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Integrating Mental Health & Substance Abuse Strategies

Managed Care Contracting


Sheila Baler, Ph.D., M.P.H., Chief Operating Officer, Menninger Care Systems, Plano, TX.

Gail Robinson, Ph.D., Vice President, Lewin Group, Falls Church, VA.

In this session, Sheila Baler, the Chief Operating Officer of Menninger Care Systems, a managed behavioral healthcare organization, and Gail Robinson of the Lewin Group, discussed issues related to Medicaid and other public agencies' contracting with managed care organizations for the provision of mental health and substance abuse (MH/SA) services.

Dr. Robinson began by providing an overview of State activity in this area, identifying the range of different managed care models and at-risk arrangements involved in these contracting arrangements.

Ms. Baler then addressed some of the critical issues associated with contracting with public programs such as Medicaid from the perspective of a managed care organization. She highlighted a number of key points, including:

  • The contract objectives: There are benefits to the State in being very clear when identifying the full range of contract objectives, and in allowing Managed Care Organizations (MCOs) the flexibility to develop strategies to meet them.
  • The benefits package: Some States have included loose benefit language in their bid documents, then after award interpret this language very broadly including services that were not reflected in the cost and utilization data shared with prospective bidders and that therefore were not included in their capitation estimates.
  • The process: States should consider a two-phase contracting process in which the State selects an MCO partner to work with the State in doing concrete implementation planning in the first phase and then moves on to the operational stage in the second phase.


Lewin Group. MCOs' Experience in Public Mental Health Contracting: Key Issues identified by Managed Care Organizations. Prepared for the Center for Mental Health Services and the Office of Managed Care. The Lewin Group, Jun 1999.

Substance Abuse and Mental Health Services Administration (SAMHSA) Managed Care Tracking Report. Managed Behavioral Health Care Updates 1999 Jun; 2(1). Rockville, MD.

Fox HB, Wicks LN, McManus M, Kelley RW. Medicaid Financing for Mental Health and Substance Abuse Services for Children and Adolescents. Technical Assistance Publication. U.S. Department of Health and Human Services. Public Health Service. Substance Abuse and Mental Health Services Administration. Center for Substance Abuse Treatment, 1999. Rockville, MD.

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