Mental disorders affect one in five elderly people (Rouse, 1995). Clinical depression and dementia affect a large number of the elderly, yet programs targeted to the elderly to treat these illnesses are rare. Adoption of managed care in order to control costs and unnecessary utilization presents particular problems for mental health care. Diagnosis and treatment of mental conditions is less concrete and more malleable than many forms of physical care, leaving mental health care especially open to narrow interpretation designed to control costs and utilization.
As a large generation of Americans now moves into its older years, how will managed care assure appropriate mental health care for the elderly? Can a system of service delivery designed for healthy populations adapt to the needs of people with more serious illnesses? How will a system targeting mental conditions address the physical health needs of a population that frequently experiences a combination of mental and physical problems? To date, little attention and less literature have focused on these issues.
Treatment of mental illness traditionally has been a public sector responsibility. Medicare, like most commercial insurance, contains limitations on mental health coverage (number of inpatient days covered, for example). However, Medicaid is a major source of funding for mental health treatment and support. States have aggressively sought Medicaid dollars to cover mental health care and other long-term and intensive services for individuals with the most severe and persistent mental health disorders. Many states have chosen to exercise their option for Medicaid to cover the care of individuals over the age of 65 in state hospitals.
State Medicaid programs now are overwhelmingly moving toward managed care for both general health and mental health. A couple of states-Minnesota and Texas-are already seeking to combine Medicaid and Medicare populations under a single managed care program. Which managed care approaches and which risk strategies are most effective for mental health treatment provision, either for a general population or for a population with significant levels of mental illness, remains unclear. Even more unclear is which options are prudent for elderly people with mental health needs. The clinical, legal, and financial implications of each approach may differ for the elderly
Among the fundamental choices states make when designing managed care plans is whether to integrate mental health services with other services or whether to keep them separate and whether to assign some level of risk to the managed care entity. These decisions have important implications, effectively determining who provides the services and who manages the plan.
This article describes the primary approaches states are taking to manage publicly financed mental health services.' To date these approaches often exclude those individuals who are dually eligible for Medicaid and Medicare. However, managed care plans for the general population may become the model for programs for the elderly. We describe one innovative program that is already enrolling people who are eligible for both Medicare and Medicaid. Finally, we raise some policy questions concerning the methods and feasibility of managed mental health plans for the elderly.
MEDICAID MANAGED MENTAL HEALTH CARE
Medicaid has had to face certain key problems in developing managed care for mental health that also must be addressed for the elderly population.
First, managed care methodology was initially designed for a functioning, working population, with acute rather than long-term mental health problems. While the same system may prove transferable to the general Medicaid population (eligible by reason of income through Aid to Families with Dependent Children/Temporary Assistance to Needy Families), will it work for the population eligible for Medicaid by reason of mental disability? …