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Magellan, Maricopa pass contract midpoint

February 1, 2010
by Alison Knopf
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Company says it's transforming care. Will consumers and the court monitor agree?

In September 2007, when Magellan Health Services won the $1.5 billion contract to provide mental health and substance abuse services in Maricopa County, Arizona, the Connecticut-based managed care company faced two major challenges: 1) separating the case management/payment structure from the provider network, as required by terms of its new contract, and 2) meeting performance targets, measured by a court-appointed monitor, that implement a 1989 court order under which the State of Arizona agreed to pay for care of citizens with serious mental illness in Maricopa County, regardless of cost.

Under a program it calls “Voices and Choices,” Magellan asserted that it would transform Maricopa's behavioral health system in two ways: First, to comply with terms of the state's redesigned RFP, Magellan would create “choices” by divesting 25 clinics and forming four PNOs (provider network organizations), each of which would have responsibility for its own providers. This structure, now complete, eliminated the conflict of interest allowed in the previous contract under which ValueOptions, the most recent RBHA (regional behavioral health authority), owned clinics and paid them higher fees out of its managed-care contract. Second, Magellan said that this, and other changes, would transform the public behavioral health system from one that managed and controlled clients to one that offers them and their advocates a stronger voice, along with greater transparency and accountability.

For all involved in this, the stakes are high. At $1.5 billion, the three-year contract, already renewed for the fourth year and renewable for the fifth, is the biggest behavioral health contract in the United States, with about 80,000 people in treatment and an annual budget that, in 2010, tops $600 million.

Next Arnold v. Sarn audit due soon

About half of that money funds services for 21,000 people diagnosed with serious mental illness-the intended beneficiaries of the 1989 Arnold v. Sarn ruling and the subjects of court monitor Nancy Diggs' concern. Diggs, whose office monitors the adequacy of the services provided by the state and the county to these individuals, is set to release the next audit this spring. If history is any guide, the audit will be tough.

Leaders of the effort to serve behavioral health consumers in Maricopa County are, from left: Dr. Laura Nelson, Acting Deputy Director, Arizona Department of Health Services/Division of Behavioral Health Services; John Romero, CEO, People of Color Network; Ron Smith, CEO, Choices Network of Arizona; Christy Dye, CEO, Partners In Recovery; Amy Henning, CEO, Southwest Network; Dr. Richard Clarke, CEO, Magellan of Arizona.

The monitor's scathing December 2008 audit stated that there was “an ongoing pattern of noncompliance” with criteria that were jointly stipulated by the plaintiffs and the state in response to the court order. “[M]uch of the data and information included in this report reflect serious deficiencies in the provision of clinically sound practices and raise serious questions about the behavioral health treatment, safety, and overall well-being of all class members,” the audit said.

According to the Diggs review, the contract award to Magellan did not improve care for patients, and in fact there was a “pattern of regression and significant declines in a number of areas.” It added that moving case management from the RBHA to the PNOs “is not likely to create the change that will be necessary to improve outcomes.” The audit also said that “the change from one large for-profit corporation to another” made no difference and wasn't likely to in the future.

The audit went on to criticize the procurement process, saying that it created an “inherent instability” in the behavioral health system, with new contractors taking over and changing the system completely. The result, it said, was that “every few years, the community starts over.” And, it asserted that “guaranteed profits” for managed care contractors “take money away from services.”

“The results of the audit indicate that an increasing number of class members do not have minimally adequate Individual Service Plans, do not have minimally adequate case management, and do not receive the services and support they need to move towards recovery and a better quality of life. Moreover, the percentage of class members still lacking these basic elements of mental healthcare is actually increasing, rather than the reverse.”

Diggs' 2008 audit concludes: “Because the past corrective actions have not produced the desired outcomes, nor significantly improved the behavioral health system in Maricopa County, the monitor believes that dramatic reforms and a complete overhaul of the service system are necessary.”

Program offers consumers “Voices and Choices”

For its part, Magellan asserts that its “Voices and Choices” program is making a difference, not only in the lives of county residents diagnosed with serious mental illness, but in the lives of nearly 60,000 other county residents that require behavioral health services. To illustrate its progress, as well as its commitment to greater transparency and accountability, Magellan introduced a new, online “dashboard” that tracks the performance of its providers on 18 different measures.
In 1995, the parties to the Arnold v. Sarn decision stipulated 287 “exit criteria” that must be satisfied to end the lawsuit, including the performance metrics used by the court monitor.

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