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Special Report:
Policy Report: School-Based
Mental Health Services
Under Medicaid Managed Care
Introduction and
Background
Whether children are publicly or privately insured, managed
care is fast becoming the dominant mechanism
for health care insurance. Of low-income children,
34 percent are covered by private insurance, 41 percent by Medicaid,
and 25 percent are uninsured (Kaiser Family Foundation, 1999). In
1987, 92 percent of employers reported fee-for-service plans as the most
prevalent plan type. By 1997, fee-for-service plans were reported as most
prevalent with only 20 percent of employers; the majority of employers
reported managed care plans as most prevalent (Hay Group, 1998).
Similarly, by 1998 nearly 54 percent of Medicaid beneficiaries were
enrolled in managed care (DHHS-CMS, 1998).
SBHCs are recognized as first-line providers
of health and mental health services
to school-aged children (Making the Grade,
1998). Although certainly not universal,
45 States have these centers. In many centers,
mental health care is the most frequent service
sought by students. Managed care arrangements
are changing the way in which school-based
health services and school mental
health providers interact with other providers
in the health care system, and are affecting
students’ access to mental health services.
Managed care also influences school-based
health care financing. In recent years, States,
foundations, and the Federal Government
have encouraged SBHCs to bill for third-party
insurance to supplement their public
and private grants (Making the Grade, 1998).
SBHCs’ ability to receive third-party reimbursement
depends in large measure on their
positioning under managed care. A recent
report on mental health expenditures in the
private sector found that while the value of
general health care benefits had decreased by
7.4 percent since 1988 because of managed
care, the value of behavioral health care benefits
decreased by 54.1 percent (Hay Group,
1998). A financing strategy that seeks managed
care reimbursement for SBHC services
may have a deleterious effect on mental health
reimbursement. This report presents the experiences
of several school-based health programs
in three States to explore how they are
adapting to the managed care environment.
Report Overview
The purpose of this study was to identify and
examine different options for the integration
of school-based mental health services with
Medicaid managed care plans. It sought to
accomplish this by:
- Observing the experiences of several States
and local communities in providing for the
inclusion of school-based mental health
services in managed care contracts.
- Exploring options and models for including
school-based mental health services
within managed care.
- Examining financing and reimbursement
issues that might affect the viability and
expansion of such services.
- Assessing alternative ways to maintain
and expand school-based mental health
services within the managed care environment.
The scope of the study was intended to
include both school-based and school-linked
mental health services. School-linked programs
are housed near or on school grounds
but not in schools, and school-based programs
are located in school buildings. The
review of the literature did not make a distinction
between these program types, and
our study sites did not include school-linked
programs. It appears that the policy and
operational issues relating to arrangements
with MCOs are similar for both program
options, but we were unable to make a
direct comparison within the scope of this
project.
A multidisciplinary team, experienced in
mental health, school health, and health care
financing, conducted the study. The team
reviewed recent literature on the topic,
formed an advisory panel to guide the study
approach, and carried out site visits in three
States: New Mexico, Maryland, and
Connecticut. A site visit protocol was developed
based on a literature review and guidance
from the advisory panel, which included
experts in the fields of mental health,
pediatrics, education, and school health
(Appendix A). The panel of experts also
helped establish study site selection criteria
and recommend appropriate sites. The chosen sites had well-established school-based
mental health services that were actively
implementing arrangements with local
Medicaid MCOs. At all three sites, the actual
contracting entity was the sponsoring agency
for the school-based services. Most schools
that offer mental health services use a sponsoring
agency (i.e., a clinical intermediary) to
administer and supervise the service delivery.
These intermediaries usually oversee clinical
practice, set practice protocols, handle communications
with other health providers, and
hire or recommend hiring school-based
providers. In New Mexico, for example, the
sponsoring agency was a medical center with
outpatient and inpatient mental health programs;
in Maryland the sponsoring agency
was a community mental health center; and
in Connecticut the sponsoring agency was a
nonprofit, community-based multiservice
organization.
Providers and administrators of school-based
mental health programs are grappling
with logistical and administrative problems
related to service delivery, service coordination,
and reimbursement. Many of the
problems associated with new partnerships
between school-based programs and MCOs
are growing pains that will probably resolve
themselves over time. Interviews with
school staff, school-based clinicians, and
representatives of sponsoring agencies, however,
revealed that contracts between
school-based mental health programs and
MCOs are not enthusiastically endorsed as
the wisest choice. Study respondents gave
the following reasons for their doubts:
- The missions and philosophies of school-based
mental health programs may not
fit well with the expectations of MCOs.
Many SBHCs have a policy of offering
prevention and early intervention mental
health services to all students without
determining insurance coverage or establishing
a mental health diagnosis.
- Improved access to health care services
through SBHCs is based on mental health
services being readily available when a
student recognizes a need. This strong
program tradition may conflict with managed
care contracting, especially when
competing plans in the area do not cover
the same services, or when school-based
providers are not enrolled in all the plans
covering the geographic area served by
the school.
- Many traditional managed care provider
contracts limit reimbursement to visits
related to a clinical diagnosis of mental
illness and treatment for an acute problem.
They often do not cover the full
value of SBHC services, which include
teaching about self-care, coaching to
reduce risk, and prevention-oriented
group programs.
- Managed care requirements for prior
authorization of behavioral health visits
and the use of Diagnostic and Statistical
Manual of Mental Disorders (DSM) diagnostic
codes on claims can create barriers
to care for children who already are reluctant
to seek mental health services and
may fear loss of confidential access to
care.
