations into the public mental health sector has complicated this issue. If, for example, a county mental health agency enters into a subcontract with a private managed care organization in which the county agency provides behavioral health services, is the agency accountable to the private managed care organization or to the state mental health agency? Such a scenario at least raises the possibility of a split between contractual lines of authority and those of organizational policy and governance.

Mr. Kast notes that the era of managed care will inevitably bring about changes in the roles and responsibilities of state and county mental health agencies as well as of private managed care organizations. He describes the move to managed care as a transition from a "welfare model" to one in which there is competition and "consumer choice." He notes that while the state will still establish overall standards for managed care providers, consumers themselves will serve as a powerful force for promoting high-quality mental health services. "If you have five health plans in your area, you can make your decision," he points out. "Eventually the good health plans will have most of the business."

In Pennsylvania, under the contract developed for the managed care project, county mental health authorities remain accountable to the state even if the county subcontracts with private enterprises for some services. The state "holds the counties responsible as primary contractors and fully accountable for implementing the managed care contract," emphasizes Lenora Stern, M.Sc., director of the Division of Research and Program Development in the Pennsylvania Office of Mental Health and Substance Abuse Services. "Some counties may subcontract the entire package or part of the package, but that does not relieve them of responsibility."

In Utah, the state Medicaid agency in the Department of Health contracts directly with community mental health centers to provide services for Medicaid enrollees. The state Division of Mental Health in the Department of Human Services contracts with community mental health centers to provide a continuum of mental health services in exchange for flow-through of state general funds. Thus, community mental health centers receive funding and are subject to oversight from two departments of state government. However, the Division of Mental Health and the Medicaid agency collaborate in their oversight roles to minimize duplication of monitoring efforts and to avoid imposing burdensome reporting requirements on the state’s mental health centers.

Assuming Financial Risk

A common theme among Oregon, Pennsylvania and Utah is the expectation that both county mental health agencies and private managed care organizations which assume the primary role of managing Medicaid public health services are expected to assume the financial risks that accompany this role. As noted in the accompanying article, however, there are questions about the financial and operational readiness of counties to take on this level of risk.

Mr. Kast notes that Oregon officials plan to initiate discussions between county mental health agencies and private managed care firms to explore various risk-sharing options. He emphasizes that counties must consider not only their ability to assume risk under current conditions but also the impact of future developments. "As time passes, reimbursement rates will be less and less generous, and patterns of utilization will change," Mr. Kast points out. "Counties may want to have private partners with more resources at their disposal who can bear risk."

Counties taking part in Pennsylvania’s managed care project have established risk-sharing partnerships with private managed care organizations. However, Ms. Stern notes that county mental health agencies have ultimate responsibility for the financial risk of the managed care program just as they have ultimate responsibility for the quality of services.

Even if a county chooses to delegate a portion of the financial risk through a partnership or subcontract with a private managed care organization, the state will still hold the county responsible for the financial viability of the county mental health system. In Utah, community mental health centers assume financial risk as would any private managed care organization.

Reinvesting Savings

State mental health agencies in all three states expect and, in some cases, require county mental health agencies or private managed care organizations to reinvest savings generated by implementation of managed care and the closing, downsizing or reorganizing of state inpatient psychiatric hospitals into community mental health services. The managed care contract between states and counties in Pennsylvania requires reinvestment of managed care savings to improve mental health service system capacity at the county level. The contract also requires counties to submit an annual county-level "reinvestment plan" for approval by the state mental health agency.

Although neither Oregon nor Utah have contractual requirements regarding reinvestment, officials from both states say they have developed mechanisms for promoting reinvestment. In Oregon county mental health agencies and private managed care organizations operating in the public sector must provide the state with comprehensive financial data and plans for how they expect to invest unspent funds. According to Mr. Kast, most counties have indicated that they plan to use any savings to establish crisis centers, finance respite beds and support other efforts to expand county-level mental health services and supports.

