Nebraska Reassumes Oversight of Medicaid Mental Health Services; Private Contractor Allegedly Denied Care

Nebraska officials announced Dec. 6 that they will assume financial control of the state's Medicaid managed care mental-health program from ValueOptions, the private contractor running the program since 1995, following allegations that the company "denied care to make money," the Omaha World-Herald reports. Although a state investigation proved "inconclusive," the charges created "such tension" between mental health care providers and ValueOptions that "quality of care was affected." The World-Herald reports that tension mounted this year when psychiatric hospitals in Omaha and Lincoln saw 400% to 500% increases in care denials by the company, leaving the hospitals, to either deny needed care or pay the costs themselves. In October, Alegent Health Care and the Richard Young Center announced plans to leave the state's Medicaid managed-care program because of their increasing level of "distrus[t]" with ValueOptions. For its part, ValueOptions contends that the problems in Nebraska were due in part to "a shortage of services," including less-expensive housing and treatment facilities for people with mental illnesses. Patti Cain, a manager for ValueOptions' Nebraska operations, said, "It got to a situation where it really wasn't good for anybody. We all recognized that something needed to change."

Changes
Beginning Jan. 1, ValueOptions will receive a flat fee from the state rather than a pool of money. The company will continue to make recommendations on whether to pay Medicaid beneficiaries' mental health care costs, until its contract runs out in summer 2002. The World-Herald reports that the state is currently accepting bids for the next contract, which will "do away with ... placing all of the money and the risk in the hands of a private company." Stephen Curtiss, director of finance and support for the state Health and Human Services System, said eliminating "even the appearance of a conflict is important at this point to repair the relationship with care givers." He added, "Given all the mistrust and dissatisfaction, this will effectively remove all of those suspicions" (Olson, Omaha World-Herald, 12/7).