- Pressure to serve children covered by
managed care plans may displace the
SBHC’s capacity to provide mental health
services to uninsured children and to
continue mental health programs that are
not reimbursable.
- Many SBHCs lack the necessary business
infrastructure to implement behavioral
health managed care contracts and
handle claims processing efficiently. The
school-based programs are usually run with
minimal staff. Clinicians do double duty as
administrators; generally no one concentrates
specifically on business arrangements.
- Revenue potential for school-based mental
health services is difficult to estimate and
predict because many variables influence
whether a claim is approved and whether
it actually gets processed. Once revenue is
collected, it may go to the sponsoring
agency or even to the State’s general fund,
not to the school or SBHC. It is not clear
that collected revenue offsets the cost of
generating it.
While these factors influence the perceived
desirability and feasibility of contracts
between MCOs and providers of school-based
mental health services, managers and
clinicians acknowledge that working with
MCOs brings the SBHCs into the mainstream
of health care financing, establishes
the credentials of school-based providers,
and improves accountability.
The main study conclusions suggest that
providers of school-based mental health
services need more support to effectively
and efficiently implement managed care contracts
and that other options for capturing
third-party insurance revenue in addition to
traditional managed care network provider
contracts should be considered.
The remainder of this report reviews study
methodology, describes study site selection,
presents study findings, offers conclusions,
and suggests areas for future research.
Appendix B includes detailed case studies
drawn from visits to the three study sites.
Background on School-Based
Mental Health Services
SBHCs were established in the early 1970s
with the goals of making all health care
more accessible to children and adolescents
and reducing the incidence of behavior-related
health problems. Over the past 25
years, SBHCs have expanded to 45 States
and more than 1,000 centers nationwide.
Centers are located primarily in high schools
but also are developing in elementary and
middle schools. Most SBHCs are located in
the New England and Mid-Atlantic regions
(422 centers). Since 1997, the Midwest has
experienced the largest expansion of SBHCs,
a 61 percent increase. Most centers (63 percent)
are concentrated in urban areas, but
growth into rural areas is increasing. In
1998, 26 percent of centers were in rural
areas (Making the Grade, 1999).
Services offered at SBHCs include an
array of primary medical care, public health,
and mental health services, including basic
physical exams, age-appropriate screening
tests, health education, and treatment of
minor illnesses. Mental health services generally
include comprehensive individual evaluation,
case management, individual and
group therapy, crisis intervention, and basic
drug and alcohol prevention and treatment
services. Some centers provide family counseling.
A survey of 405 SBHCs in 1996
found that 17 percent of visits to SBHCs
were for mental health concerns. Eighty
percent of SBHCs offered crisis intervention,
70 percent offered individual evaluation,
62 percent offered preventive mental health
services and 57 percent offered individual
treatment. Urban centers were more likely
to provide comprehensive mental health
services than rural centers (Advocates for
Youth, 1998).
Center staff usually includes part-time
physicians, nurse practitioners or physician’s
assistants, nurses, social workers, and mental
health providers. Some centers also have
health educators and nutritionists. In some
centers the school nurse is part of the center
staff, while in others he or she is a school
employee and coordinates with the center.
In the 1997/1998 Making the Grade survey
of SBHCs (Making the Grade, 1999), 57
percent of responding centers reported a full-time
primary care provider on site. Data
available on mental health providers in
schools was reported by school districts, not
by SBHCs. Fifty-five percent of schools had
counselors, 40.5 percent had psychologists,
and 21 percent had social workers (Davis,
Fryer, White, & Igo, 1995).
Mental health services delivered in schools
are sometimes integrated with and sometimes
separated from SBHCs, or sometimes are
located in schools that do not have an
SBHC. For the freestanding school mental
health services, schools usually make
arrangements with providers from community
mental health centers or outpatient facilities
to provide part-time services in the
schools. Often schools will employ mental
health providers such as school psychologists
and social workers as part of their special
education programs. These providers usually
are not available to the general student population.
Such variations in service delivery
affect which students in the school have
access to which services. Multiple methods
for delivering mental health services within
each school carry with them the potential for
service duplication but also create opportunities
for service coordination and integration.
School-based mental health programs
traditionally have a mix of funding sources,
with heavy reliance on State general funds,
private foundations, and Federal grants.
Thirty-seven States and the District of
Columbia helped to fund at least some of
the centers. Funding from third-party insurance
reimbursement is increasing. Medicaid
fee-for-service, Medicaid managed care,
commercial insurance revenues, and Child
Health Insurance Program (CHIP) outreach
were reported by schools as sources of revenue
(Making the Grade, 1998). Fifteen
States reported Medicaid fee-for-service
revenue, five reported Medicaid managed
care revenue, and seven reported commercial
insurance revenue.
State policy increasingly enables SBHCs
to collect third-party revenue. Forty-three
States allow SBHCs to bill Medicaid and
CHIP. Only three States (Arizona, Hawaii,
and Oklahoma) prohibit Medicaid billing,
and those three States plus North Carolina
do not allow SBHCs to bill CHIP. Twenty-two
States report that at least one SBHC
in their State signed a managed care contract,
while 23 States plus the District of
Columbia report no SBHC/managed care
contracts. State policy supports SBHC/
managed care contracts to varying degrees.
Twenty-eight States report encouraging
SBHC participation in Medicaid managed
care (Lear, Eichner, & Koppelman, 1999).
According to a 1997 review of State
Medicaid agency contracts with managed
care organizations, 13 State contracts contained
provisions related to relationships
between managed care plans and SBHCs,
and, of those, two States specifically
addressed mental health services in schools
(Rosenbaum, Silver, & Wehr, 1997).
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