Dr. Alden of Utah notes that the former county mental health agencies now serving as private, not-for-private mental health providers have already used savings generated by managed care and other sources to expand the range of support services available to consumers. She points out that Valley Mental Health, the private, not-for-profit organization that serves Salt Lake County, has used savings to expand the availability and quality of support services such as vocational programs, supported housing and school-based services for children and youth.

Reducing Reliance on State Hospitals

Pennsylvania has a goal of reducing utilization of its 14 state inpatient psychiatric hospitals. At the outset of the managed care initiative, consumers who are hospitalized will be temporarily disenrolled from the managed care program. Although the county mental health agency or private managed care organization will not pay these hospital costs, it will still remain responsible for coordinating admission, monitoring the individual’s status while hospitalized and discharge planning.

Over the next several years, however, the state plans to incorporate hospital expenditures into the capitated rate provided to county mental health agencies and managed care organizations. They, in turn, will be responsible for contracting for the number of inpatient hospital beds to be used in the coming year.

Oregon also hopes to reduce use of its two remaining state- operated psychiatric hospitals by requiring managed care organizations to assume financial responsibility for the first 30 days of hospitalization. The goal is to prompt providers to develop alternatives to long-term hospitalization. According to Mr. Kast, the use of acute care dropped significantly during Oregon’s two-year managed care pilot project.

Utah’s prepaid, capitated mental health plan for Medicaid enrollees was largely driven by escalating inpatient costs. After implementing managed care in the state, inpatient utilization has been dramatically reduced, with savings being reinvested in community-based services.

Using Performance Indicators and Outcome Measures

Pennsylvania’s approach to measuring performance and outcomes focuses on quality, timeliness and access. For example, the managed care contract requires that in the case of emergency services, the provider must be able to ensure a face-to-face interview with the consumer within an hour after the initial contact. In cases that are deemed urgent, but not emergencies, a face-to-face interview must occur within 24 hours. In routine cases, a mental health practitioner must meet with the consumer within seven days.

Accountability in Pennsylvania’s mental health system also includes distance requirements. In urban areas, providers must be within 30 minutes travel time for consumers anywhere in the metropolitan area. In rural areas, a maximum of one hour travel time is allowed. The state may impose monetary sanctions on county mental health authorities or managed care organizations that do not meet state requirements and standards.

Utah’s Public Mental Health Outcome System began collecting data on quality, access and cost measures in 1996. The Division of Mental Health, the state Medicaid agency and community mental health centers are partners in this effort, which assigns different survey instruments to different mental health centers. Experience with various survey instruments will be used in the eventual development of a statewide instrument.

Conclusion

The issues addressed by the three states discussed in this article are characteristic of those faced by all states with county-based mental health systems in their transition to managed care. A better understanding of the different approaches states are utilizing will help all states as they seek to implement managed care in the public mental health arena.

With this issue, we continue our focus on the relationship between states and counties in states with county-based mental health authorities.

NTAC’s recent publication, "In the Public Interest: The Developing Alliance between State and County Mental Health Authorities," grew out of the recognition that one of the more interesting changes resulting from the nation’s shift to managed mental health care in the public sector is the new wave of partnerships that are developing between state and county mental health agencies.

Sometimes smooth, at other times rocky, these collaborations increasingly recognize the important role that counties have to play in delivering mental health services and assuming risk within a capitated environment.

State and county mental health authorities in the 24 states that deliver mental health services in whole or in part through a county-based service delivery model (and, by the way, the debate continues about the number of states that actually fall into this category) are experimenting with a host of different service delivery and financing models as they try to maintain their historic responsibility to protect the public interest.

This issue of networks explores a number of these models, from the perspective of individuals who are served by, fund and manage service delivery systems. What is remarkable about the current experiment is the dedication and commitment that the parties to these new alliances have demonstrated to improving services during such challenging times. The field is learning some important lessons, and NTAC is pleased to be a part of that effort.

