NEWS RELEASE
June 29, 1998

Engler Announces Federal Government Approves Community Mental Health Services Waiver

Innovative Plan is First in the Nation

Governor John Engler today announced that Michigan has received a waiver from the Department of Health and Human Services, Health Care Financing Administration (HCFA) for Medicaid prepaid, specialty mental health and substance abuse services and a combination waiver for Medicaid prepaid specialty services and supports for persons with developmental disabilities.

"This waiver is outstanding news in our efforts to provide the highest level of care for persons with mental illness and developmental disabilities," said Engler. "Now individuals will have much more flexibility and choices when it comes to their services and supports. This is another step in the right direction for Michigan's public health care system, which will assure access and quality for consumers, while maintaining costs at reasonable levels."

Under this waiver, the Department of Community Health will contract on a sole source basis with Community Mental Health Service Programs to manage and provide Medicaid mental health, substance abuse, and developmental disability services and supports under a prepaid, shared-risk arrangement. The habilitation supports waiver for persons with developmental disabilities will continue so that qualified individuals on this waiver will also receive the new waiver services.

"Michigan is the first state in the nation to offer this innovative plan," said Department of Community Health Director James K. Haveman, Jr. "We can now proceed with new managed-care contracts with all Community Mental Health Service Programs and implement new Medicaid managed-care contracts with the coordinating agencies. This is a great day for Medicaid enrollees who are in need of mental health, substance abuse, or developmental disability services."

In a letter from the Department of Health and Human Services, Center for Medicaid and State Operations, Director Sally K. Richardson stated, "HCFA recognizes and appreciates the good faith negotiations that took place with the Michigan Department of Community Health while these waivers were under review and being revised. We particularly commend the way the State has opened up the entire waiver process to participation by consumers, family members, and advocates."

The waiver was also applauded by Michigan's Community Mental Health Service Programs. "The approach to managed care enabled by this waiver will maintain accountability to local units of government, preserve the public mental health safety net for person with severe and persistent mental illnesses and developmental disabilities and permit any savings to be reinvested to enhance local services," said Michigan Association of Community Mental Health Boards Executive Director David LaLumia.

The waiver is for a two-year period beginning October 1, 1998 and ending September 30, 2000. Under the terms of the waiver, Michigan must provide a detailed plan to shift from a sole-source model to an open competitive model within the next two years and implement this competitive plan within the next four years. The Department of Community Health must also arrange for an independent assessment of the waiver program with respect to access to care, quality of services, and cost-effectiveness. The waiver also includes detailed requirements regarding data collection, cost-effectiveness, and quality assurance.

"This is a major breakthrough for Medicaid managed care for persons with long-term disabilities," said Deputy Director of Mental Health & Substance Abuse Services William J. Allen. "All the major advocacy and provider organizations were involved in the development of the waiver and managed-care plans, with the advocacy organizations representing persons with developmental disabilities especially anxious to begin implementation."

This will be the first comprehensive, prepaid plan for Medicaid long term supports for persons with developmental disabilities in the country. The plan calls for person-centered planning, pre-paid capitation funding, and a great deal of flexibility in terms of services and supports. Under the waiver, Community Mental Health Service Programs will provide or authorize the full range of mental health services to Medicaid enrollees and will do so with much more flexibility and in a more responsive manner for consumers than is the case under the current Medicaid system. All services and supports for persons with developmental disabilities or mental illness will be provided utilizing a person-centered plan in accordance with the revised mental health code. In addition, the 15 local coordinating agencies will be responsible for authorizing substance abuse services for Medicaid enrollees.

The Department of Community Health is currently in the process of finalizing new managed-care agreements with the 49 Community Mental Health Service Programs and 15 Substance Abuse Coordinating Agencies. The Department recently released the funding methodology and proposed funding levels under the managed-care plans to the Community Mental Health Service Programs and Coordinating Agencies. It is anticipated that contract negotiations with the local mental health and substance abuse organizations with be completed in time for implementation on October 1, 1998. A major change in the new managed-care contracts calls for quality assurance and quality improvement based on outcome measures rather than process measures. A number of performance indicators (outcome measures) have been included in the managed-care contracts that deal with consumer satisfaction, access to services and supports, and quality of life measures concerning work, housing and related issues.

FOR IMMEDIATE RELEASE CONTACT: John Truscott
June 29, 1998 (517) 241-2112