The Public Policy Committee of the Hammond Commission met on Tuesday, May 25, 1999, in House Room 1 of the Virginia State Capitol in Richmond. The Chairman, Dr. Louis Rossiter, called the meeting to order at 10:12 A.M. He introduced the Committee members, Charline Davidson, Director of Planning and Regulations for DMHMRSAS and staff liaison to the Committee, and Olivia Garland, Hammond Commission member.

Members present were Dr. Louis Rossiter, Virginia Commonwealth University, and Raymond Burmester, Coalition for Mentally Disabled Citizens of Virginia.

Presentation: Major Policy Issues Regarding the Appropriate Utilization of Medicaid for Mental Health, Mental Retardation, and Substance Abuse Services

Richard E. Kellogg, Commissioner of the Department of Mental Health, Mental Retardation, and Substance Abuse Services:

Mr. Kellogg discussed the relationship between the DMHMRSAS and DMAS. Virginia began Medicaid for mental health (MH) services in 1991 and the mental retardation (MR) waiver in 1993. The total amount collected in 1991 was $15 million, and currently the amount is $172 million. The system was set up through the CSBs who worked in conjunction with DMHMRSAS and DMAS to construct the benefits and write the regulations.

In most states the match is provided by state appropriations to the mental health authority, but in Virginia the match is appropriated to the CSBs through performance contracts. Mr. Kellogg believes that the application of the Medicaid system through SPO and the waiver through the CSBs has been generally successful. The targeting of state plan option MH services with medical criteria requiring serious mental illness defined in Medicaid regulations, as well as new medications and PACT teams, have caused a significant decrease in the use of state facilities. The Department welcomes the ongoing audit of costs for Medicaid services with the utilization review process. Costs have been an issue. Except for two services, the rates for services have not been adjusted since the beginning of the program.

Mr. Kellogg discussed some challenges the commonwealth faces.

• He said that it is a good time to review the construction of the match. A local challenge is to make general state funds available in CSB budgets so services can be provided to Medicaid eligible people who meet the criteria of medical necessity. Mr. Kellogg believes that those criteria need review.

• Access differs across Virginia because CSBs choose which Medicaid eligible reimbursed services they will provide to the community. Lack of "statewideness" of service availability could jeopardize the entire program.
• The private sector is concerned about whether they can serve Medicaid eligible people directly or have to go through the CSB system.
• Many consumer advocates support self-determination, and Mr. Kellogg believes that this will be part of the future for service delivery.

Commissioner Kellogg believes that the service menu needs review.

• The DMHMRSAS supports and is funding PACT teams, which are comprehensive services for the seriously and chronically mentally ill. They include psychiatric nursing, social work, and case management services. This program could be expanded and the funding bundled into a single service item and fee. District 19 has the first PACT in Virginia to be certified by the National Alliance for the Mentally Ill (NAMI).
• Virginia should consider providing coverage for substance abuse (SA) services, however, caution is required because of the mixed outcomes in other states. The DMHMRSAS supports a Medicaid option targeting individuals with dual diagnoses of SA and mental illness.
• The DMHMRSAS would like to work with DMAS to develop a psychogeriatric transitional community program to help avoid hospitalizations. It would provide nursing home care and behavioral management with the involvement of the CSBs.
• Cost is a critical factor in attracting the private sector and competition and moving into a more market based system.
• Mr. Kellogg believes there is an opportunity for DMHMRSAS and DMAS to work together to integrate individuals in the publicly funded mental health system with the primary care HMO system.

Mr. Smith informed the Committee about DMAS. Its budget is $2.6 billion and pays for more than 700,000 clients per year through a network of more than 42,000 providers. More than three-quarters of Medicaid funds are expended for the elderly or disabled, and $465.8 million specifically on mental illness or retardation.

DMAS is the designated state agency to receive federal medical assistance funds and bears the responsibility for meeting the federal requirements. In collaboration with fourteen public agencies, it exercises four major roles:

• Health care coordinator;
• Financial institution;
• Health policy initiator; and
• Program developer.

Although some functions have been delegated to other agencies and the private sector, DMAS is responsible for and should remain responsible for the following: eligibility; claims payment; provider enrollment and contracting; defining enrollment of recipients; utilization management; appeals; defining amount, duration, and scope of Medicaid services, and medical necessity criteria.

Mr. Smith does not think that the two functions can be separated. Federal law says that:

1. DMAS must not delegate its authority to exercise administrative discretion in the administration or supervision of the plan, or to issue policies or rules on program matters;
2. The authority of DMAS must not be impaired if any of its decisions are subject to review by an agency of the state;
3. If another agency performs services for DMAS, it must not have the authority to change administrative decisions or substitute its judgment for DMAS.

