Tuesday, April 3, 2012

Is the Michigan CMH system too inefficient and costly?

In my experience, Michigan's Community Mental Health system is chronically underfunded and overburdened. It can be both frustrating and tremendously helpful, depending on who you are dealing with and the system's capacity to solve your particular problem. Despite its flaws, the CMH system has many things going for it.

This is from the "MACMHB [Michigan Association of Community Mental Health Boards] Guide to Integrated Care for Dual Eligibles":

There has been some talk of excessive administration in the existing public behavioral health and developmental disabilities structure. However, the actual expenditure data suggests a very different reality. Consider the following:

  1. The MDCH Finger Tip report indicates that the managed care administrative expense for the PIHP [Pre-paid Inpatient Health Plan] system in FY 10 was 6.5% of reported expenditures. An Analysis of the Medicaid Unit Net Cost report data required by MDCH indicates that payments for services constitute 91.4% of Medicaid expenditures by PIHPs. The remaining expenditure of 8.6% consists of administration and payment to risk reserves. As there is no profit factor, this suggests an MLR [Medical Loss Ratio] for the PIHPs of 91.4%. In the letter from the Michigan Department of Licensing and Regulatory Affairs to the federal Center for Consumer Information and Insurance Oversight supporting the state's request for an extension for meeting the PPACA [Patient Protection and Affordable Care Act] requirements for MLR insurance companies cited in this letter (other than BCBS [Blue Cross Blue Shield]) reported MLR ranging from 55.5% to 86.1%
  2. The average administrative expenditure for CMHSP [Community Mental Health Services Program] service delivery operations for all services (both Medicaid and non-Medicaid), as reported in the Administrative Cost report for FY 10 was only 9.9%. Consider that the excessive administrative cost in healthcare is pervasive and considered one of the most significant challenges to reducing expenditures. The CMHSP programs bear considerable regulatory burden and serve a chronic population which would suggest a higher administrative cost, which is not evident.
  3. Per capita health care costs in the US increased by more than 5% per year between 2002 and 2009, with a total increase of 57% during that period. The public mental health system has seen an increase of approximately 2.2% per enrollee per year in that same period.

While the public mental health system may have various issues, an examination of the data demonstrates an efficient health care delivery system. The public behavioral health system--as the only system currently managing dual eligibles--has effectively transitioned Michigan from state-based institutional care to a network of community-based alternatives during the past 30 years. the PIHPs/CMHSPs have successfully expanded access to services by 16% since 2002 have demonstrated consistently good cost controls illustrated by low administrative expenses and rates increases significantly lower than our counterparts in traditional healthcare. The existing system, under public control and responsive to local needs, has a proven history as both the financial manager and the service delivery structure for the public healthcare safety net. It seems prudent to work within the existing system to create necessary improvements rather than to abandon this public management structure.

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