With this issue of the newsletter, we also bid a "partial-goodbye" to Gail Hutchings, M.P.A., who has left her position as Associate Director of NTAC and been named Deputy Executive Director of the National Association of State Mental Health Program Directors, NTAC’s host organization. Gail has been instrumental in NTAC’s work during its most formative phases. Although we will miss her, she will continue to work with NTAC on a part-time basis on selected projects. We thank her especially for her significant contribution to the development and production of networks from its inception.

As always, we welcome your comments and suggestions on our work. Please let us hear from you.

Bruce D. Emery, M.S.W.

Bruce Emery, Director of the National Technical Assistance Center for State Mental Health Planning (NTAC), has announced that NTAC is seeking candidates for the Assistant Director’s position. The Assistant Director is responsible for developing and managing a broad array of technical assistance activities, including on-site consultation, regional and national focus groups and training events, periodic publications and reports, and on-line communications.

Interested individuals, especially those with prior experience with State Mental Health Agencies, technical assistance and training agencies and programs, publication development and Internet communications, are requested to submit a resume and cover letter to Mr. Emery by October 15 at NTAC, 66 Canal Center Plaza, Suite 302, Alexandria, VA 22314. Fax: 703-548-9517. Consumers and family members are encouraged to apply. EOE.

During the past six years, California’s state and county mental health authorities have developed a "true intergovernmental partnership" in the transition to managed care. This is the assessment of Robert C. Egnew, M.S.W., M.P.H., director of behavioral health for Monterey County and past president of the National Association of County Behavioral Health Directors.

Mr. Egnew points out that this partnership resulted, in large measure, from a process known in the state as "realignment." Key elements in this process included refocusing state mental health priorities from state psychiatric hospital-based inpatient services to county-based outpatient services; increasing responsiveness to the needs of consumers, their families and other stakeholders; and restructuring state mental health funding from legislative appropriations to a percentage of the state sales tax.

As with many states, changes in California’s mental health system were prompted by an often unstable financial support base and competing demands for services. However, the decision to expand the county role in managing mental health services, including assuming financial risk for these services, was in keeping with the counties’ traditional responsibility for providing human services in the state.

Along with increased responsibility came additional freedom for counties to determine the best use of funds and the most effective service structure. "We believe that counties are best able to be responsive to the mental health needs of the 32 million Californians," emphasizes Stephen W. Mayberg, Ph.D., director of the California Department of Mental Health.

As the realignment process developed, state and county roles became more distinct. The state assumed the role of project monitor, focusing on broad policy issues and promoting best practices. Counties took primary responsibility for managing and providing services. "Strong leadership from the state, strong program delivery from the counties. Everybody wins," Dr. Mayberg asserts.

To ensure the stability of the mental health system, counties in California are assuming financial risk for mental health services in stages. In the first stage, counties took on financial risk for inpatient hospitalization. On September 8, California received federal approval for a Medicaid waiver to incorporate implementation of managed care for outpatient psychiatric services, which makes it possible for counties to now assume financial risk for outpatient services.

Realignment also brought changes in California's state psychiatric hospital system as counties received a dedicated funding source to purchase state hospital beds. As a result, counties were able to develop a community-based capacity to serve former state hospital patients closer to home and reduce reliance on costly state hospital services. Each county could decide how many state hospital beds to contract for each year. For example, Mr. Egnew notes that Monterey County, with a population of about 370,000, contracted for the use of just six state hospital beds in 1997. County purchase of state hospital beds has declined from more than 2,500 in 1991 to just under 1,100 today.

In many cases, counties now contract with local private psychiatric hospitals to provide short-term inpatient services when needed. Reduced reliance on high-cost state-operated hospitals has resulted in "significant savings and reinvestment in county services," Mr. Egnew emphasizes.

