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Mental illness is the country's leading cause of disability, and, despite a host of effective new medicines and treatments, the archaic, maze-like mental health care system blocks most people from accessing them. The signs of failure are widespread: 30,000 suicides a year, 650,000 suicide attempts serious enough to require emergency medical attention, and millions of people facing needless disability, unemployment, and incarceration. The total annual cost for mental illnesses in the public and private sector is at least $150 billion in lost productivity and treatment costs, according to the President's Commission on Mental Health.

State and local governments shoulder a huge responsibility for mental health care. They now control just more than one-half of the nation's spending on mental health care, up from 45 percent in 1991. Medicaid has surpassed private insurance payments as the largest payer of mental health services. State and local governments also control myriad other mental health spending sources that are almost as great as Medicaid.

Bureaucratic boundaries and financing rules for mental health care have created a fragmented maze of services. One key to reform is to make financing flexible so that it follows the person to where services are most needed. Each person with mental illness should have an individual health plan developed by that person and family members in cooperation with care providers and coordinated by a case-manager. States should ensure that the many agencies in control of mental health services follow the plan. In turn, the plan should require different providers (e.g., a psychiatrist, social worker, or a job counselor) to coordinate their care and share information about patient outcomes. Instead of being treated merely as patients who are passively manipulated by the "system," they should be treated as consumers for whom mental health services produce measurable and meaningful results.

The following three approaches to reform can achieve the flexible financing, coordination of care, and accountability for results that will enable people to recover from mental illness:

"For too long, behavioral health care was regarded as inferior to intervention and treatment provided for physical health. We inherited a policy of confusion and duplication that is neither cost-efficient nor effective. By consolidating behavioral health programs across 15 state agencies, New Mexico will provide better service to those receiving care and greater value for taxpayer dollars." -- Gov. Bill Richardson, New Mexico

Funding That Follows the Consumer, Not the Agency: A model for reform, known as "cash and counseling," is already in place for aiding the developmentally disabled. It gives consumers direct control of their spending on approved services, with counselors aiding consumers in managing the funds for the services. If the providers do not serve the patients well, these consumers will simply choose to go elsewhere, and that local agency will not receive its usual funding. Cash and counseling has improved the quality of care and patient outcomes, as well as reduced fraud. A similar approach can be used for the mentally ill, with appropriate safeguards. This includes using an "advanced directive" that outlines the consumer's choice of providers during any psychiatric emergency. In addition, federal officials are studying the use of an innovative Food Stamp-like "personal independence" debit card that can be spent on pre-authorized Medicaid and Medicare providers. Some health care providers will likely resist such a change, but taxpayers and mental health consumers can both benefit. A growing pilot program for self-directed care in Florida has had some good initial results, including decreased hospitalizations, along with some problems associated with contracting abuses.

No Wrong Door: The coordination required among funding sources can be achieved with or without consolidation of the financing -- the key is to focus on serving the individual. For example, "Wraparound Milwaukee" in Milwaukee County, Wisc., offers cost-effective, comprehensive care to seriously disturbed children and their families, linking a crisis team, provider network, and access to 80 different services through a single public agency. A guiding principle is "No Wrong Door," which ensures children get the help they need, regardless of where they enter the system. Given the confusing array of programs in most localities, this is one of the best ways to overcome fragmented services. Thanks to the program, the rates of felonies and misdemeanors by the young clients fell by about one-half. Washington state has a similar program that covers a wide variety of social services. Under Gov. Kathleen Blanco's administration, Louisiana has also adopted a no wrong door program.

Consolidated Management: States with multiple agencies serving the mentally ill can be coordinated through an outside organization. In New Mexico, which has the country's most ambitious plan to end fragmented services, Gov. Bill Richardson has united behavioral health-related services handled by at least 17 different agencies into one delivery system. The agencies have not been merged, but their mental health and substance abuse services have been drawn together through a "behavioral health purchasing collaborative" that oversees services, spending, and performance outcomes. The collaborative has had recent success in passing legislation that will increase access to behavioral health services through Medicaid in rural and tribal areas of the state.

