Institute for Excellence in County Government

Mental Health Realignment Review

June 3-4, 2010

Sandra Naylor Goodwin, PhDPresident & CEO

California Institute for Mental Health

Agenda

Mental Health in ContextBackground and HistoryStructureFunding Impact

Mental Health in Context

Prevalence Impact on EconomyCost

Prevalence

7.3% of adults18 or older experience serious mental illness (2001)

Rates highest for persons aged 18; decrease each successive year after 18

4.9% for persons aged 50 or olderHigher among females than males

(8.8% vs. 5.6%)

PrevalenceBetween 9 – 19% of children have a

mental/ emotional problem60% to 79% of the youth that receive

mental health related services are male

Disease Burden - WHO

1 Unipolar depressive disorders 8.2 2 Ischaemic heart disease 6.3 3 Cerebrovascular disease 3.9 4 Alzheimer and other dementias 3.6 5 Alcohol use disorders 3.4 6 Hearing loss, adult onset 3.4 7 COPD 3.0 8 Diabetes mellitus 3.0 9 Trachea, bronchus, lung cancers 3.0 10 Road traffic accidents 2.6

Faces of Medicaid III: Refining the Portrait of People with Multiple

Chronic Conditions

New analysis includes pharmacy & 5 years data Fewer than 5% of beneficiaries account for more

than 50% of overall Medicaid costs 75% of Medicaid costs attributed to persons w 3 or

more chronic conditions 45% of Medicaid beneficiaries w disabilities have 3

or more chronic conditions October 2009 Center for Healthcare Strategies

Faces of Medicaid III (cont)

49% of persons w disabilities have a psychiatric illness

Psychiatric illness is represented in 3 of the top 5 most prevalent pairs of diseases among the highest-cost 5% of Medicaid beneficiaries with disabilities

We have reached the tipping point in understanding the importance of treating the healthcare needs of persons with serious mental illness and the behavioral healthcare needs (MH & SU) of all Americans

Behavioral healthcare has become very important to managing Total Health Expenditures in the U.S. and bending the cost curve

The Behavioral Health “Tipping Point” Hypothesis

Background and History of Realignment

Background & History 1991 $14 B Budget Shortfall New Republican Governor (Wilson)/Demo

Legislature County Supervisors Chronic Under funding of Mental Health

Services• Loss of $100 M in 1980s• Increased population & inflation• Unlimited Mandate to Serve• Active & co-coordinated advocacy

Stakeholder Master Plan

Background & History

Realignment: raised taxes $2.2 B (Sales Tax/VLF)

Enacted to accomplish the following aims: Program costs of $2B were shifted from state to local govt w

dedicated funding source Responsibility for planning, managing, delivering programs

were shifted to local govt Risks for program growth in subsequent yrs largely passed to

local govt Significant program flexibility provided to local govt to permit

management of risk, especially in MH programs

Realignment Mental Health Structure

Realignment: a major shift of authority from state to counties

County becomes single point of authority, responsibility, funding

Programs realigned from state to counties: All community-based mental health services State hospital services for civil commitments “Institutions for Mental Disease” which provide

long-term nursing facility care

Elimination of categorical gave counties flexibility to manage around client needs

Mental Health County Role

Statutory Requirements Counties must use funds for public mental health services 10% Transfer Option To the extent resources are available

Target Population – limits mandate to serve – provides priority populations Seriously ill adults and older adults Seriously emotionally disturbed children Persons in acute crisis as a result of a mental disorder Persons in need of “brief” treatment as a result of a

disaster

Mental Health County RoleFlexibility

Eliminated categoricals – establishes flexible “array of services”

Eliminated division between short-term services and long-term services funding

Eliminated end of year “spend or lose” Small County risk sharing Established flexible system of care

planning around needs of patient, not services/facilities

Mental Health County Role

County Single Point of Responsibility Planning System of Care Funds

Accountability Outcomes QA Medi-Cal audits only

Mental Health County Role The County Role

Sign a Performance Contract• Comply with Realignment funding constraints• Provide involuntary treatment • 3632 SED IEP services (Paid through mandates

process)• Meet Medi-Cal requirements (managed care

requirements)• Meet Patients’ Rights requirements• Meet data requirements• Other State requirements

Mental Health County Role Local Mental Health Board or commission

• Families, consumers and community representatives

• Review performance contracts, outcomes and results

• Review and evaluate community mental health needs

• Provide information to Planning Council on local performance

Mental Health State Role Develop outcome measures & integrate into

data system Develop performance based contracts

w/counties Review county expenditure plans Provide tech assistance to counties Ensure compliance w/federal law (esp Medicaid) Manage state hosp system (LPS; judicially

committed; prison & CYA transfers) Administer specific programs (Cond release;

3632; EMHI; pilot programs, CSOC, ASOC)

Poison Pills“Poison pills” = would render entire

realignment statutes inoperative under certain circumstances• Reimbursable state mandate claims –

