The Medicaid program and mental health care are inextricably related. Unfortunately, this relationship is not well understood by many professionals and advocates of either program. Despite increased sophistication in both the Medicaid and mental health policy arenas, misunderstanding and poor communication still occur, and periodically lead to problems in access to care, quality, and accountability.
It may not be too much of an exaggeration to describe the disconnect between mental health and Medicaid as a kind of cross-cultural problem. So many of the basic characteristics and "rules" vary between the systems that misunderstandings are common, even when not obvious. At its worst, this can lead to bad patient care and fiscal abuses. Even when these "worst case" problems are avoided, working relationships between the systems can be difficult. And for providers having to deal with both payor systems, the different expectations, payment methods, and requirements can be frustrating.
Yet there are signs of change and improvement in the relationships between federal and, especially, state-level Medicaid and mental health leaders. Some of these changes may relate simply to more experience with collaboration. Other reasons for change may include a growing awareness within health care generally of the scope, impact, and costs of mental disorders.
Behavioral Health Issues
There is an increasing recognition of the significant impact of behavioral health problems across health care and in Medicaid. Part of this increase may reflect a growing recognition that mental illnesses are indeed illnesses - with a substantial prevalence, high social and economic costs, poor access to care, and availability of treatments that are both efficacious and underutilized (National Advisory. Mental Health Council, 1993). There is also a growing awareness of the high levels of disability associated with mental illnesses such as depression, an awareness bolstered by the World Health Organization's finding (Murray & Lopez, 1997) that behavioral problems were half of the top ten causes of disability worldwide in 1990.
There is also a growing awareness of the significance of behavioral health problems especially mental illness - in Medicaid policy circles. The development of new, effective, and well-marketed psychiatric medications has certainly had a disproportionate impact on Medicaid pharmacy costs. These medications include new treatments for prevalent conditions like depression and anxiety disorders and more effective treatments for the less prevalent but sometimes almost permanently disabling illness of schizophrenia. By 1997, for example, six of the top ten medications by cost in Ohio's Medicaid program were psychiatric drugs (Ohio Department of Human Services, 1998). Concern about formulary limitations to address the rising costs of these medicines-despite their utility - led to the unusual step of letters on their effectiveness being sent from Medicaid's director of state operations and the director of the National Institute on Mental Health to state Medicaid directors. This action by itself signaled the increased significance of mental health issues in Medicaid. Other emerging mental health issues in Medicaid include the growing awareness of how untreated or poorly treated mental illnesses (especially depression) lead to significant increases in the use of other health care services, concern about poor recognition and treatment of depression in primary care settings (Wells et al., 1989) and questions about how to better manage Medicaid costs (including mental health) for disabled eligible persons, including those with mental illness.
Medicaid is an even more significant concern for mental health officials. The main reason for this is the dominant role of Medicaid funding among the various revenue sources of the public mental health system. The causes and dynamics of these funding patterns will be discussed, but they are illustrated by the fact that Medicaid revenues constitute an estimated 30 to 50 percent of all revenues in state mental health systems. …