The new system is administered by a managed care company that is required to meet "system performance and consumer outcomes" goals, or face the potential loss of the contract. To support this initiative, the U.S. Substance Abuse and Mental Health Services Administration, has been awarded New Mexico a $2.5 million Mental Health Transformation State Incentive grant.

Such reforms are better alternatives than the cuts to Medicaid mental health services being considered in many states. Such cuts can simply shift costs elsewhere by way of higher incarceration rates, family violence, and lower productivity. The Tennessee chapter of the National Alliance for the Mentally Ill has proposed similar reforms as an alternative to these Medicaid cuts.

Additional reforms, as outlined in a Progressive Policy Institute report by Art Levine, are also critical: advancing parity for mental health services with provider accountability, promoting recovery from mental illness through proven treatments, providing mental illness screening to protect children, and encouraging work instead of lifelong dependency. In general, improving the quality of care is as important as improving access to care, a belief strongly supported by the Institute of Medicine. As Levine writes in the report: "At the heart of any genuine progressive alternative to our current failed mental health care is a transformed view of what is now possible -- even for people with the most serious mental illnesses -- a life in which they have a far greater role in making health care choices and are given the support they need to enter the workforce rather remain forever disabled."

Resources For Action

Florida 's Adult Mental Health Self-Directed Care Program
http://flsdc.org/

"Wraparound Milwaukee," Milwaukee County, Wisconsin
www.milwaukeecounty.org/display/router.asp?docid=7851

No Wrong Door," Washington state
www1.dshs.wa.gov/rda/research/11/99.shtm

"Telling the No Wrong Door Story," Louisiana Department of Social Services,
www.dss.state.la.us/departments/
dss/Telling_the_No_Wrong_Door_Stor.html

"New Mexico's Behavioral Health Initiative," New Mexico Health and Human Services Department
www.state.nm.us/hsd/bhdwg/

Additional Reading

"Improving the Quality of Health Care for Mental and Substance-Use Conditions," Institute of Medicine, National Academies of Science, November 1, 2005:
http://www.nap.edu/books/0309100445/html/R1.html

"A `Shared State' of Mind: Finding Common Solutions for Funding of Mental Health Services in Tennessee," National Alliance for the Mentally Ill-Tennessee, March 3, 2005
www.nami.org/Template.cfm?Section=Tennessee&template=
/ContentManagement/ContentDisplay.cfm&ContentID=21364

Interim and Final Reports to the President, The President's New Freedom Commission on Mental Health, October 29, 2002 and July 22, 2003
www.mentalhealthcommission.gov/reports/reports.htm

Judith Cook, et. al., "Promoting Self-Determination for Individuals with Psychiatric Disabilities through Self-Directed Services: A Look at Federal, State and Public Systems as Sources of Cash-Outs and Other Fiscal Expansion Opportunities," University of Illinois at Chicago, Chicago, IL
www.psych.uic.edu/UICNRTC/sdsamhsaconfsentver3.pdf

Debra Srebnik and John La Fond, "Advanced Directives for Mental Health Treatment," Psychiatric Services, July 1999
http://ps.psychiatryonline.org/cgi/content/abstract/50/7/919

Contacts

Michelle R. Welby
Health Policy Advisor
State Capitol Building Suite 400
Sante Fe, N.M. 87501
(505) 476-2243
michelle.welby@state.nm.us

Art Levine
Senior Fellow
Progressive Poliy Institute
3003 Van Ness St. NW, Apt. W-516
Washington, D.C. 20008
(202) 248-9320
artslevine@yahoo.com

Dave Kendall
Senior Fellow for Health Policy
Progressive Policy Institute
4021 Heritage Way
Missoula, Mont. 59802
(406) 543-2265
dkendall@ppionline.org