In addition to overseeing the program DMAS is a financing agency because it is responsible for paying claims. DMAS must ensure the availability of services, accountability, compliance, and choice.

Waivers are designed to create some program feature or service that could not be implemented under the Social Security Act or to waive federal requirements for the program. There are three types of waivers:

1. Research and Demonstration Waivers are designed to prove that a program change will achieve a desired outcome. They are temporary and apply academic methodology.
2. Home and Community-based Waivers are designed to offer services not usually covered by Medicaid and the individual must be in imminent risk of institutionalization. Waivers for the mentally ill would be limited to individuals under age 21 or age 65 and older.
3. Freedom of Choice Waivers give the state the authority to restrict a recipient’s freedom to choose a provider in order to control the client’s overutilization of services or to permit the state to purchase services on a prepaid capitation basis. The recipient must have the same access to any service as the general population enjoys. The public mental health system does not presently have the capacity to meet the access requirement.

One innovative model is the PACE project that will be discussed later.

The future of the waiver may be affected by the review of Virginia’s Home and Community-based Waiver to be conducted by the Health Care Financing Administration (HCFA) this summer. A recent study was conducted of the MR waiver and recommendations have been made to address issues that were identified. There are five other waiver programs that have provided positive experiences. Necessary changes to correct problems identified in the MR study and in the HCFA review will be developed jointly with the DMHMRSAS. DMAS must meet its responsibilities to adequately and effectively monitor the appropriateness and quality of home and community-based services.

Local Community Policy and Management Teams manage CSA funds, and DMAS may not delegate payment approval to any other agency. Both agencies are accountable to their respective audit processes. The services for which Medicaid can pay must be defined, and an appropriate level of funding be provided in DMAS’ budget to cover these services. Local governments should be allocated funds to pay for services that Medicaid will not cover.

5. How should Virginia approach Medicaid reimbursement for substance abuse services?

Mr. Smith informed the Committee that there are two studies being conducted concerning Medicaid coverage of substance abuse services. The 1998 Appropriation Act requested DMHMRSAS and DMAS to evaluate the costs, benefits, and feasibility of expanding Medicaid reimbursement for SA services. SJR 387 (1999) requests DSS, DMHMRSAS, DMAS, and DRS to evaluate the effectiveness and applicability of the proposed plan for SA treatment for recipients of public assistance. He recommended that the results of the studies be reviewed before any final decisions are made.

6. Will CMSIP cover substance abuse services for juveniles?

CMSIP covers outpatient SA services for children up to age 18.

7. Specialty Solutions for Geriatric Clients:

Many elderly individuals are not receiving appropriate treatment for mental health problems. There needs to be more interaction with the MH system and professionals to avoid or delay institutional placement. Caregivers and nursing staff should have additional training and resources. DMAS is conducting a study of the Intensive Assisted Living waiver to determine the adequacy of the current regulatory structure for heavier care recipients. If Medicaid funds were used for these specialty populations, federal regulations would have to be met.

Medical Rehabilitation Clients:

The Elderly and Disabled Waiver currently serves most of the individuals in this category. DMAS is developing a waiver for individuals with developmental disabilities that should address those who not currently included.

8. How can Virginia obtain the best level of federal financial participation without changing asset or income tests for eligibility?

Virginia’s match is basically one for one according to its relative wealth. The amount of federal money available is controlled through the state’s appropriation. The money is accessed when a Medicaid eligible person seeks services or when a CSB requests the MR waiver for an eligible consumer. Virginia will claim the most federal dollars it can when all Medicaid recipients are receiving all services for which they qualify. Mr. Smith said that, contrary to the perceptions of some individuals, it is unlikely that there is a vast untapped source of federal funding. He also reminded the Committee that federal law requires that income and asset requirements are uniform for all individuals in a covered group.

9. How can problems related to the IMD exclusion be minimized?

An institute for mental diseases (IMD) is a facility that is primarily for the care and treatment of individuals with mental diseases. Medicaid reimbursement is not available for inpatient services in an IMD for Medicaid patients age 22 to 64. A facility can avoid IMD status if the Virginia Department of Health licenses the facility as a general hospital or a unit of a general hospital, and if it is controlled by a common owner, directed by a single CMO and a single CEO, and served by an integrated medical staff.

Mr. Smith believes that DMAS plays a critical role in the future of the MH and MR system. It makes a significant contribution to the funding side and offers expertise in helping to develop and maintain quality services for those in need.

