Common Questions and Answers

There were several common questions asked by treatment providers who attended workshops in which the checklist was used. This part of the guide gives answers to a few of those questions.

QUESTION: Do I have to pay attention to these managed care issues? I have contracts with the State and revenue from fees, so won't my organization survive intact?

ANSWER: Economic forces are leading to the use of managed care approaches by almost all payers. If you have secured a "niche market," where it is unlikely that other organizations will compete with you, then you may be in a unique situation where the payers will continue to buy your service. However, organizations that deliver basic outpatient and residential substance abuse care cannot ignore managed care.

QUESTION: My organization delivers residential treatment. Should I add outpatient services or otherwise diversify?

ANSWER: Managed care organizations frequently shift services from hospital inpatient to community residential facilities. A second strategy of MCOs is to then shift the location of care from brief residential services to intensive outpatient or outpatient care as quickly as possible. The best strategy would be to offer all needed services and plan to shift the balance between services as referral patterns and MCO practices change.

QUESTION: What staff qualifications do managed care firms require for outpatient services, and are graduate degrees a necessity?

ANSWER: There is considerable variation. Staff qualifications are frequently determined by the payer rather than the MCO. Some MCOs require State-licensed practitioners, while others accept all staff working within a licensed or State-approved program.

QUESTION: How cost competitive is managed care? Will I be asked to accept reimbursement rates below my cost?

ANSWER: Most MCOs attempt to secure discounted rates. It is important to know your costs and establish a level below which you will not negotiate. It is also important to be aware of the costs and rates of your competitors, in order to be able to judge the marketplace.

QUESTION: Will managed care require my organization to change our clinical practices?

ANSWER: As you market your services, carefully consider the types of services that managed care organizations want. Most will favor brief and focused counseling models, with rapid step-down to less intensive levels of care.

You may have to modify your service practices in order to secure and maintain business.

QUESTION: My staff are concerned about losing clinical control of our services to a gatekeeper or case manager. Is it necessary to give up clinical control if I get a contract?

ANSWER: It's best to think of working with an MCO as a partnership where you exchange information about clients and determine a plan of treatment together. Most MCOs watch the length of treatment episode very carefully, either through a case manager or by reviewing your organization's practice patterns (based on the analysis of your organization's paid claims).

QUESTION: We don't do outcome studies. How can I begin to focus on the impact of treatment?

ANSWER: Implementing a consumer satisfaction survey is a good place to begin. It can provide feedback on access, staff, the most (and least) valuable components of services, and the value of care to clients and family members.

QUESTION: Will it be necessary to create new alliances, join networks, establish joint ventures, or merge with another organization to be successful?

ANSWER: It depends on your local situation and your organization's goals. There are many new relationships currently being established to improve the likelihood of doing well as the healthcare system changes. You may find arrangements that strengthen your organization clinically and managerially. No organization should rule out considering these options.

How Can We Design an Action Program for Change?

The information you gained from completing the readiness checklist is a good start. There are several steps in classic organizational planning. The action planning steps are to:

1. Assess Your Current Position

• Assess your organization's strengths: What do you have going for you, and what should you be sure to maintain and/or expand?
• Assess your organization's limitations: What areas need improvement, and what is your realistic capability to address these areas internally?
• Assess the opportunities emerging in the marketplace: What are the commercial and public managed care developments in your State and locality?
• Assess the competition and other challenges: What threatens your plans, how quickly will you need to implement changes, and what are your competitors planning which will impact on your future?

2. Develop an Achievable Plan

• Establish clear long-range goals: What changes are needed in the organization's mission and long-range targets, if any?
• Chart 1-2 year objectives: What are the priority actions that will make the greatest difference as you penetrate the managed care market?
• Develop targets: What are the numerical targets and the schedule to be used for each priority action?
• Involve the staff and board: What steps must be approved and accomplished by the various actors, and what are the resource requirements?
• Consider strategic partnerships: What new organizational relationships will strengthen your ability to reach your objectives, and what scarce skills or resources are essential to success?