Commission or Court ruling• Constitutional issues –

• VLF increase “match” requirement• Revenues raised count toward Prop 98 (school

funding)

• Court cases re: MIA• Transfer ruled a reimbursable mandate

Realignment Mental Health Revenue

Realignment Revenues Created a new revenue source outside SGF New revenues into state trust fund, then to

county trust fund Two dedicated funding streams:

½ Cent Increase in State Sales Tax State Vehicle License Fee

• Allocated by formula = to amount county would have received in 91-92

Revenues fell short of expectations due to the recession

Revenue & Transfer Provisions

• Established structure for future growth funds:• first priority to social services caseload

growth• COLA • base restoration• under statewide average, special equity

(restoration & equity payments now at an end)

Revenue & Transfer Provisions

• New requirements in social services caseload programs are consuming realignment growth for the foreseeable future

• Social Services growth includes AFDC Foster Care; Child welfare services; in home supportive services; county services block grant; adoption assistance; TANF

Realignment Funds Distributed by Formula

Revenues distributed to counties on a monthly basis until each county receives funds equal to the previous year’s total.

Funds received above that amount are placed into growth accounts – Sales Tax and VLF.

Growth funds are distributed annually, the first claim on the Sales Tax Growth Account goes to caseload-driven child welfare & IHSS

Any remaining growth from Sales Tax and all VLF growth are then distributed according to a formula developed in statute.

Realignment Formula – Insufficient Growth for Mental Health

Mental health has received no Sales Tax growth since FY 2005/06

In Fiscal Years 2007-08, 2008-09 and 2009-10 mental health did not even make the prior year’s base.

FY 2009/10 Mental health Sales Tax revenues for mental health remained flat

VLF revenues are approximately the same as FY 2003/04 amounts.

Estimate future overall growth in total MH Realignment 1-2% for at least next 3-5 years.

Realignment Formula – Insufficient Growth for Mental Health

Meanwhile, costs of services and other demands steadily rise…

Impact of Medi-Cal on Realignment

Medi-Cal Mental Health Plan requirements have increased county risk & administrative requirements

Medi-Cal match requirements have significantly reduced availability to serve indigent target population

Realignment funds have significantly increased FFP available for services

The MHSA = A Growing Percentage Statewide for Direct Services

Community Mental Health FundingFY 1999-2000($2.2 Billion)

Realignment

FFP

EPSDT SGF

Managed Care SGF

Other SGF

Other

The MHSA = A Growing Percentage Statewide for Direct

ServicesEstimated* Community Mental Health FundingFY 2010-11($4.5 Billion)

Realignment

FFPManaged Care SGF

Other SGF

MHSA

Redirected MHSA

Other

* Based on Governor's Proposed FY 2010-11 Budget

Mental Health Realignment Impact

Realignment Improvements

Stable and growing funding source for mental health programs

Eliminated competition with other entitlement programs for state General Fund dollars

Single point of responsibility - greater flexibility, discretion and control

Established priorities to serve most vulnerable population

Realignment

Improvements (continued) Elimination of categorical gave counties

flexibility to manage around client needs Initiated a period of adaptation to new

technology, including Medi-Cal consolidation Significant increase in federal funds Local accountability Intended to Streamline the bureaucracy

Realignment Problems

Did little to address the basic under funding of mental health prior to 1991; the system is still only funded to treat approximately half of the mentally ill

Funding has not kept pace with the growth in population or increasing prices and medical costs. Caseload requirements, including state mandates, diminish growth distributions

No administrative funds transferred

Realignment• Problems (continuted)

• Outcome system not simple and trustworthy for state level policy-makers

• VLF reduction backfill puts funds at risk• Because the Social Services programs were

entitlement programs, they were given priority for growth funding.

• Over time, this structure resulted in the failure of Realignment to keep pace with mental health needs.

LAO 2001 Evaluation

Realignment has been a largely successful experiment in the state-county relationship, but could be improved

In mental health, realignment’s reliable funding stream and increased flexibility have allowed counties to develop innovative and less costly approaches to providing services.

LAO 2001 EvaluationRealignment succeeded in better

coordinated, more flexible, and less costly mental health programs in the community.

The evidence suggests counties have been successful in shifting their tx strategy so that fewer clients receive tx in costly MH hospitals & other long-term care facilities

LAO 2001 Evaluation More clients are served w more effective tx

approaches in less costly community-based outpatient and day-treatment

LPS placements in state mental hospital beds dropped dramatically From 1,900 in 1992-93 to about 850 today.

Number of patients placed in IMDs has also dropped. From 3,900 IMD to about 3,500.

Can counties get out of Realignment?

Counties have statutory responsibility to care for the indigent - WIC 17000; case law limited responsibility to amount appropriated by legislature

Realignment limits indigent care to the target pop to the extent resources are available

Repeal realignment, new structure would need to be developed and new funding developed

If a county dropped the Medi-Cal Managed Care Contract, realignment funds that match Medi-Cal $ would be transferred to the state