Mr. Burmester, a Committee member, expressed concern about maintaining quality services and protecting consumers when services are outsourced to private vendors outside of the CSB system. He wondered if DMAS would merely provide funding or if it would provide some oversight and quality control.

Mr. Kellogg said that this is an important concern and involved the construction of the waiver system. The CSBs are currently the single access providing case management in the system, and the DMHMRSAS is trying to address some of these issues through performance contracts. CSBs are responsible for the individuals in the waiver service, but they cannot require contracts with private providers. Accountability is a problem and has not been resolved. Mr. Smith and Mr. Kellogg are willing to work together to ensure that high quality services are provided to consumers by the private sector providers as well as the public providers.

Dr. Rossiter asked if there were individuals in state facilities who could be better served in communities if there was a change in Medicaid policy. Mr. Smith and Mr. Kellogg agreed that the biggest problem for many clients in facilities, who could be released, is the lack of housing. Some CSBs have begun housing programs to allow for residential placements. Medicaid will provide wrap-around support services for those individuals living in the community.

Mrs. Burmester informed the Committee about the Team from Virginia that attended the National Academy in Washington, D. C. in August 1998. The Team drafted an Action Plan for Virginia's mental retardation services with the primary goal that Virginia will assure the availability of appropriate resources, services, and supports to all Virginia citizens with mental retardation who clearly demonstrate needs. The assessment of those needs will be based on an equitable, objective methodology and individual choice.

To meet this goal, the Team has the following objectives:

1. Address emergency residential service, in-home or out of the home needs;
2. Make jobs or vocational/day programs available to every interested individual;
3. Support primary caregivers of individuals with mental retardation;
4. Obtain the funds that are necessary to implement this goal;
5. Improve the level of accountability and administrative efficiencies through statewide standardization.

Mrs. Burmester discussed some of the concerns and recommendations of the Team as they relate to the principles developed by the Hammond Commission:

• CSBs should have a contractual requirement to provide oversight of services to ensure state-wide standards are met by private providers who deliver services to CSB-area recipients;
• To ensure that access to services is fair and equitable, the cost of assessments to determine eligibility for the Waiver should be provided through either Medicaid or general fund dollars;
• Multi-agency collaborative efforts should be made to guarantee employment options are available to everyone and to address housing issues for people with mental retardation;
• Action should be taken to develop specific strategies that will allow greater consumer and family choice and control through self-determination and person-centered planning. Virginia should implement a pilot project such as those funded by the Robert Wood Johnson Foundation;
• Revisions and additions to the array of services provided under the Waiver would improve service delivery and choice. One example is Community Guides, which helps connect individuals to needed services available in the community;
• Dental services should be included;
• Rates have not been increased in more than eight years, limiting the attraction of qualified private providers to allow consumers greater choice;
• The system needs to develop and implement standardized unit costing and set rates with a geographic differential;
• DMHMRSAS and DMAS should specify an overall budget for the Waiver program with DMHMRSAS continuing to be the lead in administering and monitoring the program.
• Sufficient match funds for those on the Waiver and those on the waiting list up to the maximum number of approved slots should be appropriated in the DMAS budget rather than through transfers from CSB appropriations;
• Training, technical assistance, and information should be provided to individuals and families on their disability, available programs, and opportunities;
• Participation in the National Core Indicators project should be continued.

Mr. Saunders provided an overview of the Comprehensive Services system. In 1988 the Department of Planning and Budget conducted a study on the rising costs of children’s services. They found that 80% of the 5,000 youths being served were involved with multiple agencies. A council was formed, including state and local governments, service providers, and parents, and they developed in 1993 the Comprehensive Services Act for Youth and Families. It is a child centered, family focused, and community based collaborative system designed to improve the delivery and coordination of services and to curtail costs.

The system serves primarily four youth populations: foster care; special education; juvenile justice; and mental health. It involves the Departments of Social Services, Education, Health, Juvenile Justice, and Mental Health, Mental Retardation, and Substance Abuse and the Supreme

Court. The State Management Team recommends training and policy, and the State Executive Council approves policy. The Community Policy and Management Teams (CPMT) consist of the local agency heads and a parent and a private provider representative. They approve interagency policy involving fiscal and service areas. The Family Assessment and Planning Teams (FAPT) handle case reviews, assessments, service recommendations, and management.

In 1998 JLARC reviewed CSA and expressed interest in the possibility of using Medicaid funds for appropriate services for eligible children. CSA’s budget for the current biennium was reduced by almost $20 million in anticipation of Medicaid benefits. Inpatient and outpatient mental health services are covered under the current state Medicaid plan. Additional services are scheduled to begin in January 2000. Copies of Mr. Saunders' notes are filed with these minutes.