Dr. Mayberg points out that state and county mental health officials are aware of the need to include consumers, families and other stakeholders in the state’s mental health partnership. The state requires that consumers and their family members make up a majority of the members of the statewide mental health planning and advisory council. A similar requirement exists for membership on county-level mental health commissions. State and county mental health agencies have both supported the development of a network of state and county advisory board members to ensure that consumers and family members play an active role in decisions concerning mental health services.

Dr. Mayberg and Mr. Egnew agree that extensive communication and cooperation between state and county mental health officials is the key to their successful partnership. State mental health officials and county mental health directors hold weekly conference calls to keep each other abreast of important developments. In addition, staff at the headquarters of the county behavioral health directors’ association based in Sacramento work cooperatively with state mental health officials on a wide range of issues and initiatives.

For more information, call Stephen W. Mayberg, Ph.D., at 916-654-2309 or Robert C. Egnew, M.S.W., M.P.H., at 408-755-4509.

The National Technical Assistance Center for State Mental Health Planning (NTAC) maintains a comprehensive web site providing information on innovative programs and technical assistance on issues of importance to mental health planning, service delivery and evaluation. NTAC's audience includes state mental health agencies, mental health planning and advisory councils, consumers and families. We encourage readers to visit our site at http://www.nasmhpd.org/ntac

Editor’s Note: In gathering information from state and county mental health agencies in Oregon, Pennsylvania and Utah for the accompanying article, we learned that consumers and their family members are exercising a growing influence on mental health policies and services at both state and local levels.

Consumers and family members in Oregon and Pennsylvania were actively involved in state-level deliberations that led to the development and implementation of managed care in the states’ public mental health systems. Oregon’s Barry Kast points out that consumers and family members have been instrumental in state mental health policy making since the establishment of mental health block grants in 1986. He adds that consumer and family representatives played a key advisory role on the statewide planning and management council that developed the Oregon Health Plan. Mr. Kast notes that contracts between the state and counties to provide behavioral health services are "extremely detailed" concerning consumer and family involvement, with strong consumer rights and grievance provisions. In addition, private behavioral health firms that participate in Oregon’s public mental health system must establish local advisory committees that include consumers and family members.

The transition to managed care in Pennsylvania’s public mental health system resulted in consumers and family members gaining new access to the state policy-making process. It marked the first time that consumers and family members have been involved in a statewide "process and readiness review," notes Lenora Stern. Under the state’s managed care contract with five counties in southeastern Pennsylvania, consumers and family members must have a voice in the management and administration of mental health services as well as in county-level quality assurance programs. Delaware County, for example, employs six family members to participate in county-level management teams.

Although consumers and family members in Utah were not heavily involved during the initial stages of the transition to managed care, they now play a key role on the state’s mental health planning and advisory council, notes Meredith Alden. They are also actively involved in the state’s clinical quality review process and in identifying and promoting best practices throughout the state. In addition, Dr. Alden notes that a children’s advocate participates in monitoring services to children under the managed care program.

American Managed Behavioral Healthcare Association and the National Association of State Mental Health Program Directors. (1995). Croze, C. (Ed.). "White Paper in Progress: Public Mental Health Systems, Medicaid Re-Structuring and Managed Behavioral Healthcare," Behavioral Healthcare Tomorrow, 4(5):63-69.

Central New York County Mental Hygiene Directors. (1996). Report of the County Mental Hygiene Directors Regarding the Establishment of Behavioral Health Managed Care Systems in the Central New York Region. New York, NY. (No charge; contact the Center for Mental Health Services’ Knowledge Exchange Network at 800-789-2647.)

Dixon, K. and Croze, C. (February 1997). "Improving Public/Private Partnerships in Managed Behavioral Healthcare," Behavioral Healthcare Tomorrow, 67-75.

Egnew, R. (1996). "Refining the Concept of Public/Private Partnerships," Behavioral Healthcare Tomorrow, 5(2): 37-39.

