The Department of Health announced today it is implementing new rules and regulations for its Mental Health Rehabilitation Program. The rules will change the reimbursement system for these services from a set rate structure to a fee-for-service approach. The new payment rule will go into effect June 1, 2005.

Currently, clinics and doctors who provide mental health rehab services are paid a set rate to care for a specific number of patients. Under this 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.

According to Dr. Fred Cerise, LDH believes that some providers have abused the system, resulting in some people not receiving the care they need.

“Beginning June 1, we will no longer pay a set, capitated rate, but pay only for services that are provided,” Cerise said. “This is a significant step as we begin steps to overhaul and reform the mental health rehab program.”

Dr. Cerise said that in order to prevent the state from paying for unnecessary and excessive services, the new rules will also require prior authorization for all mental health rehab services. This means LDH must approve in advance any treatment prescribed by a mental health rehabilitation provider.

The new rule’s purpose is to improve quality and contain costs for this specialized, community-based program that helps adults and children with mental health and emotional problems.

LDH estimates that the program will cost $62 million this current fiscal year that ends June 30. It is a high-cost program that is slated for substantial funding cuts next year, and the new rule is critical to reducing costs. The rule is subject to oversight by the Joint Health and Welfare Committee of the Legislature.

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 to overall reform,” 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, and remove any provider who is found to be abusing the trust we place in them.”