The 1998 Appropriations Act directed DMAS to submit an amendment to the State Plan for Medical Assistance to provide Medicaid coverage for children under CSA for treatment foster care effective January 1, 1999, and provide coverage for inpatient psychiatric residential treatment on January 1, 2000. Staff worked with a large group of stakeholders and designed a program for treatment foster care that was believed to meet all federal requirements. It was submitted to HCFA but was not approved. It is being redesigned as a home and community- based waiver, and Ms Cook is hopeful that it will be accepted and coverage will begin in January.

DMAS is also working on residential treatment and believes that it will be approved. Implementation will be slow because federal regulations require that only accredited facilities may receive federal funds. Accreditation takes 12 to 18 months to complete. DMAS will continue to work with HCFA to explore possible ways for Virginia to secure federal matching funds for services for CSA children. Ms Cook said that it has been difficult to forecast placements and plan programs because CSA has no central database. Some localities have contracted with DMAS' utilization management contractor to provide needed data. A copy of Ms Cook's notes is filed with these minutes.

Presentation: Lessons Learned from the Comprehensive Services Act for Mental Health by Robert Cohen, Ph.D., Department of Psychiatry, Virginia Commonwealth University

Dr. Cohen said that he believes that CSA is one of the most ambitious and most sophisticated statewide structures for integrating services for children in the country. However, he is not ready to say that it is the most effective or leads to the most improvement. It incorporates all of the principles for providing good services, including individualized service plans, families as active partners, local empowerment, pooling of funds, and multi-disciplinary collaboration.

Dr. Cohen discussed some of the lessons learned from CSA that may be relevant for the public mental health system:

• Some localities, when given the latitude to plan their own services, demonstrated creativity in service planning and delivery to fit the needs of their children, but it was not universal;
• Incentives need to be aligned with the goals of the program. Private providers are encouraged to offer an array of services for children besides residential, but there are concerns about quality and cost;
• A utilization management system was developed for planning services for children, driven from the local level using a common set of principles. Some of the elements involved in planning are desired outcomes, factors determining placement, tracking progress, and clear expectations. It is too soon to evaluate the system’s effectiveness.
• A strength of CSA in being locally driven also becomes a liability in statewide reform because there are 140 different systems. It is an enormous challenge to maintain a balance between providing guidance in the form of principles, framework, and technical assistance and not forcing on the locality the state’s way of doing things. Dr. Cohen believes that the state should set up a framework and allow the localities to tailor services to meet their local needs best;
• We need to keep sight of the principles, objectives, and plans that were developed in the beginning throughout the implementation of comprehensive reform;
• Interdisciplinary planning is labor intensive, and the resulting, unintended costs may appear to localities to be nonfunded state mandates; and
• We should look ahead and try to forecast any issues that need to be addressed in order for the program to be implemented as intended.

Ms Thorpe explained the Program for All-Inclusive Care for the Elderly. PACE is a comprehensive service delivery and financing model of long-term care for the frail elderly. It enables frail, older adults to live in their homes and in the community as long as medically and socially feasible. PACE provides a full continuum of care by an interdisciplinary team in the most appropriate setting, including inpatient and outpatient medical services and long-term nursing care.

It operates through capitated Medicaid and Medicare financing. Approximately 2/3 of the revenue comes from Medicaid and 1/3 from Medicare. A small percentage comes from private sources or enrollees paying directly. Participants must be at least 55 years old, reside in the provider's service area, be certified by Medicaid as eligible for nursing home level of care, and agree to the terms of participation. Based on national data, a typical PACE enrollee is an 80-year-old widow, living alone with several chronic medical conditions, and probably suffering from some degree of cognitive impairment.

In 1996, DMAS entered into a contractual agreement with Sentara Lifecare Corporation to begin a pre-PACE program in Virginia to serve the Tidewater area. Currently, this site is the only program in Virginia. The 1998 General Assembly authorized DMAS to add PACE to the State Plan option and to develop state regulations. The Sentara program is growing slowly but not breaking even. Transportation costs are high. Ms Thorpe feels that PACE programs have to be located in urban areas in order to be cost effective. Some of the reasons to consider a PACE model are: nursing home placement is delayed; hospital days and medications are reduced; clients have generally better health and quality of life; and risk is transferred to the provider. A copy of Ms Thorpe's notes is filed with these minutes.

The next meeting of the Committee will be on Monday, June 21, 1999, at the Prince William CSB Ferlazzo Center in Woodbridge, Virginia. The topic will be on Performance Measurement.

The meeting was adjourned at 3:00 P.M.