Folcarelli, C. (1995). In the Public Interest: The Role of Public Mental Health Authorities in the Emerging Healthcare System, Results of Conference Proceedings. Washington, DC: Mental Health Policy Resource Center. (No charge; contact Andrea Sheerin at the National Technical Assistance Center for State Mental Health Planning (NTAC) at 703-739-9333, ext. 22.)

Horvath, J. and Snow, J. (1996). Emerging Challenges in State Regulation of Managed Care: Report on a Survey of Agency Regulations of Prepaid Managed Care Entities. Portland, ME: National Academy for State Health Policy. (Cost: $85; contact the Academy at 207-874-6524.)

Institute of Medicine. (1997). Managing Managed Care: Quality Improvement in Behavioral Health. Washington, DC: National Academy Press. (Cost: $49.95; contact the National Academy Press at 800-624-6242.)

National Technical Assistance Center for State Mental Health Planning. (1997). In the Public Interest: The Developing Alliance between State and County Mental Health Authorities. Alexandria, VA: NTAC. (Cost: $10; contact Christine Diaz at 703-739-9333, ext. 30).

October 23-25: Institute for Research and Education HealthSystem Minnesota. Fourth Annual Managed Care to Managed Health Conference: Measures that Matter--Using Internal Versus External Performance Data to Improve Health Care Delivery, Minneapolis, MN. Contact Kari Haeger at 612-993-3527.

October 24-28: American Psychiatric Association. Institute on Psychiatric Services, Washington, D.C. Contact Erin Murphy at 202-682-6324.

November 3-4: CentraLink and the Public/Private Partnership in cooperation with the Institute for Behavioral Healthcare. Public/Private Partnership Skills: Mission Critical Know-ledge, Competencies and Networking for Public Purchasers and Community-Based Organizations, Phoenix, AZ. Contact Ellen Tishman or Marcia Byrnes at 415-435-9821.

November 3-6: National Managed Health Care Congress. Integrating and Shaping the World of Managed Care, Los Angeles, CA. Call 888-446-6422.

November 19-21: National Council for Community Behavioral Healthcare and Behavioral Health Network, Inc. New England Conference: Making Behavioral Healthcare a Primary Concern, Nashua, NH. Contact Kat Barton at 603-643-2325.

December 3-5: Florida Mental Health Institute. Fourth Annual Florida Conference on Behavioral Healthcare Evaluation, Orlando, FL. Contact Ann Strawn at 813-974-4672.

December 11-13: National Rural Health Association. Third Annual Rural Minority Health Conference. Charleston, S.C. Call 816-756-3140.

January 22-23: CentraLink and the Partnership for Behavioral Delivery System Integration in cooperation with the Institute for Behavioral Healthcare. Behavioral Healthcare Delivery System Integration for Regional Health Systems, Academic Medical Centers and Community-Based Organizations, McLean, VA. Contact Ellen Tishman or Marcia Byrnes at 415-435-9821.

February 1-3: National Association of State Mental Health Program Directors Research Institute, Inc. Thinking Outside the Box: Ethical Challenges in Public Mental Health Services Research, Orlando, FL. Contact Vera Hollen at 703-739-9333, ext.16.

The National Technical Assistance Center for State Mental Health Planning (NTAC) has released its newest technical assistance publication, In the Public Interest: The Developing Alliance between State and County Mental Health Authorities. The report explores why this alliance is necessary for the effective management, delivery and evaluation of mental health services, particularly in a managed care environment. Recommendations are provided for each section of the publication covering: state and county partnerships and collaboration, decision making, fiscal incentives, management issues and governance, and performance indicators and outcome measures.

The document is based, in part, on themes and recommendations that emerged during a two-day meeting co-sponsored by NTAC, the National Association of State Mental Health Program Directors and the National Association of County Behavioral Health Directors. Appendices include a list of participants, an annotated bibliography, a list of relevant web sites and membership rosters. To purchase this publication, please send a check for $10 to NTAC, attention Christine Diaz, 66 Canal Center Plaza, Suite 302, Alexandria, VA 22314.