State Mental Health Policy: New Mexico's Medicaid Managed Care Waiver: Organizing Input From Mental Health Consumers and Advocates

The community stakeholders' efforts led national and state legislators to take seriously complaints about the difficulties of obtaining mental health services under Medicaid managed care. In September 2000, as CMS prepared to render its decision on continuing the waiver, Senator Jeff Bingaman, a member of New Mexico's congressional delegation, requested that CMS conduct another on-site review of the Medicaid program. CMS then initiated its most comprehensive review. The six-person CMS review team spent three days traveling throughout the state. Instead of relying on the state Medicaid agency, the team worked with a coalition of local providers and patient advocates to organize meetings with diverse groups of community stakeholders. The coalition also convened a "speak out" where more than 200 persons discussed problems with services.

The legislative finance committee, which had audited Medicaid mental health services at the request of state legislators, shared two reports with the CMS review team. Although CMS requires state governments seeking waiver renewals to provide evidence that their Medicaid programs are cost-effective and do not diminish access to or quality of care, both reports concluded that New Mexico's integrated system lacked adequate capacity to deliver mental health services. The first report revealed that projected Medicaid cost savings of $125 million per year under the integrated system would not occur (6). This report disclosed that the state Medicaid agency was neither effectively monitoring consumer complaints and grievances nor collecting reliable encounter data to evaluate the new system. The second report demonstrated a diversion of financial resources to administrative services, because only 55 percent of Medicaid managed care funds earmarked for mental health services in 1999 were distributed to providers (7). Access problems were attributed to cumbersome service authorization procedures required by managed care organizations. Disturbed by these findings, one state legislator—the chair of the interim legislative committee on health—wrote to CMS officials objecting to the program (12).

In an unusual move reflecting the deficiencies of the Medicaid program, CMS revoked New Mexico's waiver on October 19, 2000, and gave the state 90 days to restore the mental health portion of the integrated system to a fee-for-service structure. CMS would not allow Medicaid managed care to continue unless the state Medicaid agency withdrew mental health services from its waiver application. CMS's intervention in a state government's operation of a Medicaid program is a rare occurrence (13). The state Medicaid agency resisted CMS's decision, as did Governor Johnson, who personally requested that President-elect George W. Bush consider reversing it (11).

Transition to the fee-for-service structure never occurred, because CMS permitted its postponement. On February 14, 2001, the state's bipartisan congressional delegation, which remained in close communication with local advocates, expressed unease to Tommy Thompson, Secretary of the U.S. Department of Health and Human Services, about the lack of mental health services under Medicaid managed care. The delegation urged Secretary Thompson to take into account "all viewpoints from concerned New Mexicans" as he reconsidered CMS's decision (14).

On February 16, 2001, CMS, under Secretary Thompson's direction, retroactively approved the state Medicaid agency's request to provide mental health services under the integrated model, asserting that CMS had concluded that the extant system would be able to adequately deliver mental health services. CMS's approval was subject to a list of conditions, including the implementation of intensive monitoring procedures and mechanisms to act on patients' complaints. Not entirely satisfied with these conditions, the state legislature passed a bill to carve out Medicaid mental health services into a fee-for-service structure. However, underscoring the polarized views on public-sector mental health care within the state government, Governor Johnson vetoed this bill.

Because 1915(b) waivers do not require public review, state Medicaid agencies are not obliged to elicit comments from community stakeholders on the content and evaluation of Medicaid managed care programs (4). However, the terms of New Mexico's waiver renewal included the creation of a provisional advisory committee, composed of state officials, consumers, patient advocates, and providers, to redesign Medicaid mental health services. The committee met from April 2001 to November 2001. These meetings provided a first step for building trust between state officials and community stakeholders. The committee negotiated a platform of shared values that guided its analysis of problems in the Medicaid program and recommendations for changes. Recommendations included setting up a permanent steering committee, which may contribute in the next waiver renewal process (15).