The Department of Health announced today it is implementing new rules and regulations for its Mental Health Rehabilitation Program. The rules will restructure the program to increase service effectiveness and fiscal efficiency. Changes include establishment of a fee-for-service reimbursement structure and new mechanisms for monitoring clinical outcomes. The new rule also requires that patients must need intensive mental health care or they will be referred to their primary care physicians or to mental health clinics.

The new payment rule begins August 1, 2005. It is subject to oversight by the Joint Health and Welfare Committee of the Legislature. The rule was to have begun in June, but LDH delayed implementation until the new fiscal year.

Under the existing capitated rate structure, providers receive a set, per patient per month payment. Capitated rates are used to create incentives for health care providers to keep people well.

LDH Secretary Dr. Fred Cerise believes the new rules, combined with improved monitoring and accreditation requirements, will result in a system that ensures the necessary services for recipients are delivered in a cost-effective manner that reduces incidences of fraud and abuse.

“On August 1, we will no longer pay the capitated rate, but pay only for services that are provided after prior authorization” Cerise said. “This fee-for-service approach is significant as we continue steps to overhaul and reform the mental health rehab program.”

Mental Health Rehab is a specialized, community-based program that helps adults and children with mental health and emotional problems. The new rule’s purpose is to ensure that only the most appropriate services are provided to clients in order to provide the maximum therapeutic benefit. By eliminating spending for non-necessary services, the Office of Mental Health can improve quality while controlling costs.

The program’s projected budget has been reduced by nearly 37 percent for the upcoming year. The program had grown from a $9.6 million budget in 1998 to a projected $68 million this year. But, the new rule will result in a current budget of $43.1 million, more than a $25 million reduction.

Dr. Cheryll Bowers-Stephens, assistant secretary for DHH’s Office of Mental Health said this is an important step to ensure quality mental health services at a cost that is affordable to the taxpayers.

“Gov. Blanco has said that we must reform health care, and reforming the way we pay for services is critical,” she said. “The rates we pay to providers must be sufficient enough to attract quality professionals, but we must also have in place the necessary controls to ensure that the money we spend is used most effectively.”

Dr. Bowers-Stephens added that the Office of Mental Health is also conducting in-depth monitoring of mental health providers as part of its reform efforts.

“For too long, there have been rumors that the mental health rehab program was ripe for abuse,” she added. “Through monitoring, we are determined to uncover all instances of abuse of the program, and remove any provider who is found to be abusing the trust we place in them.”