3. Implement the Plan

• Assign the tasks: What are the expectations for all of the key persons and organizational units?
• Coordinate the work: Manage the process and make the needed adjustments in day-to-day activities.

4. Check Progress and Adjust the Targets

• Review achievements against the objectives: What was accomplished and what were the deviations from the plan?
• Reassess the environment: What has occurred in the business environment, with Medicaid managed care, in healthcare reform, or in your local service system that will impact on your success?
• Change the strategic plan: What better strategies have been identified and how should the plan, targets, or timetable be modified based on your experiences?

Summary and Conclusion

This guide and checklist were developed for the Center for Substance Abuse Treatment (CSAT) to assist States and publicly funded substance abuse treatment providers to succeed in a managed care environment. The objectives are to increase managed care participation by expanding knowledge, assessing readiness through use of the checklist, and encouraging effective action planning.

Remember, the checklist will be helpful but should not be the only tool your organization uses to prepare for managed care participation. Providers should attend workshops, read, share ideas with colleagues, and participate in State association activities.

Treatment providers seeking additional assistance should contact their State authority or CSAT's Quality Assurance and Evaluation Branch within the Division of State Programs.

References

England, M.J., and Vacarro, V.A. New systems to manage mental health care. Health Affairs 10(4): 129­137, 1991.

Feldman, S., and Goldman, W., eds. Editors' Notes. New Directions for Mental Health Services: Managed Mental Health Care. San Francisco: Jossey-Bass, 1993.

Holahan, J.; Rowland, D.; Feder, J.; and Heslan, D. Explaining the recent growth in Medicaid spending. Health Affairs 12(3):177­193, 1993.

Letsch, S.W. National health care spending in 1991. Health Affairs 12(1):94­110, 1993.

Oss, M.E. Industry statistics: Managed behavioral health programs widespread among insured Americans. Open Minds: The Behavioral Health Industry Analyst 8(3), n.p., 1994.

U.S. General Accounting Office. Medicaid: States Turn to Managed Care to Improve Access and Control Costs. Washington, DC: GAO (GAO/HRD-93-46), 1993.

Waxman, A.S. "Managed mental health care: How to survive in the next decade." Presentation at the 2nd Annual Managed Care Conference, Psychotherapy Finances, Palm Beach, Florida, 1994.

Wilson, C.V. Substance abuse and managed care. In: Feldman, S.  and Goldman, W., eds. New Directions for Mental Health Services: Managed Mental Health Care. San Francisco: Jossey-Bass, 1993.

Additional Readings

Ansoff, H.; DeClerk, R.; and Hayes, R., eds. From Strategic Planning to Strategic Management. New York: John Wiley and Sons, 1976.

Bryson, John M. Strategic Planning for Public and Nonprofit Organizations. San Francisco: Jossey-Bass, 1988.

Center for Substance Abuse Treatment, Division of State Programs. Managed Care and Substance Abuse Treatment: A Need for Dialogue. Rockville, MD: CSAT, 1992.

Center for Substance Abuse Treatment, Division of State Programs. Reports on the Meetings of the Center for Substance Abuse Treatment (Executive Summary); September 9-10, 1993 Kansas City, Missouri; January 12-13, 1994 Cincinnati, Ohio; and February 24-25, 1994 Phoenix, Arizona. Rockville, MD: CSAT, 1994.

Harwood, H.J.; Thomsom, M.; Nesmith, T. Healthcare Reform and Substance Abuse Treatment: The Cost of Financing Under Alternative Approaches–A Final Report. Lewin-VHI, Inc., February 1994.

Join Together: A National Resource for Communities Fighting Substance Abuse. Health Reform for Communities: Financing Substance Abuse Services. Boston: Join Together, 1993.

Koteen, J. Strategic management explained. Strategic Management in Public and Non-profit Organizations. New York: Praeger Publishers, 1989.

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